QUESTION:
What types of anti-money laundering risks are most common with real estate and mortgage transactions?

ANSWER:
In August, 2017, the Financial Crimes Enforcement Network (“FinCEN”) issued an advisory to financial institutions and real estate firms and professionals warning of the dangers of money laundering and providing insight into the types of risks that exist in the industry. FinCEN explained that real estate transactions are particularly vulnerable to such abuse because they may involve high-value assets, opaque entities and processes that can limit transparency.  FinCEN indicated that real estate transactions are an attractive vehicle for money laundering because they can assist in appreciating the value of the funds, while also “cleaning” the funds. 
As part of the Advisory, FinCEN encouraged mortgage lenders and real estate professional to keep the following risks in mind when identifying and reporting suspicious activity:

• Use of shell companies (i.e. non-publicly traded corporations, limited liability companies, or trusts that have no physical presence beyond a mailing address and generate little to no independent economic value)
• All-cash real estate purchases.

In addition to these risks, mortgage lenders should be particularly alert to mortgage fraud schemes and concerns, such as altered or fraudulent documents and misrepresentations with regard to occupancy or employment.
Although not required to by regulation, FinCEN encourages real estate brokers, escrow agents, titles insurers and other real estate professionals to voluntarily report suspicious transactions.  Mortgage lenders should speak with their third party vendors and business partners about the dangers of money laundering and encourage them to report any suspicious activity to them if it involves a transaction that both parties are involved in.
It is important for mortgage lenders to maintain an AML Program that meets regulatory requirements.  This includes, but is not limited to, performing AML risk assessments and independent audits of the Program at least every 12-18 months.
 
The FinCEN Advisory (FIN-2017-A003) referenced in this article may be found at: https://www.fincen.gov/sites/default/files/advisory/2017-08-22/Risk%20in%20Real%20Estate%20Advisory_FINAL%20508%20Tuesday%20%28002%29.pdf

• For more information on MQMR or their SubsequentQC or HDVendor Management offerings, contact Britt Haven or Alan Ridenour.
  

If you missed Digital Mortgage 2017, you missed 1100+ of the mortgage industry's most innovative executives gathering to gauge which innovations will drive the industry's red-hot forward momentum.

After each round of demos, attendees voted for the demos they thought were most likely to succeed. The winners from each grouping then faced off in the final voting, with TMC Preferred Partner Notarize winning best in show!

Click on this link to see Notarize's demonstration at Digital Mortgage 2017.

Congratulations to the team at Notarize including Pat Kinsel, CEO & Adam Pase, Co-Founder & COO on winning this highly sought after crown in the digital mortgage space!

• For more information on Notarize, contact Jennifer Parker.
  

From page 27 of Secondary Marketing Executive's October Issue by Patrick Barnard "How Much Skin Should Be in the Game?" with commentary from industry veterans on  Freddie Mac has made some adjustments to how borrowers can reach Home Possible Advantage’s 3% minimum down payment requirement. Click here to view the October publication.

Arthur Prieston, chairman of The Prieston Group, which includes subsidiary PBIS and affiliate American Mortgage Law Group, says, “Ideologically, the FHFA is more inclined to support programs where the borrower has a significant-enough stake in the investment.” This ideological stance, he says, could have been part of the rationale for the change.

Prieston, who also serves as chairman of the Mortgage Collaborative’s newly formed capital markets committee, points out that the recent guideline change for Home Possible brings Freddie Mac “more in line with Fannie Mae and the Federal Housing Administration, which both have three percent programs.” This, he says, also could have been part of the rationale.

Another possible factor in Freddie’s decision, Prieston says, is that “there is growing interest amongst affinity groups to co-support down payment assistance programs.” For now, lenders can still do 1% down loans using Freddie Mac and other loan programs.

• For more information on The Prieston Group, contact Arthur Prieston or Lynette Nelson.
  

Trusted for market coverage since 1992, MBSQuoteline is pleased to announce another enhancement to its market information service.   MBSQuoteline now gives its users the option to see MBS price tracking using price increments of either 32nds or basis points. Mortgage loan originators will especially benefit from the ability to see MBS prices tracked in basis points. Originators will find it easier to keep up with real-time price movement and to use the information to impress their customers. 

Go to www.mbsquoteline.com for the mortgage market information you need, when your need it, wherever you are.  Take a free trial.  Special pricing is available to employees of The Mortgage Collaborative member companies.

Contact Joe Farr at joe.farr@mbsquoteline.com for any questions.

NCS founder Robert E Knuth will resign from his position as
President/CEO and become Chairman of the Board.
 
EGG HARBOR CITY, NJ, October 20, 2017 – National Credit-reporting System (NCS), a full-service consumer reporting agency specializing in third-party verification solutions and credit intelligence, announced today that its Board of Directors has elected Curtis R Knuth as President and Chief Executive Officer, effective November 1, 2017.  Curtis has served as Executive Vice President at NCS since 2010.  Robert E. Knuth, the company’s founder, will resign from his role as President/CEO and become Chairman of NCS’ Board of Directors.

“The Board and I believe that Curt and the Executive Team have positioned the company upon a solid growth plan for the coming years,” said Bob Knuth.  “Curt’s ethics and leadership capabilities will serve NCS and our clients very well.  I’m quite proud of him.”
 
Curtis and the Executive Team at NCS have led a company-wide transformation to embrace additional data verification solutions that have cross-appeal to multiple marketplaces, such as its recently launched solution for verification of employment.  As Executive Vice President, Curtis has played a critical role in the development of the company’s leadership team. He is also responsible for overseeing key strategic initiatives at NCS and regularly interfaces with government and industry resources for the firm.
 
“My father has been an incredible mentor to me professionally and personally,” said Curtis.  “He has set an ethical leadership example at NCS, has mentored many in our industry and is well known for his humility, determination and thoughtful analysis on tough issues.  As I assume leadership of the firm, we’ll work even harder to assist benefit providers in their determination of who they should lend to today, and in the future.” 
 
Curtis holds a B.A. in political science from Stockton University in Southern NJ.  He’s active in multiple industry trade associations and is a frequent writer and speaker on topics concerning the mortgage industry.  
 
About NCS
 
NCS (National Credit-reporting System, Inc.) is a leader in verification solutions with the distinction of being the first organization to offer IRS tax transcript solutions (TRV® Services) nationwide.  NCS’ solutions include a full suite of credit reporting and verification solutions.  Since 1978, NCS has offered advanced verification products and services to the financial industry.

• For more information about NCS, contact Casey Hughes.

MBSQuoteline's service provides real-time, concise, easy to understand answers as to why current prices may not be as good as they were a day ago or even an hour ago. MBSQuoteline's market information is available to originators at their desk, phone, e-mail or by text!

Impressed Customers Generate More Referrals
Surprises area a big deal to customers, especially when it comes to what they are asked to pay (i.e. rate sheet changes). Price movement creates an opportunity for an originator to impress a customer with what he or she knows, and counsel the customer through the decision to lock. A vague or incomplete explanation can result in customer mistrust. Happy customers make for happy referral partners!

No one knows where prices will be tomorrow.
MBSQuoteline's goal is to help the originator focus on what is known and react to that. Their price tracking graphs show, at a glance, when intra-day price movement puts current mortgage rates at risk of moving. Their calendar of future economic announcements can be used as a call to action.

Convenient Answers to Questions about Rates.
Customers expect originators to know about changing mortgage rates, but the answers do not have to be complicated. MBSQuoteline offers a convenient source of real-time mortgage-backed securities prices, which leaves more time for the originator to focus on other customer needs.

Become Top of Mind with Referral Partners.
Every Friday morning MBSQuoteline produces a newsletter summary what happened to mortgage rates over the course of the previous week, and a look ahead to events that may effect rates over the course of the coming week. The content is easy to understand and added to a template that is personalized with the originator's contact information, photo and company logo. This allows the originator to share with clients and referral partners with a personal touch!

The Company Benefits as well.
Your company will benefit from originators having MBSQuoteline. In addition to more referral business, the information provided can enhance the company's reputation by empowering originators with additional knowledge and understanding of rate movement to share with their clients and create better relations with investors.

• For more information on MBSQuoteline, contact Joe Farr.
  

Equity Prime Mortgage, TMC lender member and leader in the mortgage industry, has a main company goal to build lasting relationships within both the real estate and financial industries. In this, they have recently partnered with reputation management firm and TMC preferred partner, SocialSurvey.

Eddy Perez, CMB, President at Equity Prime Mortgage is quoted saying: “Company reputation is an important aspect with any business. We at Equity Prime Mortgage want to showcase our sales team's efforts in the field. Their hard work is a testament to how we run our company. We are confident this partnership will allow our community to experience transparency in how we operate.”

Social Survey is leading the way for Enterprise Reputation Management solutions. They’re passionate about enhancing and promoting a favorable reputation for their client’s brand. SocialSurvey provides a system that meets compliance requirements, insuring prospects can quickly identify a client’s best professionals amidst the noise of competitors in all social media channels.

About Equity Prime Mortgage
Founded at the height of the mortgage crisis in 2008, Equity Prime Mortgage has grown to become one of the leading mortgage lenders in the U.S., operating 16 office locations across the nation, and currently licensed in 45 states. The mission of Equity Prime is to provide a “unique road map” for clients that will strengthen their Mortgage origination platform while working through our customized, “boutique service offering.” Equity Prime Mortgage is set to move into the next stage of professional development.

Headquartered in Atlanta, Ga., Equity Prime Mortgage provides an array of lending resources such as Conventional, FHA, VA, 203K, Reverse and USDA loans as well as a trusted Fannie Mae, Freddie Mac & Ginnie Mae Seller/Servicer. With a dedicated staff of highly experienced professionals, Equity Prime provides exceptional pricing for thousands of clients annually, without compromising follow through and customer service. For more information about Equity Prime visit Equityprime.com.

Plaza Home Mortgage's Certified Loan Program protects their correspondent partners from loan manufacturing defects such as underwriting errors, fraud and misrepresentations, including defects from compliance, miscalculation of income, occupancy, undisclosed debts and appraisal issues. Plaza helps protect their correspondent lenders at no additional cost, thus substantially mitigating correspondent repurchase risk.

Plaza Home Mortgage’s Correspondent Lending Division provided case study data to display the dramatic savings that can be realized by being protected through their Certified Loan Program.
 
REPURCHASE CASE STUDY #1:

• $240K Note Loan Amount; LVT 80%, DTI – 31%, FICO – 680
• Reason for Repurchase: Current LP findings not verified; When re-run after closing: showed invalid, ineligible or incomplete findings.
• Borrower not qualified to refinance to avoid repurchase.
• Scratch & Dent Bid: $168k, $.70 on the dollar.

Calculating the Value of CLP Insurance (in bps) on a per loan basis – Spreading the savings in losses across each loan based on past total volume purchased up until the time of the client’s first insurance claim.

In this case, Plaza’s Certified Loan Program saves the client between $64,500 and $232,500 depending on the outcome.
 
REPURCHASE CASE STUDY #2

• Guideline Violation
  
• $482K Note Loan Amount; LTV – 99%, DTI – 49%, FICO – 626
• Reason for Repurchase: Insufficient VA guaranty fee
• Action Taken: Loan sold Scratch & Dent at 70%