How Do Lenders Really Feel About Their LOS?

Many lenders see their loan origination system or LOS as a necessary evil. They know they have to have one, but they are seldom entirely happy with their LOS. In the early days of paperless processing I even spoke to lenders that wanted to do things like electronic disclosures or adopt a more automated workflow, but couldn’t because their LOS was not ready. And at that time some of those lenders didn’t even want to be quoted by name in my story for fear of insulting their LOS vendor. Today the active LOS players have evolved, but we still don’t often hear them labelled as being “innovative” or “progressive” by lenders. So, does this mean lenders today are eager to switch their LOS as a result? A new study from QuestSoft posed this question to the industry today and here’s what they found:

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According to QuestSoft’s 10th annual survey, 15.8 percent of lenders report that they are considering changing their LOS in 2016. This represents a decrease of 21 percent from the 2015 survey results and marks the lowest percentage of lenders seeking an LOS change since the survey began. QuestSoft, a provider of automated mortgage compliance software, has annually tracked the number of lenders pursuing an LOS change (as well as a number of other critical bellwethers of the mortgage industry) since 2007 when the mortgage industry was vastly different than today.

“As we’ve seen over the past few years, ongoing regulatory changes in the mortgage market continue to play a key role in lenders’ decisions regarding their LOS,” said Leonard Ryan, president and founder of QuestSoft. “With lenders still recovering from TRID and preparing for the new HMDA changes in 2018, many are actively assessing their current LOS to ensure that the system will adequately handle the newest changes rather than looking to implement a whole new system.”

While QuestSoft does not disclose which LOS companies are currently being used or evaluated, information from the survey points to the idea that traditional top vendors are less dominant in the survey results. According to Ryan, this can mean one or a combination of two things – either people have already made their changes and are satisfied, or other vendors have improved their products.

QuestSoft integrates with more than 40 leading LOS platforms to provide banks, credit unions and mortgage companies with automated software to help satisfy Home Mortgage Disclosure Act (HMDA), Community Reinvestment Act (CRA), Ability-to-Repay/Qualified Mortgage (ATR/QM), Fair Lending, NMLS Call Reporting, and other automated compliance needs.

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