Daily Mortgage News & Commentary

Dec. 5: Letters regarding appraisal transfers, artificial intelligence, and efficiency; Saturday Spotlight: Maxwell

In late breaking news, yesterday morning I’d found that the garbage man had left an Alcoholics Anonymous (AA) flyer on my recycling can. Come on vaccine! The mortgage industry is well versed in the alphabet and acronyms, too numerous to list here, including HUD, the CFPB, and the DOJ, and lenders and servicers are keenly interested in if, and when, they will make enforcement a priority and key fair lending rules would be revisited and expanded. Many vendors use technology to help lenders remain compliant. Where do you draw the line with technology? A robot that cuts the crust off of your bread? Pretty innocent. How about a drone that counts people inside of a house to alert authorities of a Christmas gathering? Not so benign. Lots of vendor and AI updates below.

Saturday Company Spotlight

This week we highlight Maxwell, specializing in creating a customizable digital platform and fulfillment services designed specifically to help small to midsize mortgage lenders grow.

In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth). Maxwell is an industry-leading digital mortgage platform and fulfillment provider founded in 2015 by homebuyers who were shocked by the complexity of the mortgage process. Our founding team spent a year learning the frustrations, routines, and goals of over 1,000 industry professionals. Then, they set out to build technology that enhances rather than replaces the human elements of the mortgage process.

Today, Maxwell and its point-of-sale platform facilitates over $5 billion in loan volume every month, helping more than 200 community lenders nationwide close loans 45% faster than the national average. We plan to continue helping small to midsize lenders compete with big players through targeted solutions, such as our new Fulfillment Platform, which provides outsourced onshore fulfillment services at offshore prices. Learn more here.

 

Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable. Our employees settled into a work-from-home environment almost nine months ago. Maxwell has also grown rapidly this year, hiring over 150 employees in 2020. Despite these challenges in a remote setting, we’ve continued to prioritize culture.

Most importantly, Maxwell remains committed to its values and mission. Our interview process includes a “values interview” meant to gauge whether candidates are a good cultural fit. When new employees onboard, their first meeting covers the company’s mission and cornerstone beliefs. The same values presented in that initial meeting continue to show up in day-to-day interactions.

We also believe that small, spontaneous connections with each other and the company matter to culture. In any given week, the Donut app on Slack randomly selects employee pairings to chat over virtual coffee. Other touchpoints might include company contests or small surprises sent to employees’ homes.

 

Tell us about company culture and what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. The Maxwell culture is built on genuine, ego-free relationships. We strive to do the serious work of making our customers’ lives better without taking ourselves too seriously. We also believe the work we do is more effective when it’s approached with rigor, ownership, curiosity, kindness, and straight-up transparency—our values.

Our value of kindness extends to charitable giving. Maxwell offers its employees two days of paid volunteer time per year. We recently launched our Holiday Volunteerapalooza campaign, which syncs employees up with volunteer opportunities—an event we plan to scale to a quarterly effort.

Maxwell also regularly contributes to NewStory, a charity that provides housing for underserved communities internationally. We chose this organization because we believe homeownership is key to building net worth and generational wealth.

What things you are most proud of that don’t have to do with sales? We’re incredibly proud of holding tight to our values and mission, even as our company grows rapidly. Instead of simply being words on a webpage, our values continue to guide hiring decisions, business choices, and how we treat each other. We encourage employees to use our #gratitudes Slack channel to shout out others who exemplify those values. And while in the moment they may not seem important, these small actions have built a cultural fabric that strengthens with buy-in from each new employee. And, of course, it’s hugely rewarding to hear that a values-based culture is what stands out to new hires most in their first few weeks at Maxwell.

(For more information on having your firm and its charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

Appraisal transfers

Last Saturday the Commentary published a letter from Matthew Simmons hitting the high points of an AMC transferring an appraisal to another lender. After that, I received some clarifications and thoughts from a major lender’s Chief Residential Appraiser. “First, an AMC is not in a position to transfer an appraisal report to a new lender. It doesn’t ‘own’ the appraisal report completed, rather it is the agent representing the lender/client that ordered the report. So without approval from that lender/client, it can’t provide a copy of that report to anyone else (unless obviously required by state law or court order). Many lender/clients may, however, request those AMCs to transfer the appraisal report for them as simply providing a PDF of the appraisal report may not be enough. Most of the new lenders would want the first-generation XML with the embedded PDF transferred so it can be submitted to an investor or GSE via the required appraisal portal to ensure salability.

“Under your Scenario #1, Lender B is not allowed to ‘accept the report’ with no further actions. Getting the report in their name is not a requirement to use the report. And as Matt noted, the appraiser can’t make that change without violating the Uniform Standards of Appraisal Practice (USPAP). There are, however, very specific regulations that require the new lender to verify the first lender ordered and paid for the report and followed the AIR requirements Matt mentioned. They also should ensure they have a true copy of the appraisal report provided to the lender/client by the appraiser… Simply accepting a report provided by the borrower is not allowed. The new lender must review that appraisal report to ensure it meets their appraisal quality requirements and the appraiser used is acceptable.

“Each lender has their own risk appetite, so having a completed report from some other regulated institution doesn’t by itself ensure the new lender will accept it. In addition, just because a regulated institution ordered the report and followed the AIR requirements, it doesn’t mean they completed a quality review or the property meets eligibility requirements of the lender or end investor. Finally, some event may have occurred subsequent to the prior appraisal report date that may make that prior report no longer valid, i.e., the report is dated, subsequent virus hot spot spikes that impact the market, natural or man-made disasters, etc..

“This topic has been an on-going problem for years for lenders and consumers. The regulators expected appraisal reports to be ‘portable’ within the lending environment. The Dodd-Frank Act attempted to codify this and make it more of a standard practice, but there are still many lenders that treat the appraisal reports as confidential and won’t release their reports to any new lender. Whether that’s simply out of ignorance or a business decision to make it harder on the new lender, many lenders just find it easier to order a new report. But in the end, the consumer carries the brunt of the added time and costs when a second report is ordered. The VA requires the prior reports to be used in almost all cases and FHA makes it fairly easy to transfer a report from one lender to another. But Fannie and Freddie don’t make it easy, which is odd given they have the largest repository of appraisal reports.

“Several years ago the FHFA was asked to look into ways to make the appraisal process easier and more efficient, but it is strange that making the reports they have on file available to lenders wasn’t one of the first things rolled out to improve efficiencies and lower costs for all involved given it should be simple to implement. There would obviously have to be rules put in place to make sure any lender doesn’t just accept the report and that it’s clear that ‘user beware.’ In defense of Fannie Mae and Freddie Mac, both could offer the new lender a waiver to get a new appraisal report once the new loan is submitted based on what they have on file on the property and surrounding properties. But not all loans get sold to a third party and there could be a subsequent loan request for say a second mortgage where that prior report could be used by the new lender in some capacity. Seems like a simple solution, but as lenders we’re still struggling with the topic in an era of high volume and fewer appraisers.”

Emerging technologies across the entire real estate market: efficiency is key

It is easy to argue that the most efficient and cost-effective lender will win in the long run. I received this note from Parag Goswami, the CEO and co-founder of Clik.ai. (Clik.ai is an automated underwriting platform that serves companies in mortgage banking, servicing, and real estate, automating and optimizing workflow for property valuation and transaction due-diligence.)

“Even before the onset of the pandemic, more industries have turned to digital solutions, often powered by artificial intelligence (AI) to get work done faster and expedite tedious tasks. Users with efficient and automated tools can better organize key information and paperwork. In the commercial real estate (CRE) industry, specifically, some digital forms and documents containing sensitive information such as renter credit histories should always be secure. Automated underwriting platforms are revolutionizing how home finance professionals perform their jobs by using artificial intelligence to absorb and extract information almost instantly.

“Our clients are asking what 2021 looks like for commercial real estate, and real estate overall, and if/when people will be buying homes again and what technologies are being embraced. When the majority of the world was in total lockdown during the initial wave of COVID-19, housing sales and prices rose sharply, mostly attributed to the extreme short-term demand for home purchases from the March-July period. This remained through the summer months amid increasingly short inventory and high demand. The commercial multifamily market has also shown strong resilience and increased transaction activity during this period.

“Our clients have a desire to be more efficient. For us, Clik.ai’s automated underwriting software can help the CRE industry enter the digital world with seamless and secure integration. We recently opened our technology to be used in combination with third-party software that agents, underwriters, and finance professionals are already using, helping them work up to 10X faster. Details from documents like operating history or rental lease terms (rent roll) are absorbed by AI, leaving nothing overlooked. Using AI to calculate each aspect, lenders are making better financial decisions faster without the risk of human error. And the automation software provided by Clik.ai works alongside asset managers and underwriters and can be utilized for review of rent roll and property cash flow data in minutes. The use of this automated underwriting system provides results within minutes relieving workers from manual efforts, thereby saving thousands of hours in this critical time. Data extracted by the system can be easily moved into the bank’s proprietary platform and servicing systems.”

Vendor news

Wemlo introduced AI to mortgage processing, creating “autonomy and intelligence in mortgage processing software with Athena.”

Constant, Maine-based FinTech company this week launched an AI-powered software platform for banks and non-bank consumer lenders to automate the highly manual, paper-heavy process, and provide faster, more accurate decisions about payment deferrals, loan modifications and other workouts. The solution can evaluate and process relief options in minutes, significantly reducing massive incoming call volume and long wait times caused by COVID-19 financial hardships.

Have you been waiting for Ellie Mae’s release of its Velocify LeadManager Essentials™? It’s a brand-new way to simplify the borrowing experience and deliver better engagement by automating consistent and compliant borrower communications.

Accurate Group announced the launch of remote data collection technology to enable interior property inspections to be conducted virtually when more than an exterior inspection is required. The Directed Remote Data Collection (DRDC) technology solution from Accurate Group’s GroundWorks™ division, enables independent property data collectors to work directly with homeowners in a remote setting, to collect property data and photos in real-time. Accurate Group’s DRDC technology solution is the only remote data collection and inspection solution with appraiser independence built in to ensure compliance.

Congratulations to Sales Boomerang. Espresso Capital extended a $5 million credit facility to the company.

Tomo has raised $40M seed funding to build a digital mortgage company whose platform will “streamline home buying for both the consumer and their real estate agent, so it is less time-consuming, confusing and stressful” and be “human-driven, technology-enabled and ambitious in its scope.”

Candor has underwritten 50k defect-insured digital loans. During its initial stress test, according to Candor, powered by KET, the LES mortgage underwriting, platform independently originated 50,000 loans. Not only, those 50,000 loans have the backing of “a defect insurance policy” that helps reduce both scratch & dent, and repurchase risk.

Homespire Mortgage announced the launch of its highly anticipated, next generation digital mortgage web and mobile app experience, HomespireGO®. Powered by SimpleNexus, HomespireGO® allows borrowers to apply for a mortgage from any device, anytime, anywhere, safely and securely. This digital mortgage experience provides loan officers and borrowers with instant access to one another and the ability to eSign and send documents securely using the app’s sophisticated document capture technology.

This year OptifiNow released My Touchpoints, available to all users of the OptifiNow platform at no additional cost; a new feature that enables users to quickly create branded, professional marketing emails in three simple steps. Once a My Touchpoints custom email has been created, it can be sent to a single recipient or in batch to a large list using OptifiNow’s simple “One Touch” email feature. Targeted lists of recipients can be created to allow users to hone their message to a specific segment and the user can be setup with a compliance review process that allows managers and marketers to preview and approve emails before they can be sent.

How to prepare Tofu:

a. Throw it in the trash.

b. Grill some meat, chicken, or fish.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Time to Call the Landlord?”.

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)