Sep. 16: Vendor news & updates in the primary & secondary markets; compliance topics from AMCs to credit repair

The Autumnal Equinox is not until next Saturday, but in many places, fall is in the air. For something fun on a Saturday morning, how about an Oregon hillside where creative folks have worked to create a natural piece of art during the autumn? Switching to a different work environment, want to save money? People need places to live, not necessarily places to work. (Yes, you can quote me on that.) Here we have, in a leaked audio tape, the Zoom CEO saying it’s hard to build trust over Zoom. As well as a new report analyzing cubicle and desk usage in 24,855 workspaces across nine regions around the world found that 36 percent of desks are never occupied, putting a substantial number on the oversupply level in the global office space market. That said, not all parts of an office are in a similar state of non-use. Meeting rooms for two to three people are 90 percent full on average. Overall, only 14 percent of desks are occupied for more than five or more hours. According to the analysis, 80 percent of floor space is taken up by those underused solo workstations, while 20 percent is collaborative spaces that are clearly in robust demand.

Compliance and regulatory actions in residential lending

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Mortgage Quality Management and Research recently wrote a hot topic on upcoming changes to the Mortgage Call Report (MCR). NMLS issued an update advising that on April 1, 2024, the new MCR Form Version 6 will be required for reporting beginning with the first quarter 2024 data. Below are some key updates with the new MCR: Elimination of the two current MCR forms (Standard Form and Expanded Form). There will be one MCR form for all filers. Regulators will rely on a company’s MU-1 Business Activities to determine which sections of the MCR need to be completed. Sections irrelevant to the filer can be auto-filled with zeros. Licensees need to ensure their Business Activities as reported on the MU-1 are accurate and kept current. Update to MCR definitions and instructions including, but not limited to, removing references to commercial activity and correspondent lending (correspondent lenders report as lenders), adding a reference to table-funding activity, and eliminating the requirement to report mortgage loan originators that did not originate in the quarter. The update also adds a Supplemental State-Specific form, which can be used by states at their option to capture data not included on the MCR form, such as commercial loan data, consumer lending data, and information on loan processors and underwriters.

Lenders Compliance Group recently wrote on system requirements for quality control servicing and quality control procedures involved in servicing. A servicer must have fully documented, written policies and procedures that address all aspects of mortgage servicing. A servicer must develop a quality control program addressing delinquency management and default prevention. Proper staffing and training are mandatory. And you must implement a strong business continuity and disaster recovery program. Failure to maintain adequate servicing quality control standards may result in a servicer being in breach of its contact with investors. Furthermore, annual quality control tests to ensure that all outsourcing firms and third-party vendors fully comply with investor guidelines and federal and state requirements are helpful.

Lenders Compliance Group recently wrote on the types of proactive measures companies should take to protect themselves from cyberattacks. An organization must be vigilant in protecting data and operations from all threats, including ransomware, phishing, social engineering leading to business email compromises, and distributed denial-of-service (DDoS) attacks. The attacks include incidents directly related to critical vulnerabilities. All financial institutions and associated entities should take immediate and comprehensive action to protect their systems, sensitive data, and the financial well-being of their members. Primary mitigation steps and best practices include monitoring, testing, and training to safeguard against evolving cyber threats. The article lays out nine proactive measures and best practices you can take to mitigate cyber threats, as they can enhance your security posture and protect against cyberattacks. Proactive cybersecurity measures safeguard systems and data integrity and confidentiality.

Lenders Compliance Group recently wrote about guidelines for digital advertising disclosures. Digital advertising is a form of marketing through online channels, such as websites, streaming content, and more. Digital ads span media formats, including text, image, audio, and video. These ads are also used for brand awareness, customer engagement, launching new products, and driving repeat sales. Advertising compliance is tricky and highly technical, legally speaking, and it is highly regulated. According to Regulation Z, an advertisement is “a commercial message in any medium that promotes, directly or indirectly, a credit transaction.” And “triggering terms” are specific terms used in various advertising media that “trigger” additional disclosures. For more information on general guidelines regarding digital advertising disclosures, including online and mobile device advertising, visit the above link.

Mortgage Quality Management and Research recently wrote a hot topic on why a Fannie Mae approved mortgage lender may not permit a mortgage loan originator (MLO) or mortgage broker to choose the AMC from a list of its approved AMCs from which to order an appraisal. Permitting sales and production staff to be involved with appraisal ordering violates Fannie Mae’s Appraiser Independence Requirements (AIR). AIR indicates “[t]here must be separation of a Seller’s sales or mortgage production functions and appraisal functions. An employee of the Seller in the sales or mortgage production function shall have no involvement in the operations of the appraisal function.” Selecting the AMC constitutes having involvement in the appraisal function and provides the MLO/broker with an element of responsibility for selecting or retaining the appraiser. Additionally, a lender may not order an appraisal by directing a broker to select an AMC from among a group of specifically authorized AMCs, one of which would receive information from the broker about the loan application and begin the appraisal process. Such a process would give the broker an element of responsibility for selecting or retaining the appraiser, and therefore would not be compliant. However, a lender may direct a broker to an authorized AMC if the lender has previously arranged for its appraisal process to be managed by the specifically authorized AMC. This process is compliant with AIR because the broker is not responsible for selecting, retaining, or providing for payment of compensation to the appraiser.

The CFPB has been very litigious against credit repair companies for all sorts of violations. And the CFPB has been getting some hefty settlements. Lenders Compliance Group recently wrote about dangers of credit repair. Generally, credit repair organizations sell, provide, or perform any service in return for the payment of money or other valuable consideration for the express (or implied) purpose of improving a consumer’s credit record, credit history, or credit rating or providing advice or assistance to a consumer with respect to any such activity or service. Consumers should know some caveats in evaluating credit counselors. Red flags include the credit repair organization demanding payment upfront before it provides any services, the organization telling consumers it can get rid of the negative credit information in the credit report in a short period, the organization representative can’t explain the specifics of the services they are offering or the total cost for those services, the organization doesn’t inform consumers of their rights, and the organization asks consumers to misrepresent information.

Vendor and third-party news, soup to nuts

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Dark Matter Technologies LLC, formerly Black Knight Origination Technologies LLC, was rebranded after it was acquired into the Perseus Operating Group (Perseus) of Constellation Software Inc. (Constellation). According to Rich Gagliano, Dark Matter Technologies’ CEO, the organization is on a mission to “revolutionize the mortgage origination business by supporting, growing and aggressively innovating new and existing products including the popular AIVA® artificial intelligence solution and the comprehensive Empower® Loan Origination Platform.”

Dark Matter Technologies “aims to be the invisible backbone behind its clients’ mission-critical operations. Its highly scalable solutions harness hidden insights, connect seamlessly to advanced capabilities, and propel mortgage origination to new frontiers with unique, market-leading innovations.”

“Dark Matter Technologies prioritizes being nimble and operates with the urgency of a startup while leveraging the knowledge and maturity gained over many years as one of the industry’s leading technology providers. The company plans to do so while supporting and retaining what’s made the business successful for decades: an experienced team focused on client service and driving simplicity in managing through a complex industry.”

Roam launched a service that helps homebuyers secure home loans as low as 2 percent through the mortgage assumption process. The company has secured a $1.25 million seed funding round with the aim being “to increase accessibility to affordable rates and assist buyers in navigating the housing market, according to the release. It is available in five markets (Georgia, Arizona, Colorado, Texas, and Florida) and the company plans to expand to new markets and impact 30 percent of all real estate transactions in the United States.”

Westlake Origination Center is turning leads into sales for mortgage companies and creating a buzz among loan officers struggling to find new clients on their own with little success. WOC creates exclusive leads using custom tailored data algorithms and verified fail-proof tactics to identify and engage with targeted clients, ensuring a steady stream of high-potential leads for businesses. Every exclusive live transfer is a potential client that is qualified and truly looking to buy a home in the LO’s specific area! With a combined 30 years in the industry, WOC’s team works closely with clients to ensure leads convert to sales. Seasoned LOs are currently at a 62 percent application rate after the initial call from a generated WOC live transfer. “Our platform is the result of years of research and development and is designed to be flexible and scalable, so it can adapt to the changing needs of our clients,” said EVP Matt Matsuda. “This has proven to be a game-changer for businesses looking to sell and succeed in today’s highly competitive marketplace.” Connect with Justin Clark at Westlake Origination Center to capture your market share.

We’ve got something special for the most innovative minds in real estate, lending, and tech. Read this engaging whitepaper from Realfinity.io that shows how to break into mortgage ancillary services. Are you looking to create a tech-powered, vertically integrated business with real asset value? Our whitepaper outlines how to establish a powerful and flexible business model for your future in real estate and lending. Act now with HomeDashboard, a tool developed by Realfinity that is designed to expand your client database and engagement and bolster your revenue. To dive deeper into these topics, schedule a meeting with Luca, one of our experts at Realfinity.io.

Gallus, the ‘New Kids on the Block’ of the mortgage industry, is revolutionizing Business Intelligence with its cutting-edge solutions. Powered by AWS and Snowflake, Gallus empowers mortgage lenders and servicers to unleash the full potential of their data. But what sets Gallus apart is its user-friendly approach: if you can use Google, you can use Gallus. Watch this quick video to see how effortlessly it works. Moreover, Gallus has just released their highly anticipated second version of the HMDA tool, now equipped with comprehensive 2022 data. Experience the unparalleled power of Gallus by scheduling a call with their Co-founder and CEO, Augie Del Rio. Discover how Gallus can transform your financial results by seamlessly turning data into actionable intelligence.

As reported in the commentary a while back, Firstline Compliance announced that Mark Wilson, Managing Partner, and Dustin Pfluger, Partner and Mortgage Banking Practice Leader at mortgage banking audit, accounting, and tax specialists, CWDL, have made a significant strategic investment in Firstline Compliance. Wilson and Pfluger join Troy Garris, Co-Managing Partner of Garris Horn, LLP, and Josh Weinberg, President of Firstline Compliance, as investors in the company. As a result of this investment, as well as the previous investment by Garris, the industry will benefit from direct access to the specialized services offered by each firm. CWDL. Firstline Compliance, and Garris Horn, LLP continue to be separate entities and maintain distinct branding and leadership structures.

Spring EQ announced it has entered into a definitive agreement to be acquired by an affiliate of Cerberus Capital Management, L.P. (“Cerberus”), a global leader in alternative investing. In this next chapter, Spring EQ will partner with Cerberus’ Residential Opportunities platform, a global investor in residential mortgage securities and assets, to support its mission to deliver best-in-class offerings and expand its leadership in the home equity financing market. With the support of Cerberus’ operating and technology capabilities, Spring EQ will enhance its platform through further investment in technology, new commercial opportunities, and growth-based operational initiatives. Founder and Chief Executive Officer Jerry Schiano, alongside the current management team, will continue to lead Spring EQ following the completion of the transaction.

Mobility Market Intelligence (MMI), a leader in data intelligence and market insight tools for the mortgage and real estate industries, announced the release of its new LO Quick Profile search tool, which provides a summary view of a loan originator’s (LO) production and top referral partners. This information allows lenders to evaluate LOs based on real-time, accurate transaction history rather than relying on their self-reported numbers. Lenders can enter specific LO NMLS numbers into the search bar and, with the click of a button, view production volume metrics from 14 months, 7 months and year-to-date, including: Loan production volume; Transaction types; Loan types; Top buy-side & list-side agent partners; and Top regions based on performance. While the LO Quick Profiles provide limited public access to some LO data, MMI’s Fast Fact Profiles for subscribers deliver much deeper details.

Douctech Compliance document update: Louisiana Mortgage Loan Origination Agreement.

LenderX has launched a strategic partnership with Veros Real Estate Solutions (Veros), an industry leader in enterprise risk management and collateral valuation services. Through this partnership, users can expect Access an expanded array of AVM products that harness Veros’ cutting-edge technology and data analytics, enabling users to make informed lending and investment decisions. AVM Model Governance, Enhanced AVM Accuracy, Fair Valuations, and Streamlined Processes.

LenderLogix announced the completion of the integration between LiteSpeed, a streamlined point-of-sale (POS) system designed for mortgage lenders, with Encompass® for Loan Officers from ICE Mortgage Technology®, part of ICE (NYSE: ICE) and a global data, technology and market infrastructure company that designs, builds and operates digital networks to connect people to opportunity. Through the integration, leads flow directly from LiteSpeed to Encompass, providing loan officers with the combined power and accessibility of their web-based LOS while on the go.

The boss walked into the office one morning not knowing his zipper was down and his fly area wide open. His assistant walked up to him and quipped, “This morning when you left your house, did you close your garage door?”

The boss told her he knew he’d closed the garage door, and walked into his office puzzled by the question.

As he finished his paperwork, he suddenly noticed his fly was open, and zipped it up. He then understood his assistant’s question about his “garage door.”

He headed out for a cup of coffee and paused by her desk to ask, “When my garage door was open, did you see my Hummer parked in there?”

She smiled and replied, “No, I didn’t. All I saw was an old minivan with two flat tires.”

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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 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 2023 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.)