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An Ohio jury sided with Equity Resources in a trade secrets suit lodged against Revolution Mortgage. As a result, Equity is entitled to a little over $70,000 worth of damages.The suit filed three years ago accused three former loan officers of diverting numerous leads, loans and files from Equity to their new employer. The Ohio-based lender accused Revolution of knowing about what was unfolding and enriching itself because of it.The jury on March 22 sided with Equity's claims that there was a misappropriation of trade secrets and that Revolution, whose conduct was "willful and malicious," tortiously interfered with business relationships. Law360 first reported on the outcome of the case.Equity Resources and Revolution Mortgage did not immediately respond to a request for comment.Equity's complaint lodged against Revolution on Dec. 30, 2021, lays out a scheme concocted by three loan officers, Larry Dugger, April Roberts and Kelly Thoman, in which Roberts and Dugger left for Revolution in April 2021 and instructed Thoman to "misuse her access to Equity Resources systems to provide them confidential information and business and sales opportunities." Thoman left Equity two months later, documents show.With the alleged help of Thoman, Dugger and Roberts diverted at least 40 loans from the mortgage shop and received at least 14 borrowers whose loans were already in the process of being originated with Ohio-based Equity. The originators also stole Equity's training models, the original suit said.Additionally, between April 12 and May 12, 2021, confidential closing disclosures for various clients were stolen, Equity claimed. The closing disclosures could be useful in "quickly refinancing such loans potentially causing Equity Resources to violate the prohibitions on churning mortgages if the loans were not properly seasoned in accordance with investor requirements," the complaint said.Leads gathered from this alleged ploy were also shared with Revolution's other loan originators. These actions combined breached the employment agreement that all three originators signed with Equity.Thoman, Dugger and Roberts are all still employed at Revolution, according to their pages on LinkedIn.Poaching and trade secret suits are common, but incredibly cash intensive and can take a long time to play out, with most settling out of court, industry stakeholders say.Mortgage shops including Loandepot, Union Home Mortgage, Northpoint Mortgage have all filed litigation in recent years accusing competitors of misappropriating trade secrets.Another noteworthy suit currently making its way through a Pennsylvania court is Newrez's litigation against a former executive. The lender accuses James Hecht, former head of its retail operations, of departing to a competitor and orchestrating a ruse to move others.According to the suit, prior to departing to OneTrust Home Loans on Feb. 1, where Hecht is now CEO, he fired the Newrez managers and later rehired them at his new place of employment. It is alleged that the scheme took place shortly after Newrez announced a recommitment to its retail business when plans to sell didn't materialize.

Ginnie Mae issuers will soon be required to make certain document submissions through Ginnie Mae Central as part of its technology upgrade program.This includes audited financial statements, the agency disclosed in All Participant Memorandum 24-04, dated March 26.The Mortgage Collaborative, a cooperative organization that among other things provides its members with secondary marketing power, said its members lauded the change during its Spring meeting this week. "We applaud Ginnie Mae for implementing a solution that will simplify the submission process for issuers," Melissa Langdale, president and chief operating officer, said in a statement. "Many of our members are looking for ways to leverage technology to create efficiencies in their process, as evidenced by the numerous conversations on this topic during our Spring conference this week, and this change from Ginnie Mae will certainly help in that larger endeavor."Mortgage-backed securities issuers starting after May 13 will no longer use the Independent Public Accounting module and the Financial Report Review Agent in the Ginnie Mae Enterprise Portal.Instead proof of their fidelity bond, along with errors and omissions insurance need to be provided through Ginnie Mae Central, which is part of the MyGinnieMae portal. That proof must be provided within 30 days of obtaining or renewing their coverage.However, submission of an insurance certificate is no longer required but can be done if the lender desires.All extension requests issuers make also must be submitted through Ginnie Mae Central."Implementing Ginnie Mae Central marks an important transformation for our MBS program and represents a milestone in our ongoing modernization effort," said Ginnie Mae Principal Executive Vice President Sam Valverde, in a press release. "Ginnie Mae Central will simplify submissions for our Issuers and employ easy-to-use technology to make our program more approachable and more direct."Last July, Ginnie Mae mandated use of MyGinnieMae for creating single-family and manufactured housing MBS pools.With the latest update, audited financials remain due 90 days after the end of the issuer's fiscal year."In the event an issuer changes their fiscal year-end, Ginnie Mae will now require issuers to notify their account executive in writing of a change in their fiscal year-end within five business days from its decision to change its fiscal year-end date," the memo states.Another change is that extension requests for the filing of audited financials will no longer be accepted by Ginnie Mae in the form of a letter. Starting May 13, these must be done through Ginnie Mae Central and must be certified by the company's CEO, chief financial officer or a person with an equivalent title.While Ginnie Mae has updated its MBS guide, its parent, the Department of Housing and Urban Development will revise its Consolidated Audit Guide Chapter 6 at a later date.If a conflict between those two documents exists, the MBS guide will take precedence until the Audit Guide is revised. 

State and local governments borrowed nearly $9 billion for affordable housing so far this year — the most for the period in at least a decade — as buying a home in the U.S. remains expensive.The Michigan State Housing Development Authority's recent $425 million bond sale is expected to help more than 2,700 families get lower mortgages, said Chief Financial Officer Jeffrey Sykes. Rhode Island Housing sold about $125 million of non-taxable bonds to aid first-time home buyers. Colorado ski town Telluride borrowed $31.8 million, half of which will be used to buy and build affordable rental housing.The 57% year-over-year jump in issuance of housing bonds coincides with a period of lower borrowing costs in the muni market. The yield on the 10-year AAA benchmark is down 1.1 percentage point since Nov. 1, the start of a prominent rally. Mortgage rates, meanwhile, continue to be twice as high as they were in 2021, before the Federal Reserve started raising interest rates.While affordable housing has been a priority for state and local governments for years, one of the main drivers of recent debt issuance in the sector has been their eagerness to retain their residents, said Alice Cheng, vice president and municipal credit analyst at Janney Montgomery Scott."Cities and states cannot afford to lose their middle-class population to somewhere that's more affordable," she said. "It's kind of an erosion of the resource base and the tech space. So having good, affordable housing for their community is important."Borrowing through the tax-exempt market is cheaper and helps these entities underwrite mortgages for middle- and low-income buyers at a lower rate than the mortgages they would get from a traditional broker like a bank. Proceeds from housing bonds can also be used to acquire and construct affordable housing.Rhode Island Housing benefited from lower borrowing costs in the muni market during its February issuance, said Bernadette MacArthur, the agency's director of finance. The bond sale came with a yield of about 4.5%, compared to 5.45% in October, she said. That allowed the agency to put a lid on mortgage rates at 5.87%, compared to the national rates of around 7%."Since the beginning of 2022, tax-exempt bond financing has provided us with better financing rates so that we can pass things down to borrowers more efficiently," MacArthur said. "And then we accompany that with our down-payment assistance. So, we're serving a decent amount of folks that may live paycheck to paycheck."But it's not just housing-bond issuance that has been up. Overall muni issuance has climbed about 38% year-over-year, with borrowers diving in after staying on the sidelines waiting for market volatility to subside.Mortgage rates are also stabilizing, and while new-home sales in U.S. fell in February for the first time in three months, the housing market overall has shown glimmers of recovery.Michigan State Housing Development Authority's Sykes, however, continues to highlight the need for affordable housing. The authority's lending rates are at 6%, he said."Sometimes, a percent less than what they could get in conventional rates — that's the difference between someone being able to afford or not afford buying a home," he said.

Payment deferrals that became widely utilized in the government-sponsored enterprise market during the pandemic are gaining on modifications, suggesting part of the pandemic's legacy in foreclosure prevention will be a more diversified set of strategies.Annual numbers for deferrals surpassed mods for the second year in a row during 2023, with the former totaling 84,358 and the latter at 57,041, according to new fourth-quarter data the Federal Housing Finance Agency released this week."The increased use of payment deferrals during the pandemic is very clear, where it was used sparingly in the past," said Kanav Bhagat, a housing policy and risk consultant for the Center for Responsible Lending. But deferrals haven't overtaken mods in the long run yet, pointing to the latter's historical and continuing importance in loss mitigation.Since the Great Recession's housing crash forced the enterprises into conservatorship in September 2008, giving rise to widespread foreclosure prevention strategies, they've doled out a total of more than 2.68 million mods and nearly 1.16 million payment deferrals.Mods were originally more prominent post-crash because "there was an expectation that the borrowers needed that reduced payment and the modification was the mechanism to achieve it," said Meg Burns, executive vice president of the Housing Policy Council."Whereas this crisis, the expectation was, the borrowers could resume making their previous payments," she added, noting that the response ultimately had to be adapted for longer-term hardships than initially anticipated.The high numbers for the two strategies, regardless of the relative relationship, show both have staying power that other home retention efforts like the discontinued Homesaver Advance haven't had. (Just 70,178 borrowers used Homesaver Advance between 2008 and 2010.)Mods "absolutely have a role to play, because not all borrowers can resume making their previous payments. So the deferral approach cannot be the singular loss mitigation of choice program," Burns said.And deferrals haven't had performance issues like Homesaver Advance, which policymakers have worked to learn from. Deferrals put aside missed payments into a non-interest-bearing obligation not due until the loan matures through refinancing, a sale or other pay off.The use of deferrals can result in an obligation due when the original loan is paid off, but most borrowers do refinance or sell before then, and when they don't, servicers generally work to structure manageable payments for the borrower.One thing the shift in home retention numbers does point to is the pandemic likely will leave government-related agencies with a more diversified set of foreclosure prevention strategies that could center on honing in on the central idea behind deferrals."There are several of us who believe that the missing set of tools are tools that would enable a servicer to access some source of funds when the borrower is delinquent rather than putting the borrower in forbearance," Burns said. Ideas have included reserve accounts and insurance.How far this concept can be extended into other government-related housing programs beyond Fannie and Freddie's remains to be seen, and the others are structured differently.The Department of Veterans Affairs discontinued its pandemic partial-claim program in October 2022, citing its budget impact, but due to subsequent issues the agency later extended a pandemic modification option and began work on a successor program.The successor VA Servicing Purchase program was still pending at the time of this writing. It is set to be released this spring. The VA has asked servicers to check in the department before proceeding with any foreclosures in the meantime.The VA provides a partial guarantee on loans that contributes to challenges making the partial claim economical.Meanwhile, the Federal Housing Administration has been doing things like adjusting its home retention strategies to address a specific market condition that has recently affected borrowers in its program: issues that arise due to differences in at-origination and market interest rates.That development points to the fact that current market conditions will have some bearing on whether current trends in foreclosure prevention persist or not."Rates are going to shift, labor markets can be strong or soft, the trajectory of house prices is going to be another key determinant in terms of whether you have borrowers underwater," said Michael Neal, a senior fellow at the Urban Institute's Housing Finance Policy Center. "Maybe to a bit of a lesser degree, lending standards will play a role," he added. "In the lead up to the pandemic, standards were arguably tighter than then they were in the years leading up to the Great Recession."My hope is that we know more in the aftermath of the pandemic about how what we did more recently is different from the past, framing it around what kind of lessons were learned and what that means for the future," Neal concluded.

Lenders saw overall application volumes flatline last week as potential homebuyers appeared willing to take a wait-and-see approach in hopes of greater affordability, the Mortgage Bankers Association said. The MBA's Market Composite Index, a measure of weekly application activity based on surveys of the trade group's members, registered its second consecutive decrease, inching down a seasonally adjusted 0.7% for the seven days ending March 22. In the prior survey, applications had dropped by 1.6%, while on a year-over-year basis, volumes came in 13.4% lower. "Mortgage application activity was muted last week despite slightly lower mortgage rates," noted Joel Kan, MBA vice president and deputy chief economist, in a press release. The 30-year conforming fixed-rate average for mortgages with balances below $766,550 in most markets, slid 4 basis points to 6.93% from 6.97% the previous week. Borrower points used to buy down the rate also dropped by 4 basis points to 0.6 from 0.64 for 80% loan-to-value ratio applications.Kan attributed much of the week's sluggishness to consumer hesitancy in an unpredictable economic environment. "Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market," he said.As a result, the seasonally adjusted Purchase Index also edged down by 0.2% from the prior survey period. But compared to the same week a year ago, volumes were 15.6% lower, with the housing market still feeling the impact of the lock-in effect discouraging homeowners from moving and taking on mortgage rates well above what they currently have.But recent measures of inventory and prices show movements that could hint at some degree of relief for homebuyers if trends continue. In mid March, online real estate brokerage Redfin saw a 5% uptick in new listings over the previous four-week period, the largest in 10 months. And both Corelogic Case-Shiller and Federal Housing Finance Agency home price indexes recorded small monthly declines earlier this winter. Meanwhile, hopes for interest rate reductions are still on the table after last week's Federal Open Market Committee meeting, even if they are unlikely to arrive neither as soon nor as often as many predicted a few months ago. But comments from Federal Reserve Chair Jerome Powell suggesting the possibility of eventual cuts in the federal funds rate seemed to calm investors and dampened the upward surge seen earlier this month."Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually, as we forecast that rates will move toward 6% by the end of the year," Kan said.The MBA's Refinance Index saw a 1.6% drop-off week over week. Compared to year-ago levels, the index was also 8.6% lower. The share of refinance applications relative to total volume slipped to 30.8% from 31.2%."With rates remaining elevated, there is very little incentive right now for rate/term refinances," Kan said.Seasonally adjusted government-sponsored volumes saw similar-sized downturns as the overall market, leading their share of activity to also remain near their prior-week levels. Both Federal Housing Administration- and Department of Veterans Affairs-guaranteed loans garnered 12% of total volume each after accounting for 12.1% shares seven days earlier. Applications coming from U.S. Department of Agriculture programs took the same 0.5% portion as well. After rising in the prior survey following reports of higher-than-expected February inflation, fixed interest rates leveled off or fell among MBA lenders. The contract average of the 30-year jumbo mortgage for loans with balances above the conforming limit stayed at 7.14% week over week. Points fell, though, to 0.38 from 0.54 for 80% LTV-ratio loans.The FHA-backed 30-year fixed-rate average tumbled 14 basis points to 6.75% from 6.89% in the previous survey period. Borrower points decreased to 0.97 from 1.04.The contract rate for the 15-year fixed mortgage dropped by 3 basis points to average 6.46%, compared to 6.49% seven days prior. But unlike other fixed-rate loans, points increased, rising to 0.75 from 0.7. The average of the 5/1 adjustable-rate mortgage, which begins fixed for a 60-month term, also finished lower last week, taking a 6 basis point drop to 6.27% from 6.33%. Borrowers typically used 0.64 worth of points compared to 0.55 in the previous weekly survey. Adjustable-rate mortgages of all types comprised 7% of overall activity, falling from 7.2% seven days earlier.

Figure Technology Solutions, a newly created umbrella company for Figure Lending LLC, is plowing ahead with going public, a move that has been forecasted by stakeholders since late last year.It has "confidentially submitted a draft registration statement on Form S-1 with the U.S. Securities and Exchange Commission (the "SEC"), relating to the proposed initial public offering of its equity securities," the company announced on Wednesday. This form is required for registering companies that want to be listed on a national exchange.Thus far, no determination has been made regarding the number of shares to be offered and the price range for the proposed offering. The offering is subject to market conditions as well as the completion of the SEC's review process, the company said.Figure declined to provide additional information regarding the IPO.Figure Technologies announced it was shifting its lending arm under a stand-alone company, which would function independently just one week ago.Companies tapped to take FTS public include Goldman Sachs Group Inc., JPMorgan Chase & Co. and Jefferies Financial Group Inc, a Bloomberg report pointed out. Valuation of the company will likely range between $2 billion to $3 billion.Transitioning its lending division under FTS is a reflection of  "growth and vision for Figure's technology-enabled lending platform that has been built to reshape the industry, starting with HELOCs," the company previously said.Figure has concentrated its efforts on growing market share in the home-equity line of credit space. Last year, it launched a HELOC wholesale loan production platform. The company also entered into partnerships with independent mortgage bankers to provide a private-label HELOC product."By creating a dedicated business, FTS will focus its resources on the continued success of its technology platform, delivering cutting-edge solutions to drive efficiency across the lending ecosystem," said Mike Cagney, co-founder and CEO of Figure Technology Solutions, in a press release March 18.

Changes are coming to the appraisal profession's top rulemaking body –, just not the kind regulators or critics had in mind.The Appraisal Foundation, which has been the subject of growing scrutiny in Washington for its handling of bias-related issues in the home valuation space, named a new president this week. Current Senior Vice President Kelly Davids will be elevated to the organization's top post.  Kelly Davids, the deputy to the Appraisal Foundation's president, has been named to take over as head of the group. Davids, who has held the number-two position at the foundation since 2013, will replace current President Dave Bunton, who has led the non-profit for more than 30 years. SheDavids officially takes the helm on March 31, while Bunton will move into a senior advisor role, according to the organization.Created by a 1980s regulator reform package, the Appraisal Foundation is a private organization tasked with writing the standards used by appraisers throughout the country. These valuations assess the collateral value of homes, a key factor banks and other mortgage originators must consider when making loans.During a Monday meeting of the foundation's board of trustees, Dayton Nordin, who chaired the group's presidential search committee, said Davids was uniquely qualified to lead the foundation."There was a level of knowledge that we knew external candidates would struggle to bring, that Kelly was able to bring to the table, and we think that's very important, especially in this time of great change in the profession, a great deal of scrutiny in the profession," Nordin said during the meeting.Davids's appointment came one week after Consumer Financial Protection Bureau Director Rohit Chopra criticized the Appraisal Foundation in a written report for being "an insular body controlled by a small circle, operating behind closed doors." The regulator also questioned the foundation's presidential search process, which began in earnest last year.Nordin, in an interview with American Banker, said the committee was well aware that the decision to hire from within would draw criticism, but ultimately opted to disregard those voices in pursuit of what it felt was best for the organization."We decided [the optics] couldn't be the only criteria in the only decision. It had a lot of weight, but it was one of many factors we had to think about," Nordin said. "We realized that the people that were going to be detractors, that were going to be negative about the process, were going to be negative about it no matter what."In a written report issued last week, Chopra accused the foundation of ignoring calls from the Federal Financial Institutions Examination Council — an interagency oversight body consisting of CFPB, Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and National Credit Union Administration — to expand the search to include outside candidates."The Appraisal Foundation's failure to fully disclose basic details or meaningfully involve the [FFIEC's Appraisal Subcommittee] in this process gives no reason to be confident in the leadership selection process," Chopra wrote.The comments were not the first issues Chopra has raised with the Appraisal Foundation. Last year, during one of four hearings on bias in the appraisal profession, the CFPB chief blasted the organization for having a "byzantine" structure that shielded it from accountability.Nordin said the foundation makes itself accountable to many "stakeholders," including entities in and around the appraisal profession, as well as the Appraisal Subcommittee, also known as the ASC. He said the search committee and its outside consultant, the executive search firm Associate Strategies, were in regular contact with the ASC throughout much of the process. Nordin said regulators' frustrations with the foundation stem from its unwillingness to relinquish control over its own hiring process to the government."We weren't willing to cede to the ASC control of the process, that would be totally inappropriate, and what they had sort of asked for at times," Nordin said. "But we were very open and reached out a number of times to ask for their input and ask for their thoughts on everything."SYet, some in the appraisal profession who were hoping for a greater change within the organization were disappointed in the decision to hire from within. Jonathan Miller, a New York-based appraiser, said the foundation's move showed that the groupfoundation has not been swayed by the many calls for reform in Washington and elsewhere in the country."The fact that there was no effort by the search committee to extend the process outside the organization shows that it was their intention to anoint Kelly Davids as Dave Bunton's successor from the beginning," Miller said. "This will only further deteriorate the public's trust in the organization and the profession."

The rapid run-up in mortgages during the pandemic represents a "pocket of risk" to the financial system but Canadian lenders are starting to get the problem of ultra-long home loans under control, according to the country's bank watchdog."During the Covid years, the principal unintended consequence of what we went through was this buildup in mortgage underwritings," Peter Routledge, who heads the Office of the Superintendent of Financial Institutions, said Tuesday at a National Bank of Canada financial-services conference in Montreal."That created a risk concentration and that's worried us really since it formed," he said. But he added that this is a "pocket of risk. I don't consider this risk systemic, but it could lead to a period of uncertainty in the housing system." At the height of a housing market boom fueled by the low-interest rate environment, banks handed out 40% more home loans compared to pre-pandemic averages, he said. Plus, half of those were variable-interest rate mortgages, compared to the regular rate of less than a quarter, he said."Notwithstanding that risk, I've been pleasantly surprised at how Canadians and their lenders continue to manage it down," Routledge said. Canadian lenders now have about C$220 billion ($162 billion) of mortgages with amortization periods — the length of time permitted to pay off the loan — longer than 35 years. That's down 27% from just under C$300 billion at its height, he said. "That's a really good sign and I'm encouraged by that."Routledge's remarks struck a more optimistic tone than comments he made last fall, when he issued stern warnings about the particular risks of variable-rate mortgages with fixed monthly payments, including calling them a "dangerous" product during a government hearing. Borrowers with these types of loans have seen the portion of their monthly payment that goes to interest increase dramatically until they are no longer paying down any portion of the loan's principal. This has led to amortization periods theoretically stretching decades beyond the standard 30 years. But the contract with the bank does not actually change, so when the homeowners go to renew their mortgage at the end of a typical five-year term, they're likely to face significantly higher monthly payments. Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Montreal are the only three major lenders that permit such negatively amortizing mortgages. Over the six months through the end of January, the trio saw this type of mortgage decrease by 27% to a combined C$94 billion. That was down from C$128.3 billion at the end of July, according to their quarterly reports.   Routledge did not specifically highlight the risk of negatively amortizing mortgages during an on-stage interview Tuesday, though in a copy of prepared remarks, he said the housing system would be better served if such products "were less prevalent."      

If you've been sourcing leads from aggregators, you need to pay close attention, because the FCC is sharpening its claws.In January, the commission shored up the Telephone Consumer Protection Act (TCPA) with a final rule that closes what it refers to as the "lead generator loophole" for telemarketing calls and texts. For lenders of all types that purchase leads as part of their business model, it's a seismic change. Under the new rule, consumers must provide "one-to-one" consent for contact by a single lender each time. That means consumers have to knowingly give permission to a specific lender to receive solicitations, and those permissions cannot be moved horizontally among lenders without the express approval of the consumer. These changes empower consumers to dictate their availability for phone calls and decide when to consent to prerecorded calls, auto-dialed calls and text messages.Key provisions go into force March 26, and the requirement to collect written one-to-one consent from each consumer goes into effect Jan. 27, 2025.For the many lenders that formerly relied on aggregators to deliver thousands or tens of thousands of leads each month, these changes are massive and disruptive — even though those leads probably converted to loan applications less than 1% of the time. Gathering personal information on consumers who may have just been curious about homes in their area for sale or rent and selling it to a lender without express one-to-one consent from the consumer will soon be illegal. Additionally, the law could render lenders unable to remarket to their own past customers unless they happen to have collected and documented the customer's express written consent in the highly specific way the new rules require.Non-compliance is not an option. This law has teeth, and if past cases are any indication, there will be lawsuits and stiff penalties for violators after the grace period ends. Consumers will be able to report receiving an illegal call or text, and consumers, states and/or the FCC can take legal action against violators, with fines starting at $500 and going up to $1,500 per violation.Beyond paying legal fines, lenders not in compliance will be spending time and money preparing for and dealing with regulatory audits, even if no penalty or legal action results. Eventually, though, examples will need to be made, with offenders facing harsh sanctions and possibly losing their business licenses.Let that harsh reality sink in and if you'll be in noncompliance soon, take action now. For many lenders, this will mean looking for a new source of leads — or better yet, an entirely fresh approach to customer acquisition that connects lenders with high-intent consumers who already know their borrowing power and are ready and willing to share the data required for underwriting.An online marketplace would benefit buyer and sellerThe lending industry can probably take a cue here from other industries where "marketplaces" like Amazon, CarMax and Etsy have reinvented the end-to-end retail experience by empowering consumers to shop on demand in an ecosystem they trust and request certain products or services they need.Marketplaces are not new. Open-air marketplaces thrived in Babylonia in ancient times and continue today in many communities as farmers' markets or craft fairs. If the banking industry were to tap into the idea of having a safe online marketplace where consumers could browse various financial services while still having complete control over who receives their information and how it's used, that would allow lenders to receive those leads and reach back to qualified customers, while operating well within the bounds of TCPA.In this scenario, everyone would bring value to the table. A consumer would be asked to "self-assess" their financial readiness for a particular product or service like a car loan or a mortgage. Their financial data and contact permission could be stored safely in an encrypted packet, accessible to their lender of choice. Lenders would review and select the customers they intend to serve based on their business objectives and requirements. Lenders would then be able to contact pre-qualified and highly motivated consumers ready to buy their loan product or service.An online marketplace like this will bring together consumers ready to commit to a loan with lenders looking for qualified customers who have provided their permission to be contacted one-on-one by the lender.The entire consumer lending industry benefitsInstead of casting a wide net around dubious leads, this online marketplace would be filled with qualified buyers who have put themselves in the market for loans. Prospecting here would save lenders time and money and boost the likelihood of leads turning into applications. Because applicants are verified to be creditworthy, even underwriting and processing the loan would be smoothed, streamlining transactions and performance analytics.This model would allow lenders to compete against one another on what matters — their true differentiators, such as a superior customer service experience or more favorable loan terms — rather than which lender can purchase the most leads, robocall the most prospects or air the most Super Bowl ads.In addition to improving profitability, this online loan marketplace would be inherently scalable, enabling lenders to manage the current cycle and environment without wide hiring or production swings. You connect with as many customers as your business can handle at that time, knowing your pull-through rate will be substantial.As an added benefit, alternative methodologies for calculating default risk could be built into the consumer assessment model to make the qualification pool for loans more inclusive. While traditional credit scores will continue to tell part of the story of a consumer's creditworthiness, not every marketplace visitor will have a credit score and may have a thin credit file. The marketplace would be a fertile environment to augment the traditional credit scoring model with other models like cash-flow analytics, residual income and rent payment history to assess additional dimensions about a consumer's creditworthiness, so lenders could extend offers to those outside the traditional credit "box."Meeting the future of FCC-compliant lead acquisition head-onWhile many lenders are anxious right now as they adjust to new modes of customer acquisition, and understandably so, I applaud the FCC for taking steps to protect consumers and limit their exposure to unwanted solicitation and harassment from lenders they may ever have heard of and don't need.A modern, streamlined, transparent, collaborative and more inclusive loan marketplace eliminates the need to cast wide nets for borrowers who may not be ready or qualified for a loan and lets you focus on those who are. At the same time, you're always in full compliance with the TCPA.With the internet making it easier than ever to make meaningful connections online with customers, the time has come to adjust the financial industry's business-acquisition model to safeguard the consumer's privacy while also making it easier for them to do business with us. Use this grace period to your advantage. Educate yourself on your lead-acquisition and consumer opt-in practices and make proactive changes to stay in full compliance.

KHUNKORN/khunkorn - stock.adobe.com While everyone in mortgage has heard of artificial intelligence, and some are actively using it, uncertainty among the industry's professionals may currently outweigh enthusiasm, remarks in a recent survey suggest.Still, although doubts about AI may not ever be fully removed, anonymous responses in a survey conducted by Arizent, the parent company of National Mortgage News, about the power of artificial intelligence show widespread recognition of the potential the technology has to transform how the industry works, even when details are not fully understood.    "I am fascinated by AI and its capabilities. I see it as an excellent tool for automating manual tasks, enhancing efficiencies, identifying trends and issues and raising the level of the entire operation," one respondent said when describing their level of understanding about artificial intelligence.  At the same time, they added, "Of course, this can only happen once we resolve the substantial data privacy concerns."The buzz surrounding AI, particularly generative and machine learning models, has already led to implementation into some internal tools mortgage employees are using at companies including Blend and Rocket Mortgage. Last fall, both companies introduced AI capabilities aimed at streamlining workflow and answering common questions loan officers posed.  Artificial intelligence will likely continue making inroads in 2024 for internal functions, typically for educating staff about laws or regulations or assisting them in their interactions with customers. "AI is being used in our call centers to transcribe calls, provide feedback on reasons for calls, recognize the customer's tone and provide solutions to the customer service representative in real time," one commenter noted."AI has the potential to change our landscape, from following up on preapprovals to tracking clients getting ready for a move-up or downsize purchase," added another.Generative AI has also proven to be effective among some lenders who utilize it as often as daily in composing content and marketing material, helping with search-engine optimization or producing email responses — but with caveats. "AI can be used to help research and write copy for marketing, but the resulting copy will still need to be verified and massaged," said one user. A more cautious tone appears when it comes to unleashing artificial intelligence in any sort of  customer-facing capacity, although a few companies are examining how a tool could be designed to be compliant while still providing value and protection to a client. But the lack of clear regulations did not deter some lenders from testing the waters with AI chatbots in the past year. Others are still "working out requirements to assess where they can potentially be used."Some degree of pessimism and skepticism remains prevalent throughout the industry, with job reductions cited as a concern among over half of the mortgage industry professionals taking part in the survey. But across all financial services industries, the loss of personal communication with clients ranked as the leading cause of worry, even as mortgage technology advocates note that certain industry jobs will always require experienced professionals in the process.Many also did not hesitate to voice what they saw as other possible dangers of widespread AI adoption, such as the loss of skills and knowledge, described by one respondent as the "dumbing down of brain function" with workers "hitting the easy button." "People can use it to mask their incompetence," another added. And even while nobody in the mortgage industry has advocated for the use of AI in approving or denying loan applications, risk may lie in its potential to influence the decision making process over the long term, some fear.According to one mortgage professional, a future could emerge where lending turns into too much of "a black-and-white process that can inadvertently cause a decline in the acceptance of loans outside the credit box or that have certain characteristics that need a more nuanced approach. This then becomes a self fulfilling prophecy that further digs the lender/broker into a small box."Another said they thought generative AI had a tendency to reply with the most popular answer to a question, but "this often is not the best or right answer to a question."  But even mortgage professionals who raise concerns about the rise of AI acknowledge its "implications are tremendous," with some expecting it to be "a huge part of the business in 2024." "It will definitely help in getting the mortgage processing timelines reduced and make the process of taking a mortgage more easier for consumers," a respondent said.