Magazine Feature: The Audacity Of Change

*The Audacity Of Change*
**By Claire Hernandez**

big-claire***As the mortgage industry and economy begin to recover, lenders are increasingly reevaluating their technology options. According to a QuestSoft survey of 461 lenders nationwide, 18.7 percent of mortgage lenders are considering changing their LOS in the next 12 months. This is the highest percentage looking to switch in the six years QuestSoft has been conducting its annual survey.

****Change is not always a bad thing if it is handled well. Making the transition from a system users are comfortable with to a new system is not an easy process. The keyword here is “process.” The process involved in rolling out a new LOS involves many tasks, communication, decision-making and most important leadership. Whenever you engage in any activity where a certain outcome is expected, a degree of planning must take place and someone has to take the lead in determining what is needed to achieve the outcome. The first step to take when planning a new LOS rollout is to assign a Project Manager. The second step is to appoint a key representative from every department representing the loan process and form a team to assist the Project Manager in planning, organizing, tracking and steering the transition to the new LOS.

****Many mortgage companies don’t fully realize the role of the project manager. The expectation is that they can outsource the entire project and the project manager will implement the new LOS system without disrupting or involving staff resources. I often hear: “We are really busy right now and need someone to get the new system up and running.” Rolling out a new LOS requires the company’s owners and its upper management spending time up front building a plan with the Project Manager, defining timeline, business requirements, key resources available and setting controls. From originations to shipping, assigning key resources within the organization will help build the plan to deliver a new system that best fits the business needs. The Project Manager is responsible for delivering the new LOS by tracking, monitoring tasks and ensuring communication of progress or setbacks.

****The task of the leader is to get his people from where they are to where they have not been, said Henry Kissinger.

****The leader in a new LOS implementation project starts with the company’s owners. If all owners do not buy into implementing the new system 100% and proceed with rollout, conflict during the project will arise. Think about it, what user is ready and willing to start using a new system that will entail re-training? I have not met one yet, except for new hires during the implementation phase. New hires are great since they are just happy to be on-board at a new company and pose no resistance to change. When resistance arises among users, the Project Manager needs the support of the company owners to re-emphasize that there is no going back, we must work together to move forward.

****In all my first meetings with a mortgage company’s upper management, the very first question I ask is: “Are you all on-board with implementing the new system and do you have key people I can count on to help bring about the change?” I do not hide the amount of work or time involved and I stress the need for upper management to be involved. I have never had a response of “no we are not on board.” Most are eager to start and want the system deployed yesterday. Sound familiar?

****One clear example of a project gone wrong was one where one of two partners was not fully on-board. He was not comfortable replacing the system he knew despite knowing the system he was working with was not a good fit for growth. I knew this going in but he said he would support efforts to rollout the new LOS. My intuition told me to not to proceed with the project without 100 % buy-in from both partners and I learned I was the company’s second Project Manager. Nonetheless, I pushed forward and worked with key staff members assigned to the project. We hit many walls on discussions concerning business rules and compliance. However, we worked together and got to the point of testing.

****This is where the project fell apart. We were testing wholesale loans, the program had unforeseen limitations, I needed consensus on workarounds and the resources assigned to run test loans were backed up with work and wanted to go live with new system without my direction or testing. I was forced to fire out a memo to owners calling for controls and in the end the project had to be put on hold. Both partners opted to stay in the old system until production slowed down. Their decision was a huge disappointment. However, it would have been a losing situation to rollout a system not ready to go live. More work was needed and time was not an available resource.

****Users need to know from the leaders of their company that the new system will be implemented within an expected time frame and that their cooperation and participation is expected and required. Any roadblock or setbacks must be worked out and not used as an excuse to halt the project. If users do not see a consensus among the company’s leaders in rolling out the new LOS, they will resist the change and seek support from the company leader not on-board with implementation. When employees resist, owners must step in and enforce cooperation. This project’s outcome may have been different if the owners would have assigned more users for testing and pushed forward. Instead, roadblocks got in the way and the path of least resistance was chosen. If the project had had 100% buy-in, we would have worked through the bottleneck at the testing stage.

****Communication is key to rolling out a new LOS. The example above provides you an illustration of how a breakdown in leadership and the lack of communicating commitment to staff caused the project’s demise. No matter how good the Project Manager is, that role alone cannot make the change happen. I have had many successful rollouts of new LOS systems at mortgage companies, as well. One company stands out above all. All five partners bought into the project 100% and made sure their staff knew it.

****Do you all recall January 2010? Anyone in the mortgage industry knows the date well. Initial Disclosures now had timelines and there were new regulations enforcing compliance. The definition of what was considered an application and when to disclose was the hot topic in management meetings, at this one company, four months prior to January. The company’s owners had long considered switching to a new LOS, which would help streamline their business, but never found the time to put their thoughts into action. All five owners agreed that if there business was going to continue, they had to adopt a system which would help them monitor loans, generate accurate reports, interface with investors and major service providers, go paperless and maintain compliance. When the new system was selected clear timelines were set for planning requirements, setup, testing and training. The staff’s full cooperation was expected.

****In this case, all the managers were made aware of the deadline set and made the time available for meetings. If they were not available, they would send a second in command. Every department from Opening to Shipping provided input pertaining to business requirements. Going paperless led to some revolt in the group, in particular processing and post closing were not too happy with the way trailing docs were tracked in the new system, but we all knew our timeline of January 2, 2010 and no one pushed for delays. In four months’ time, the new system was configured, tested, users trained by managers and the company went live. The timeline set for this project was realistic, the owners communicated goals and required all staff’s cooperation, resources were managed and best of all testing was a communicated priority for everyone involved from receptionist to shipper.

****In order for a project manager to be effective, they need the support of upper management, full resources and access to critical employees/managers. Together the lender and a good project manager can configure a system to automate their business flow. A good process should start with all of the critical stakeholders working with the project manager. The project team needs to set controls on changes during implementation. The Project Manager needs to make sure that someone follows up with something that may or may not be working right. Employees can’t say that they don’t have time to work with the project manager or to learn the system after implementation. Further, once the system is implemented, there needs to be an evaluation period where an assessment is made as to whether or not there is a need to change the current course of action or whether or not to continue moving forward.

****You are always going to encounter some resistance. People will constantly say, “I do it a different way.” Remember, the point of implementing a new system is to streamline how you do it normally. Every bit of resistance has to be addressed and overcome. How does that happen? When everyone knows that they can’t stop the implementation and go back.

****The biggest opportunities for lenders to ensure success and growth moving forward are to make the time to plan for change. Don’t be tempted by outsourced service providers promising packaged solutions with quick turn times. Take the time to document, communicate, configure and formalize good practices so that your business stays in compliance and continues to grow.

****Change sometimes takes audacity. What do I mean by that? Audacity is defined by Webster as “intrepid boldness.” In order to change a process that has literally been in place for years and years, you have to be bold. With all the regulatory changes in particular, only the courageous lenders that have the boldness and audacity to change will survive and thrive.