Apr. 18: Notes on LO trends, credit reports; fan fave Eileen O’Grady on the ABA Real Estate Lending Conference: The Perils of Prudence?

Production personnel are at a premium – no one wants to leave their plump pipelines. But are there broader trends at work? Mat Ishbia, President/CEO of United Shore, wrote in with his opinion saying, “Yes, we’re seeing a lot of loan originators leaving banks and larger retail originators and going to brokers. A lot of people who had been scared because of all the regulations – loan originator compensation and GFE changes – and went to big banks or big lenders, began realizing that, as all the regulations had cleared, mortgage brokers are still the best route for loan originators and consumers. By shifting to brokers, originators are able to capitalize on having access to a greater number of products. Instead of working with just one lender, they can utilize many lenders, and take advantage of access to many lenders’ turn times, programs and pricing. Brokers provide originators with the best options for their consumers, and thus, the best ability to write the most loans. We’re seeing more and more originators make the switch from banks to brokers and having a lot of success, so I think it will continue to happen.” Thanks Mat.


Last Saturday’s comments about the quality of free credit scores for consumers – and the unrealistic expectations they set – set off a few comments about credit reports in general. Remember that FICO is only one type of score – there are plenty of others.


Jonathan Roisman posted a story on the upcoming credit scores. “FICO is rolling out its pilot program to help some 15 million Americans who currently don’t have a FICO credit score begin tallying a credit history. In all, about 53 million Americans don’t have credit scores. This is due to either choosing not use any form of credit at all, or because a negative financial event, such a bankruptcy or foreclosure, impacted their finances so greatly it cost them the ability to receive loans from conventional sources, such as a bank.”


Janet S. supplied, “I was excited to see that you had even mentioned credit reports. In response to your conversation about credit scores, FICO 9 is supposed to be released to lenders early this year the article says. Personally I wish they’d hurry up! Much of the press involves medical debt. Most of my business is done with people that I have to work with for many months in order to get them to qualify and I have found that the general public is so undereducated about what hurts their credit – yet the bureaus don’t make it any easier for them. In general, people think they are doing the right thing by paying off old collections but it ends up biting them; they become discouraged and give up. There are just so many unfair practices by creditors/collection agencies. Consumers are hungry for hope and direction, they just don’t know where to turn or who they can trust.  I’m not a credit counselor and I do refer them to agencies to help…but many of those businesses are out to take advantage of these folks too.  It’s a sad state of affairs.  People do make mistakes but unless you got money to fix it, your mistakes reach far into the future.”


Josh L. wrote, “Being a veteran in the consumer credit card industry and now being in the tech vendor space in mortgages, I’ve always been fascinated by the number of FICO scoring models that are available.  Based on your post from last Saturday, I thought this post may be an interesting/fun read for some of your subscribers (I’m probably one of the few that find it fun J). Here is a link to the official post at myFICO.com that discusses the different scoring models used in various lending scenarios.


Jim Kaiser with Advantage Credit sent, “One of the most misunderstood facts about FICO scores is that most consumers think they only have 3…one for each bureau. The fact is that a consumer actually has dozens of FICO scores. With the rollout of FICO 09 a consumer now has approximately 65 different FICO scores. That can sound a bit overwhelming and our recent article How Many FICO Scores Does a Person Have provides some clarification. We also wrote an article named Fair Isaac Takes Steps to Help the Home Buyer which explains details about the new FICO 9 scoring model and how it will most likely be used first by credit card and auto lenders and slowly be adopted by some private mortgage lenders, but as to whether it will truly help the majority of potential buyers lies in the decisions made by Fannie Mae and Freddie Mac. (And you can always download our FREE App form our website to be notified when we publish a new article, which is usually every two weeks.)”


And Bill Mapp contributed, “A quick comment on free credit scores, if I may. Credit bureaus are in the business for one reason: to make money, and they make a ton of it. Although sites like Credit Karma get paid by driving consumers to various credit products and advertising, these ‘fako’ scores are the only thing readily available to consumers without charge. The catch, of course, is that the free models only approximate the formula credit bureaus use. The best consumer protection the CFPB could offer today would be granting wider, inexpensive or FREE access to personal information contained within and owned by the three major credit bureaus. Our society is far too credit-based and risk-averse to keep people in the dark about their real credit scores, and NONE of the bureaus should charge a consumer to know his/her FICO.” Thanks Bill – although critics will ask, “If the for-profit credit bureaus are required to give out free credit reports, how about free x-rays, free tax preparation, free real estate agent services…”


Eileen O’Grady wrote from “the ABA Real Estate Lending Conference in “chilly, rainy Baltimore” where the theme was “Find Your Center – with Customer-Centric Strategies”. “It was a modest crowd, but a good ratio of attendees to vendors and an atmosphere of ‘let’s do business.’ On the flight in I sat next to a Rob Pommier of Settlement One, and formerly of Open Close.  A nice coincidence, and we played the ‘do you know’ game most of the flight.  When I looked around the cabin at one point, I could see many other (grey-haired) colleagues on the flight, all of whom really look more and more alike each year, just like my Aunt Pat and all her friends at ‘The Home.’  And not nearly as much fun as the flight to the Disney World of MBA Tech.


“I liked the tone of this conference. Not flashy. Substantive; a get-the-work-done kind of conference, serving the residential as well as commercial real estate space, where exhibitors are given time between the sessions to meet & greet. No big flashy names or aging rock bands on premise here at the very nice Marriott in a revitalized Baltimore Waterfront – best shower water pressure ever. Number of investment banks or accounting firms here: zero. Number of Attorneys admitting to being here: zero. Telling.


“You won’t believe this, I know, but they actually have a session on some new regulation that I think they call….DIRT?  TIRD? No, no… TRID! That’s it! Yeah, TRID!  Have you heard anything about it….?  I hear it’s going to be a big deal….  I, for one, am much more interested in the conference’s sessions like ‘Accelerate Your Origination Business,’ ‘Increase Residential Mortgage Lending Profits in 2015,’ and, ‘Basel III – Facts and Fallacies.’ A session that I did not attend: ‘The Perils of Prudence’ – sounds like a mash-up of a kid’s storybook with an Emily Bronte novel. Session they are not offering that I would go to if they did: ‘Project ReStart:  Making a Loan That Your Borrower Can Actually Afford to Repay.’  Can’t help thinking about George Ostendorf’s quote to me: ‘Check your mid-market borrower’s residual income before you’re certain that “Gross Income Ratios” really work for rebuttable presumption at income levels as high as $60,000 or higher.’


“Other Bests: ‘Best Bank Name’ goes to Cape Cod Five Cents Bank.  All their ATMs dispense nickels. Best idea of the Conference today:  ABA’s ‘Endorse’ Program….Great idea; a win for both lenders and vendors, where the ABA does the due diligence on any investors worth considering, on behalf of Association member banks. Best Tchotchke o’ The Day:  PHH Mortgage’s Power Converters. Talk about saving time and money on due diligence/vendor management. Perfect.


“There have been some highlights – and low points. One low point ended nicely: I was loitering with vendors in the very quiet Exhibit Hall, and all of a sudden the energy in the hall goes from ‘There’s nothing for vendors to talk to each other about anymore’ to ‘vibration’ mode, and all of these community and commercial bankers go directly to the 4 PM Cocktail Bar. So I go up to the apparently thirsty attendees drinking wine and other libations in an alarmingly non-compliant manner and ask why they are drinking so copiously, and, to a person, they answer, ‘Because I just came from a regulatory session.’ I stepped back and said ‘Drink away!  Drink away!’ because I knew that this industry is rife with extremely competent people who are trying to decide whether to stay in the industry – and face the hassles of Regulation Purgatory – or leave, and face the hassles of which 401K to crack. Tough choice.


“I owe an apology to a dear friend, and colleague, Tim Anderson, of DocMagic.  I referred to him as Tim Davis in a previous write-up. And what I know about DocMagic is that due to the number of lenders that use them nationally they are developing a secure web portal to manage the electronic exchange of closed loan fee data between the lenders system of record, (LOS) and the title closing agents system of record to ensure compliance of The Integrated Disclosure Reg, (the dreaded TRID) for compliant documents and the three day proof of receipt of delivery requirement.  Anybody who gets ‘system of record’ is a thought leader. Nicely done, Magic Tim.


“Speaking of Thought Leaders, Michael Chan, of ComplianceEase made it to the conference, and he provided some certainty around regulatory metrics – nothing like a little certainty to help ease anxiety in this era of uncertainty. Here’s what he shared from the rich statistics they capture, since January, 2015: TILA Fails (+0.125%) Tolerance: 14%; RESPA Failed Tolerance:  16%; Average Reimbursement: $900; QM…Failed Safe Harbor Protection: 5%; Failed QM Category Identification: 25%. If you don’t understand these metrics I suggest you either call Michael (1.856.452.1673) or find another career, my friend.


“Hope you saw QuestSoft’s recent write up stating that 1 in 5 lenders is looking for a new LOS.  Could it be TRID-Terror?  With that in mind, I saw some brave LOS vendors at the conference, who must be TRID-Ready if their soliciting new business, yes?   D+H (peek at their home page:  Brilliant Image), Ellie Mae, and newcomer PATH LOS were here and ready to sell.  If you don’t know about PATH, think “a web-based enterprise level product in a fresh new architecture, unburdened by legacy functionality.”  A great new contender.  But the TRID-Ready ship has just about sailed, with 8-1-15 looming, Rob.  So I would plan on canceling any weekend and evening plans for the next 4 months if you still have “buy and deploy a new LOS” on your Q3 ToDo list.


The Conference wrapped up and I actually attended the ‘Perils of Prudence’ session, after all, and I must say I had misjudged it. It was great advice from Brian Ranson of CRC on how best to look beyond accounting and regulatory requirements to better understand, measure and price their credit risk: an erudite presentation of not-self-evident correlations. Best tchotchke overall:   The hotel electronic room card! From Framework.” Thank you Eileen!



(No, this joke does not represent any particular political leanings.)

Say you’re an older senior citizen and can no longer take care of yourself. The government says there’s no nursing home care available for you. So, what do you do? You opt for Part G.

Our plan gives anyone 65 years or older a gun (Part G) and four bullets. You are allowed to shoot four politicians.

This means, of course, that you’ll be sent to prison where you’ll receive three meals a day, a roof over your head, central heating & air conditioning, cable TV, library, and all the health care you need. Need new teeth? No problem. Need glasses? That’s great. Need a hearing aid, new hip, knees, kidney, lungs, sex change, or heart? They’re all covered.

As an added bonus, your kids can come and visit you at least as often as they do now!

And who will be paying for all of this? The same government that just told you they can’t afford for you to go into a home.

And….you can get rid of 4 useless politicians while you’re at it. And now, because you’re a prisoner, you don’t have to pay any more income taxes.

Is this a great country or what?

Now that your senior financial planning is solved, enjoy your week.





(Copyright 2015 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Rob Chrisman