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» VISIT US ONLINE @ DSNEWS.COM 57 As big as this year's sales are, we have a long way to go. e people who understand the current conditions and future implications will do extremely well, those that don't will just be "in the game". We are extremely excited about 2016 as we anticipate this increasing supply of non- performing loans making their way down stream to the smaller capital investors. COVER FEATURE VALUATION TOM O'GRADY CEO, Pro Teck Valuation Services Two factors that will impact the real estate valuation business in 2016 will be the continued recovery of the US housing market and navigating the new regulatory environment. As seen over the last several years, the US housing market continues to strengthen. While a year ago thirteen CBSAs were deemed "weak" by our Home Vale Forecast, this month it is down to four. On the flip side, 54 of the CBSAs received our highest ranking of "hot" as compared to only seven a year ago. Serious defaults have returned to historic levels of 3-4%. With loans originated since 2011 having a default rate lower than 1%, we believe this trend will continue. And although we do believe the Fed will increase interest rates at some point, we feel the impact on the real estate markets will be minimal. With the housing recovery has come home appreciation, and with that the reemergence of home equity lending. Home owners that were underwater a few years ago are now eligible for home equity loans. We feel this is a market with pent-up demand and will be an area of growth in 2016. e impact of new regulation will continue to be a challenge in 2016. Many lenders, servicers and investors have struggled with the enormous increase in regulation. When it comes to property valuations – partnering with a national AMC that is on top of changes, working with regulatory agencies and state legislators and able to provide expertise and compliance will be more important than ever. As a bank you might be ready for an audit from a regulatory entity, but is your AMC? Regulators are diving deeper into the value chain. If you are not sure your AMC could pass an audit, you may want to explore other providers. Financial institutions have also been looking for products to meet the new regulatory landscape, and valuation companies like Pro Teck continue to work at designing products to provide effective and compliant solutions. It is an exciting, challenging, fast moving and innovative time in our industry. We are up to the challenge and look forward to meeting the needs of our clients in 2016 and beyond. COVER FEATURE COMPLIANCE VINCENT SPOTO Founding Partner of RRMS Advisors In today's marketplace, regulatory scrutiny has taken center stage. No longer can mortgage originators, loan servicers and other mortgage banking service providers take a 'blind-eye' to regulatory practices aimed at protecting consumers. Within the past decade, a large number of consumers have fallen prey to a host of unscrupulous lending, servicing and other mortgage finance administration practices. As a result, a series of regulatory requirements were enacted to help reign-in the 'bad guys' and offer protections to consumers nationwide. Guidelines enacted by the Consumer Financial Protection Bureau (CFPB) were principally aimed at protecting consumers and have made it more for firms to partake in residential mortgage loan lending, servicing and other administrative practices. As a result, shrinkage has occurred relating to the number of players in the industry. is, together with a significant number of organizational consolidations, has sharply reduced the number of active mortgage banking participants. Further adding to this is the weariness of investors to participate in Residential Mortgage- Backed Securities (RMBS), thereby leading to a significant reduction undertaken by issuers to package, structure and sell RMBS. Hence, today's mortgage finance industry is merely a fraction of what it was less than ten years ago and only the strongest and most committed players remain. Surviving in today's marketplace is clearly linked to having a strong commitment (both organizationally and financially) to a robust internal control environment designed to protect consumers. Many mortgage banking firms today have began to implement formal Management Internal Control (MIC) utilities designed to proactively ensure that key mortgage finance functions are appropriately managed and controlled to ensure proper consumer protection. A strong MIC function is also helping many firms identify and reduce process redundancies, streamline operations and ultimately lower costs. Once outside regulators have dropped in and identified internal control and processing inefficiencies leading to mortgage lending and / or loan servicing practices, the 'cat is out of the bag' so to speak and damages have already occurred to the consumer as well as to the firm's overall marketplace reputation and cost infrastructure. Beginning to emerge as a critical component of robust MIC functions is the development and implementation of a formal Business Self Testing (BST) Program. Such programs are being designed to monitor compliance with applicable laws and regulations for a host of mortgage banking functions. Business Self Testing is has become the first line of defense in ensuring that mitigating controls are working as intended on an ongoing basis. For 2016 and beyond, mortgage bankers can more effectively weather the storm brought on by increased regulatory scrutiny and compliance requirements by adopting a robust Management Internal Control function with a solid Business Self Testing Program at its core. COVER FEATURE TITLE JEFF PUTHOFF & DAN CLUNK Attorney at Omega Title Agency e Default Title Industry is on the cusp of unprecedented opportunity, though it's cloaked as uncertainty. Uncertainty with the CFPB's role in the marketplace and its "regulation-through-enforcement" approach to TRID compliance will undoubtedly have severe impacts our industry in 2016. In fact, the CFPB's focus is shifting away from mortgage lenders turning instead to service providers, COVER STORY SUCCESS FORMUL A INDUSTRY INSIGHT COVER FEATURE

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