09Jun

Top 10 Servicing QC Findings in a Turbulent Year

June 9, 2021 California MBA

From the unforeseen effects of the pandemic to an 11-year-mortgage volume high, the past year has been ground-shifting for mortgage servicers.

Servicers faced several challenges, with the impact of the CARES Act being among the most notable. After all, it resulted in forbearance plans that millions of homeowners took advantage of.

In fact, according to the MBA’s May 18, 2020 press release, loans in forbearance made up 8.16% of servicers’ portfolio volume, with 4.1 million homeowners in forbearance plans. Black Knight’s data shows that this number decreased significantly by the end of December, dropping to nearly 3 million homeowners, or about 5.3% of all active mortgages. The MBA’s National Delinquency Survey data shows the 2020 seasonally adjusted delinquency rate dropped from 8.22% in the second quarter to 6.73% in the fourth quarter.

But despite the rapidly changing mortgage servicing landscape this last year, servicers continued to struggle with the same quality control challenges that have plagued them in years past, a MetaSource analysis of servicing QC findings shows.

Among the 10 most common findings from among thousands of servicing QC audits the MetaSource team conducted over the past year were many that reflect an ongoing struggle with missing documents as well as oversights likely exacerbated by a year of unprecedented pressures. Here’s a look at the findings list along with insights into why they occurred – and how to avoid them in 2021.

24May

Top Three Remaining Compliance Issues of 2021

May 24, 2021 First American Docutech

We are a little over a third of the way through 2021 and massive shifts within the mortgage industry have occurred, whether due to the unexpected (COVID-19) or to the long-anticipated (URLA). While First American Docutech cannot address the unexpected for the remainder of this year (as much as we wish), we are keeping a watchful eye on changes expected to occur within the near future. The top three that we have identified are:

New restrictions on Federal National Mortgage Association’s (“FNMA”) and Federal Home Loan Mortgage Corporation’s (“FHLMC”), requiring them to only purchase Qualified Mortgages (“QM”);
FNMA’s and FHLMC’s discontinuance of Constant Maturity Treasury (“CMT”)-index adjustable-rate mortgages (“ARM”);
New State laws requiring the safeguarding of private personal information of consumers.

The following is a “high-level” overview of these changes, with more details to come over the next few months.

QMs Only
Three major parts of the QM requirements promulgated under 12 C.F.R. § 1026.43 were recently amended, one of which is in regards to the expiration of the so-called “GSE QM Patch” under Ibid. § 1026.43(e)(4)(ii)(A)(1). Under this Patch, a loan purchased or guaranteed by either FNMA or FHLMC, while operating under the conservatorship or receivership of the Federal Housing Finance Agency (“FHFA”), along with meeting a couple of conditions, would be considered a QM.

05May

Technology Innovations in Private Lending

May 5, 2021 Civic Financial Services

One of the greatest benefits of private money loans is speed. However, with that faster processing window comes the increased demand for real-time information. Enter: Origin8® — the cornerstone of innovation for Civic Financial Services, delivering an exceptional, private-labeled experience for today’s broker and your customers.

Origin8 is one of the first secure cloud-based online portals for private residential lending, designed for ease, flexibility, and transparency – but also designed with your wholesale business in mind. Bells and whistles aside (we’ll get to those shortly), what makes this truly unique is the power it gives you to brand your client’s experience to your business instead of the lender’s. Because, let’s be honest, you want your hard-earned clientele to be constantly reminded of the white-glove service you’re providing, and not the financial transaction alone.

Today’s real estate investor wants to conduct their business just as any other customer does — fast, simple and at their convenience. For some brokers, depending on the systems and resources available, streamlining a process with numerous moving parts can be quite challenging — especially with multiple clients and properties. As the relationship manager and main point of contact for your clients throughout the lending process, Origin8 is completely customized to you and your business.

The technology delivers a seamless digital lending experience that can be white labeled to your business, starting with a personalized website to direct borrowers to, enabling your customers to request a “quick quote”, check rates, submit an online application, upload documents and check loan status online, from any device, 24/7. It is packed with features that include real-time pipeline views which display loan status and outstanding underwriting conditions, and a document management interface to allow uploaded documents to satisfy conditions immediately. But wait – it gets better…

Emails generated throughout the process display your logo with no mention of CIVIC, you can choose from six different color themes for your personalized website, and you can quickly generate an LOI with your logo on it. Have a support team? No problem. With its seamless digital broker approval process you’re granted the ability to independently manage your users and your customers, making it easy to add internal team members to access the platform, such as LOs and processors.

Ordinarily, customers would have to get in touch with you during business hours to run through a scenario to even get an idea of pricing. Now, with Origin8, they have pricing available at their fingertips 24/7, and you keep control of the process. Hundreds of quotes are being run through broker Origin8 websites by customers who have no human interaction with anyone, and that is a key indicator of the success and demand for a fast, easy, digital resource. Consider this:

Sales Superpower: Origin8 is the Superpower sidekick you’ve been waiting for. It allows you to focus more time on finding new clients and nurturing your existing ones.

Smooth Operations: Automate manual steps, eliminate redundancies, consolidate documentation, and streamline communication to expedite the loan process and ensure an on-time closing.

The Need for Speed: Time is money. Origin8 dramatically reduces closing time, getting your customers from quote to closing with speed and simplicity.

Increased Accuracy: With no need for handwritten applications, documentation accuracy is improved and human errors are reduced in the process.

A True Digital Package: More than just an online application, Origin8 is the most robust lending platform in the private lending industry. It enables you to conduct business with your clients at the speed and transparency they desire and enables white labeling so the innovative closing process can be done digitally under your own brand.

Juggling multiple loans simultaneously just got easier, and the customer experience for your savvy real estate investor clients just got better. As an institutional private lender, CIVIC developed Origin8 not only to simplify and expedite the lending process, but to help you provide borrowers with the level of transparency they demand. The platform, personalized with your name and branding, has improved conversion from quick quote to application, and from application through funding. CIVIC understands the needs of our broker partners and is committed to investing in innovations and technology that enhances the efficiency and transparency of our broker platform.

17Mar

Top 15 Mortgage QC Findings for 2020

March 17, 2021 MetaSource

While very little about 2020 was predictable, it was a year in which mortgage quality control issues fell into a familiar pattern. This findings report includes MetaSource’s top 15 findings along with a deep dive into our #1 finding and best practices for avoiding it.

Top QC Findings for 2020

Here is the complete list of our top findings for 2020, including all loan types and both regulatory and agency findings:

Rank Finding
1. Closing Disclosure – Tolerance Violation
2. Closing Disclosure – Calculation Cash to Close
3. Closing Disclosure – Defective
4. Closing Disclosure Timing Violation
5. Other Application/Processing Documentation – Intent to Proceed
6. Income not Documented
7. Other Application/ Processing Documentation – Loan Estimate – Timing Violation
8. Product Parameter Points and Fees
9. Insufficient Assets to Close
10. Income Documentation – Aged
11. DU or AUS Findings Report – Missing or Defective
12. Incorrect Income Calculation
13. Security Instrument – Missing or Defective
14. Closing/Title Documentation – Closing Disclosure – Defective
15. Note – Missing or Defective

#1 Finding: A Continuous Trend

Closing disclosure defects remain lodged firmly in the top five of our annual QC findings, where they have put down roots every year since TRID Rules took effect more than five years ago.

06Mar

Access to Capital is Key to Real Estate Investment Success

March 6, 2021 Civic Financial Services

By William J. Tessar, President and CEO of Civic Financial Services, a premier institutional private money lender for real estate investment financing. With more than 30-years of experience in the mortgage and lending space, he is also host of Industry Insights the monthly show featuring expert advice and discussion on the real estate investment market.

The most important aspect of success in real estate investing is having ready-access to capital when you need it, so you can seize opportunities in today’s dynamic real estate market. In fact, many investors will wait for the right opportunity to roll along only to see it vanish because they didn’t plan ahead and have capital partners with different financing options all lined up and ready to go.

If you’re only looking for capital when you need it, 99 times out of 100 you’re not going to make the best decision—only the fastest. The better strategy is to cultivate your real estate financing sources first, beginning with understanding the different options that are available and what lenders are looking for. Each option has different requirements and parameters, which we explored in our recent Industry Insights show.

Understanding the Differences

“One common option for investors is conventional real estate financing, which is based not only on the property, but primarily on the warm body behind it,” said Robert Kang, relationships manager at First Republic Bank. When working with real estate investors, Kang looks at where the borrower’s income is coming from, their ability to pay off the loan and whether the investor has a second source of repayment if things go south.

Kang also looks at whether the capital will help the investor achieve their goals or actually hinder them. “We’re taking a snapshot of what their life looks like at a certain point,” he says. “That’s why we love to build relationships and get to know the individual investor, where they are today, and where they are going.”

Hard money and private money lenders each look at residential investment property financing opportunities with a different set of optics. “We don’t have set guidelines,” says Kevin Guisnow, a senior loan officer with PCL Group, a true hard money lender. “Each deal is individual and we look at it with an open mind.”

Guisnow says he likes to get to know investors, their passion for their project, their exit strategy and how they plan to repay. However, he adds that the property itself comes first, because if the investor defaults, Guisnow has to determine whether he can take it back and sell it to recoup his investment.

Institutional private money lenders like CIVIC, are a kind of hybrid capital partner. They have access to capital from institutional partners like banks and from Wall Street. They can operate more quickly and have more flexibility than conventional lenders, but also have stricter underwriting guidelines than a pure hard money lender.

Investors who need a steady stream of accessible capital can also get residential financing from a private money lender or a correspondent lender to access ‘warehouse lines’ of credit. These are lines of credit that, once established, can be used to finance properties that meet certain guidelines established by the lender. While having ready access to affordable capital is hugely advantageous, there are often barriers such as volume commitments that may create barriers for typical investors or small brokers.

“Some warehouse financing vehicles can be complicated, while others are fairly straightforward,” says Vinnie Ciardullo, senior vice president of capital markets for CIVIC Financial. He adds that the longer that a warehouse lender holds real estate assets, the greater amount of due diligence it requires from the lender.

Speed to Close

In addition to greater flexibility, another big benefit of hard money lenders is that they can usually close loans much faster than other sources. For example, conventional financing typically takes 45 days, while private money lenders like CIVIC typically take one or two weeks. If the deal is right, hard money lenders like PCL Group can get them done in a few days.

For example, Guisnow recently had an investor who was buying an unhabitable historic landmark with no comparables within five miles—and she had to close in seven days. Guisnow was able to qualify the investor based on her tax returns and her 70 percent loan-to-value (LTV) position. “After getting her on the phone and hearing her passion and vision, I got past the valuation part of it,” he said. “I got the feeling this is going to be a good loan, and to this date, so far, so good.”

With hard money lenders like PCL Group, there is no minimum or maximum financing, although they may not look at deals less than $400,000. The money can be used for anything from single-family properties to apartment buildings, even ground-up construction, but not for buying land.

Conventional lenders will typically provide financing for owner-occupied homes, therefore it is generally challenging for non-owner-occupied properties. The DTI, Income qualification and LTV requirements are usually more stringent as well. Kang said most of his investment financing deals are around 60 percent LTV, but says he’s gone way above that many times when “it made sense.” For true hard money lenders like PCL Group, the LTV ratios are generally between 70 and 80 percent, but other private money lenders like CIVIC can go as high as the low 90s.

Prepayment penalties are another factor to consider. For a conventional lender like First Republic Bank, paying off a loan in less than three years will cost the borrower just $500, no matter the loan size, Kang said. For a hard money lender like PCL Group, there may be a guaranteed interest involved if the investor plans to pay back the loan within a few months. For CIVIC, there is no prepayment penalty, however, there may be early termination fees when financing involves using warehouse lines of credit.

Tips for First-Time Investors

Most seasoned real estate investors are familiar with the different types of financing options and understand the process. But those relatively new to the game, it can be daunting. What can they expect?

Kang says to be prepared for lots of questions. As a conventional lender, he’s focused on how the money will be used and how the investor plans to pay it back. “We work with the deal from start to finish, so we have to understand every little piece of that deal,” he said.

Ciardullo adds that investors should consider how easy it is to work with a particular lender, noting that a lender with a low rate but is hard to deal with may not be worth it. “Even if you’re sacrificing cost, finding a partner that’s easy to deal with and gives you quick access to your capital is going to help you tremendously in the long run,” he said.

Guisnow says investors should understand the financing terms, do their own due diligence on the property, and be truthful with their lender. “Show us everything, because we’re going to find it, and if you don’t disclose it, your odds of getting a loan from me are slim and none,” he said. “Be upfront and be prepared, and you’ll have a better result.”

About Civic Financial Services

CIVIC is one of the nation’s leading institutional private money lenders, having funded more than 10,000 private loans totaling over $4.5B. For more information on our short term bridge loans or long term rental loans, call CIVIC at 877-472-4842 or visit www.civicfs.com

You can also access our Capital Strategies Guide @ https://www.civicfs.com/ThinkRealty

Join Industry Insights every month for real talk on real estate investing. Join live, or on demand.

© 2021 Civic Financial Services, LLC. All Rights Reserved. This is not a commitment to lend. All offers of credit are subject to credit approval. Restrictions may apply. All loans are made in compliance with Federal, State, and Local laws. Civic Financial Services, LLC is a California Finance Lender under NMLS 1099109. Loans made or arranged pursuant to a California Finance Lenders Law License 603L321. Civic Financial Services, LLC is an Equal Housing Lender. For complete licensing information, please visit https://www.civicfs.com/Licensing

02Mar

Active Forbearances Rise Above 2.7M Once Again; Recovery Remains Slow and Steady

March 2, 2021 Black Knight Financial Services

New data from our McDash Flash Forbearance Tracker shows that the last full week of February saw the number of active forbearances climb once again, increasing by 21,000 (+0.8%). With this weekly increase, the number of homeowners in a forbearance plan rose above 2.7 million once again after falling below that threshold for the first time since April 2020 earlier this month.

Portfolio-held and privately securitized mortgages saw the largest weekly forbearance increases, growing by 16,000 (+2.4%), followed by FHA/VA mortgages, which increased by 7,000 (+0.6%). The number of outstanding GSE forbearances fell by 2,000 (-0.2%) from last week.

10Feb

What’s the Difference? Mortgage Application Versus Mortgage POS

February 10, 2021 BeSmartee

BeSmartee examines the difference between a mortgage application and a mortgage point-of-sale (POS) platform, and uncovers how a POS platform is a lender’s all-in-one solution.

The modern mortgage experience is so much more than a mortgage application.

As millennials continue to dominate the housing market, it’s evident that today’s borrowers want to get a home mortgage just about as easily as you can order a pizza from your smartphone. Having a digital lending platform is no longer a choice, it’s a must-have for lenders to stay relevant, especially in the COVID-19 era.

How does a mortgage application compare to a mortgage POS?

Let’s talk about what a mortgage POS can do for your lending business and how a mortgage application can’t compete.

What is a Mortgage Application?

A mortgage application is a document filled out and submitted by one or multiple individuals applying for a mortgage loan to purchase real estate.

Most lenders use the Uniform Residential Loan Application, or Form 1003, to determine if potential borrowers qualify. The application is lengthy and provides lenders with the necessary information to determine whether or not the potential borrower is financially stable enough to pay back the loan.

15Jan

CFPB issues statement on providing financial products and services to LEP consumers

January 15, 2021 Ballard Spahr

In a development welcomed by industry members, the CFPB published today a “Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency.” The Statement is intended to provide “compliance principles and guidelines to inform and assist financial institutions in their decision making related to serving LEP consumers.”

The Statement is divided into two sections. One section contains “guiding principles for serving LEP consumers.” These principles consist of the following:

The Bureau encourages financial institutions to better serve LEP consumers while ensuring compliance with relevant federal, state, and other legal requirements.
Financial institutions that wish to implement pilot programs or other phased approaches for offering LEP-consumer-focused products can consider doing so consistent with the Statement’s guidelines.
Financial institutions can consider developing a variety of compliance approaches related to providing products and services to LEP consumers consistent with the Statement’s guidelines.
Financial institutions can mitigate certain compliance risks by providing LEP consumers with “clear and timely” disclosures in non-English languages describing the “extent and limits” of any language services provided throughout the product lifecycle.
Financial institutions may wish to consider extending credit pursuant to a legally compliant special purpose credit program to increase credit access for certain underserved LEP consumers.

08Jan

Grow Your Business with a Real Estate Investor Channel

January 8, 2021 Civic Financial Services

The mortgage world is a feast or famine business. And with today’s refi boom most originators’ bellies are full. But if you’re looking ahead at what your next big opportunity is in 2021, you don’t have to look further than an investment real estate channel.

15 to 20 percent of a typical originator’s prospect database is a potential investor who may need a private money loan to buy an investment property as a rental or fix and flip a property in today’s hot market. Also, investors are often real estate agents, which makes them a great source for future business.

Why Private Money Lending?

Make no mistake, interest in private money loans – once considered ‘hard money’ loans – is growing.

The private lending industry currently accounts for $50 to 60 billion in originations and growing. Institutional capital from Wall Street is pouring into this space, making it very lucrative due to it’s high yield and measured risk. Conventional lenders and mortgage brokers are aligning themselves with trusted private money lending partners because they understand the value of serving investors.

The average borrower on a primary residence gets a new mortgage every four years and refi’s a time or two. The average real estate investor, finances four or more properties every year. More experienced investors purchase a dozen or more annually.

Because they are based on the “hard” asset, rather than the borrower’s qualifications, a key benefit of private money loans is that they are considered “business purpose loans”. There’s no TRID or difficult consumer regulations, so they typically close in 7-10 days, enabling borrowers to compete with cash buyers on lucrative deals or in competitive markets.

Best of all, it’s easy to add private money loan options to your current lending portfolio as they are much less complex and challenging than conventional mortgages. Even those brokers with no experience with private money loans can learn to qualify customers in no time.

How to Select a Private Lender

When surveying the market of private money lenders to partner with, it’s important to know how strong and stable their business is. The pandemic shook up the private money industry significantly. At the onset, many lenders were over-leveraged, and when warehouse lines dried up and institutional investors paused, margin calls ensued. Many private lenders paused or shuttered entirely. Only the strongest, best-capitalized lenders continued lending uninterrupted and prevailed.

To protect yourself and your clients, identify your private lender’s capital source. Are they lending their own money, using bank lines or brokering? Ensure they have an uninterrupted track record of funding loans as well as the strength and capacity to meet financial commitments and adapt to change.

Check out their loan product offerings and ensure their loan options and pricing is clear. To succeed in this space, you will need products for short term Bridge loans, long term loans for rental properties and financing solutions to cover full rehab and construction costs. Credible lenders understand each unique scenario and offer loan options to meet individual needs. True capital partners are problem solvers.

Your Trusted Lending Partner™

CIVIC Financial Services is a leading institutional private lender. With CIVIC as your capital partner, you can serve grow your business and serve customers throughout their entire real estate journey – purchase, refi, fix and flip or long-term rental.

In 2020, CIVIC onboarded more than 600 Brokers to its Wholesale Channel and added several Correspondent Partners. In spite of the pandemic challenges, CIVIC funded more than $1B in loans in 2020, bringing funding volume since their founding in 2014 to more than 10,000 loans and over $4.3B

To be sure, the mortgage business is a feast or famine market, and this certainly isn’t the time to take up golf. For opportunistic originators, there is always more on the menu than there appears – and a Private Money Lending partner might be the most rewarding meal of all.

Check out this video interview with CIVIC’s president William Tessar and download CIVIC’s free guide ‘Keys to Success in a Post Refi World’ at https://www.civicfs.com/cmba

22Dec

10 Proven Ways Banks Can Deliver More With a Mortgage POS

December 22, 2020 BeSmartee

Analyzing the proven benefits a Mortgage POS can bring to your bank.

Technology is constantly changing the mortgage industry, making it easier for lenders to work with their customers and guide them through the origination process on a digital channel. One of these tools is the mortgage point-of-sale (POS) platform.

The right mortgage POS platform can allow banks to effectively communicate with their customers and provide them with the necessary information and documentation to validate data and complete their mortgage loan application. By accessing a web-based dashboard, borrowers can upload documents, communicate with their lender, and track the progress of their application.

Let’s examine 10 proven ways banks can benefit from the right mortgage POS platform.

1. Improve the Borrower Experience

The digital mortgage is all about the customer experience and it begins at the point-of-sale.

The results from a 2019 survey conducted by McKinsey & Company of 1,200 residential mortgage customers showed that there’s plenty of room for improvement in customer satisfaction. Findings showed that superb customer experience was as important as getting the best rate. First-time home buyers said they relied on online reviews and word of mouth to learn more about how well the bank worked with their borrowers to deliver an exceptional experience.