The CFPB is on the hunt. Are you in the crosshairs?

The CFPB is on the hunt. Are you in the crosshairs? Referrer be cautious. Asking for something in return can cost you. The Consumer Financial Protection Bureau (CFPB) is heavily enforcing actions against illegal or questionable kickback schemes in the mortgage, real estate, and title insurance industries. Kickback agreements involve title companies entering into marketing services agreements (MSAs) with companies, such as real estate brokers, with the expectation that mortgage closing and title insurance business will be referred to title companies. Referrals are common in the real estate industry. Brokers and builders refer clients to mortgage lenders. Lenders refer clients to title companies. CFPB Director Richard Cordray made the statement: Kickbacks harm consumers by hampering fair market competition and by unnecessarily increasing the costs of getting a mortgage. The CFPB will continue to take action against schemes designed to let service providers profit through unscrupulous and illegal business practices. When the CFPB ordered Texas

homebuilder, Paul Taylor, to surrender more than $100,000 he received in kickbacks for referring mortgage origination business to Benchmark Bank and to Willow Bend Mortgage Company. Since CFPB is being proactive about enforcing these laws, itis time we all get proactive about complying with them. Proactive marketing with compliant campaigns will ensure your success by filling up your pipeline and make it easy to stay within the new guidelines. If you have never successfully marketed yourself now is a great time to look at that option. You have the ability to produce your own leads with a marketing campaign that will bring in new business. Keeping control of your lead generation will also ensure compliance. Use the tools you have at your disposal as a lender to generate more business. As a lender, whether you are a banker or a broker, you have access to extremely specific information for targeting consumers and generating new business. Only lenders can access credit information. Combine credit data with the traditional direct mail campaign and create your own leads. This has been an eventful year and there are a lot of changes happening in the financial industry: such as new laws like TRID. We would like to share with you effective marketing methods and let you in on some marketing secret other marketers don t want you to know.

Big lending institution like Wells Fargo are choosing to sever ties with home builders and brokers all together. We are giving you options if you decide to do that! MSA AGREEMENTS A Marketing Services Agreement (MSA) outlines very broad marketing plans between a real estate firm and a lender. The MSA allows a lending institution access to real estate agents and home buyers. The fees associated with a MSA often amount to thousands of dollars paid to real estate firms, by lenders, for the ability to share in marketing costs. In some cases, the lender and real estate entity even occupy the same office space. Marketing Service Agreements are available to lenders to bid on and submit proposals for the marketing tools they intend to use. The MSA also outlines the compensation the lender is willing to pay out. Many advocates to MASs say that these relationships are RESPA compliant, but in practice they are not. This is where the line between compliance and non-compliance gets skewed.

Last year the Director of the CFPB, Richard Cordray, spoke about the issue. In September of last year he took action against Lighthouse Title, a Michigan title insurance company that had entered into a series of MSAs. Mr. Cordray basically said that, Kickbacks are illegal, and that action will be taken against anyone not playing by the rules. No one is safe, as companies large and small have had action taken against them by the CFPB. This month sweeping changes took effect regarding MSAs. The widespread talk among people in the mortgage and real estate industries about what they are going to do is still a hot topic. For many, the MSA model is something they have relied on heavily to keep marketing costs low. For these folks, having to completely change their marketing model seems like a daunting task, and being RESPA compliant adds even more stress to the process. It doesn t matter if you are a small one to three person shop or a Fortune 500 Corporation: TRID affects us all. Don t let it slow your referrals, your pipeline, or your business growth. There are ways you can easily protect yourself and your business while ensuring your success. You do not have to try and beat the system. You can work within the new guidelines and still be successful. There are two new three-day rules that come along with TRID: your marketing can help you stay in compliance with both. The first new form and three-day rule is the Loan Estimate. The Loan Estimate must be provided to consumers no later than three business days after they submit a loan application; not three

days after you pull credit. Three days after they submit the application. In some cases this means three days from the time you get the lead. An application is considered received when the consumer provides the following information: a. Consumer s name, b. Consumer s income, c. Consumer s social security number to obtain a credit report, d. Address of the property, e. Estimate of the value of the property, and f. The mortgage loan amount sought. This is how some mortgage companies are receiving their leads! Are you providing a loan estimate three days after you receive your leads or referrals? TRID does not have guidelines for when you cannot get in touch with someone. If you are not currently processing loan estimates this fast you have some work to do. This will make sure they will already meet certain criteria and speed up the time it takes to provide a loan estimate. Of course you will never know exactly whether a borrower will or will not qualify for a loan until you get them into your system and take an in depth look at their financial situation. If you could, you would certainly be able to get those loan estimates done much faster right?

Now you can. As mortgage professionals, you have access to extremely sensitive information. Use the tools you have at your disposal as a lender to innovate more specific marketing campaigns. This will pre-qualify your leads, making it much faster for you to get that loan estimate out in the three days you have. As a lender, whether you are a banker or a broker, you have access to extremely specific information to target consumers for your marketing and to generate new business: credit data. Only very few industries can access credit information for the purposes of marketing and generating new business. You are lucky to be in one of them. Utilize credit data to help you pre-qualify your leads and personalize your marketing campaigns in many different ways. The second form and three-day rule is the Closing Disclosure. The Closing Disclosure must be given to your borrower at least three business days before, what the CFPB defines as, consummation. This is NOT CLOSING DATE. This is not when the property closes, but rather when the borrower becomes contractually obligated to the creditor, which will also be affected by applicable state laws. The Closing Disclosures must be delivered to the borrower no less than three days before this date. This also gives your borrowers three days to shop! With the invention of the mortgage trigger lead this may become a serious issue. Protect yourself by educating your clients and making sure they understand how the credit inquiry will create a trigger lead. This lead will, in most cases, be bought by one or several other mortgage lenders, and they will be solicited. The trigger lead comes from the credit bureaus. A trigger lead, like credit data can be filtered to specifically target

credit scores, income, LTV, and hundreds of other criteria. So even though a loan cannot be finalized and closed in a three day window, another lender may seize the opportunity to preapprove your borrower and make them a counter offer before they are contractually obligated with you. You don t have to be a victim in all this. You also have access to this information. So you can also use the trigger and create a dog-eat-dog scenario, or you can generate your own leads that have a higher retention rate than leads purchased from third party providers. Generate your own leads and referrals through your customer base, not through a realtor network, and you will create more customer loyalty that will keep your customers yours. Traditionally, education is the best policy on this matter. Educate your customers on what to expect, and you will keep a higher percentage of the business you write. Loans that are generated by traditional marketing techniques, like direct mail, have a higher retention rate than loans that are generated from the internet. The internet gives people options, and those options turn into competition in the mortgage business. Couple that with the lack of loyalty we ve seen in recent years, and all signs point to generating your own leads. Let s show you how to put a marketing campaign together that allows for the pre-screening of your prospects or leads before you get them.

Different Marketing Campaigns Direct Mail Marketing: Considering the fierce competitiveness of today s mortgage market, it is more important than ever to have a direct mail campaign that works. After all, there are many direct mail campaigns out there likely to cost you a fortune...only to end up in the trash and leave you penniless. Here are aspects of successful campaign: Credit Data: Pre-Screen your prospects for the following criteria: Mail Piece (i) Credit Score; (ii) Income; (iii)delinquencies; (iv) Loan Amounts; (v) Bankruptcies; (vi) Foreclosures etc. The content that is going to get your prospect to pick up their phone and call you. If you are using pre-screened credit data, you have to make a firm offer of credit. That means the mail piece is required to have the small pre-screened disclaimer on the front, and the long form OPT-OUT disclaimer on the back. When you do that, in a lot of cases, it is going to lower your response rate. You ll want to be careful and make sure you test and measure to find out what is going to work. Tracking CRM

Make sure you are using some kind of tracking system on your campaign. All calls should be tracked and recorded. This allows pin point accuracy in tracking the results of your direct mail campaign. A Purl You can now add a Personal URL (PURL) to your direct mail marketing to give consumers yet another way to respond to your campaign. PURLs have been shown to increase effectiveness of a campaign by over one percent when done correctly. Use a PURL on your direct mail marketing piece to get responses from consumers who otherwise would not have responded at all. A PURL gives someone a chance to safely and securely respond to your direct mail marketing from the comfort of their own home. Combining your tradition direct mail campaign with direct mail voice is another way of increasing your response rates and making a personal connection with the client. Direct Mail Voice: Everyone who receives your direct mail will also receive one to two personal messages from you. These messages will: let them know they can expect your mail; ensure that they received your mail; and most importantly, that you are serious about helping them. The personal touch will make them feel like they are the only person on your list.

The voice messaging system will deposit your recorded message into the residential telephone voice mail box of a potential customer without ringing the phone The customer will never know you used voice messaging system because the message delivered is as clear as if you called and left the message yourself. Login to a secure voicemail to record your own message, or we can provide you with generic messages or help you with your scripts. The maximum length of the message is 30 seconds. Triggers: Trigger leads can be a double edged sword. Not only can you safeguard yourself against losing customers to other lenders, you can also utilize a trigger lead to prospective customers already in the process of obtaining a loan. Make absolute certain that the company you are buying them from, as well as you, understands the compliance aspect of the lead. People have the tendency to skip over compliance. Trigger leads come in several age ranges, 12-24 hours old, one to seven days old, and weekly, eight to 30 days old. You cannot use trigger leads after 30 days. That holds true with credit data as well, which we will get in to a little further along. Don t be a victim to TRID, protect yourself!

Using credit data and tradition direct mail can keep you out of CFPB crosshairs. Also by utilizing the campaigns we mapped out for you, it will make it easier for you to deal with TRID three-day rule and protect yourself against trigger leads. Proactive marketing with compliant campaigns will ensure your success by filling up your pipeline and make it easy to stay within the new guidelines. We are always open to taking calls, so feel free to call or email anytime if you have any questions about your current marketing or future marketing plans and/or general questions. THANK YOU FOR READING AND HAPPY HUNTING! 711 Medford Center STE 240 Medford, OR 97504 p. 855.294.7060 f. 541.858.4340 www.tagquest.com info@tagquest.com