According to the MBA lenders saw a net gain of $224 on each loan they originated in the first quarter of this year – down from $575 in the fourth quarter of last year. The drop was due mainly to higher per-loan production expenses. These expenses – which include commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to a study high of $8,887 per loan in the first quarter, which is up from $7,562 in the fourth quarter. So, how do lenders streamline their origination process so it’s faster and less costly without giving up quality? Wayland Pond and Kelli Himebaugh of VirPack have some ideas. Here’s how they see the current mortgage market:
Q: Describe how you first got involved in the mortgage industry.
WAYLAND POND: My best friend from high school recruited me to VirPack when it was a startup. I remember interviewing with Michael Coar, VirPack’s founder and CEO, and I was struck by his passion for mortgage technology and his mission for VirPack to provide the mortgage industry with a platform for the paperless management of loan documents from origination through post closing, including fully indexed electronic loan delivery to investors and business partners. 17 years later, and I’m proud to say we have achieved that mission and our passion is stronger than ever.
KELLI HIMEBAUGH: Similar to Wayland, in 2003 I was recruited to a sales role in the mortgage industry by a personal friend that worked for a midwestern bank with a national home equity lending program. In 2007 when the market and economy started to collapse, I was fortunate to meet the owner of a small LOS technology company that was hiring for their first sales role. In 2008, I transitioned to a different LOS company that I represented in different roles until 2016 when I joined VirPack. I met Wayland and the VirPack management team in 2010 while exploring a vendor partnership, and I was extremely impressed with VirPack’s technology and the positive impact that electronic document management would make in our industry. When the offer came last year, I didn’t hesitate to accept the opportunity to join the VirPack team.
Q: How has the industry changed since you first entered the space?
WAYLAND POND: There have been numerous changes over the last 17 years, but technology innovation and adoption are at the top of the list. When VirPack was founded, the Internet was a shadow of what it is today. VirPack’s first product was a desktop application that scanned loan documents, automatically indexed the documents (via barcode recognition) and stored the indexed loan files in our imaging system. A short time later, we pioneered electronic loan delivery with the release of the first version of our delivery application that provided lenders with the means to exchange data, documents and images with their investors and business partners. Fast forward to today, and the industry thrives on web-based, software-as-a-service (SaaS) applications such as VirPack’s Document Management and Delivery System (DMDS).
KELLI HIMEBAUGH: In the last 3-5 years the bar has been raised for technology automation expectations, a primary example is integrations. Today, lenders have higher expectations for integrations that both reduce human interaction and are triggered by a status or milestone change in the loan process. VirPack has responded to these higher expectations with integrations like our partnership with DocuSign. VirPack’s Document Management and Delivery System (DMDS) automatically imports and indexes eSigned documents into the borrower’s loan file as soon as the eSignature experience is completed, eliminating the process of manually importing these signed digital documents and filing them.
Q: What can you say hasn’t changed during the years that VirPack has been in the space?
WAYLAND POND: Despite technology innovation, the industry continues to struggle with reducing the cost to originate and service loans, and eliminating the manual processes associated with collecting, indexing and managing loan documents. The number of pages in the average loan file has soared in recent years. According to VirPack’s Mortgage Origination Loan File Statistics Report, more than half of all residential loan files now exceed 500 pages and 43% of all conventional loan files contain between 600 and 900 pages. Lenders need to deploy technology that will reduce costs and improve operational efficiency.
KELLI HIMEBAUGH: To provide an example regarding the struggle to contain and reduce origination costs, VirPack recently partnered with an independent mortgage banker that had been utilizing a different imaging solution for more than 9 years. The owner of the company shared in the very first sales call that the next stages in the successful growth of their business were dependent on a new solution to gain efficiency to deal with increasing loan file sizes, along with the need to automate the document workflow and improve the borrower experience. This requirement was key in their strategy to grow volume and profitability by mitigating costs, primarily the need to not hire more operational staff. VirPack’s DMDS definitely checked all of the boxes for their paperless needs, and our workflow and tasking functionality provided the answer for their cost containment requirements. Our rule-based workflow features provided the automation requirements they had been looking for.
Q: What has VirPack learned from talking to lenders in the last year?
WAYLAND POND: Two things are consistent with our lender conversations over the last year. First, production costs continue to rise and lenders are not achieving the operational efficiency gains and ROI expected from the document management tool provided by their LOS. More often than not, it is private-labeled or bolted-on and the lender’s requirements and expectations are not being met. Second, many lenders prefer to leverage software solutions from vendor partners that are subject-matter experts and have a mission and culture that aligns with theirs. They recognize that through these partnerships they can close the gaps in their mortgage operations and workflow and avoid the disruption that comes with converting to a new costly, enterprise LOS.
KELLI HIMEBAUGH: Also, there’s no denying the digital mortgage race and its appeal to the millennial generation and tech-savvy consumers, but we’ve learned it’s not an all-or-nothing/one size fits all approach. Not all lenders are ready to fully embrace the digital mortgage and sacrifice the relationship-driven mortgage origination experience that is tried and true. Lenders are confident they can find a balance between the traditional approach and utilizing technology that will provide innovative communications in real time, workflow automation and improve collaboration between borrowers, production, and operations teams.
WAYLAND POND: VirPack’s journey with mortgage lenders over the last two decades supports this balance with the latest features in document management and workflow solutions, along with our portals designed for borrowers and third party originators that provide the real time data and document updates to improve the borrower/lender experience.
Q: Can you tell us more about the Rapid Deployment program that VirPack launched in 2017?
WAYLAND POND: Traditional document management technology implementations are often costly and time consuming, and I’m pleased to share that our rapid deployment program has streamlined DMDS implementations and our customers are up and running within weeks. We’ve accomplished this by harnessing best practices from lender deployments across the country and eliminating duplicate and labor intensive activities. By leveraging preconfigured document management software, lenders can quickly automate business processes throughout every step of the mortgage lending process while supporting retail, wholesale and correspondent lending operations.
KELLI HIMEBAUGH: And, because lenders are not starting with a blank canvas, they can readily turn their focus to leveraging additional capabilities and advanced functionality that further optimize their operations including — automated document recognition and indexing using optical character recognition (OCR), rule-based workflow and tasking, customizable web portals for third party originators and borrowers and deeper integrations with other technology partners.
Q: What are the required capabilities that a lender should put on its document management technology evaluation?
WAYLAND POND: Lenders should pass on a technology provider that does not have a) document management capabilities that include OCR to automate the identification and indexing of documents, and b) integrated one-click delivery of loan files and data electronically to investors, HUD for FHA insuring, servicers, subservicers, QC firms and MI companies. For maximum functionality and efficiency, a vendor’s document management offering needs to have strong integration features, such as gateways to external data sources and web service APIs to exchange documents and data. These capabilities are essential to enable document management to be an integral part of a broader, cohesive loan processing and management solution.
KELLI HIMEBAUGH: Enterprise solutions like the LOS provide high value if their ancillary solution components are enterprise compatible and tightly integrated. LOS providers today are not focused on document management enhancements, but instead are focused to develop and implement all the regulatory changes required in their technology to mitigate risk for lenders, and rightfully so. And, if their offering is a series of bolt-on technologies that are subject to secondary, delayed support services and are not designed to adapt to atypical scenarios, then lenders can lose thousands of dollars each year in what is perceived to be an included or “free” feature of their enterprise platform. Lenders have to consider technology like VirPack that solely focuses on its core competency and what it does best — developing and delivering innovative, feature-rich document management and delivery solutions that incorporate best practices and years of experience.
Wayland Pond is senior vice president of sales and marketing at VirPack, where he has spent his entire 17 year mortgage technology career promoting the benefits of document management and delivery technology and collaborating with lenders, investors and technology providers to improve operational efficiency. Wayland was instrumental in pioneering the mortgage industry’s first electronic delivery of a loan package that included data, documents and images. In his role at VirPack, a leading provider of document management, imaging and delivery technology to the mortgage banking and financial services industry, he oversees the sales and marketing team and partners closely with the product management team to ensure customer and lender feedback is incorporated into the company’s technology solutions. Wayland also serves on the Board of Directors at VirPack.
Wayland Pond thinks:
1.) Lenders will continue to be cautious about compliance therefore page counts in files will continue to increase.
2.) More LOS and other industry technology providers will offer APIs to support their clients’ desire to integrate with best-of-breed technology providers.
3.) More investors are going to require electronic loan delivery and will not provide best pricing if delivered another way.
Kelli Himebaugh is the National Account Executive with VirPack, a leading provider of document management and delivery technology to the mortgage banking and financial services industries based in McLean, VA. Kelli is a proven sales leader who brings more than 20 years of housing finance experience and 10 years of experience in mortgage technology to VirPack. Prior to joining VirPack in 2016, she served as vice president of customer experience with Altisource Origination Solutions. In this role, she was responsible for managing client relations and operations support across four business units. Prior to her work at Altisource, Ms. Himebaugh spent 8 years with Mortgage Builder, a loan origination solutions provider, where she served as corporate vice president overseeing business operations, client services and sales. She is also a member of the Executive Team at PROGRESS in Lending Association and was named in “the 50 Elite Women in Mortgage” by Mortgage Professional America magazine.
Kelli Himebaugh thinks:
1.) Home affordability and mortgage qualification will worsen due to rate increases and slow income growth.
2.) More non-bank owned investors will enter the secondary mortgage lending market.
3.) Rental home rates will continue to rise faster than incomes due to lack of inventory.