Rick Grant & Associates

Loan-Score Decisioning Systems, Irvine, Calif., a provider of automated underwriting solutions to the mortgage industry, has appointed Jon McGuire as chief technology officer. As CTO, he will drive Loan-Score’s development strategy to engineer new products and enhance the company’s solution offering to deliver highly configurable, flexible and scalable solutions that easily integrate with disparate systems using Web services and contemporary architecture design.

McGuire brings more than 10 years of mortgage technology experience to Loan-Score, having served a number of technology and lending firms including ex10sion, Stonecreek Funding, Wilmington Finance and Provantedge Technologies.

McGuire said in a release that he hopes to help build Loan-Score into the “industry’s leading enterprise decisioning and risk mitigation software automation firm.”

Wall Street Journal readers will recall yesterday’s story about underwriting at Countrywide and the resulting problems. The time is right for a firm to offer a solution that is both flexible enough to allow lenders can get deals done and yet rigorous enough to defeat fraud and mitigate risk. What would that look like? I have some ideas, but I’m looking forward to more discussions with vendors to see what direction they are moving.

Lend America, Melville, N.Y., a privately-owned, direct-to-consumer residential mortgage lender that focuses on government-insured lending, has partnered with the Rainy Day Foundation, a non-profit organization, in an effort to keep FHA borrowers in homes longer.

Under the new agreement, Lend America will originate the loans and Rainy Day will provide its Homeowner Education and Loan Protection Program (HELP).

I spoke to Michael Ashley, Chief Business Strategist of Lend America, and Rick Del Sontro, CEO of the Rainy Day Foundation, about the new program.

According to Del Sontro, H.E.L.P ensures borrowers have a clear understanding of the home ownership process, while offering counseling to promote the positive financial behavior, such as savings plans, needed for long-term home ownership. In addition, H.E.L.P will offer borrowers financial protection, including assistance with mortgage payments, should an unexpected financial crisis arise.

Del Sontro, who stared Rainy Day in 2003, says that FHA borrowers can get into trouble by the sixth month and delinquencies usually peak by the 12th month and then begin to decline by the 18th month.

“Over the past 5 years, we’ve learned that these borrower face some inherent challenges,” said Del Sontro. “They don’t come into home ownership with a lot of reserves. It’s not required, so they are one hiccup away from running into problems. And they don’t have great allies. They don’t have anyone who can coach them through certain things.”

Ashley said the alliance with Rainy Day is a perfect fit for his business. Lend America abandoned subprime lending about three years ago because Ashley thought government-insured programs would serve his market better. The company secured the toll free number 1-800-FHA-FIXED and began specializing in the products. But Ashley says he still sees more borrowers getting into trouble.

“We are hearing firsthand, through our telephone hotline, how homeowners are finding themselves overburdened by their mortgage situation and our looking for real solutions that can help them now,” he said.

H.E.L.P. provides one-year job loss protection that provides up to 6 months of mortgage payments, financial crisis protection that provides mortgage payment assistance in a crisis, and a monthly newsletter. Del Sontro said that the organization makes monthly calls to the borrower for the first six months to solidify the relationship.

“Many homeowners have little understanding of their current and/or future financial obligations and the first time there is a significant financial setback, there is not enough savings to keep them from experiencing a financial setback,” Del Sontro said. “With a preventive initiative such as H.E.L.P., borrowers will better understand the process and financial responsibilities of owning a home and learn the tools to be better prepared to manage the debt associated with home ownership.”

The insurance is underwritten by a national insurance provider Rainy Day declined to name, but Lend America also pays a fee to enroll its customers in the program.

Lenders have counted on community organizations in the past to help first time homeowners get into new homes, mostly through downpayment assistance. Most of the programs designed to get borrowers back out of trouble have been reactive in the past. Ashley says this alliance is a proactive response designed to make borrowers more successful at home ownership. Since FHA is the new subprime, this may be a timely test of the industry’s ability to make that happen.

One of the biggest challenges for vendors serving the mortgage lending industry is that it is very difficult to get executives to talk about how happy they are with a given solution. Personally, I think this is because lenders don’t really know how happy they are until the solution is fully scoped out, developed, implemented, integrated and put into production. By that time, most of these guys are already working for someone else. One of the advantages of the new SOA-based tools the industry has migrated to is that new tools can be brought online much faster.

Obviously, I’ve only hit upon part of the reason more lenders don’t shower their vendors with praise, because shorter implementation time lines alone have not created a flood of new testimonials. But Costa Mesa, Calif.-based PriceMyLoan is one company that has been fairly successful at getting their new customers to comment favorably about their offering.

Just two months after implementing the PriceMyLoan (PML) automated underwriting and loan pricing engine Prysma Lending Group, a wholesale mortgage lender based in Connecticut, credited the tool with increasing its efficiency and contributing to its overall growth.

“Our wholesale business has been growing, but we found that it’s almost impossible to keep moving ahead and expanding without some type of automation,” said Luiz Serva, founder and chief executive officer of Prysma Lending Group. “PriceMyLoan put a structure in place for pricing and loan submission. It has streamlined our entire process.”

In the past, most of us who write about mortgage technology have described offerings like PriceMyLoan as Product & Pricing Engines (PPE), but the company says we’ve missed the mark.

“The rise in popularity of PPE systems have led to inaccurate descriptions of PML,” the company said in its release.

“There are so many companies out there offering PPE technology,” said Gigi Campbell, national sales director at PriceMyLoan. “It obscures the fact that pricing alone is next to useless when it doesn’t accurately determine borrower eligibility. Lenders don’t gain any operational advantages by displaying pricing on a screen. Originators need to know if their borrower qualifies for the pricing, and they have to be able to trust that the decision is accurate.”

Well, that certainly makes sense. Of course, the whole idea behind the PPE was that it could search the database for a product that fit the specific borrower and was priced according to the risk involved in the specific deal. PriceMyLoan says it has 150 lender implementations that say it can get that job done.

Time will tell. Another benefit of the new software architecture is that switching costs are lower. That may be one of the reasons PML has grown so quickly. It’s also a risk.

On another note, lower software switching costs are moving lenders closer to something they have always claimed was a goal but never really bought into. More on then in the next post.

Mortgage Industry Advisory Corp. (MIAC), New York, has hired Doug Mayers to be its vice president of sales and marketing. This is a great move for this company.

While MIAC has been providing valuation services on all manner of mortgage-related assets for many years, the company has never really formalized its marketing operation. Based in New York, the company principals and top sales execs basically know everyone on the Street and have been doing a great business there for 20 years, running mostly under the radar.

MIACs tools have become more important in an environment of increased volatility where the real value of these assets becomes more difficult to gage given significantly lower trading volume. The firm’s proprietary software, MIAC Analytics™, is used in pricing, hedging and accounting for over $4.0 trillion dollars in mortgage assets each month. Even so, not enough people know what MIAC has to offer.

In his new position, Mayers will be engaging mortgage bankers and regulated depositories to expand their adoption and usage of MIAC’s integrated suite of risk management software, analytics, and advisory services, including DataRaptor®, MarketShield™, WinOAS™, DecisionServ™, ALM/VAST™ and BondAgent™.

Mayers has a broad range of experience in the secondary market, including positions in sales and sales management; whole loan and distressed asset pricing, acquisitions, trading, and platform development; and agency MBS pooling, delivery, and acquisitions operations. Mayers began his career in the industry with Lomas and Nettleton in 1985, and has also been associated with Fannie Mae, Countrywide, Bayview Financial, and Indymac. He was also a co-founder of Radius Mortgage Capital, a principal buyer of distressed mortgage assets. Prior to joining MIAC, Mr. Mayers was the owner of Hillcrest Mortgage Capital, a non-positioning trader of distressed mortgages.

He’ll be concentrating his initial efforts on the west coast, according to the company.

Back when Atlanta-based Advectis was signing up wholesale lenders to its Blitzdocs system, the old bar code–which had been in use in other industries since, well, about as long as printing–was a shiny new tool the mortgage industry was using to keep documents together so they could be smoothly digitized into electronic loan files. That was a couple of years ago.

Last year, Xerox bought the company and rolled it into its Xerox Mortgage Services and the next month won the Mortgage Technology magazine Synergy Award for the Blitzdocs offering. Now, the bar code is old again and Xerox is rolling out a new way to encode paper documents for lenders interested in moving toward electronic documents.

As the news came out that Blitzdocs would be leveraging the Xerox DataGlyph technology, I kept trying to imagine what these things looked like. I kept picturing the two-dimensional codes the airlines have started stamping on boarding passes, but that’s not what these guys are talking about. According to the company:

DataGlyphs encode information in thousands of tiny glyphs - diagonal lines that can be as short as 1/100th of an inch depending on the resolution of the printer. Each glyph slopes backward or forward to represent a binary 0 or 1. Glyphs are laid down in groups on a regular, finely spaced grid to form unobtrusive, evenly textured gray or colored areas. Even when groups of glyphs are large enough to be seen by the human eye, they form a pleasing pattern that is not distracting.

To us it looks like a smear of color. To the machine, it tells a story. And because it can be so small, redundancy can be built in, making it more durable than the old bar code.

I called on Judson Phillips, vice president of marketing for Xerox Mortgage Services, to find out what else would be changing now that the firm has been fully integrated into Xerox.

“Our goal is to pursue the same charter,” he said, “(which is) going out and providing our network and our Blitzdocs solution to all participants in the mortgage space.”

But he added that being part of a larger company was making that easier in some exciting ways. The DataGlyphs are “just the beginning.” As lenders continue their move into all-electronic mortgages, the new technology will delivery more efficiencies, he said.

The company is also looking at some of the Xerox smart document technology (distinct from the mortgage industry’s SMART doc, touted by Fannie Mae). While he didn’t tell us what the company was planning, he did say that “there’s not another player in our space that has the resources to do that kind of thing.”

First, we’ll have to see how lenders adopt the new DataGlyphs. At least one doc prep firm is already making them available and Phillips says a number of lenders are in pilot.

How many people will view your amazing Web video? That’s a question many B2B marketers have been asking. The answers they keep coming up with have kept most marketing departments out of the online video world, at least on the business-to-business side, but that may be changing.

A new study from ABI Research forecasts the number of viewers who access video via the Web to nearly quadruple in the next few years, reaching at least one billion in 2013.

“The rapid expansion of broadband video creates opportunities across a number of market sectors,” according to senior analyst Cesar Bachelet, who made his remarks in a press release. “A wide variety of actors aim to gain a share of this fast-growing market: not only content owners such as the BBC and NBC Universal, and Internet portals such as AOL and Yahoo!, but also a range of new entrants including user-generated content sites such as YouTube and Dailymotion, broadband video sites such as CinemaNow and Lovefilm, and Internet TV providers such as Apple and Zattoo.”

While most of these players will be seeking out traditional television mass markets and using old advertising models to monetize their efforts, the professional B2B marketer will be working to provide informative and entertaining content to appeal to specific target audiences. Many of these online viewers already have access to broadband at work, but come home to enjoy traditional television, provided by cable or satellite television companies.

The real sea change in online video viewing will probably have less to do with broadband access and more to do with viewers plugging their media PCs and Apple TVs directly into their big screens. There are already a number of online players providing programming. Soon, we can expect one of the Content Delivery Networks, players that today provide faster streaming by parking video content in locations closer to online viewers, to develop a viable online business channel.

In the future, business prospects will come home after a busy day and watch online video from their comfort of their easy chairs. When that happens, B2B marketers will need to be ready to leverage online video that is both informative and entertaining to continue to build out their brands.