The mortgage market is going through some fundamental changes, and it’s best to be prepared for what’s to come. Is there a rise in non-Qm, and what should be done about it? In today’s episode with host David Lykken, and co-hosts David Kittle and Marc Helm, they interview Arthur Prieston to pick his brains on what moves to make in this crucial time. Arthur is the President of Prieston and Associates, LLC. In their chat, Arthur shares his mortgage banking journey, discussing the nuances of the industry and best practices for top-tier service. He also enlightens on the growth of the non-QM market and its impact on the purchase and repurchase requests going on right now. Tune in as he also breaks down the relationship between lenders and insurance companies and how they continually innovate their services.
Watch the episode here
The New Normal: Fundamental Changes In The Mortgage Market And The Rise Of Non-Qm
I am excited about every one of our interviews, but this one is super special to me because of whom we are going to be talking to. One of the most innovative individuals in the industry who has come up with more outstanding ideas at the right time in the marketplace. I thought I originally met him through David Kittle. Arthur told me, “We used to do business together” That brought it together. I invited Marc Helm to join me in the interview. Marc, good to have you here. I appreciate you joining in for this interview.
I’m glad to be here, David. Thank you.
We have also added Mr. David Kittle, a dear friend and someone that does not need an introduction but also one of the co-founders of TMC. He is a regular on the show. David, I want you to get this interview started by telling us about Arthur Prieston, and I will add to it afterward. Go ahead, David.
Thanks for having me, David, and Marc. It is good to see you as always. Thanks for having Arthur on. As you said, David, innovative and timely. I believe this is the perfect timing for your listeners to learn about Arthur. He has been a friend of mine for many years. He is a CMB and knows every in and out of the mortgage industry. He is an attorney. He was a visionary with a rep and warranty insurance program several years ago. It couldn’t be more timely than it is now, with volumes low and the GSE pushing loans back for re-purchase. I like to introduce my great friend, Mr. Arthur Prieston.
It is good to have you here. I was being introduced to Arthur. I was like, “Arthur, nice to meet you.” One thing I love about Arthur is that he is such a human being. He is a warm individual. He says, “David, you don’t remember me. We used to do business together.” In our last mortgage company, Arthur was the one that came in and did some innovative things for us. Arthur, thank you for reconnecting and helping wake up some of those old brain cells. That was a long time ago, but it was good.
What impressed me back then and all along this journey was how you seem to come up with the right solution at the right time for what we are going through in an industry. We are going through unprecedented times right now, Arthur. Before we go there, tell us a little bit about your journey in mortgage banking and how did you get into this. You go from being an attorney to what you are doing now. Give us a little insight into your journey.
Before I do that, I have been listening to looking at lending for as long as it has been born. I don’t listen to it at night to put myself to sleep. I have to listen to it during the day to learn a few things. Every time I do, I pick up something new. My dad always told me, “There isn’t a meeting worthwhile. We can’t pick up one little tidbit.” I always do in your podcast. It is an honor and a pleasure to be on this podcast with you.
Thank you very much. It is an honor to have you here.
To answer your question and for David to talk about many years, I did practice for quite some time. I have recovered from being an attorney. I’m going to make everybody feel somewhat dated on this call. When FIRREA was first announced back in the late ’80 and early ‘90, it was when Freddie Mac came out with its fraud squad and quality control was now in place, and 10% reviews on post-funding. We all discovered exactly the stuff we were originating and making back then. It was somewhat embarrassing.
It tightened up a lot of screws that needed to be tightened. Most importantly, it also exposed a lot of liability for mid-size lenders. We all know, in particular, what happens. Marc, on the servicing side, you understand that when you are servicing loans, you are looking back at a lender, and that lender is worth about $150,000. It is not a whole lot of significance when you have a rep and warrant that requires them to buy a loan back.
Back then, I was working with Western Region Freddie Mac. There was a wonderful woman named Bev Kennedy. She was responding to every one of my emails, saying, “Please stop emailing me. Come on with all these questions.” I said, “I need some guidance.” She mentored me for a number of years. God bless her since her passing. I have missed her for many years, but more importantly, she was instrumental in helping me come up with a concept that said, “Mid-size lenders need some paper behind them. They need a few billion dollars of insurance coverage. Their rep and warrants are somewhat meaningful when they are exacted on a re-purchase request.”
We all know we all have Arizona missions insurance, but it has been required since Ginnie Mae was born. We all know that it is the go-to insurance, but none of us make claims against it. If you do, it is generally unsuccessful. Rep and warrant were more of a transactional idea we came up with in the early ‘90s. I packed the idea up and shopped around to Philadelphia, where all the insurance companies are. I end up putting into a forced place coverage unit of all things relative to rep and warrant. Marc, you can relate to that. How can you have rep and warrant coverage and force place coverage combined together? It makes no sense. That is what they thought about it back then.
When I talk about rep and warrant coverage, what I designed was an ability for a lender to say, “I got this coverage. I know you want me to buy this loan back. Maybe we can get the third party that caused the fraud or problem to come up with the money. In the meantime, the insurance will be a backstop for it.” That was before the new systems that are in place now. We have a rebuttal, impasse, and management as it relates to buyback on loans. We have been working on that. We helped with some of the design systems behind that.
When it came time for a re-purchase request, the rep and warrant back before the implosion of 2007 and 2008 were ubiquitous in the secondary market. We were ensuring most of the loans on the securitization side. The good news is we didn’t ensure any subprime loans at the time, and we had certain provisions in the policy that protected us. If a company becomes insolvent, the policy is no longer valid. That has changed since then. We were talking many years ago, and we survived through it.
To make it clear for your listeners, David, it is important to note that the coverage was designed by lenders, and that is important. Half the table was insurance carriers, and the other half was lenders. Insurance carriers didn’t want to pay a single claim, and the lenders wanted everything covered and ultimately fell down to the lenders, saying, “We won’t buy it, if it is something that will easily be denied.” We designed the coverage for that, but we became particular in who we took care of. You were one of them, Mr. David Lykken, many years ago.
Since then, we have gone through many iterations and adoptions. In this particular market, we are in trying times. I don’t know if everybody read Angel Oak sold for $400 million at $0.83 on $1 on a non-QM product. That is simply because of the market conditions, the spreads, the mark to markets, and the volatility. Those things are affecting everybody. We all understand that. The question is, “How can you stay in business, make some money, be a little bit more judicious in your approach and at the same time, have a company that is a member of Lloyd’s of London back behind you in case there is a problem?” That is where we are now. That is my story.
I want to get into what sparks the growth in the non-QM market. We will toss the question over to Marc and get back to you, David, and jump in on this. What is the reason for the growth in the non-QM?
I would simply say it is twofold. One, when you have less volume, you like to make more money prolonged, and non-QM is clearly more profitable from a net income standpoint. We won’t talk about risk right now, but we will talk about for every 10 QM loans, 2 or 3 non-QM loans make up the difference in the net profit. There is that.
I want to bring this out, and I’m sure everybody can agree with this. Since COVID, this has been an extraordinary expansion in the percentage of freelancers and independent workers. Look at yourself there, Mr. Lykken. More importantly, it has been a situation where you have self-employed people that don’t necessarily have traditional documentation, and we are looking at 53% of the workforce fill into that.
When you start looking at non-QM, it is less attractive when you are high-flying low-interest rates refinance market. When you don’t, you have to work for your money. That is why these mortgage bankers are now looking at companies like Angel Oak, but I also mentioned Acra Lending. Acra is in the non-QM market, and they are also judicious. They are growing their corresponding group carefully as long as there is specialization in underwriting because non-QM is an important feature.NonQM was less attractive when you have a high flying, low interest rates refinance market. Click To Tweet
Marc, I will toss the mic to you.
It is interesting the concept of what you have been working on. I get always get branded with servicing, but I started off in originations and was area manager and original manager. One of the things I got to work on is something you touched on you first started the podcast. I got to work on the lender place coverage side. I got to know Lloyd’s market extremely well.
I worked with the first couple of companies that took lender-placed to a new level where lender-placed was not just covering the mortgage company but was covering the bar as much as the mortgage company in the long term. Originally, it was trying to cover the asset for the loan and came with insurance for the whole value and all that. The reps and warranties now couldn’t be at a better time because I agree with Mr. Kittle. This is the time when the agencies are going to look at everything.
I can tell you from the approval process with GSEs. It is tough these days to get somebody’s magazine and get approval. It is because they are crossing T’s and dotting I’s on everything. I’m sure they are going to do that on the reps and warrant since we got on the road. What you are working on is going to be extremely important for the industry, and I’m excited to hear about it.
Arthur, what are some non-QM characteristics and their impact on the re-purchase requests that are going on right now?
We have been working with Milliman. They have some proprietary data that they have crunched over the last few months, given the current marketplace. In a comparison between QM and non-QM, there is almost a six times greater default rate. The default rate is what we look at as it relates to our underwriting for insurance products like a non-QM. If it has a six times default rate based upon its characteristics, clearly, that raises the question of scrutiny by the GSEs. Once that occurs, that increases the number of re-purchase requests.
I want to make a comment on something relative to that. Since 2008, systems relative to re-purchases have been far and away more advanced relative to algorithms, flagging and, most importantly, origination processes. We will get into this later and I will comment on it because of the advent of the use of vendors pretty much doing most of the business for these mortgage bankers. It is important to remember that there has been this symmetrical war going on between the vendors, the GSEs and the investors on the same side, analyzing loans for potential risk associated with the purchases.
Has that increased? We all know that when there is a lot less to do with the investors, the first thing they are going to do is look at loans they can put back. That is what they have been doing. There is no question about it. For example, we have a number of lenders that we have insured, and they have come to us. They said, “Can we do retroactive insurance?” I created this, and it has been around, but we have not issued it nor have we underwritten it. We haven’t identified the right pool to do that with for quite some time. We do now in this particular market. We have created a process where we can underwrite the last couple of years of loans and protect those loans against rep and warranty coverage.
Kittle told me about this when we were talking, and that is why he says, “You got to get Arthur on the podcast.” It was the retro part of Kittle that you started talking to me about, Mr. Kittle. David and I are good friends for those of you new to reading the blog. Kittle and Lykken, we always go by the last name because it is David. Look for Mr. Kittle for those that are listening for the first time. Mr. Kittle, you talked about this, and I love to have you expound on what this means to the independent mortgage banker. This is huge, retroactive insurance, re-purchase insurance.
I will tell you what it does. It goes back to the three lending companies I have. It protects my assets and protects all my cash. It takes 1, 2, or 3 re-purchases to cover what you are going to spend on what Arthur can go back for several years of originations, do a cursory underwrite. We will use Evolve to do the underwrite and put a wrap policy on it. You want to talk about peace of mind at night. As another example, a relationship that David sent us, we ensure their flow business. They sent us a tape of 2,000 loans that date back to 2020. We put a wrap on it. It is fairly inexpensive comparatively. We are not going to talk prices here, but it varies. Importantly, we are able to successfully put a wrap on it.
Marc, David Kittle, you, and I have all owned mortgage companies, Marc. To have this peace of mind, what is this going to do for many lenders that are already feeling up against the ropes in many cases?
I knew a couple of lenders now that wish they had it. Arthur, let me ask a question since I don’t understand the basics of the coverage. Is there some type of deductible that works on the loan balance or something like that? It is not 100%. Can you expound on that a little bit?
There is a deductible, a pro loan limit, and an aggregate. Each loan is covered for a particular period of time. I designed this and I have the pen associated with it. My carriers and I have been working together for over 26 years. We have a strong relationship. We have been successful at doing what we do. We can design the coverage for each lender. We can go up to $1.5 million in losses per loan.
There isn’t any loan that we can’t ensure if it meets our requirements. I mean risk requirements and a lot of it has to do with the characteristics of the particular lender. I don’t mean product. I mean characteristics of the culture of the company. As the three of you know, culture is probably the key element when you are taking a look at partnering with them and taking care of their back.
What I mean by that is I said earlier, “I cut my teeth in the law.” I was empathetic to the needs of that mortgage banker, especially as relates to our purchase request. We become specialists on rebuttals, impasses, and management issues. That is the toolbox that also comes with this. It also comes with third-party reviews of the services that were provided that may have triggered that re-purchase request. All of these things are what’s going on in the industry as a whole, and it is all of us working together to limit these losses. They are not draconian for that particular lender.It's all of us working together to limit these losses so they're not so draconian for that particular lender. Click To Tweet
You have an aggregate loss for the company you are working with, much like an E&O has an aggregate loss limit. Let me ask you one other question because I’m trying to get my hand around this solid. When you ensure a loan and has some issues, and re-purchase and request it, a lot about what the net loss on that is what the lender does with that loan, whether they try to do a workout, how they sell it aggressively, how they end up selling the net REO if it gets that far, etc. What safeguards does the insurance company have to put around the fact that they can’t have a lender liquidate the asset, come up with a loss, and say, “This is it,” without making sure that the lender is taking care of the insurance company like the insurance company is taking care of the lender?
Twenty-five years ago, we borrowed a page from the MI companies on how they resolved those same issues and negotiated settlements that have to be approved. We are all part of that process. In many instances, it becomes multi-layered, meaning that the third-party vendor could be a credit bureau or credit reporting service that missed something. That was what triggered it. They are involved in the resolution process.
Think in terms of MI and don’t think in terms of subrogation in the classic sense, meaning we will pay a claim and go after third parties. It means that we are in this together as partners to resolve it together. In some instances, we got very cooperative borrowers, as a matter of fact. If they lied or somehow made a mistake, an undisclosed liability, we are there for them too. In the meantime, we go to scratch and dent, cover the laws, who knows? The borrower might even kick in some loss. You never know. That is how we resolve things.
I came up with your sales byline for the coverage. It is called quotes like your back because you are bringing these years of experience together to have the back of the lender. That is important right now. Especially with these stressful times, we are going through.
In our history, we have insured over $600 billion of loans. We had thousands of claims and resolved them. Most of our business comes from referrals. That should tell you all things.
What Arthur said is that he pays the claim. I did not see one of them, but there have been bits of this out there and competition of this over the years that haven’t. It’s important to know that if it is a claim that is right and just, it is going to be paid. I have a little bit of knowledge about what Arthur does. I’m dangerous with this. Arthur, you may have mentioned it. You are of counsel, and you should mention maybe that aspect of what you do. That possibly has representation right through this. Would you opine on that?
We have a relationship. We have over 250 lawyers in the group and high-level specialists in the area of everything from borrowing fraud to secondary market issues. We have a number of lawsuits and the sprout issue that everybody has somehow been affected by, which is a matter of public knowledge. That toolbox is also part of the process. We also utilize all mortgage services for our specialist’s rebuttal process.
When a loan does come in, maybe we could rebut it. David, this might segue into another question, but there has been a problem for a lot of lenders. They had a lot of talent go. We will get into that. As a result, specialists are important these days. We wrap legal with underwriting with insurance altogether to provide the perfect solution for any size lender. That is the point.
Arthur, you were talking about the impact of layoffs and the reduction of staff, a lot of expertise that, quite honestly, in the good times, we didn’t necessarily need. It has been laid off mistakenly in some cases, but what your solution does is come in and backfills those layoffs and provide that. Expound on that some more.
We are constantly innovating based upon current needs, especially from the insurance, legal, and mortgage banking services environment. One of the things we are missing a lot of days is a lot of good friends who have been working at a lot of wonderful companies who had to go simply because of the reduction in forces that have occurred with many of these companies. We are all witnessing it from both the origination side to the secondary market side as well as the vendor side.
The first go, in many instances, is the salespeople per se, but there are fewer loans to underwrite, and underwriters also serve another purpose in many instances, especially depending upon the size of the company. They are used to rebut re-purchase requests because they have the talent or they may have underwritten that particular loan. Therefore, they have the expertise and background behind it.
The problem is if you let that person go, who stands in the position of saying, “Here are the reasons why we feel this should be rebutted successfully?” Many of these executives are in the C-Suite. Now, the files are dropping off on their desks. They got boxes on either side of their desk. They are behind on the rebuttals. They are pulling their hair out. They are trying to make a dollar at the same time they have to deal with this nonprofit, making a venture.
One of the things that we do, and we have been doing for years because we are partnered with the game, and we are sharing in the risk, is we look to companies. In particular, our partner Evolve Mortgage Services have this expertise. We have insured thousands of loans with them over the course of ten years. To give you guys a background, it took five years for them to even be approved for the insurance. We had to track them for claims for five years. This was back in 2016 to 2017. We have been insuring them ever since because their processes are capable of being underwritten and for insurance.
Simply put, if they make an error, it is insurance. They also are talented at rebuttal. Their rebuttal saves us money from the insurance claims standpoint to be black and white. We like to use them. When you get the insurance, you are also getting the rebuttal services. The insurance therefore applies. You say, “Arthur, we got this re-purchase request.”
I said, “Let’s take a look at it. It looks like there was an underwriting error that is something that we covered if you used Evolve to underwrite it, but if you didn’t, that’s okay too because we want Evolve to rebut it and use their expertise to do so at no cost.” It is already built in. That has been used to the point where it has saved companies. Companies that had a $25 million net worth several months ago. Now, we are at $7 million or $8 million. All it takes is ten repurchases, and you are done. That is one of the solutions that come by request.
The other thing is, many have got in for a reason the margins got tight. They went into the non-QM, which you alluded to earlier. They are not experts on non-QM lending. They laid off the underwriter that underwrote that loan, which goes to the point of having that expertise. I want to go to Marc and get some feedback on this because we have seen this happen over again in different cycles. Comment on this and give us some color on that.
It is unique because sometimes we see it when we get into the first payment defaults. Another thing is servicing on a non-QM loan. We see the problems that were born out of the origination cycle. We see re-purchases and other things come up during that period of time. We are looking at that. It is common for that to happen. It is not always something that happens right up front early on in the loan. It is caught by an underwriter.
The thing that I like about what Arthur is talking about here is that it brings the whole picture to the plate, which is neat. You not only have an ensuring body that is ensuring you and got your back. You have these pinnacles of experience reaching out in all areas that are going to be a multitude of folds better than what you have internal to your mortgage company until the general counsel you have for your mortgage company is on your side and going to be helping you fight those things.
One of the biggest values of the product is having that network of all that support. It is something needed. Especially on the non-QM side, if we start having problems with that and we don’t have something like this, that is going to kill that market like some things got killed in the market here because of the rising interest rates. We will see a dying of the market. Mr. Kittle knows that sometimes it takes a couple of lending cycles for those things to get their feet back on the ground and come back. I like the way this conversation is going. I’m thinking of at least a dozen people I could refer this product to right now who probably need it more than they think they need it.
David Kittle, comment.
The numbers are out there for a second, David, especially the IMBs. The banks will certainly understand it when they start getting re-purchase requests as a whole. I’m not talking derogatorily about anything. Banks have the mortgage division. That is not what they specialize in. When the re-purchases come, they are going to be surprised and not happy about it, whereas, for IMBs, it is their livelihood. To Marc’s point, it is why I wanted to point it out earlier with Arthur, and the fact that he is of counsel with Alfred Kern is the fact that this is not an insurance product. “My car got hit. Would you fix my fender? Thanks.”
It is like the guy that had the auto access calling from as he is looking at his damaged car, and he is going, “Arthur, I want to get insurance from my car. I got T-boned, and I don’t know if it is totaled or not, but would you mind writing an insurance policy?” It is what it sounds like. I’m like, “What the heck?” When David Kittle brought this up, I was going, “Are you serious, retro?”
Here is the question that the readers are asking as I’m thinking about our readers. All of a sudden, everyone is going to start clamoring through your phone to get ahold of you. What is the capacity that you have to ensure? Is there a limit to the number of companies that you can insure? Is there a dollar amount? What are the limitations, Arthur?
We write somewhere in the range of $10 billion to $20 billion annually. It is not something that limits us. I will say this, “It is a somewhat exclusive club too.” This is not E&O insurance. If you can qualify, it is pretty much a one-week turnaround in terms of the approval process.
In as little as one week, you will get approved.
One week, as long as we get all data in place. We have been doing this for many years. It has been like this for quite some time. We have algorithms that are long in place. We run it through our systems. We understand our risks. Our modeling has changed almost daily. We are constantly taking in new information. That is why the non-QM market is important to us. We are careful about whom we want to underwrite and whom we will approve. As we all know, that is a specialized area, which is why it doesn’t exceed 5% to 10% of the overall marketplace. It will probably go higher, but we are going to be careful about whom we select and who our partners are going to be.The nonQM market is important to us simply because we're very careful about who we want to underwrite and who we will approve. Click To Tweet
May I add something to that? It comes to mind that if you haven’t taken care of yourself and your personal culture, you are probably not going to get life insurance at the rate you want it. You may get turned down. It is the same thing. If you haven’t taken care of the company’s integrity and culture, you are probably not going to be accepted into Arthur’s program.
It also goes to the importance of having solid systems. The conversation would be worth having with you, Arthur, to find out if we do qualify and if not, what I need to fix about my company to keep moving forward. The dialogue in itself, whether they can get it and they qualify or not, is it that difficult to qualify for Arthur? You were talking about it like we were talking like this panacea, like everyone can get it. It is not E&O insurance, where everyone has to get it. How difficult is it to get this type of insurance?
It is not that difficult, depending upon your prior history and the bios of your C-Suite, where you are in the industry, your commitment to the borrowers, and your commitment to the secondary market. It’s the smell test that you can always walk in. I have been doing this for a long time. I have not-so-fond memories of the SNL crisis and walking into offices that have leathered tile ceilings and are built like castles. They stopped paying rent on that a long time ago.
Everybody knows when you walk inside a company that has been there and is still there now. You understand how they have been managed and how they have been operating. That is part of it. Granted, we have financial, analytics, and tool set that we use relative to understanding the risk and demographics and so forth. All of that comes into play similarly to the way you get approved for a warehouse bank. At the same time, this is more about a partnership. We have to be there for you.
There has been instances where we have had lenders that we thought we approved. They went ahead and did a scratch and dent without approvals. They tried to find ways to make claims, even though they were the ones who created the fraud. You understand where this is coming from early on in this business. Now, we are very particular. Is it hard? No, it is not that hard. If you stand out as one of those companies that probably won’t be around a year from now, you can tell that.
Mr. Kittle, you use a great analogy there as someone who is getting life insurance. A smoker is going to be paying higher premiums, even if they can get insurance. There are a lot of great metaphors when it comes to the insurance world.
The other side of it is that just because you have behaved and done a good job, done your best with integrity, and trained your loan officer doesn’t mean you are not going to get a re-purchase request. That still doesn’t mean you are not going to get a loan thrown back. You need to take a look at this.
Marc, we both have been in this for a long time. We work with the agencies to get companies approved. We tell people, “You are going to get approved.” If you are doing business and you are doing it in a way that is benefiting the consumer, you are going to get re-purchases. Not that you are going out and pushing the limits irresponsibly, it is a matter of doing the business. Arthur, we have talked a lot about what you are doing now, but there are vendors that are involved in this and different aspects. Would you wrap this interview up by sharing what we have not covered?
This industry is interesting and unique. If you go and buy something at Home Depot, you could simply return it, and they will give you credits for it. In our industry, if you use a service, they have lengthy verification and provisions that limit its liability. There are what I consider cutting-edge companies and vendors out there that are saying, “We are willing to put our money where our mouth is.”
If we make a mistake and you get a re-purchase request, we are going to stand up and cover that net loss because we got an insurance policy in place. We also have a vendor policy. I will use an example. Exactus has this policy. If there is a credit report, you receive the credit report from Exactus, and it turns out there was an error, something that was missed on it. They will cover it simply through insurance. They have stepped up and done it.
Voxtur is another great company. I don’t know if everybody is familiar with Voxtur. One of their primary products is in AOL, which is an Attorney Opinion Letter. They were able to get FHA approval. Fannie and Freddie now use them. They are ubiquitous, and they have a typical title insurance type bond. Because affordable housing is such an important issue now, it reduces significant costs as opposed to title insurance by almost $2,000 to $3,000.
They have transactional coverage, which is the rep and warranty coverage. If the loan is sold and there is a title issue, which eventually is put back because of that, the insurance kicks in as well. All these vendors were stepping up. A lender is wise to take a look at a vendor and ask, “Do they have some rep and warranty coverage?”
Marc, I want to get you as we wrap up this, then go to you, Mr. Kittle. We will get back to you, Arthur.
I have two quick questions for you, Arthur. Number one, I’m assuming the insurance structure for the insurance you have is a typically little bit to Lloyd’s in that you have a lead broker, and underneath that, people are sharing the risk. Is that true? Is it like the lender place coverage and others?
It’s similar in that it is underwritten by a particular insurance company within the umbrella of Lloyd’s. If it does exceed beyond that, yes, the umbrella, but it never would and never could.
The other question I have is that I was on the board of a company that sold. I had never seen this before. They were able to buy a rep and warrant insurance policy on their deal, not on loans. Are you involved with that side of the business?
We do it in a couple of different ways. One is a wrap like you suggested. Yes, we can do that. More importantly, to avoid that 10% holdback on re-purchases on a business that has been sold and there is a trail of liability, we will cover the trail. The answer to that question is yes.
Mr. Kittle, I want to say thank you so much for suggesting we have Arthur on. I have always been a fan of his. I have worked with him. One of the things I recommend, listeners, is that you learn what Arthur created as a result of needs in the marketplace right now. There are other needs out there. What I love is having partners with whom I can talk to that are thinking out of the box. They go, “That is an interesting problem. Let me see if there is no solution to it.”
That is another reason why you want to be in a relationship with Arthur Prieston. He is a guy that thinks outside of the box and is always looking for solutions. You don’t know that you have a problem that Arthur can’t create a product for. David Kittle, you know this about him well. Comment on this, and we will call it an interview.
We are all about the relationships we have made for many years in this business. I certainly care about my relationships and my friendships. People inside the mortgage collaborative, 280 lenders, are vendors inside TMC, but also all those people that I know outside. It is something that I know that they should look at because we have all been through these cycles. We are going to see as much or more re-purchase in this particular environment than we have seen in the last several years. I want my friends to be prepared for it.
They are prepared with a good friendship. Once you have a friendship with Arthur, you are going to enjoy the journey. It is a quality human being who has got things out of the box and is a lot of fun to hang it with. Arthur, thank you so much for being here. How can people reach you and connect with you?
Arthur, it has been a joy to have you on. Through the years of us working together, it has been an honor to have you here, and I encourage our readers to reach out to you. David and Marc, thank you for joining me on the interview here. It is always a delight to have you join on the microphone. Thank you.
- Arthur Prieston – LinkedIn
- Marc Helm
- Angel Oak
- Lloyd’s of London
- Acra Lending
- Evolve Mortgage Services
- [email protected]
About Arthur Prieston
For 40years, Arthur J. Prieston has been a pioneer in the mortgage banking industry in the detection, prevention, and resolution of mortgage fraud and its consequences. He began his career in 1981 as an attorney specializing in mortgage fraud law, recognizing the significant personal and financial damage that could be caused to innocent lenders and consumers by fraudulent parties who often escaped punishment or even prosecution. Driven by these inequities, Mr. Prieston developed over the ensuing years proprietary systems and processes that ensured quality lending practices and protected both borrowers and lenders against fraud and misrepresentation.
American Mortgage Law Group (AMLG), P.C. -Mr. Prieston is the Founder and Owner of the American Mortgage Law Group (AMLG).
Education, Background and Personal Interests:
Mr. Prieston received a B.A. in 1977 from the Long Island University, CumLaude and a J.D. in 1981 from San Francisco School of Law. He has been licensed by the California State Bar since 1981. Mr. Prieston has been married for over 33 years and has two children, Dane, who is awaiting bar results from the State of Arizona and the other, Zach, works as a key executive for PA. Mr. Prieston has had extensive interests and hobbies in winemaking and hospitality in Napa Valley and is a co-owner/investor of a variety of restaurants in the bay area including Perbacco and Barbacco in San Francisco as well Wildfox in Marin County.
Patents by Inventor Arthur Prieston
• Lender Rating System and Method (Patent 8275700)
• Business Structure for Providing a Representation and Warranty Insurance for Mortgage Loans (Patent 20050203779)
• Method for Offering Representation and Warranty Insurance for Mortgage Loans (Patent 7725386)
• Method for Determining Premiums for Representation and Warranty Insurance for Mortgage Loans (Patent 8311912)
• Method and System for Offering Insurance for a Mortgage Pool Using a Risk Assessment (Patent 20100235200)
• Method and System for Offering Insurance for Loans (Patent20100235199)
• Method for Handling Claims Arising Under Representation and Warranty Insurance for Mortgage Loans (Patent 8055518
Mr. Prieston was co-founder and past co-chair of a majority of the industry trade association fraud committees and subcommittees including the Mortgage Bankers Association (MBA) Legal Issues Subcommittee on Fraud, the Mortgage Quality Assurance Council, and the California Mortgage Bankers Association Legal Services Subcommittee on Fraud. Some of his industry affiliations include:
• 1999 CMBA Convention Chairman
• 2005 and 2006: MORPAC Millennium Donor
• MBA MORPAC Committee
• Special Advisor to the OCAWL Fraud Committee
• Member of the MBA Fraud Prosecution Sub-committee
• Member of the MBA “Cost of Fraud” Sub-committee
• 2015: Elected to the Managing Board of The Mortgage Collaborative.
• 2017: Chair of Capital Markets Committee of The Mortgage Collaborative