July 2007
KEEPING YOU CURRENT WITH THE MORTGAGE OUTSOURCING INDUSTRY
ABOUT OCWEN EVENTS LOOKING INTO THE FUTURE INDUSTRY UPDATE
INDUSTRY UPDATE Regulators Crack Down On Subprime Home Loan Practices
In our pursuit to bring you the latest updates, company news and best practices in the mortgage industry, we have compiled this issue of Live Wire. Please send us your feedback for incorporation in future issues. Industry News Foreclosure Prevention Campaign Launched: NeighborWorks America and The Ad Council have launched a new public awareness campaign to help prevent foreclosures by urging struggling homeowners to call for assistance (888-995-HOPE.) "More than one million families will probably face foreclosure this year," said Ken Wade, chief executive officer of NeighborWorks. "Research tells us that more than half of these families will go into foreclosure without ever having any contact with their lender or a financial counselor who could probably help them." The ads will begin airing in July. Homeowners will be encouraged to contact their servicer to discuss their financial options. Solutions will range from establishing a repayment plan to finding a way to exit the mortgage responsibly without going through foreclosure.
Lenders of Subprime mortgages must include clear and balanced product disclosures to borrowers, conduct an analysis of the borrowers ability to repay, put limits on prepayment penalties to ensure borrowers can obtain loans they can afford to repay, and establish controls on their dealings with third-party lenders, a joint agency of the five major federal banking regulators announced. The guidelines spell out how lenders should treat consumers with poor credit background that are seeking mortgages. Subprime mortgage loans have seen rising failure rates, with nearly 16 percent of the loans 60 days or more overdue in April, about double the rate of April 2006, according to tracker First American Loan Performance. Click here to read more LOOKING INTO THE FUTURE
Jamison Releases Credit Repair Technology: Jamison Law Group, Los Angeles, has announced the launch of Credit CRM, an out-of-the-box software and training system designed to empower mortgage originators to offer credit repair services to Americans with poor credit. Credit CRM includes full credit training as well as a credit and sales software system, unlimited telephone support, and a full Internet-based marketing system. Credit CRM is offered to businesses and individual entrepreneurs who are looking to start a credit repair business, and is often used as a supplemental business opportunity for mortgage professionals. The system provides Web-based sales management modules, over 20 hours of credit repair training, and a full marketing program. The announcement came at the National Association of Mortgage Brokers annual conference in Seattle.
Loan Servicers Advised on How to Prevent Foreclosures: “Foreclosure Prevention: Improving Contact with Borrowers,” a report released Tuesday by the Office of the Comptroller of the Currency, highlights best practices that loan servicers are using to improve their contact rate with delinquent mortgage borrowers to help prevent foreclosures. Click here to read more
“The next wave of transformation for financial transaction processing industries” – Part 6 The Emerging Decision Paradigm and Its Drivers Making
As Thomas R. Abraham so aptly pointed out in his article “Improving return on technology investment: outsourcing as an alternative,” “The advent of an open architecture marketplace has had a negative impact on many firms’ position in the value chain and created new challenges on the distribution front. Much of the IT investment in the industry is required in the back office and may thus crowd out investments in the front office and distribution side of the business.” How will companies stretch their resources to cover the necessary investments? The build vs. outsource decision will change as more industry specific outsourcing capabilities become available and as the historical bias toward doing processes internally shifts toward outsourcing. The decision process will go like this: 1. A business (unit) must perform a relatively large number of processes to complete its business model 2. The more processes the business must perform the more investment and management bandwidth is required and the greater the management distraction and risk of process failure. 3. Only a few processes will create unique value for the marketplace and thereby competitively differentiate the company.
By: Mickey Linn, Member of the Board of Directors, Ocwen Financial Corporation To be continued… Top
Company News Ocwen Financial Corporation Acquires NCI Holdings, Inc: Ocwen Financial Corporation (NYSE:OCN) has acquired, by reverse merger, NCI Holdings, Inc. and its operating subsidiary, Nationwide Credit, Inc. (NCI), a privately held accounts receivable management company. NCI will be combined with Ocwen Recovery Group's operations. The consideration for the merger is $55 million in cash, subject to certain closing adjustments. NCI's senior executives, Chief Executive Officer and President Patrick Carroll, Chief Financial Officer George Williams and Executive Vice President of Operations Dale Bissette, are remaining with the company. Click here to read more Freddie Announces Product Enhancement: Freddie Mac has announced changes in its
INDUISTRY EVENTS
interest-only fixed-rate mortgage product to make more IO financing available, as well as changes aimed at providing greater flexibility in its Treasury Plus Yield Maintenance Option. "Freddie Mac has expanded the credit terms of its interest-only product in response to feedback from its customers and the unique challenges presented by the marketplace," said Mitchell W. Kiffe, Freddie Mac's vice president of multifamily production and sales. "The changes are twofold: Freddie Mac is providing the potential of a longer interest-only term for all loans, and it is also offering lower debt coverage ratios for certain acquisition loans with above-average fundamentals." Regarding its Treasury Plus product, the government-sponsored enterprise is offering to modify the assumed reinvestment rate in the yield maintenance formula up to the Treasury yield rate plus 100 basis points or the net spread, whichever is lower. Fidelity Title Offers Mortgage Fraud Protection: Fidelity National Title Group, Jacksonville, Fla., has announced the introduction of a new product offering (in partnership with Experian Consumer Direct) aimed at helping its customers protect themselves against mortgage fraud. Under the partnership, Experian will offer Fidelity customers one year of credit monitoring, fraud resolution assistance, and a credit report at no cost. "We recognize that mortgage fraud and identity theft are a growing concern not only for our industry, but for our customers as well," said Randy Quirk, co-president of Fidelity National Financial, the parent company of Fidelity National Title. " Now, when our customers purchase title insurance from participating locations of our companies -Fidelity National Title, Chicago Title, Ticor Title, Security Union Title, or Alamo Title -- they will receive a one-year membership to Experian Consumer Direct's CreditCheck Basic at no cost.".
ACA International’s 68th Annual Convention & Expo July 25 – 28, Chicago, IL More info CAMB 2007 Annual Convention & Grand Exposition Aug 16 - 18, Long Beach, CA More info USFN Fall Regional Default Servicing Seminar Sep 19 – 21, Huntington Beach, CA More info
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ABOUT OCWEN
We Make Your Loans Worth More! ™
Ocwen Financial Corporation is a leading business process outsourcing provider to the financial services industry, specializing in Loan servicing; Mortgage fulfillment; and Receivables management services.
Best Practices Tips for Brokers to Avoid Buyback Lawsuits: Unlike in past downturns, mortgage lenders are trying to hold mortgage brokers responsible for buybacks, but there are ways that brokers can protect themselves, according to Douglas Lowell Davies, an attorney with Lane Powell Attorneys and Counselors. Speaking at the National Association of Mortgage Brokers annual
Ocwen is headquartered in West Palm Beach, Florida with offices in Arizona, California, Florida, Georgia, Illinois and New York and global operations in Canada, Germany and India. Utilizing our global infrastructure, state of the art technology, world-class training and six sigma processes, we provide solutions that make our clients’ loans worth more. Additional information is available at www.ocwen.com.
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PUBLICATIONS IN THE MORTGAGE INDUSTRY
conference in Seattle, Mr. Davies said he has successfully represented several mortgage brokers that have been sued by lenders to pay for buybacks that investors have pushed back to the lender. He predicted that this is a trend that is likely to escalate and force brokers out of business if they are held liable in some cases. Mr. Davies advised brokers to come up with a short, one-page disclosure detailing all of the pertinent loan terms in plain English for each of their borrowers to sign. For stated-income loans, Mr. Davies added that brokers should have borrowers sign a document swearing, under penalty of law, that the income provided in the application is accurate. Directing Lenders on BPO Strategies:
If a lender wants to offer reverse mortgages -- but has no idea how to process them -- Mortgage Cadence is poised to offer business process outsourcing to handle all the complexities involved. Meanwhile, Guardian Mortgage Services continues to get high marks for the integration and ease of use of its proprietary TMS system for vendor management and fulfillment. Though many lenders still want to create and control their own systems, outsourcing some -- or all -- backoffice processes has become a compelling option for others.
Secondary Marketing Executive is the monthly journal for mortgage professionals in charge of originating, buying and selling loans and mortgage servicing rights. It's the umbrella publication for all mortgage company executives who are involved with the multi-billion dollar secondary market. Secondary Marketing Executive, the monthly publication for the nation's top mortgage executives, is available to subscribers at $48 per year. For more online.com details, visit www.sme-
If you have specific questions or suggestions, please write to us at livewire@ocwen.com
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