NMP Next: It's What's Next
Knowing what’s going on in your industry at any given time is critical if you hope to make the kinds of decisions that will positively impact your enterprise. Knowing a bit of history is nice, too, because it puts what you know about today into context and helps you do a better job of predicting what will happen tomorrow. But knowing what’s going to happen next is pure gold. That’s the goal of this new special section of National Mortgage Professional Magazine.
Two things you should know about this new section in NMP. First, I’ve been asked to edit it, working under NMP Editor-in-Chief Eric C. Peck. I’ve been around this industry for a while now, starting as a special reports editor under Mark Fogarty at National Mortgage News in 1997. Since then, I’ve interviewed thousands of executives working in our space and written for about half of the trades that serve executives working here. I’m very excited about getting back into that work. I’m not giving up my own company, and I’m not becoming an employee of NMP. In effect, I’m a freelance editor partnering with NMP to bring something totally new to the market.
The second thing you should know is that this section is sponsored content. Wait, what?
Yes, the companies that appear in this section, the experts I call upon for commentary (in almost all cases) and the firms that are the focus of our in-depth features have all paid a price to be here. Well, technically, they’ve bought in on this new concept and chose to sponsor this section.
So, this is the concept. Publications serving our industry have seen rapid growth in sponsored content sales. That makes sense. While display ads are essential brand builders, feature articles and special directory listings are very good at letting buyers know exactly why a given company should be an option and receive an inquiry. As sponsored content has flooded the market, publication readers have been quick to separate this material from “real news.” The result has been that many good pieces go unread because they bear the legend “sponsored content.”
Why does this happen? It’s a credibility issue. We’re fortunate to have trade publications that employ really good journalists. Every single pub in our space has reporters that my firm calls upon frequently because we know they get the stories right. They are credible journalists, in every sense of the word. But they don’t write the sponsored content. Typically, the content is written by the sponsoring firm’s marketing department, which tends to make it a brochure. Doesn’t mean it’s not great material. Just means it may not get read.
It might be better if the editorial staff could write the material, but they cannot because then they lose their objectivity and their credibility will swiftly follow. It’s that Great Wall of China that publications work so hard to maintain and it’s important. Sponsors could hire freelance writers, and many do, but they maintain strict control over the story and too often it comes out sounding exactly like the brochure. It can be very difficult for a freelancer to hold his ground against a client that pays well and on time.
So how does NMP Next work?
This is a hybrid approach to sponsored content that combines a professional industry trade press editor working on a freelance basis with a publication’s internal marketing machine. In this section, I’ll control the content, under the direction of Eric C. Peck. I’m the outside editor working on a freelance basis and Eric is head of the Editorial Department. NMP’s sales team will interact with potential sponsors. If it works, as I suspect it will, we’ll have tossed a rope over the Great Wall, allowing us to work together without compromising what we all bring to the task of sharing the most important stories with the industry.
Still, two potential problems seem obvious. First, won’t the Sales Department pressure me to write fluffier articles about companies we cover? Maybe, but Eric will protect me. If he can’t, this experiment won’t last long. Second, why would a rich advertiser agree to let me control a story if they have to pay to be included? Won’t they just walk away? I’m not overly concerned about the fact that some may. There are plenty of opportunities for companies to buy sponsored content, and I’m sure they’ll do quite well elsewhere. Anyone can find a home for anything they want to publish.
NMP Next will attract sponsors who are doing great things, who have great stories to tell, executives who are not afraid to look into the future and tell us what they see. NMP Next is for the companies that are driving our industry toward whatever is out there for us to encounter tomorrow. These are the people I’ve enjoyed reporting on for as long as I’ve been in this industry. I think they will embrace this section. I can’t wait to tell you their stories.
What’s Next for Mortgage Brokers
When the financial crash led to the foreclosure crisis and people started looking around for guilty parties, they looked where they always look during a mortgage downturn. It was decided by some of the nation’s largest bank-owned mortgage lenders that the source of the problem was their third-party origination (TPO) networks and they promptly shut them down, sending tens of thousands of mortgage brokers into different industries. Now, years into the recovery, brokers are still working their way back to a position that, at one time, put them primarily responsible for originating upwards of 70 percent of all home financing available in America.
Two forces are driving the return of the mortgage broker. The first is the rise of a number of very large, non-bank wholesale lenders who are actively building out their TPO networks. The second is NAMB—The Association of Mortgage Professionals. In the spring of 2015, NAMB approached wholesale lenders about working together to advance the future of the wholesale lending business.
The goals of the inaugural NAMB Wholesale Summit was to brainstorm and exchange ideas on how to change the legal environment where everyone wins, from consumers to mortgage brokers, to correspondents, and even large banks and lenders. More than 15 wholesale lenders answered the call. It was the beginning of an ongoing project to build the wholesale lending business, increase market share and profitability, and address compliance concerns for both wholesale lenders and their TPO partners. They met with NAMB board members first in Orlando in March of 2015. Since then, they have come together on two more occasions, most recently in San Antonio in February.
The February meeting focused on a number of key topics, including marketing to and recruiting Millennials, technology, compliance and legislative action.
NAMB President-Elect Fred Kreger took the microphone for the first official session of the day. He presented with Ginger Bell. She focused on the Millennial opportunity, while Kreger talked about shifting our approaching from trying to survive to preparing to thrive.
“We want to look at how we can move on from surviving and start thriving. We want to see our channel get off defense and onto the offensive,” Kreger said.
Bell shared some very interesting statistics regarding the new generation of homebuyers, the Millennials, and asked the audience to begin thinking about not only how to sell them but how to recruit them. It’s a subject Bell said she had been discussing with people both inside and outside of our industry, including Larry Cox from Pepperdine University. Bell and Cox put together a focus group made up of Millennials who were already in the industry and talked to them about their perceptions, in order to find the problems and create a software solution. The process took a year.
“The problem is really the perception of our industry,” Bell said. “The reason is that many universities teach in their business ethics class how financial services is an example of bad corporate ethics. They are being taught to hate us.”
And it’s having an impact. Bell pointed to a statistic that showed that every day, 10,000 youngsters turn 21.
“We have to address this,” Bell said. “But not internally. We have to take the conversation out of our industry.”
With Cox, she has started a financial literacy initiative at Pepperdine. She pointed out that the University had a great finance program, but they had never been approached by anyone in the industry to speak to their students. There was no evidence of mentorship being provided by our industry.
But Bell cautioned the audience to think about more than just selling to this group, as these young people will account for three out of four workers within nine years. She promised that the group would explore ideas for recruiting Millennials in an upcoming roundtable. Doing that successfully will require the industry to learn more about them.
She provided the following information:
►80 percent of Millennials surveyed believe that they are better off than parents, but
►53 percent are living paycheck-to-paycheck
►32 percent are saving for a house, while
►33 percent are saving for a vacation and
►22 percent are not saving at all
►35 percent still get financial support from relatives
With homeownership at 64.7 percent, the lowest level we have seen in 19 years, it’s time to get Millennials into homes. After all, it’s 23 percent cheaper to buy a home than rent a house. But do they know it? And will they trust us when we tell them?
Bell pointed out that Millennials are afraid of financial services.
“Remember, they went through the downturn during their formative years,” said Bell. “They saw their parents lose homes and jobs, as well as their retirement accounts. Now, they are being taught in school that we’re an ethically bankrupt industry.”
Some are calling the Millennials the next hero generation. They want to be involved in giving back, doing good.
“Why would they get into our industry?” Bell asked.
NAMB Director David Luna took the microphone for an entertaining and informative session on technology. He shared a number of videos with attendees that demonstrated the growing comfort level on the part of consumers for today’s latest technologies. He also offered examples, taken from working brokers in attendance, demonstrating how certain technologies are essential for any broker who hopes to do business with the next generation of homebuyers. That requires everyone to keep up, which can be difficult with the Internet of Things a reality and everything moving very quickly.
“I’m sure that some brokers are still doing things the ‘old fashioned’ way,” Luna said. “And by that, I mean from the summer of 2015. Or the fall of 2015.”
Luna asked lenders in attendance what could be done to help brokers originate more electronic loans. Ultimately, the group agreed that there were so many parties involved in the mortgage that it’s taking time for everyone to get on the same electronic page, even with the work MISMO has done to standardize our data elements. One wholesale lender, who spends time working on a MISMO workgroup estimates that it will take another 10 years for the mortgage industry to go fully paperless.
It’s unlikely that consumers will wait that long. The results of Quicken’s Rocket Mortgage will be an indicator. In any event, Luna pointed out that brokers now realize that technology constitutes a competitive advantage and they will gravitate to wholesale lenders that can offer them–and their borrowers–the best tools.
Finally, NAMB Government Affairs Committee Co-Chair Valerie Saunders led the last session of the day with a look at regulatory compliance and some of the work NAMB was doing to prepare brokers. Much of her presentation focused on a recent survey performed by the National Association of Realtors (NAR) in which they asked real estate agents about pain points resulting from the CFPB’s TILA/RESPA Integrated Disclosure (TRID) rule.
By the time she was done, everyone agreed that the real estate sales industry still didn’t understand what TRID was supposed to accomplish and were blaming the lending industry for the shift in information flow, sending documents that used to come to them directly to the borrowers in the form of the Closing Disclosure (CD).
Lenders are still working through the TRID changes and attendees agreed to continue to work together to ensure that brokers were delivering compliant loans.
As the Wholesale Summit came to a close, attendees agreed to reconvene in the fall to continue to work together for the advancement of the wholesale lending industry. The next meeting is set for the fall in conjunction with NAMB National in Las Vegas.
Next Up: A Look at What’s Coming in May
As more people become exposed to NMP Next over the new month or two, I expect to be bringing you a host of stories from the industry’s most innovative companies. It’s easy to get more information about getting involved in this special section and I look forward to working with sponsors to find out what’s really coming to our industry next.
As this issue was heading to press, I was in Los Angeles for the Mortgage Bankers Association’s Technology in Mortgage Banking Conference. I’ll be bringing you the show overview and some stories about the innovations I found on the exhibit hall floor next month. If you were in Los Angeles and didn’t get a chance to visit with me, please get in touch. I’d love to know what you were promoting at the show and what you thought of the event. Please contact me, NMP Special Features Editor Rick Grant, by e-mail at RickG@NMPMediacorp.com.
Also, next month we’ll be preparing for the MBA’s Secondary Market Conference in New York City. As we continue to look for new investors returning to the mortgage market, this annual conference becomes increasingly important. We’ll tell you what we’re hoping to find in New York and look forward to visiting with some who are planning to attend.
Finally, our nomination process for the NMP Next Awards will be underway by the time you read this issue, and by next month, I’ll be sharing a bit of information about some of the companies we’re considering for our inaugural awards. I don’t expect the judging to be easy, given the competition we’re already seeing in an industry eager to speed the recovery.
If you have questions about this special section, I hope you’ll reach out to me at RickG@NMPMediacorp.com. Over time, I expect it to be one of the first places people look when they’re trying to figure out what’s coming next.
Mortgage Servicers Get a Dose of What’s Next
If you had to choose a sector of the mortgage business that has resisted change the most successfully for the longest period of time, it would likely be mortgage servicers. They haven’t had to entice consumers to do business with them and the nature of their work, at least up until the foreclosure crisis, was simply to accept payments and post them to the proper accounts. Up until a few years ago, the industry’s largest servicing software package was still written largely for DOS and servicers worked off green screens tethered to a central mainframe much like every business did in the 1970s. But times are changing.
When the nation’s servicers recently came together in Orlando for the Mortgage Bankers Association’s National Servicing Conference, they got an injection of future thinking from a man who has made a career out of figuring out what’s coming next and writing about it.
David Pogue (pictured right) is the founder of Yahoo Tech, a former personal-technology columnist for The New York Times (for 13 years) and a monthly columnist for Scientific American. He has been the host of science shows on PBS’s “NOVA” and a correspondent for “CBS Sunday Morning” since 2002. With more than million books in print, he is one of the world’s best-selling how-to authors. After graduating summa cum laude from Yale in 1985, with a distinction in music, he spent 10 years conducting and arranging Broadway musicals in New York. He has won three Emmy Awards, two Webby Awards, a Loeb Award for journalism, and an honorary doctorate in music. He’s been profiled on “48 Hours” and “60 Minutes.” And … he’s a helluva speaker.
He took the stage in Orlando as a keynote speaker for the conference dressed casually, save for the baby grand piano set back on the stage. For the next hour or so, he told the servicing industry what’s coming next and why they’d better learn to deal with the new generation of American consumers if they hope to be successful in the very near future.
“The kids who entered college last fall have never lived in a world without air conditioning, running water and the Internet,” he told the audience. To those of us born in the last century, our kids seem like aliens. They all have devices attached to their appendages. His kids have smartphones, but they never use them as phones. “My kids wouldn’t return a phone call if you paid them,” he said.
Understanding how this new generation lives with technology is one key to our success in the future.
Millennials are all about mobile, he told attendees, but it’s probably not the mobile we’re used to. When the older Americans in the audience got started with mobile, it was likely with a Blackberry and only to read e-mail. Today’s youth don’t read e-mails. They don’t use it. It’s as outdated to them as a home phone number. Studies show that e-mail use in new business apps has dropped 65 percent in the past year. For the next generation, everything is real-time and app-driven. To interact with them, we’ll need an app they can download from among the 1.3 million other apps currently available on the iTunes store or Google Play.
Not only must the industry appeal more to app users, but also begin to share the data these apps collect. Our industry can capitalize on that, but we have to keep our eyes on the Internet of Things (IoT). While he says this concept is only now taking hold, we will soon be living in a world in which everything is connected and the data these devices collect is shared as well. Privacy is not as important to today’s consumers as it was to the previous generation. They share everything from the most recent ride they took through Uber, to the last place they stayed from Airbnb, to the health data their wearable devices is collecting.
This, Pogue says, is one exciting opportunity that we’re currently missing in America. Consumers will purchase 70 million wearable health devices this year. We already have piles of health data available to us, mountains of it. “The cure to cancer is hiding in that data,” he said. Maybe with the addition of Google’s “Study Kit” we’ll discover it.
But the recent innovation he was most excited by was the new USB port the major hardware providers are building into their new devices.
“This is a power connector, a USB connector a video out connector and more. It’s the dawn of the universal power cord for everything. It’s the Jesus Jack!” It will add steam to the IoT revolution because you can charge your device, whatever it is, with anyone’s cord.
Pogue did not go into detail about changes he would recommend the mortgage industry make to better communicate with the next generation, but told the audience to expect more disruption. Robots are coming. Self-driving cars. Imagine Uber with self-driving cars, he said.
Taken as a whole, his presentation seemed to be meant as a wake-up call for an industry that has thus far avoided change fairly successfully. To put a finer point on it, he finally approached the piano and performed a piece he had composed about a horrible experience he had with a call center. It was a funny song, but few in the audience were laughing. I suspect he hit a nerve.
For more information about David Pogue and his thoughts about the future, visit his Web site at DavidPogue.com.
Innovation News Roundup
A look at some of the news we expect have a big impact on the industry in the near future. Given that this is our inaugural issue and there has been a lot of activity during the first quarter, we can only provide a short glimpse here. In future issues, we’ll try to look deeper into some of the innovation news that we think matters. You can find the original releases for all of these items online.
BestBorn Business Solutions announces a lite version of its loan level accounting software
The firm was pulled into our industry when a lender asked the Microsoft Dynamics NAV developer to customize an accounting package for them. The product turned out so well that the company took Loan Vision to market and today has more than 35 lenders on the system, including wholesale mortgage giant United Wholesale Mortgage (UWM). The lite version will make a scaled down version of the software available to even the smallest lender, who today has to rely on spreadsheets to do work that QuickBooks and similar general accounting software cannot.
DocMagic launches Total eClosing Solution
Since the Consumer Financial Protection Bureau (CFPB) asked lenders and their vendor partners to participate in an eClosing pilot last year, the government has become sold on the idea of paperless mortgages. We expect to see a lot of companies bring eClosing rooms online in a big way. While that’s not necessarily new as we’ve had companies offering paperless closings for some time (a recent example was the offering launched by Pavaso and SigniaDocs), what is new is that now lenders have a really good reason to use them. DocMagic has been a strong competitor in all things electronic and document related for some time. It offers its eSign functionality as part of the deal for free.
Nationwide Title Clearing (NTC) offers White Paper on the state of eRecording
For years, we’ve assumed that the biggest hurdle to electronically recording the mortgage-related documents was the County Recorder. After all, government bureaucrats are not known for being technologically advanced. NTC’s White Paper goes into the Recorder’s Office to find out exactly what these professionals think about eRecording, and it might surprise you. The paper offers a look at the hurdles remaining, from the perspective of the recording professionals.
Ernst Publishing Company gets traction with its Settlement Agent Gateway offering
One of the unanticipated consequences of the CFPB’s TRID rule (and there are have been quite a few) was that lenders suddenly had reason to end relationships with smaller settlement agents who could not be counted on to provide accurate fee data. Without accurate numbers, the lender can’t deliver a Loan Estimate that has any hope of lining up with the Closing Disclosure (CD), which could lead to re-disclosure and failure to meet closing deadlines. Naturally, this scares real estate agents to death. The result was that many lenders began to pull their business away from smaller agents and concentrate it on larger firms that could provide the data they needed. Ernst’s Gateway allows any agent to negotiate and certify fees in advance of the CD. The real benefit is that local LOs don’t have to lose their existing referral networks.
eLynx integrates with Lendtech Data recently in another move that was likely spurred on by TRID-related consequences
This integration enables lenders utilizing eLynx’s Expedite ID compliance solution to exchange property, fee and loan data electronically with the 3,000 settlement service providers in 47 states using Landtech Data’s XML Real Estate Settlement System. The companies say the resulting bi-directional exchange of data simplifies the collaboration required for lenders to generate the CD mandated by TRID.
Cloudvirga launches intelligent Mortgage Platform (iMP)
A tech firm founded by seasoned lenders and tech developers promises to deliver digital mortgage and has already delivered $5 billion worth of loans. While there is no shortage of LOSs in this space (you could build an entire publication just around them), we are starting to see a new generation that gives consumers the sense that they have more control. I don’t think they actually do yet, but these new systems are paying more attention to what today’s consumers want to see on the screen and how they want to interact with lenders. We expect to see a number of loan origination systems move in this direction in the near future. A case in point is a new offering from Arc Systems and Mortgage Dashboard founder Jorge Sauri, which also launched this month.
TeleVoice launches TeleVoice Insight
TeleVoice has launched TeleVoice Insight, a call recording solution designed to ensure compliance, improve customer service and allow servicers to quickly resolve customer disputes. Now, we’ve had call recording in our call centers for decades, but we expect to see more new software that is intended to focus more on what matters to industry players -- both originators and servicers -- today, which is compliance, the borrower’s experience and dealing with borrower complaints. The TeleVoice system is already integrated into the Black Knight MSP platform, which should add more power to that venerable system.
Platinum Data connects lenders and appraisers
Platinum Data has released RealView QB (Quality Bridge), an appraisal quality technology that creates a link between lenders and appraisers. As the government continues to push for more valuation data delivered electronically, it's useful to have electronic tools that can help lenders and appraisers work together from order to fulfillment. QB is a workflow feature in RealView, Platinum Data's appraisal quality technology. According to the company, it enables a single, centralized system of record for appraisal quality control. Users can invite virtually any relevant party to access their appraisal quality and underwriting process on a limited, user-defined basis, which I suspect regulators and investors will appreciate. This is another excellent example of innovation that gets the industry closer to what their upstream partners and regulators are asking for.
To get news of your recent innovation into this space in future issues, please contact me, NMP Special Features Editor Rick Grant, by e-mail at RickG@NMPMediacorp.com. Our industry has always been pretty good at avoiding innovation unless it is absolutely necessary. There are plenty of reasons today that moving on to what’s next is both a competitive and a compliance-related mandate. Let us know why your news is important and why it points to what’s next for our industry.
NMP Next Awards
As we working through the planning process for putting this new special section together, we thought long and hard about the kinds of companies we were hoping to attract as sponsors and write about as examples of leading innovators. While we found plenty of examples of companies worthy of writing about, we also saw some stand out examples of innovation in action.
I’m not talking about technology, per se. Automation and industry technology is often a requirement when we want to radically improve processes. But there are already some very good industry technology awards. We wanted to focus more on the thought process behind the technology.
For instance, there are many good loan origination systems (LOS) on the market. There will likely be more introduced in the near future and some of them will be very good, from a technological standpoint. But will they just be a slightly better, faster or cheaper method of moving data around the same way we always have, or will they fundamentally improve our processes? The latter only comes as a result of careful thought and analysis. That’s what we want to recognize with the NMP Next Awards.
Watch the NMP Daily and NationalMortgageProfessional.com for information about the nomination process. We’ll be making our decision early this summer and handing out the awards this July in New Orleans as part of the Ultimate Mortgage Expo. Stay tuned for more information and get ready to tell us about how your team is thinking about the future. It might just win you an award.
Rick Grant is NMP special features editor for NMP Next and National Mortgage Professional Magazine. He may be reached by e-mail at RickG@NMPMediacorp.com.
This article originally appeared in the April 2016 print edition of National Mortgage Professional Magazine.
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