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» VISIT US ONLINE @ DSNEWS.COM 55 COVER FEATURE PROPERTY PRESERVATION DAN LEADER COO, Guardian Asset Management We see delinquencies and defaults decreasing in 2016 as the overall number of homes in foreclosure has dropped approximately 36 percent over the past year. However, the number of "zombie foreclosures" which account for roughly 1.5 million vacant homes may increase the number of REO property assignments in certain markets like New Jersey, Florida, New York, Illinois, Ohio, Pennsylvania, Massachusetts, and Missouri. Although the overall number of defaults and REO properties will decrease, there will be an increased emphasis on quality of service from the GSE's, HUD and mortgage servicers. e property preservation industry will continue to be strictly regulated and monitored. FHA may increase the spending limit caps on "overallowables," however, agencies and servicers will require background checks for all field service workers, geocoded photo documentation and a proof of service mechanism with each service provided. Quality assurance will be at the forefront for all of our lines of business: inspections, property preservation, repairs and hazard claims. FHA claims and over allowable requests will be reviewed closely and will require field service providers to increase both their field and desk audit procedures. Enhancements to mobile applications will continue to drive efficiencies and service authentication. In the coming months, we will see the use of video and audio to supplement digital photography on high profile or escalated cases. COVER FEATURE RESIDENTIAL APPRAISALS MARC HINKLE Senior Vice President, MCS Valuations Although the Truth in Lending/RESPA Integrated Disclosure (TRID) became effective on Oct. 3, 2015, the federal agencies charged with enforcing it have announced grace periods of varying length. It's a safe bet, however, that by the time we ring in 2017, the entire mortgage industry – including appraisers and appraisal management companies (AMCs) – will be expected to be in full compliance. e primary challenge in TRID, from the appraisal standpoint, is the tight timeline on the front end of the transaction. is timeline begins once the lender receives a completed mortgage application. If lenders don't get the address of the property until the end of the application process, the appraiser would need to quote the appraisal fee without the ability to research the property. Although appraisers rely on their expertise to quote a fee without seeing the property, for some assignments it is impossible to fully grasp the complexity until the appraiser begins his or her work. Before TRID, appraisal fees could be adjusted without necessarily threatening the closing timeline or risk being penalized by the CFPB. Post-TRID, however, appraisal fees are now subject to zero tolerance. is means that the appraisal fee cannot change from the initial quote unless "changed circumstances" or "borrower requested changes" occur. If that happens, the lender may absorb the fee increase or charge the consumer. If the consumer is charged the increased amount, the lender must provide a revised "Loan Estimate" within 3 business days of learning of the change. is in turn will lengthen the time before the transaction may close. To ensure TRID compliance, it is critical that appraisers, AMCs, and lenders establish a robust system of communication and disclosure. Such a system needs to elicit crucial information from consumers, as early in the transaction as possible, to allow appraisers to quote their fees based on the best possible information. Granted, consumers may not always be in the best position to supply the information needed to quote an appropriate fee. For example, the consumer may know that he or she has a single family home; however, they may not realize or think to disclose that the single family home is in the middle of a 2-acre farm. It is incumbent on AMCs and appraisers to ensure that any fees account for as many nuances as possible and significantly reduce the need for AMCs and appraisers to request increased fees. COVER FEATURE TITLE CRISTY WARD Chief Strategy Officer, Mortgage Connect In 2015, low interest rates stimulated a strong housing market, while regulatory and compliance changes forced profound operational demands on service providers and lenders. In 2016, we believe several key factors will most impact the market and consequently play a pivotal role in reshaping the terrain. First, we forecast rising interest rates combined with increasing home values will support market stabilization. As the market shifts, we can expect to see lenders focus on strategies to fuel retail growth, to capture purchase business and to expand their builder services. Additionally, those who will flourish in the new environment must embrace innovation to meet the demands of growing demographic segments, specifically the next round of first time homebuyers, Millennials. While much has been said about this group of 18 – 34 year olds, one fact remains consistent: at a projected 75.3 million they present a huge swath of homebuyers in the coming years. Second, we forecast regulation and compliance will continue to be a driving force in 2016. Lenders are beginning to understand the true impact of TRID on their core mortgage operations. For example, the increasing cost of compliance and management of thousands of title and closing agents for those with a distributed retail model will greatly impact COVER STORY SUCCESS FORMUL A INDUSTRY INSIGHT COVER FEATURE EXPERT OPINION Although the overall number of defaults and REO properties will decrease, there will be an increased emphasis on quality of service from the GSE's, HUD and mortgage servicers. –DAN LEADER

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