“Licensing is our way of cleaning up our act and be more accountable. It worked really well because regulators were feeling pressure to stop the fraud,” said Robert Lotstein, managing partner at Lotstein Buckman LLP.

One proposal under consideration is a licensing database to track performance of originators, which could in turn be tracked by regulators. Regulators are often the last to know when licensing laws are being passed, according to Felecia Rotellini, superintendent of the Arizona Department of Financial Institutions.

“The database projects is attempting to take the licensing laws that are on the books and to make state regulators jobs and licensing more efficient and more coordinated and in the process bring benefits to the licensees and to the consumers as well. But primarily to help the regulators do a better job regulating the mortgage industry,” Rotellini said.

Arizona was among the first states to regulate the mortgage industry. “We passed our laws in the late 1980s regulating brokers, mortgage bankers and the commercial mortgage bankers,” Rotellini said. “Today all but one state, Alaska, regulates the mortgage industry and there is a good chance that a law will be passed there in the next legislative session.”

With the increase in adoption of regulation, states will be forced to automate their processes. “We are seeing more states going to the automation process. Arizona will probably be going to online renewals in March 2007,” Rotellini said. “As our technology has gotten more streamlined, then each of the subsequent agencies has an easier process with us.”

As a result of the growth and differences between the state, the leadership of the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators decided to create a coordinated approach would be more effective and yield additional benefits in oversight coordination and licensing.

“In essence, the state regulators meeting through these associations got together and said ‘Why should multiple states collect and process individual fingerprinting for the same person? Why should they track continuing education mandates? Wouldn’t it make it easier to do it in a coordinated fashion?’” Rotellini said. “Out of these questions has come the project named the CSBS Residential Mortgage Licensing System. It really is the cornerstone of a new and improved generation of coordination and cooperation, and effective supervision of the state system.”

Uniformity is one of the goals of CSBS’ database. The database would also offer consumers a central location to check the licensing status of mortgage brokers and lenders in addition to finding whether a state has taken enforcement action against that company.

“However, the system does not determine who or who not will be licensed,” Rotellini added. “If you are licensed in a state as a mortgage bankers, broker or loan originator, this database will be a mechanism by which you can apply for a license or renew your license. Legislators make the laws, not databases. This has been a source of confusion.”

“It is important to note, that right now there is complexity in the industry,” Rotellini said. “A key point is that once licensing information is entered, it does not have to be given again—only updated. It will be easier to apply for a new license in another jurisdiction or transfer an employee license from one company to another.”
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“You have to be cost efficient,” Walsh said. “Today it does make a difference.”
 
However, people and process also add to the equation. Laura Pephens, managing principal at Pephens & Co. Inc., a San Clemente, Calif.-based consulting firm, said the ability to make changes quickly and manage new products with real-time access to critical information will help the sales side in chasing new business.
 
“Put [the sales team] in competition with each other,” Pephens said.
 
Pephens, a CPA in Texas and California, said some systems provide real-time information on business operations that can help take back-end costs and benefits and move them into competitive front-end pricing with proper general ledger and best execution analysis.
 
The “bottom line” in the operations statement, for example, would come before generally accepted accounting procedures (GAAP) adjustments and not after them in a general ledger, according to Pephens.
 
“If you manage your organization to the bottom line, you are not correctly determining that month’s true financial picture,” she said.
 
Some mortgage companies also improperly use technology and duplicate processes and functionality unnecessarily. Failure to implement technology properly can result in lost return-on-investment (ROIs). Technology failures in the past would occur when mortgage lenders would purchase technology without suitable in-house IT resources. Additionally, some LOSs would support retail lenders but not necessarily wholesale lenders, and not all firms needed the same infrastructure for the LOS.
 
“Lenders need to be mortgage lenders and not technology companies, and that is tough to deal with,” Pephens said.

Overall industry statistics show 30 percent of lenders depend on broker point-of-sale (POS) products, 20 percent of lenders are “stuck” on legacy technology, 50 percent of LOS implementations fail and 30 percent of LOS implementations are in the process of failing, according to Walsh.
 
A study from MORTECH on the small-to-medium size users of Del Mar’s DataTrac LOS showed a 280 percent dollar volume increase in originations, a 63 percent increase in overall production per full-time employee and an 85 percent reduction in average time to fund a loan. Walsh said 30 percent of mortgage lenders use image files and 80 percent of lenders use imaging just for loan storage. One lender was able to reduce its number of shippers from three to one-half based on moving to a paperless environment.
 
“You can’t afford to walk away from that kind of money,” Walsh said. “Paper is going away. More investors are encouraging lenders to send paperless files and in two to three years, they may not take them at all [unless electronic].”
 
Walsh pointed out that mortgage lenders will need to take on a “Nordstrom’s service,” including 24/7 loan status availability, instant file uploads and automated real-time pricing. For one mortgage lender, high-tech service resulted in a 300 percent increase in loan volume and a 10 percent to 50 percent reduction in problem calls.
 
“I would argue you can’t afford to be inefficient today,” Walsh said.
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IBM Acquires Palisades Technology Partners
IBM, Armonk, N.Y., announced a definitive agreement to acquire New Jersey-based Palisades Technology Partners, a privately-held provider of services and technology to the mortgage lending industry. Financial terms were not disclosed. The acquisition is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close before the end of the year.

Palisades Technology Partners provides strategic consulting, systems integration and a web-based multi-channel lending platform, which supports the lending lifecycle from point-of-sale through post-closing. The firm's clients include five of the world's top 10 lenders. Palisades Technology Partners has been recognized as a Top 100 Technology Vendor by Mortgage Technology Magazine.

Veros Launches VeroSelect 2.0
Veros, Santa Ana, Calif., released VeroSELECT 2.0, a collateral management service. The platform provides access to collateral risk services, including property information, AVM products, BPO services, appraisal solutions, varying photo and condition reports, collateral fraud tools, prequalification solutions and hybrid products and services.

Version 2.0 enhances selection and acceptance criteria and allows lenders to generate and automate rule sets for the other collateral valuation techniques. In addition, different rule sets can be built and applied to different channels or product types and run simultaneously across various programs or business units.

Ellie Mae Launches Encompass Banker Edition
Ellie Mae, Dublin, Calif., a provider of software and services for the mortgage industry, announced the launch of Encompass Banker Edition, a version of its Encompass Mortgage Automation System designed specifically for mortgage bankers. 

Encompass Banker Edition incorporates both front-end customer relationship management and loan processing capabilities along with the back-end loan fulfillment functionalities required by small- to mid-size correspondent mortgage lenders, mortgage bankers, community bankers and credit unions. 

Overture Technologies Announces Mozart AUS 5.0
Overture Technologies, Bethesda, Md., a developer of decisioning technology, announced the launch of Mozart AUS™ 5.0, an automated underwriting, pricing and product selection tool for mortgage lenders and investors. Key enhancements include a new prequalification capability, a rate lock timer, a pricing mark-up feature and access to automated valuation models.

The new prequalification capability enables loan professionals to secure underwriting findings reports and request rate locks at the point of sale. This feature is designed to benefit the broker by providing a quicker way to get the borrower to a “yes” decision.

MortgageHub Announces New Warehouse Lending Application
MortgageHub, Conshohocken, Pa., a mortgage industry Web services provider that offers Internet-based systems and consulting services for the wholesale, correspondent, retail and servicing channels, announced development and upcoming release of Warehouse Pro, a web-based application that enables brokers, correspondents and investors to communicate directly with warehouse lenders through a warehouse lender’s system. 

Warehouse Pro enables warehouse lenders to track lender compliance. It provides facilities for tracking expiration dates and provides automated expiration notifications. It also empowers warehouse lenders with the ability to control their warehouse lines and all phases of the lending relationship.

Warehouse Pro was designed for mid- to large-sized lenders, and is scheduled for release in early 2007.

Veros launches Collateral Integrity Analysis Report
Veros, Santa Ana, Calif., introduced Collateral Integrity Analysis, a predictive indicator of mortgage fraud and market risk for the industry.

The Collateral Integrity Analysis (CIA) report analyzes, detects and identifies high risk properties, market areas and transactions while minimizing false positives. The CIA report provides lenders with information vital for identification of fraudulent or high-risk real estate transactions, prior to critical business decisions involving origination, acquisition, servicing or loss mitigation strategies.

Document Systems Says Interest in e-Signatures Up Tenfold
Document Systems Inc., Carson, Calif., a developer of mortgage technology for compliant loan document preparation and customer contact management, reports a “marked increase” in the number of mortgage lenders seriously exploring electronic signatures in 2006.

According to Terry Van Bibber, president of Safedocs, "the industry will see mainstream adoption of e-signatures in 2007."

DSI and Safedocs have an existing alliance through which the companies have been providing digital document work flow solutions and fully electronic mortgage closing packages to lenders for more than a year. Van Bibber has been retained by DSI to consult with the company and its in-house legal compliance department on electronic signatures.

"There is a great deal of piloting going on right now," Van Bibber said. "People are testing the waters. The number of lenders that are now in conversations about moving into electronic signatures has increased tenfold over this time one year ago. This convinces us that the industry will see mainstream adoption of electronic signatures in 2007."

MIAC Launches New Corporate Portal
Mortgage Industry Advisory Corp., New York, launched a new Web site the company officials said more accurately depicts the breadth of its offerings. The new Web site can be found at www.MIACAnalytics.com.

MIAC was founded in 1989 by Wall Street veterans Bob Husted and Paul Van Valkenburg to provide whole loan and MSR hedge advisory and valuation services to the mortgage industry. Since then, the company's services have evolved to include valuation, accounting and risk management services, secondary solutions and strategic asset sales for nearly all mortgage asset classes.

Vision Financial Chooses MortgageDashboard
Vision Financial & Home Mortgage Inc., Minnetonka, Minn., has chosen a new wholesale lending automation service from VueCentric Inc., Austin, Texas, developer ofMortgageDashboard, a mortgage loan origination system provided as a Software as a Service (SaaS) model.

MortgageDashboard is a Web-based loan origination system that comes with the BundleOne tool for setting up and managing electronic partner/vendor networks. The LOS allows for processing of paperless mortgage loans. It provides loan product optimization, loan application processing, all state-specific forms and disclosures and automated underwriting and closing documents.

BrooksAmerica Mortgage Intros 50-Year Loan Program
BrooksAmerica Mortgage Corp., Irvine, Calif., a direct wholesale mortgage lender, announced a new 50-year, fully amortized loan program. The program is targeted at first-time homebuyers and growing families who need a larger home.

Tricia Bailey, president of BrooksAmerica Mortgage, said the loan gives lenders and brokers more options for their customers and helps them grow their businesses.

Amherst Funding Group Partners with Optimal Blue
Optimal Blue, Plano, Texas, developer web-based platforms that couples decisioning technology with content management for the mortgage industry, announced a joint venture with Austin, Texas-based Amherst Funding Group L.P. The partnership allows loan originators to lock loans directly with an investor through a lender’s third-party platform.

Once a loan is locked with a lender, instead of logging out of Optimal Blue’s product and pricing engine (PPE), the lender can lock the loan directly with AFG without the risk of the market changing and diminishing their return potential. The process connects the lenders with AFG, enabling them to source their mortgage products, then price and lock them in real time.

FIS Releases Service to Deliver Property Tax Data Prior to Closing
Fidelity National Information Services Inc., Jacksonville, Fla., a provider of products, services and technology services to the financial and real estate industries, announced release of PropertyTaxDirect, an online service that provides lending institutions with aggregated property tax data for loan closing and escrow account setup.

PropertyTaxDirect provides address standardization, automated tax ID search, tax agency identification, correct tax amounts to collect at close and tax lien setup.
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“Glen is an incredibly smart, astute, thoughtful professional,” said past MBA chairman Regina Lowrie, CMB.  “He is a consummate diplomat who has consistently given his personal time for the industry, Mortgage Bankers Association and its members.” 

Wertheim has been an active member of MBA for more than 20 years.  Under his stewardship of MBA’s investments, he professionalized their management and oversight. Between 2001 and 2005, MBA’s reserves grew from $35.5 million to $67.6 million. 

Wertheim served on MBA’s Board of Directors in 2000 and from 2003-2006. In addition, he served as a member of MBA’s Residential Board of Governors’ Legislative Steering Committee in 2002, the Residential Board of Governors in 2003 and RIHA’s Board of Trustees in 2002. This year he served on the Commercial/Multifamily Mortgage Banking Committee, the GSE Policy Task Force and the Audit Committee. 

Nominees for the annual award must be associated with an MBA member firm; have a record of sustained and extraordinary service to MBA and the mortgage industry; and have a strong reputation for ethical and professional conduct.
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"MBA is proud to honor Mayor Guido with the Investing in Communities Award for his outstanding efforts and service to the Dearborn community and to the nation," said MBA Chairman John Robbins, CMB. "He has done a terrific job as mayor and as president of the U.S. Conference of Mayors. This award encourages mayors across America to join MBA in our continued commitment to provide affordable housing to all Americans as our members invest in communities."

Under Guido’s leadership, the City of Dearborn regularly partners with individuals, small organizations and large developers to reinvest in residential neighborhoods as well as its commercial districts. The striking results of these partnerships are evident throughout Dearborn but especially in the city’s downtown business areas, where mixed used projects have expanded the city’s variety of housing options and dramatically changed the landscape.

“It’s truly an honor to receive this award,” said Guido. “Dearborn is a very special place, and it’s my privilege to help lead the way in working with the private sector to bring our city the kind of high-quality development that expands our tax base, increases property values, adds new jobs and enhances our quality of life. I’d like to thank the Mortgage Bankers Association for this tribute and to thank its members for the important financing work they do to make projects like these possible.”

Through strategic investments by Dearborn, more than $100 million in new downtown projects investment has occurred since 1999, which in turn has stimulated another $200 million in lofts, commercial and entertainment venues that are now on the drawing boards for construction. These achievements produce bottom-line benefits for the community in the form of an increased tax base, new jobs and new shopping, dining and nightlife activities that both enhance quality of life for residents and attract new visitors to Dearborn.

In June, Guido was inaugurated as the 64th president of the U.S. Conference of Mayors and will hold that position through June 2007. His leadership and dedication have contributed to his emergence as a national leader, helping to shape public policies affecting America's urban areas. The USCM has honored him with its City Livability Award for initiating innovative programs in Dearborn.

Guido is a past member of the Board of Directors of the National League of Cities and continues to serve on the NLC's Advisory Council. In the wake of the September 11, 2001 terrorist attacks, he was asked to chair the NLC's Working Group on Homeland Security. From 1997-2003, Guido was a member of the Federal Communications Commission’s Local and State Government Advisory Committee. Currently, he sits on the Fannie Mae National Advisory Council.

A first-generation American and a lifelong resident of Dearborn, Guido’s passion for public service was inspired by his father’s 42-year career as a City of Dearborn employee. At age 23, he became the youngest person ever elected to the Dearborn City Council, serving two terms. He then became the youngest mayor in the city's history. In 2005, he ran unopposed for re-election, and is now serving his sixth term in office.
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Canada benefits from borrower direct debit on a coast-to-coast basis in a country with strong political stability and legal framework. Canada, like the United States, is increasing product innovation and includes mortgage default insurance, title insurers and market liquidity.

The five-year term variable rate mortgage has become the most popular mortgage product coming on the market in Canada as 20 percent of Canadian homebuyer are holding adjustable rate mortgages, according to Charles Lambert, managing director at Scotiabank, Toronto.

The five-year fixed-term with a 25-year amortization is a “common product for 70 percent of Scotiabank mortgage holders. Unlike most U.S. mortgages, Lambert said most Canadians face a penalty for paying off their debt before maturity, making refinance activity less likely. Canadians do not receive tax deductions on mortgage interest and do not receive capital gains on the sale of real estate.

“Canadian consumers, from a cultural standpoint and a corporate standpoint, are very focused on paying down that debt,” Lambert said.

Canadian mortgages represent CDN$700 billion (US$621 billion) in mortgages outstanding, 27 percent of the gross domestic product and CDN$140 billion in mortgages outstanding annually, according to Scotiabank. Lambert said the strongest housing markets in Canada, a country one-tenth the size of the U.S. with 32 million people, are in Montreal, Toronto and Vancouver.

Outstanding mortgage-back securities (MBS) in Canada hit CDN$78.6 billion in December 2004. Half (50 percent) of Canadians have mortgages and 66 percent of Canadians own homes. Six major domestic banks dominate the mortgage market in Canada with some non-bank lenders and traditional lenders that form all functions.

With CDN$365 billion ($US323 billion) in Canadian assets, CDN$85.5 billion is in the mortgage portfolio. High employment and rising incomes increased housing stock to nearly 230,000 this year, but the forecast for 2007 is 210,000 home starts, according to Scotiabank. The bank also expects resales to drop to 462,200 in 2007 from 481,700 this year. 

South of the U.S., in Mexico, the first cross-border residential mortgage-backed securities (RMBS) transaction took place this year and RMBS is projected to grow to 800 billion pesos (US$73 billion).

Deborah Grissom, president of Bladestone Financial LLC, said securitization still requires reliable investor reporting, reliance on a trustee obligation and longer performance activity. Also, differentiation among parties who are not accurately portraying their roles in the mortgage process needs to be addressed, she said. 

“This issue is becoming more pressing and one that does not have an easy answer,” Grissom said.
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