Will Not Implement
We had an issue where a client continued to receive daily Rate Tracker emails even after having their loan locked. This created a situation where we face a 6 month period risk of recapture, which places significant unnecessary exposure on Watermark. This is a serious issue and needs to be addressed.
In 2014 Casey receives ID *LC-RLCTTJX* email address *email@example.com Casey sets the prospect up with an active Rate
Tracker that emails rates to the client for up to 1 year. Casey does not lock the loan, and has no further contact with the borrower.
In 2015 Regan Hagestad receives tracking ID *1426180179830*,borrower name *Wei-Lee Hu*, and email address *firstname.lastname@example.org*. Regan requests a rate lock for this prospect and the lock desk completes the lock request which sets the prospect status to *Locked*.
Regan’s locked loan eventually funds, but Casey’s Rate Tracker emails were never shut off by the system, and continue to be delivered. Rates dip prompting the borrower to call Casey. If Casey (of any loan officer from any company) closes a new loan that replaces the loan Regan funded within a period of 6 months, Watermark will be held responsible for Early Payoff penelties which include SRPs and over par profit in the tens of thousands of dollars*. If this happens once it is a significant loss. If this happens multiple times it could put us out of business. This is why this is a significant issue and needs to be immediately looked
Cld David to gather more information about this 6 month recapture period he is speaking of. L/m requesting call back.
David and I spoke. He explained he has an agreement with his investors that if a loan they financed gets refinanced within 6 months of close the investor can request all funds back that Watermark made. They have done this in the past and it has cost them thousands. I requested documentation or details of the agreement to better a case for change. He and Julia emailed to exchange NDA forms. Executed forms have been exchanged and now waiting on the supporting docs.
Thank you for your patience and your time.
I have attached Watermark’s contract with US Bank, which contains a section regarding recaptures. The section begins on page 7 of the contract, or page 9 of the PDF, with the header 10. Refund of Service Release Premiums. I believe this clause to be almost universal among all lenders we have contracts with, although some lenders leverage additional penalties past the standard 6 months / 180 days. Of our current lender pool of over 25 lenders, only one lender, SunTrust, has a recapture period shorter than 180 days.
I have also attached three sample recapture bills to give you an idea of how much each recapture hurts the bottom line. Recaptures are something we are constantly trying to avoid, so this relates to my initial request to discontinue rate tracker and email campaigns for every prospect in the company that shares the email address as soon as any user account in the company sets a prospect status to locked. It is the belief of Watermark that in the initial situation submitted where Regan locked a client that Casey continued to market rates to, that the client would likely not have been as aware of the rate dip, and would have been less likely to pursue a refinance that would lead to a recapture penalty for Watermark.
The main concern here is to avoid recapture, and the suggested fix is to stop marketing a client when a rate is locked in. If Mortech has a better solution than the one I suggested, then by all means go with that. I know there are always a variety of scenarios that would need to be considered, such as what if you have two separate loan officers working on two separate properties for the same client, so finer details may need to be worked out. That situation would be very unlikely to happen at my company, however, that might not be true for all companies, so it would be something to consider prior to releasing a system change for all users. Perhaps this could be addressed by adding this in as an optional feature, that defaults to off, requiring account administrators to opt-in at the companywide level?
As you and your team look into this issue, I am happy to make myself available for comments, questions, or additional information, as would other Watermark staff. We take recaptures very seriously, and would greatly appreciate any features Mortech could provide to help us avoid them.
PH Meeting Takeways:
-Issue could be avoided from the beginning if duplicate prospects (verified by email address) were dealt with in a better way once they enter our system.
-Need to find a better way to flag or handle duplicate prospects
-Curious as to how frequently we will see this same situation or how often this will come up.