Bruce Backer is the president of LoanSifter, Inc., which provides tools for mortgage bankers, loan officers and secondary departments to price, market and manage loans. Bruce has held leadership positions with a number of technology-based companies, beginning with IBM and Travelers Companies. Prior to joining LoanSifter, he was the founder and president of C3 Corporation, an automation technology provider, and president and co-owner of EMS Sales and Engineering, an energy solutions provider.
For this episode of In This Corner, Bruce sits down to talk about LoanSifter's role at the Fed and how complicated loan pricing can get.
HW: Does the Federal Reserve Bank use LoanSifter data?
Bruce: "Yes. LoanSifter provides a mechanism for the FRB to observe the market’s reaction to changes in monetary policy and other market changing events."
HW: Well, there have been a few proposals have been introduced in Congress to downsize the Fed. Is this a good idea or should the Fed stay where it is?
Bruce: "We don’t have an opinion on this."
HW: Fair Enough. You recently joined forces with AllRegs to provide an online Loan Library application for loan officers. What sort of results are you seeing from that venture? Who's putting it into place?
Bruce: "We’re getting great feedback so far. Together, AllRegs and LoanSifter now have the industry’s most seamless and complete use of lender guidelines. In addition to ensuring timely and reliable updates, the LoanSifter implementation is the first to allow loan officers and secondary teams to view their investor’s guidelines from within their product and pricing system. Both companies were involved in putting this together."
HW: With subprime disintegrating and reverse mortgages earning some negative attention, what new creative products could we expect from originators in 2010?
Bruce: "Although we expect to see strong origination levels in 2010, we don’t expect to see any truly progressive products introduced. There could be a reduction of programs, such as FHA, if there is significant fallout from underwater loans. Potential new products will likely be offered by the government as an incentive to spur investment, as with the first time home buyers program."
HW: That's interesting. How about the credit lines? Will those loosen after the New Year?
Bruce: "We anticipate a tight credit market through 2010 with lenders still reeling from past losses, largely focused on mitigating risks associated with the devaluation of real estate prices, coupled with a tougher regulatory climate, less protection from government, and a market whose loans seem riskier to the end investor than a few years ago. We need to see improving valuation levels and decreasing unemployment to bring stability, increasing the appetite for better returns and the creation of new mortgage products."
HW: Calculating risk is changing dramatically in the credit crisis. How are lenders coping with the difficulties in loan pricing given the different requirements of various parties?
Bruce: "Pricing has gotten so complicated, that it's almost a case-by-case situation with each borrower – there’s very little consistency. We're seeing lenders turn to pricing technology not necessarily because they want to, because they have to. It's just too complicated to keep up with all the requirements and changing factors that go into risk-based pricing without some level of automation aiding the process."
HW: Is LoanSifter looking at new ventures similar to your joint operation with AllRegs? You don't have to name names, but is there a part of the business LoanSifter is looking to explore?
Bruce: "We have four important initiatives in the works. First, eligibility and pricing data from mortgage insurance companies is being incorporated into every search we perform. Second, LoanSifter is exploring significant relationships with our eOriginations suite for the automation of online loan originations. Our current platform is tightly integrated with Wolters Kluwer, and we are exploring private labeling and partnerships with strong solution providers. Third, we are exploring tight relationships in secondary marketing for bankers involved with mandatory delivery. Fourth, we’re expanding and enhancing our integrations with LOS platforms. Our tight integration with DataTrac is representative of the approach our customers find ideal."