On March 16-19, 2008 , the Annual National Technology in Mortgage Banking Conference & Expo was held in Dallas , Texas . Sometimes perceived as a "vendor" show, this year's Technology Conference reflected the current state of the industry, with less attendance and a more somber feel than in years past. That doesn't mean the technology slowed! The show serves a great purpose in allowing a deep exploration into the technology that is so critical to the success of lenders. The attendees were in full support of rising to the challenges that are sure to last into 2009. Below is a breakdown of some of the bigger issues discussed at the conference:

MISMO
MISMO announced the upcoming release of the version 3.0 architecture, which features a conversion from a DTD (data type definitions) structure to a W3C schema format. This was fully discussed in the MISMO Standards Adoption by Industry Partners session. Not only is MISMO continuing to grow in its use throughout the industry, but also the new conversion structure allows a broader adoption by encompassing an even wider variety and array of possible transactions. Robert Lux, CMT from GMAC Residential Holding Company and a speaker at the session, showed how one of the ways they used MISMO was to integrate their two GMAC and GMAC-RFC platforms to one RES-CAP document classification standard.

The Governance committee advises, however, not to immediately adopt the 3.0 convention into our technology. The final version should be complete in October 2008. The new MISMO architecture will play a key part in forwarding the evolution into e-mortgages, a dream that is not so far off in the future, although, still limited by the ability for technology vendors to catch up, and lenders to adopt. Increased adoption by lenders will cut costs for the entire industry!

Information Security Offshore
Al Kirkpatrick, Chief Information Security Officer of The First American Corporation and Prashant P. Kothari, Chief Executive Officer and Founder of String Real Estate Information Services were speakers at the Information Security Offshore session. When thinking of offshoring, it is key to already have an effective domestic security base before getting started. Being knowledgeable of the concern from federal regulators is also important. For example, business governance and data protection laws are different from country to country, so working with a company incorporated in the US , such as String Information Services, can be beneficial. 

Other things to be considered beforehand for successful offshore implementation include:

• Skepticism from clients
  
• Documentation to support training long distance
  
• Good communication
  
• Reasonable timeline expectations
  
• Distance based time management
  
• Cultural differences
  
• Measurable key performance indicators

With so many considerations, is it worth it? If done right, yes, there are many pros to offshore processing, the most apparent of which is cost savings. Of the above, communication is vital. It's hard enough to get communication right when you're dealing with two US companies where English is the native language. It's quite another art to clarify your intentions, concerns and desired outcomes when there is a language differential. 

E-Mortgages
One recurring theme was the move to e-Mortgages, which was discussed in several sessions from e-Mortgage Technology Update to How to Implement e-Mortgages to Exploring Today's Most Electronic eClosing Solutions to many more . To recap, several things have been introduced in the last few years to set the groundwork: MERS, MISMO, document imagery, SMART DOCS, e-Notes, electronic packaging, and PRIA, etc. E-recording is in production in Iowa , New Jersey and Missouri . While it is taking a while to get there, electronic mortgages are still the goal throughout the industry. Some benefits include lower cost, greater efficiencies, better compliance and a shorter loan cycle time. To keep gaining momentum, attendees were asked to actively participate in MISMO to help set the emerging standards.

"While it's clear that the Mortgage Industry isn't going away , it is equally evident that we must take the issues very seriously to heart and work as a cohesive entity to improve our future, as well as our reputation, quite frankly," commented Christine Kirby, CEO-President of MBS-ProClose after attending the conference. "Every player, from lender to vendor has a role in raising the bar. Industry members must dedicate themselves to creating a more solid, more efficient and safer platform of products and services to prevent this kind of catastrophe from ever happening again. When it comes to integrity, there is no compromise."

Well, who hosts a Tex Mex party on St. Paddy's Day? Calyx Point had no hesitations! One of the only social events offered outside of the Technology Conference Exhibit Hall, the Calyx Fiesta was a beautifully orchestrated and well-attended event. It truly represented Calyx as a neutral vendor with friends in all spaces. Vendors and lenders of all types met and enjoyed the evening after a long conference day. Calyx is an aggregator and a connector, which certainly bodes well for their future as a major "hub" to all of the players in the industry.

MBS-ProClose was a proud sponsor of the Calyx Fiesta, as ProClose will be one of the first integrated with Calyx Point's new 6.1 version officially being released in May. It was nice to have this match up during a conference that strongly promoted that the very best solution for a lender is one that frees up overhead and still gets the job done. With extremely little investment, a lender can purchase Calyx Point 6.1 and use ProClose Platinum to position into the future. With no licensing fees, no monthly service fees, no installation costs, no server space required, no IT support needed , a lender can use Platinum with any system which will export a MISMO XML to produce a tightly controlled and highly tested loan package which is sure to meet purchasing requirements. 

The Calyx Point 6.1 MISMO XLM is a perfect fit to Platinum's closing system and documents. While there are many enterprise "soup to nuts" systems out there, and some may do everything under the sun, the cost and hours to implement those systems are high. That's not going to be a solution for most lenders these days. In fact, the implementation of such systems can mean the end of business for some. The Platinum solution makes the most sense; the lender satisfies the current need, and has the scalability for tomorrow's demands with no financial barrier to entry. Its design allows even an inexperienced closer to use it flawlessly, because the rules govern the process, protecting from compliance mistakes. The lender can focus on originating the right kind of loans, keeping costs under control while still laying the groundwork for the future technology such as e-mortgages.

Chase
Chase has eliminated the purchase of all DU Expanded Approvals and LP A Minus recommendations from their Agency Product suites on March 5, 2008. In response to the signed Stimulus Package, Chase announced that effective Thursday, March 13, 2008, Chase is accepting registrations and locks on Fannie Mae, Freddie Mac and FHA loans with expanded loan amounts.

Effective with loans delivered Friday, March 7, 2008, Chase Correspondent Lending will not purchase FHA ARM loans for First Time Homebuyers in the State of Massachusetts. For conventional loans in Massachusetts, a new Election to Proceed form, (ProClose ID MAXAS1) is required. See MA Notice in the compliance section below for the reasoning behind these changes and other investors announcing the same form requirement.

Countrywide
New Agency Jumbo Loan Programs are now being offered, matching the trend started by the Economic Stimulus Package. Several ARM Disclosures have been updated to match their new Interest-Only terms for the LIBOR ARM Products. Other state forms have been introduced to meet new state requirements: DC Mortgage Disclosure, Massachusetts Income Verification and Loan Terms Comparison Disclosure. All forms are already in our ProClose library or will be released in April.

Flagstar Bank
Effective March 10, 2008, Flagstar Bank adopted the new increased FHA loan limits allowing loan amounts as high as $729,750 for one-unit properties (higher for properties with more units and in certain areas). To go along with this adoption of higher Agency loan limits, Flagstar Bank also introduced 2 new JUMBO Loan products. Effective Thursday, March 20, 2008, these programs will incorporate the new temporary conforming-jumbo loan limits and open up additional home financing opportunities for borrowers. We will be adding these programs to our ProClose offerings in April. Please contact your client support representative to have them in time for any early April closings.

Also in Flagstar news, Flagstar now requires that a TX Fraud disclosure be included in all closing packages as of April 1, 2008. The form (ProClose ID TXXAD1) will automatically print for all of your TX closings. All loan applications in the District of Columbia now require a DC Mortgage Application Disclosure to be provided to the borrower within 3 days of application. The verification of this form will be a requirement as a prior to close underwriting condition. ProClose is releasing this from as DC4PC1. Please contact your support representative if you are interested in getting the ProClose up-front/processing form library.

A few Flagstar programs have been suspended: 100% financing loans and Stated Income Loans over 80% LTV. Also, effective March 31, 2008, all Stated Income Stated Assets loans (program 5333) are discontinued. All SISA loans must be closed and delivered by April 30, 2008.

Franklin American
As announced in their March 18, 2008 Bulletin 2008-01, Franklin American released new 3/08 versions of some of their ARM and Interest-Only ARM disclosures. These forms are currently being updated by the MBS forms department and will be released to ProClose users in April. Franklin American also posted a Closing Attorney Affidavit and Waiver of Borrower's Rights form that they require on all Georgia properties. MBS-ProClose already covers this requirement with our GAXAA1 form (Waiver of Borrower's Rights).

GMAC Bank
All ALT-A Products, as well as Purchase Money Piggybacks with Another Lender's 1st and Standalone Home Equity (HELOC and Closed End) transactions have been removed as eligible GMAC Bank options. Loans must have been locked on or before March 7, 2008 (March 3, 2008 for Purchase Money Piggyback) and must be purchased and funded by GMAC Bank on or before May 2, 2008.

Indymac Bank
Prepayment Penalty options have changed. They are no longer available under the Super Jumbo Program. Only a 3-year prepayment penalty term is available on the Alt-A Preferred Program (1- and 2-year terms are not permitted). Indymac has also eliminated their Alt-A Preferred 3/1 LIBOR ARM program, including interest only. Manufactured housing is not available under any loan program, although modular homes are permitted. For more details on modular homes see Indymac's Bulletin 08-13 (dated 2/20/08).

SunTrust
Effective for locks on or after March 17, 2008, SunTrust has discontinued their higher risk Freddie Mac 100 Loan Program.

VHDA
VHDA released a February 8, 2008 notice, which eliminated several programs. Their Flexible Alternative Loan Programs will be suspended with no new locks after March 31, 2008. Effective April 1, VHDA's Step Rate Program (including FHA, VA, RHS and Conventional) will be suspended. These program eliminations are part of an effort to best utilize resources, maintain long term funding for other programs and mitigate risk. They may be reintroduced at a later date.

Wells Fargo
Aimed at high-cost areas only, Wells Fargo has introduced their new High Balance Conforming Loan Program. According to Wells Fargo's March 17th Newsflash, limits are the higher of the 2008 conforming loan limit or 125% of the area median house price as defined by HUD, not to exceed $729,750 for a 1-unit property. Fixed Rate, 5/1, 7/1, 10/1 and Interest Only are all available products. This loan program is available from 3/1/08 through 12/31/08.

According to research from the National Association of Realtors (NAR), the new limits will help 138,000 Americans purchase new homes and 200,000 to refinance. On March 6, 2008, NAR lobbied for the limits to increase permanently to $625,000 overall, with an additional 125 percent of the local median home-sales price in high-cost areas.

HUD Proposes Extensive RESPA Reform in Response to Market
The U.S. Department of Housing and Development (HUD) issued a proposal on March 14, 2008 to change the Real Estate Settlement Procedures Act (RESPA), which includes regulations for a new Good Faith Estimate (GFE). The proposed GFE is designed to clarify the terms of the loan for the borrower and to enable them to compare several different loans from different lenders. The first page of the four-page GFE includes a summary of the loan terms and a breakdown of the fees. Subsequent pages contain detail on the extent that the charges listed can change on the final loan, a chart comparing the disclosed loan to alternative loans with the same loan amount and similar terms, and a list of the estimated annual amounts for property taxes and insurance. The proposal states that the GFE will also disclose the Yield Spread Premium (YSP) to the borrower, but the YSP will be included under the heading "Our Service Charges" and will be shown as a credit for the interest rate chosen. The GFE has to remain available for the borrower to use as the basis for their loan application for ten days after it is issued. The proposal includes minor changes to the HUD-1 to match the proposed GFE.

If the borrower applies after receiving the GFE and is rejected, the borrower must be notified after 1-business day. As well, if there is another loan product available, the borrower must be issued a new GFE based on this alternative loan product.

This proposal includes a script to be read at the closing table that further informs borrowers about the terms of the loan. There is no regulation determining how to employ this script in closings where the parties are not physically present.

HUD is also seeking to implement regulations that will allow it to enforce these changes, adding penalties involving disclosures, title insurance, kickbacks, referral fees, unearned fees, and use of escrow accounts.

Currently this proposal has a comment period of 30 days.

Upcoming Changes to Freddie Mac Delivery Fees
Freddie Mac issued a bulletin March 13, 2008 listing a change to one of their post-settlement delivery fees, and stating that there are more changes to come. Effective immediately, Freddie Mac will not be implementing the 30-basis point post-settlement delivery fee for mortgages with LTV/TLTV ratios greater than or equal to 80 percent and minimum Indicator Scores less than 740. This fee was initially announced in the February 21, 2008 bulletin. After June 1, 2008 Freddie Mac will be revising their delivery fee structure and delivery fee rates for cash-out refinances, and implementing new LTV ratio ranges with delivery fee rates for mortgages secured by 2- to 4-unit properties.

FHA Act Proposed to Help Borrowers Retain Homes
House Financial Services Committee Chairman Barney Frank proposed a plan on March 13, 2008 to give the Federal Housing Administration (FHA) $150-$300 billion over each of the next two years to provide guarantees to help refinance at-risk mortgages.

There are numerous requirements borrowers must meet to qualify for one of these loans - essentially borrowers should have the same qualifications listed under FHA law for a traditional short-refinance, and refinancing under this plan should result in lower payments.

Under the terms of the plan, the existing lender would receive no more than 85% of the house price as compensation for turning over the lien. Second lienholders would likely be cut out entirely. The proposal states that it will take action as necessary to ensure cooperation from lienholders, but does not have details on what those actions might be.

OFHEO Reduces Capital Surcharge for Fannie, Freddie
On Wednesday, March 19, 2008 the Office of Federal Housing Enterprise Oversight said it would reduce the 30 percent capital surplus requirement for Fannie Mae and Freddie Mac. This requirement has been reduced to 20 percent, and OFHEO indicated that there might be more reductions to come. OFHEO expects this act to provide up to $200 billion of liquidity to the mortgage market.

Both companies have said in response that they plan to raise more capital, enabling them to keep up with their expanding role in the mortgage market. They and the OFHEO both state that they plan to ensure that their numbers stay ahead of their limits, to maintain market confidence.

Massachusetts Requires New Documents For First-Time Homebuyers
The Massachusetts Division of Banks released Regulatory Bulletin 1.3-104 on January 30, 2008. The bulletin provides regulations concerning the counseling and opt-in requirements for first-time homebuyers getting subprime adjustable rate mortgage loans. The requirements in this bulletin are in addition to the statutory counseling requirements in Massachusetts HB 4387. This regulation is effective for all applicable loans closed on or after January 31, 2008.

There are two new documents required by this bulletin: a Certification of Counseling, and Election to Proceed. The borrower's Credit Counselor must provide the Certification of Counseling, and the lender must obtain a copy prior to moving forward with the loan. A copy of the Certificate must also be included in the loan file. The Election to Proceed is a lender-developed form, and must be signed by the borrowers.

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