June 15: Compliance, fraud prevention products; lender M&A and cutbacks; lenders’ digital notes & closings

Taking a tour around the nation…No one has ever used the term “bespoke” in describing any place I’ve stayed. I barely know what it means. But if you’ve got the bucks, and want a nice place to bunk down in Hawai’i, here you go. Marlin jerky? 5,100 miles and six time zones away, a Martha’s Vineyard house that the Obamas have vacationed in sold for $15 million, $7.5 million under original asking. Falling demand on the high-end? In-between, here’s an article on the lay-offs to expect in the Dallas-Fort Worth lending industry. But Freddie Mac announced a new partnership with re-employment solutions company NextJob to provide job search assistance to current and aspiring homeowners living in high-needs and other persistent poverty areas.

Lender products

FundingShield, the Fintech market leader in wire fraud prevention, closing agent risk / compliance and vendor risk automation has estimated $3 billion in wire and closing fraud attempts in the first 4 months of 2018.This alarming amount is triple the $1 billion reported to the FBI for all real estate related wire fraud losses for the first 9 months of 2017. This report leverages FundingShield’s industry-leading proprietary software, analytics and transaction database of wire account information and is specific to lender impacted wire and closing fraud attempts only. The IBM X Force Threat Intelligence Index 2018 shared that 27% of all security incidents and 17% of attacks in 2017 were in the financial sector and 76% of this involved injection attacks. FundingShield’s newsflash shares what approaches various lenders are taking to manage these risks per the company’s unique market view. Contact info@fundingshield.com (800.295.0135, ext. 2) for a demo or meeting.


Agency and Regulatory Reporting Essentials – Leveraging Your Data with Technology: Watch the recent on-demand webinar presented by mortgage qc expert Sharon Reichhardt, VP of Client Success at  ACES Risk Management. The webinar covers valuable reporting tips and tricks when it comes to working with regulators and investors. Topics include: most valuable types of data to capture for regulatory and agency reporting; how to use data fields to create robust reporting charts; importance of action plans; and reporting on task tracking for FNMA. CLICK HERE to access the webinar.


Vendors Compliance Group has announced a special offer: a no-obligation, free, half-hour consultation. Plus, they will provide a free Policy and Procedures Manual for Vendor Management with the very first minimum order. Magdalena Castleman, Executive Director, will conduct each free half-hour consultation. VCG was one of the first compliance companies in the service provider review space. It is an affiliate of Lenders Compliance Group, the country’s first full service compliance firm. VCG conducts a deep dive, due diligence of closing agents and third-party vendors. Their audits of service providers are hands-on, decisive, comprehensive, and state-of-the-art – much more effective than a machine-driven method. The company has noted that Federal and state regulators have told their clients that VCG’s work product is comprehensive, reliable and well researched. Contact Magdalena by email at mcastleman@vendorscompliancegroup.com or call her at 866-602-6660 x 148.

Floify, the mortgage industry’s leading end-to-end point-of-sale system, has just rolled out their newest integration with document generation, automated compliance and digital transaction services giant, DocMagic. Now, customers on Floify’s enterprise plan can empower borrowers to quickly review and electronically sign disclosure packages directly from their Floify dashboard, keeping them in one place throughout the entire mortgage process. Combined with Floify’s robust document management portal, powerful email and text notification system, and remastered “interview-style” 1003 loan application, the DocMagic integration is the perfect one-two punch for organizations looking to dramatically reduce their average time to originate a mortgage. If you’ve been considering Floify for yourself, your brokerage, or your enterprise, now is the perfect time to take advantage of this incredibly powerful solution and innovative 1003. Request a live demo today – plans start at $29/month!


Alterra Group, LLC (dba Alterra Home Loans), is actively seeking company growth through acquisitions. As the market faces never ending changes in demographics, capital requirements, risk and rate volatility, Alterra is expanding its presence by leveraging its resources. Recent events have shown that large scale banks have quietly put a hold on acquisitions, but Alterra realizes the value and potential in procuring growing companies today. With a mission of building wealth through homeownership, Alterra has a passion and understanding in serving first time home buyers. Whether your company is currently serving this segment or not, Alterra looks to beneficially work with existing platforms to expand its market focus and vision reaching the next level together. If your firm is exploring strategic options, contact Jason MadiedoVince White, and/or Alex Urmersbach.

NewDay USA announced that David Loeser has been appointed vice chairman to the company’s board of advisors and will be serving as EVP of human resources to direct the company’s recruiting and staffing efforts.


M&A and layoffs

From Indiana comes news that Ruoff Financial Corporation and SBB Bancshares, Inc. announced they have executed a definitive merger agreement in which Ruoff will acquire SBB in a cash transaction. “As part of the transaction, the parties anticipate that State Bank of Burnettsville, the wholly-owned subsidiary of SBB, will be renamed and operate as Ruoff Bank.

The transaction is expected to be completed in the fourth quarter of 2018, subject to the approval of SBB’s shareholders, regulatory approvals and other customary closing conditions. No job losses are expected to result from the merger.”

(Editor’s note: anyone displaced, streamlined, let go, fired, laid off, etc., can always post a resume, at no charge, at www.LenderNews.com. And potential employers can view them.)

Isn’t the first, won’t be the last, but news broke from the Pacific Northwest that HomeStreet will “consolidate” 19 home lending centers and fire 127 employees. Because of these actions, the company expects to book one-time charges of nearly $10 million on a pretax basis. Yes, HomeStreet, Inc., the parent company of HomeStreet Bank is taking steps to “streamline” operations in its Mortgage Banking segment after experiencing several quarters of single family mortgage market challenges that have reduced loan origination volume and profit margins. Among other things, the Bank will close, consolidate, or reduce space in nineteen single family home lending centers (“HLCs”), including both primary and satellite offices and at one regional processing center.

“Purchase demand has declined because of an ongoing shortage of new and resale housing in our markets and demand for refinance mortgages has also declined in the face of rising interest rates. Profit margins have declined due to competitive pressure and a shift in loan mix as a result of higher demand for jumbo non-conforming and high-balance conforming loans due to increasing property values, and lower FHA loan demand due to the reduced attractiveness of FHA loan products. Jumbo non-conforming loans and high-balance conforming loans have lower profit margins than conforming conventional loans and FHA loans have generally higher profit margins than conventional conforming loans. To mitigate the impact of these challenges on the profitability of our Mortgage Banking segment and to improve efficiency and reduce consolidated earnings volatility, the Company is closing or consolidating the affected HLCs that have been most affected by these market conditions.”

Digital mania

Digital: late 15th century, from Latin digitalis, from digitus ‘finger, toe.’ Meaning “using numerical digits” is from 1938, especially of computers after 1945. Lenders are using vendors, and vendors are scrambling for market share.

Veritas Funding, a Utah-based mortgage company, is the nation’s first mortgage lender to roll out electronic disclosures through Blend’s mortgage platform. “This new feature allows for more efficient, accurate, and speedier loan processing resulting in greater borrower satisfaction. “Veritas will continue to invest time and resources in leading-edge technology allowing us to attract and retain some of the best mortgage talent in our industry. Blend is a valued partner helping us grow our business”, noted Josh Pratt, Vice President of Information Technology at Veritas Funding.

Out in California, Bay Equity Home Loans, just weeks after announcing it was unveiling its BE Express Closing Platform, has completed its first electronically signed mortgage note. President Casey McGovern sagely commented, “Our technology means borrowers no longer have to spend hours at a closing table, signing document after document.  We can reduce that process to just minutes.” Bay Equity had already closed “hybrid” loans through BE Express Closing. These loans still require some inked signatures due to certain state requirements.

Embrace Home Loans is now verifying assets electronically by allowing borrowers to share their banking data online. The new service takes only seconds, thanks to Finicity, a provider of software that enables real-time sharing of financial data. Because Embrace can collect complete bank statements, they can also use a borrower’s cash flow data to verify income instead of tax forms. The system now allows borrowers to rapidly verify assets through a digital experience, eliminating the need for borrowers to print, copy and email paper bank statements, effectively reducing the process to secure a mortgage by up to a week or more. When borrowers apply for a mortgage online, they can simply give Embrace permission to generate a verification of assets report using data direct from their bank.

BOK Financial has implemented a partnership with Roostify. This new digital platform is a tool that offers functionality and efficiency to customers including: Customers can start an application, provide documentation and follow their loan’s progress online. Applicants have a secure way to upload, send, and receive loan documents. Homebuyers can add other involved parties to transaction, such as the real estate agent. Users don’t have to guess where they are in the process – they will receive timely loan status updates.

MERSCORP Holdings is accelerating digital mortgage adoption through the launch of a new solution via digital transaction management company eOriginal. MERS eNote Solutions will enable the creation, execution, registration and management of the electronic promissory note, or eNote, to mortgage originators across the industry. This news comes on the heels of Quicken Loans’ partnership with eOriginal to digitally create an electronic promissory note – thus allowing the country’s largest online mortgage lender to move more than $7 billion in mortgage to the secondary market. Fannie Mae also recently selected eOriginal for the launch of its next-generation electronic vault, which moved billions of dollars of assets onto its hosted platform to enable the secure management of eNotes through their life cycle. “This solution will enable thousands of originators to realize the benefits of a digitally executed promissory note at the closing table. The eNote is the most important document of a digital closing because it is critical for the funding of electronic mortgages by investors,” said eOriginal Senior Vice President and General Manager of Digital Mortgage, Simon Moir. “MERSCORP Holdings, as the operator of the MERS eRegistry, has been instrumental to the advancement of digital mortgage. We are proud to have eOriginal’s technology power the MERS® eNote Solutions.”

Capital markets

The 10-year closed -3bps to 2.95% yesterday in response to the latest policy statement from the European Central Bank, which had a dovish twist to it. It was still a hawkish statement from the ECB, which indicated that their asset purchase program would end by the end of the year (with tapering beginning after September and ending in December), but ECB President Draghi turned dovish during his press conference when he spoke of uncertainty in the outlook due to global factors with lower staff projections further aiding that sentiment. The surprise came in the form of a rate hike forecast, as the ECB noted it will keep rates unchanged until the end of summer of 2019, a few months longer than July 2019 expectations. The understanding that the policy divergence will remain in place for longer boosted the U.S. dollar. The other news of note yesterday was strong retail spending on goods in May will feed expectations for a healthy pickup in Q2 GDP growth.

In the U.S. today’s economic calendar kicked off, besides China implementing tariffs, with the Empire State Manufacturing Index for June. Not a big market mover. Expected to drop to 18.0 from the 20.1 previous reading, it went up to 25. Also today are May’s industrial production and capacity utilization (seen at -0.1% MoM and 77.9% versus 0.7% and 78.0% previously), the University of Michigan Sentiment Index (seen ticking higher to 99.8 versus 98.0 previously), some Fedspeak following Wednesday’s decision with Dallas Fed President Kaplan in a moderated Q&A. Finally, from Japan the BoJ came out with its latest policy decision (adhering to accommodative monetary policy). We start today with rates lower versus last night’s close: the 10-year is yielding 2.92% but agency MBS prices are only a few ticks better. A trade war with China and others won’t necessarily help our economy and which one could argue could lead to lower rates.

Friends, let me tell you friends that one simple spelling mistake–even a typo–can make your life hell.

I recently texted a short, romantic note to my wife while I was away on a fishing trip, and I missed one small “e.”

No problem you might say.

Not so. This tiny error has caused me to seek police protection to enter my own house.

I wrote, “Hi darling, I’m enjoying and experiencing the best time of my whole life, and I wish you were her!”

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, “The Plight of the Small Independent Lender.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 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