By now, most lenders can agree that there are countless benefits to integrating their Loan Origination System (LOS) with a technology provider’s software. For one, it eliminates the front-end data entry of having to visit multiple vendor websites and rekeying data they have already entered into the LOS. With a true “lights out” integration, the lender doesn’t have to ever leave the LOS; they can order everything they need within one system, saving valuable time.
In addition, LOS integrations eliminate copying and pasting on the back-end of the process once the order is complete. When the report is delivered back to the lender, not only is the PDF imported to the “manage files” section of the LOS, but key data elements populate important data fields. When done correctly, the LOS automatically populates the legal description and vesting information from the title work, the value of the property from the Automated Valuation Model (AVM), desktop valuation or appraisal, and valuable flood zone and HMDA data from the flood certification. Populating these key data fields saves the lender from copying, pasting or rekeying the information into the LOS. It also mitigates the risk of potential human errors associated with manual data entry; for example, the “w” and “e” keys, located right next to each other on the processors keyboard, could be accidentally keyed incorrectly which would present a problem for legal documents and recordation if “E. MAIN ST.” inadvertently becomes “W. MAIN ST.”
Lenders partnering with a provider that enables a true “lights out” LOS integration surely experience benefits. However, if their provider is not a middleware aggregator, they are still missing out on ways to improve their loan processing. By partnering with an aggregator, lenders can take their LOS integration a step further and distinguish themselves among competition.
In most LOS integrations, a technology provider integrates into a lender’s LOS in order to enable access to their own brand of products and services. An aggregator, on the other hand, provides lenders access to all brands within one platform. Even if a lender wanted to integrate with multiple providers, the process to include all of their vendors could take months to complete. With an aggregator, lenders can go live with hundreds of vendor choices available to them on day one.
Some aggregators even give lenders the ability to add their own vendors that may not be integrated with the aggregator; such as small, local title companies or appraisers. With User Defined Vendor (UDV) technology, the lender selects which vendor they would like to utilize and the aggregator delivers the order to the preferred vendor. Local vendors looking to access an aggregator’s system on the back-end can easily upload their documents to the system with data elements and the PDF so that the aggregator can convert the forms to XML and deliver them back into the LOS. UDV technology enables lenders to add their preferred companies into their LOS in days as opposed to months.
Another important tool that lenders should look for when choosing an aggregator is escalation intelligence. This type of technology programs the systems to automatically know what the lender wants to do next if orders receive a “no hit” or if the underwriting guidelines dictate that a more robust type of product needs to be ordered. For example, if a lender orders an instant property valuation and there is not enough information on the property for the system to return an AVM, the system will automatically order a desktop valuation, drive-by appraisal or full appraisal, depending on the underwriting guidelines, risk tolerance and cost savings objectives of the lender. The same technology can be applied to instant title searches, full property reports and title insurance products.
Finally, an aggregator has the ability to mimic the lender’s underwriting guidelines to provide additional efficiency and “automated decisioning” technology. They provide configurations that intelligently know what products to order based on credit scores, loan amounts, LTV and other underwriting criteria, then auto-order the appropriate products and services that are required for that specific loan. This type of technology eliminates the need for the processors to determine what to order and when to order it, thereby reducing the risk of human error.
LOS integrations with middleware aggregators result in reduced processing and closing times for lenders. The aggregator delivers faster integrations with more vendors, manages vendor turnaround time on behalf of the lender and even calculates Loan to Value (LTV) and Combined Loan to Value (CLTV) to automatically populate on the lender’s system. While general LOS integrations are beneficial, it is clear that the most competitive lenders use middleware aggregators to take their integrations to the next level.
About The Author
Tedd Smith is chief executive officer of Austin, Texas-based FirstClose, provider of end-to-end technology solutions to mortgage lenders nationwide. The FirstClose reporting suite is the first, comprehensive solution with capabilities to deliver title, flood, valuation and other important data elements in one report. For more information, visit www.firstclose.com.