Thursday, May 30, 2013

Source for 2013 Regulatory Changes

With so much to keep track of, the continuously changing laws and regulations can make it complicated to adjust. Here at IDS, Inc., our compliance team remains up to date on all important changes that influence the mortgage industry. We as a company are dedicated to keeping our clients compliant, and as a result, our knowledgeable staff have suggested a few resources to assist our readers and clients in preparing for the upcoming compliance revisions and regulatory changes.

Many different companies have discussed these changes, and while trying to learn more you may sometimes become overwhelmed by the abundance of information. You may even be wondering as you’re filtering through different sources, what is of the greatest importance to know here?

Our compliance team members have suggested using Consumer Financial Protection Bureau (CFPB) to get acquainted with all the new regulation changes. Instead of getting lost in all of the commentary, go to the regulatory source itself. This is a great resource for whether you want long in-depth content, summaries, or video content.

CFPB’s YouTube channel provides an overview of the 2013 new mortgage rules via one long video, as well as gives explanations of the following rules and regulations on their own:

  • Ability-to-Repay and Qualified Mortgage Rule
  • 2013 HOEPA Rule
  • ECOA Valuations and TILA Higher-Priced Mortgage Loans Appraisal Rules
  • Loan Originator Compensation Rule
  • Mortgage Servicing Rules
  • TILA Escrow

CFPB’s YouTube channel can be accessed here:

You may also view rules in full or in summaries here:

Tuesday, May 28, 2013

The Biggest Threat to the Mortgage Industry

Does Technology Threaten the Mortgage Industry?

As was mentioned in the previous post “Technology: The 3 Biggest Threats to Industries Then and Now,” technology has proven to be a threat to many businesses and industries. So the question remains, is technology a threat to the Mortgage Industry?

As opposed to the examples in the previous post, the mortgage industry has a structure all its own and is to be considered a system of operations run by people. Just as government could not be taken over by technology, neither could the mortgage industry because it runs in direct correlation with the laws and regulations of government. That being said, it does not mean that technology has no effect on the way the industry is run and the way that business is handled. Quite the contrary. Technology has changed the way lenders do business, but not the business itself.

The Biggest Threat: Societal Changes

The changes we've been seeing in the mortgage industry have not been as a result of the advancement of technology, but rather the rapid changes of society itself. The author Don Kracl of the article “It Won’t Happen to Us” gives a great visual of the drastic difference between the baby boomer generation and the millennial generation in regards to the industry:

“We (baby boomers) would not have dreamed of asking a mortgage lender to deliver a loan quote on our schedule to our mobile device and then force the lender to compete with other lenders.”

The millennial generation is very individualistic and asks for business to be done in the way that it benefits them the most. “I can choose the business who will do it the way I want, who can give me what I want, when I want it.” This has become the mentality of many consumers, especially among the younger generations, and has consequently driven competition to become fiercer in order to respond to the generational change in mindset.

Mortgage Industry Evolving

Because consumers crave technology, businesses in the mortgage industry have increased the use of technology to fill the needs consumers have to be able to access information at the tips of their fingers. Apps, blogs, interactive websites, social media sites, and other technological web-based promotional tools are being used to let the consumer know all that they need-to or want-to know about a company.

Don Kracl also stated that:

“Instead of asking for a pile of paperwork before making a decision on a loan, our industry is using technology to return eligibility and loan pricing information to the consumer in exchange for very little information, giving them the impression that they are in control of the transaction.”

The mortgage industry is now using tools, much in the form of technology, to satisfy the needs of customers. On-call or chat customer service agents, online newsletters, process assisting software, managing software, software collaboration, e-sign, and many other technological advancements have aided in the effectiveness and success of the mortgage industry.

It is clear to see that as society changes, so does the mortgage industry. It is not technology that is our biggest threat, but the changes in the needs and demands of consumers. Oftentimes technology provides the way to address consumer needs and is a tool that assists the industry to adapt. 

Blog post inspired by Don Kracl's article "It Won't Happen To Us" in the May 2013 Mortgage Banking Magazine.

Thursday, May 23, 2013

Technology: The 3 Biggest Threats to Industries Then and Now

Technology has proven to be a threat to many different industries over the years. You don’t have to search hard to find the many businesses and entire industries that have been wiped out as a result of new technology. Just look at the evolution of transportation. Back in the 1800s, horse drawn carriages were the standard and most widely used means of transportation. Soon trains became the popular means to travel great distances, and shortly thereafter the automobile industry began. At first automobiles were only used as luxury cars but the mass production of cars in the 1900s changed the face of transportation for everyday Americans.

Fast-forwarding to today’s technological landscape, we notice the decline of printed newspapers as news can now be accessed on the internet via computers, tablets, and smartphones. The publishing industry in general is struggling with this shift. Landlines and phone books are becoming a thing of the past, and who knows where you can find a telephone booth anymore. Entertainment media such as traditional television, movies, and music are now more easily accessed online and the streaming technology has left brick and mortar stores little choice but to cut back or close down.

What are the commonalities among all businesses and industries that failed to survive technological changes? There are three threatening factors that make or break the ability for an existing company or industry to survive the evolution of technology:

     1. Can your company effectively compete for consumers who demand an ever greater
         share of control?

     2.   Does your company have a clear migration path that allows the evolution of 
         offerings to meet new consumer demands and needs?

     3.   Do your executives believe their current business could never go away? Or are 
         they open to and welcoming of change?

In the case of horse drawn carriages losing out to the automobile industry, the automobile offered greater control to the consumer, there was no way to evolve the use of horses to give consumers more control, and most likely, the producers of the horse and carriage industry did not anticipate becoming obsolete in the future as this had been the standard means of travel for centuries.

A more current example lends insight to why being aware of and addressing these 3 threats consistently is crucial to a business or industry’s success in this ever changing technological environment. For example, Blockbuster, a leading company in the in-home entertainment industry, has experienced a significant amount of store closures and financial losses in the past few years. This year alone Blockbuster has decided to close 300 of its stores.

The failure in the company lies in not addressing the 3 threats soon enough. Netflix and Hulu beat Blockbuster to streaming and while Blockbuster now offers streaming, they were too late. Maybe they missed the bandwagon because the executives of the company believed their current business could never go away (just speculation, but something to consider). Their migration path had not been defined, and as a result, the company is fighting to survive. This is an unfortunate example of a company struggle that was caused by misreading the warning signs; one example that I hope we can all learn from.

Blog post inspired by Don Kracl's article "It Won't Happen To Us" in the May 2013 Mortgage Banking Magazine.

Is technology threatening the Mortgage Industry? Find out next time (Monday) how the Mortgage Industry has dealt with the changes in technology and what the industry’s greatest threat is.

Monday, May 20, 2013

Mortgage Network Testimonial

Mortgage Network
Mortgage Network, a well-established private mortgage banking company headquartered on the east coast, provides a variety of mortgage banking services from east to west. As one of the largest independent mortgage companies, Mortgage Network is dedicated to turn the complex process of buying a home, into one that is quite effortless; their commitment to quality customer service adds a personal touch to the lending process, which allows customer needs to come first.
In order to fulfill those needs, Mortgage Network consistently works to ensure compliance and customization throughout the mortgage loan process. As a way to increase both compliance and customization, Mortgage Network turned to International Document Services, Inc's idsDoc prep software, as it is IDS's specialization.
IDS Service
Mortgage Network's recent implementation of the idsDoc prep software has not only increased company savings, but improved the preservation of data integrity. Mortgage Network's Director of Operations Christine Terranova testifies of the increased efficiency and cost savings that idsDoc software provides:
“The IDS integration with our proprietary loan origination system has drastically improved the productivity of our staff,” Terranova explained. “Before, our closers could process four to five loans a day. Now, our closers are closing eight loans per day – and that includes initial reviews, HUD-1 reviews and all compliance checks. The integrated compliance features in idsDoc have also significantly reduced our costs because we’re not having to pay for a separate compliance check for each loan.”
Terranova also remarked on the benefit of custom docs being prepared within 24 hours and how this service is crucial to maintaining lender relationships as market conditions constantly change.
-- Kiley Elsberry