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Market Analysis: A Gift For Servicers

*Tackling The Single Point Of Contact Rule*
**By Tony Garritano**

***Servicers are plagued with, among other things, dealing with the new single point of contact rule. The good news for servicers, and mortgage professionals in general, is that vendors always catch on to provide solutions. In this case a lot of vendors have sought to solve this issue. For example, eMASON, Inc., developer of the Clarifirebusiness process automation software for the financial servicers industry, has unveiled the Clarifire Community. The new Clarifire feature, it says, enables the nation’s largest servicers to drive compliance with Department of the Treasury regulations, while delivering a solution to borrowers—and all others involved in mortgage servicing—that provides real-time access to borrower delinquency management processes. Clarifire Community is the portal through which borrowers, servicers, investors, title agents, realtors, regulators and other mortgage industry players can come together in one platform to synchronize activities relating to mortgage loans.

****Recently the Treasury Department has required lenders and mortgage servicers to provide a “single point of contact” for borrowers who need help understanding the array of loss mitigation options available to them. Moreover, those servicers are now required to maintain detailed records (with audit trails) of their interactions with borrowers. eMASON’s Clarifire Community meets both directives in a single point of access in a secure private cloud environment.

****With Clarifire Community, borrowers access their single point of contact with just one click. Banks and servicers often have over a dozen customer points of entry. With Clarifire Community, this is consolidated into one solution. A live chat feature, Clarifier Concierge, expedites the flow of information borrowers need. Clarifire automates the business processes that touch the mortgage loan, each to servicer specifications, while providing an action or contact trail that is both accountable and auditable. The various workflows and user interactions involved in delinquency management now happen in one place, in a secure, easy to use, intuitive platform.

****In addition to its auditable single point of contact features, Clarifire Community generates documents, such as borrower final workout agreements, and delivers them through a secure Internet connection. Messages are delivered instantly to borrowers, telling them that the documents are ready in the communication method of their choice…email or text.

****“Clarifire Community lets servicers deal accurately and efficiently with the volume of work they see today and are likely to continue to see in the future,” said Jane Mason, founder and CEO of eMASON. “The technology also gives borrowers a voice by letting them be informed participants in the process, which is what our regulators want to see. Technology is the heart of the solution.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Default Management: Innovation At Work: REO Fixes

*Localization: Key to Better REO Outcomes*
**By Joseph Badalamenti**

***Elevated numbers of foreclosed properties are placing lenders under significant pressure to reduce ballooning REO inventories, while minimizing portfolio losses. In these extreme market conditions, it has become increasingly difficult to sustain property-specific marketing strategies. Time constraints and sheer numbers tend to reduce the focus on individual properties in favor of volume-driven approaches. Ironically, the resulting one-size-fits-all solutions have often had the opposite of their desired effect, leading to longer disposition cycles and lower selling prices.

****Strength Where it Matters

****To improve results, stronger field execution is paramount. Servicers need to look for an REO asset manager with a nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties. This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

****A nationwide network that includes both brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient, effective approach for each asset in the lender’s REO inventory.

****End-to-End Control

****Servicers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

****>> Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

****>> Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process –  is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

****>> Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

****>> Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turnkey auction management or assigning a broker, as appropriate.

****>> Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most important, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

****>> Closing Services – Well-qualified REO  asset management organizations can provide the people and expertise to  coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information ? all in strict accordance with client, legal and regulatory requirements. Title procurement, HUD-1 review and approval, escrow/closing coordination ? these capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Joseph Badalamenti (Joe Bada) got his start in the default management industry in 1967 as a HUD contractor. Now, 43 years and over 5 million inspections later, Joe has built Five Brothers into a highly successful and respected industry leader offering a full range of default management services and technology solutions. His strong belief in client-centered partnering has spawned a nationwide network of highly effective customer and field service professionals. Advanced technology solutions created under his leadership the industry’s first web-based workflow management system, FiveOnline, a complete document management and processing system (MARS), state-of-the-art loss mitigation software (MOTZ), which allows quick and efficient loan modifications according to FDIC and HAMP guidelines, automated document storage/workflow management software (IntelliStorage) and HUD claims processing system (ClaimSys). Joe remains an advocate of client-specific business solutions, an approach he believes is Five Brothers’ most important competitive advantage.

Market Analysis: Give Back

*Let’s Lend A Hand*
**By Tony Garritano**

***My great friend Roger Gudobba lives to golf. In fact, most people in the mortgage space love to golf. I always say that once they add a miniature golf component to mortgage outings, I’m in, but until that happens my skills when it comes to real golfing are lacking. My friends will attest to this fact. So, why am I talking about golf today? I just got an announcement about a company that has combined golf with charity, and those of you that read this column regularly know, I love to talk about companies giving back. In this case The Carrington Charitable Foundation (CCF) announced today that its Inaugural Golf Classic was a tremendous success, raising $350,000 to benefit the Veterans Airlift Command. Funds raised through this event will support the administrative functions required to coordinate the efforts of the VAC volunteer pilot network, which includes arranging free air transportation for Veterans of Iraqi Freedom and Enduring Freedom (Afghanistan) for medical and other compassionate purposes.

****The VAC aids wounded warriors dealing with devastating injuries and long-term hospitalization in facilities that may be hundreds of miles away from their families by providing free air transportation, donated by a national network of private aircraft owners, for the Veterans and their families.

****“This event was truly a milestone for the VAC,” said Walt Fricke, Founder/AirBoss of the Veterans Airlift Command. “The partnership with the Carrington Charitable Foundation brought a whole new group of friends together, allowing them to see and hear first-hand how extraordinarily difficult routine air transportation can be for wounded warriors, and what a wonderful experience these veterans and their families have when they are instead transported in private aircraft. Without the financial support like that of the sponsors and attendees of this event, the Veterans Airlift Command could not exist.”

****Carrington Holding Co., through its subsidiary Peregrine Jet, has been donating flights to the VAC for the past four years, contributing flight services, fuel, insurance and crew. Eager to further support the VAC in its mission to connect veterans and their families, the Carrington Charitable Foundation chose to hold its Inaugural Golf Classic to raise funds for the organization. Over 97% of total in-kind donations and funds raised by the VAC throughout the year go directly to the cause – only 2.66% are used for administrative purposes.

****“This event was a life changing experience for our employees and guests who had the opportunity to hear the stories of our injured veterans and interact with them throughout the weekend,” said Bruce Rose, CEO and Founder of Carrington Holding Company. “We believe very strongly in the Veterans Airlift Command and the work they do to unite troops with their families, and are pleased that our golf tournament could raise awareness for the VAC mission and provide funds to further the crucial work they are doing for our wounded warriors.”

****Over 100 companies and individuals participated as event sponsors.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Acquisition News

*A New Title And Data Quality Acquisition Deal Inked*
**By Tony Garritano**

***I sound like a broken record when I say now is the time to innovate, but it really is. Now is the time to take a new approach to an old method or strategy. To this end PROGRESS in Lending has learned of a creative acquisition that pledges to revamp the title sector. Charles Sanders, the founder of Urban Lending Solutions, a provider of residential and commercial mortgage products and services, has teamed up with settlement services industry veteran Michael Forgas, formerly CEO of National Real Estate Information Services (NREIS), to acquire RealtyData, a provider of title search productivity solutions. Sanders will serve as President and will hold a majority interest in the company and Forgas will serve as chief executive officer. Here’s the new company’s value proposition:

****“The technology that RealtyData has developed is very exciting and will change the way the title industry operates,” Sanders said. “That made the company a good investment at this time. I’ve known Mike for many years and look forward to working with him.”

****RealtyData technology allows title companies to automate title searches in 900 counties across the nation. In addition, a quality control engine can perform automated quality control on the resulting title commitments, reducing title agent expenses significantly.

****“The title industry has been slow to adapt to technological change, but economic pressure is forcing title agents to seek out tools that will allow them to provide their services more efficiently,” Forgas said. “Our technology allows title agents to not only be more efficient but also improve quality and at favorable prices. We must not forget about quality, especially in this time of significantly increased regulatory oversight.”

****Sanders said he and Forgas will first focus on penetrating deeper into RealtyData’s existing client base, moving good customers beyond simple searches and into the company’s quality control solution. For more information about the company, visit the website at http://www.realtydata.com/.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Rethinking Originations: Changing Dynamics

*Changing Dynamics*
**By Mark Phlieger**

***As the market has shifted, so has the face of the average lender. What’s changing? We’re seeing the rise of the community bank or credit union owned mortgage banker. Depositories are king. These institutions are buying independent lenders and starting robust mortgage departments.

****What happens after the sale of that independent lender closes? They need technology. There’s a lot of interest in loan origination systems today. The deals are coming in left, right and center. We are seeing a surge of companies looking for a Web-based LOS. In the cases of these community banks and credit unions picking up independent bankers and coming into mortgage, they’re looking to the Web as well. Here’s why:

****They want to be up and running quick. They are looking at low barriers to entry. They want rapid implementation. They want to avoid a large capital expenditure. They are steering clear of all the old school technology. They want a turnkey solution that the provider will run.

****All of this leads to cloud computing and placing the entire mortgage office on the cloud. What’s great about this new market dynamic? The depositories now own the mortgage companies and these depositories don’t have legacy technology. They aren’t stuck doing things the same old way because they’re used to doing things that way. They want to innovate. They want to be efficient and nimble.

****This is very different as compared to how things used to be. We used to see lenders look to upgrade from client server technology to Web-based technology. We saw evolutionary change. However, we’re seeing those guys get acquired by a community bank or credit union and then bring in a whole new system. Now we’re seeing revolutionary change and an opportunity to leapfrog these new lending institutions into this century with the latest technology.

****Another important factor to note in this changing dynamic is when you talk Software as a Service and cloud, you as the vendor can drop code into the LOS quickly to meet changing regulatory requirements, which keeps the lender compliant. We at Avista had an LQI solution in place in late September because of the agility that Web technology affords. That’s just on of the huge benefits of moving toward the Web. I think it’s also important to differentiate between Web-based and Web-enabled technology as we have this discussion. If it’s truly Web-based you could do the demo with the vendor from your computer’s web browser and if you can’t it’s because the technology is just Web-enabled and requires client downloads or client installed software to run. This Web-based model better supports the lender in this new world. Core technology has moved to become on-demand vs. installed technology. Don’t be fooled, join the new mortgage lending dynamic.

A longtime leader and technologist for the mortgage lending industry, Mark Phlieger is president and CEO of Avista Solutions, the Charleston, South Carolina- based creator of innovative all-channel, Web-based loan origination systems. Co-founding the company in 2001, Mark has led Avista since its inception and has an impressive record of achievement in pioneering and development in the mortgage technology space. Mark was a team member on the Fannie Mae project that developed the groundbreaking technologies of Desktop Underwriter and Desktop Originator and later became responsible for their implementation and adoption as the industry standard among Fannie Mae lenders. He went on to create Resource Bancshares Mortgage Group’s core Web-based e-business platform, e-RBMG.

Market Analysis: A Bright Idea For Servicers

*A Bright Idea For Servicers*
**By Tony Garritano**

***Yesterday I talked about how e-collaboration can benefit servicers. Today, I want to stay on the servicing topic because it’s a huge issue for our industry. Servicers need help. So, when I hear about new innovation happening in the area of servicing, I’m going to bring you that news. PROGRESS in Lending has learned that Wingspan Portfolio Advisors, a special servicer based in the Dallas area, is preparing to launch a new affiliate company, Wingspan Information Technology, LLC, aimed at helping mortgage servicers adapt to new requirements more easily. Here’s the scoop:

****The company makes available the same capabilities that have enabled Wingspan to provide single point of contact (SPOC) access for borrowers since its inception, and brings benefits of its centralized database approach that would otherwise require significant costs for servicers and lenders to achieve. E.J. Kite, Wingspan’s senior vice president of information management, describes the technology as a breakthrough for mid-market servicers and portfolio lenders who are deeply concerned about complying with new regulations. The old way of organizing information among different internal systems and trying to make them work together often creates more problems than it solves, he feels. Wingspan Information Technologies is offering a “single source of truth” approach to information, providing much greater efficiency and real-time transparency for investors and other stakeholders.

****“When everything is in one place, it is far easier to access data and manage it,” Kite explains. “When companies use a centralized approach, everyone stays on the same page, and that includes the borrower interface teams, making single point of contact an integral part of the servicing process.”

****Kite has more than 26 years of experience in mortgage technology, including over two decades at Freddie Mac. Prior to Wingspan, he spent three years at Fannie Mae as Management Information Systems director, working with Dallas area-based technology consultants Miller & Associates, a company specializing in business intelligence and custom software development, to build out the credit performance management reporting infrastructure. A longtime advocate of centralized database structures for mortgage servicing, Kite recommended the strategy to Wingspan founder and CEO Steven Horne while the company was being formed. Using Kite’s “results-oriented approach,” Wingspan created an infrastructure to manage large amounts of complex mortgage information, delivered in a highly useful form for finely directed applications. The approach integrates teams and aligns information and users with great precision.

****“Since day one,” Horne says, “Wingspan Portfolio Advisors has been a single point of contact company, creating very effective relationships with borrowers that have led to our outstanding track record of success.” Kite and Horne are working with Miller & Associates to bring Wingspan Information Technology’s benefits to servicers and lenders with very reasonable costs and implementation timeframes. The technology is highly customizable and leverages web portals for unprecedented access to information by those who need it. “Smaller servicers, including regional banks and credit unions, can achieve a level of servicing sophistication they have not seen before with Wingspan Information Technology’s offering,” says Horne.

****“We are also working with Dedo Interactive, Inc., a Miller & Associates spin-off which specializes in touch/gesture/mobile-based technologies, on a GPS-enabled smart phone application that will prevent or minimize many types of fraud from third parties,” Kite notes. “It authenticates field services providers at property sites, receives their updates and reports instantaneously, and adds transparency to all kinds of property management activities. It even handles location-verified photos from mobile devices to prove that the grass is cut and the hedges are trimmed to specifications.”

****Wingspan Information Technology expects to accept its first clients during the fourth quarter of 2011, with implementations completed in the first quarter of 2012. “We’re excited to be making these technology advancements available to the mortgage community and expect Wingspan Information Technology to provide meaningful assistance to the overall servicing effort,” Kite says. “Wingspan Portfolio Advisors has had great results with the platform, and we look forward to sharing what we have learned.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Putting The Spotlight On Servicing E-Collaboration

*Putting The Spotlight On Servicing E-Collaboration*
**By Tony Garritano**

***I’m a true believer in electronic collaboration. It just makes sense. Why pick up the phone to order title, credit, the appraisal, etc., when you can put in an electronic order for all those services and more on a centralized system? I think this makes a lot of sense to most people in the mortgage industry, but most don’t think of it in terms of servicing, but rather in terms of origination. Not so, this approach benefits servicers, too, and vendors realize that. For example, PROGRESS in Lending has learned that DRI Management Systems, Inc. has launched the new DRI Office Service Ordering Platform, whereby servicers can automatically execute their orders for services, seamlessly manage the incoming information from providers, and tap a growing list of premiere, in-network vendors. Here’s the scoop:

****Servicers, already hard-pressed to keep up with the volume of problem loans needing attention, will find the Service Ordering Platform in DRI Office of great assistance, says DRI Chief Operating Officer Fred Melgaard. “We built the system to handle as many of the vendor ordering and management tasks as possible,” he explains. “The ordering process eliminates errors and non-reimbursable duplications, and the onboard rules engine makes ordering and acting on the results more automated than ever before. Vendor management tools are built in to maximize those relationships, and the integrated content management system stores and keeps track of things so nothing gets misplaced,” he says.

****The system keeps things as paperless as possible, eliminating the clutter and confusion in servicing operations of all sizes, Melgaard says, and the system is designed to deal with information flowing back from vendors, regardless of format. “By having everything integrated, the workflow becomes more efficient and productive, with impressive cost savings for users,” he says. Melgaard notes that a large national servicer had been spending up to a million dollars a month on duplicated orders alone and urged DRI to prioritize a solution to this problem.

****Steven Horne, CEO of Wingspan Portfolio Advisors, a Dallas area-based special servicer and long time DRI client, thinks that the cost savings offered by the Service Ordering Platform represent more than a simple benefit of using the technology. “The efficiencies and cost savings offered by the Service Ordering Platform will be very significant for our company,” he says. “A primary first lien servicer might find that with their volume, the savings would pay for most if not all of their DRI Office technology costs.”

****DRI’s Melgaard says that the company is adding vendors to its network of participating service providers. Early integrations with the Service Ordering Platform include Epiq Systems’ AACER® (bankruptcy creditor solutions), CoreLogic (automated valuations) and CoreLogic Credco (verifications services and credit reports), Equi-Trax (property valuations), NetDirector (connecting servicer’s systems to the platforms used by their law firms), SWBC (insurance coverage), and others. “We’re looking for the best vendors in the industry,” he notes. “The system benefits them too, by reducing their costs associated with order management and delivery.  All parties can focus on what they do best while we remove transaction friction and keep the default management process running smoothly.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Market Analysis: Going Turnkey

*Going Turnkey*
**By Tony Garritano**

***Right now everyone is talking about efficiency and ease of use. Some times that means switching systems. As a result, you’re seeing vendors embrace concepts like SaaS and cloud computing to make it easier for lenders to implement new technology. For example, PROGRESS in Lending has learned that Mortgage Cadence, LLC has introduced Mortgage Cadence Symphony Reverse, a reverse mortgage software solution, allowing lenders to get up-and-running quickly utilizing standard, pre-configured workflow. Products like this not only allow faster implementation, but also allow forward lenders to dabble in the reverse world. Here’s the scoop:

****In today’s environment, reverse lenders are facing the inevitability of increased Federal and State requirements surrounding reverse mortgages, just like in the forward mortgage world. In addition, as the country continues to struggle with high unemployment rates, Americans are banking on their home values to rebound and become a possible means to retire. As a result, the ability to quickly implement upcoming changes quickly and efficiently is a growing concern for reverse lenders. Symphony Reverse was designed to fill that technology void and address those concerns by enabling lenders to eliminate manual processes and increase their productivity and throughput. In addition, large players exiting the space have left an opening for lenders to gain market share. By leveraging Mortgage Cadence’s core technology, Symphony Reverse allows those lenders to quickly enhance their core platform while taking advantage of lower implementation timeframes and costs.

****“With the higher HECM Loan Limits set to expire on December 31st of 2011, there will be a revival of proprietary products. Fortunately, Symphony Reverse is flexible enough to support such products quickly,” stated Rob Jannotte, executive vice president of product development for Mortgage Cadence. “Coupled with the fact that many large reverse lenders have left the space, an opening has been created for mid-market reverse lenders and outsiders to get in the game and look to reverse mortgages as a way to expand their product offering and increase their profits.”

****The Mortgage Cadence Symphony Reverse product will also offer integrated documents through Finale Document Services. This document preparation and delivery solution offers document management and risk mitigation services.

****We at PROGRESS in Lending will keep you informed on the success of this product and any news of other vendors making similar moves.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Innovation Simplified: ROI-Take One

*ROI—Take One*
**By Kelly Purcell**

***September is the time of television’s season premieres. New shows, old shows with new characters, new shows with old characters, well you get the picture. So who decides what shows are brought back and what’s not? The ratings of course, the ROI of television. Did you know that Seinfeld was almost not renewed for a second season? It did not have substantial ratings—the financial numbers to justify the investment. Luckily there was a studio visionary that saw the intangible of “something promising in the future” and took a risk and continued to invest despite the ratings. As they say the rest is well, yada yada.

****Today’s economic environment has forced companies to make technology investment decisions solely on the financial numbers with an expectation of return in the first season. How many Seinfelds has your company canceled, or better yet never even premiered? ROI should be a combination of financial data and risk analysis. So what cast of characters need to be engaged to create a technology winning series in today’s ever changing mortgage market? I’ll tell you.

****Everyone assumes the “easy part” of the ROI analysis is the financial data. If only it was that simple. Most companies struggle with assessing a specific process and its associated cost. While companies track “operational” expenses there is little data associated to a specific process. How can one really measure savings assuming a technology investment is about a better, faster, less expensive process when the baseline data is not available or inaccurate. In addition there is typically a lack of data around the actual “ business process.” This type of data represents the analysis of cycle times, conversion rates, and the exception process. The first re-write in producing a technology winning series occurs when there is basic information that is not available—one must know the current process and cost in order to make future technology investment decisions.

****There are so many pieces to the mortgage process and they’re all so disjointed it’s hard to put a cost on any one process. That all changes in an automated world. It’s easier to associate a cost with an electronic process because you can track that process from start to finish. For example, disclosures in the paper world are delivered via regular mail, priority mail, email, courier, fax, etc., which gives you several different points of origin for that transaction. There also could be several different inputs of data based on the output option. How do you quantify cost there? In an electronic process you know down to the second about when the disclosure package was created, sent, received and signed. That is almost impossible to track in a paper world.

****So let’s look at the risk analysis portion of the ROI. What are those intangible risk factors? Compliance. A winning series that addresses compliance before a problem has occurred will be sure to bring in the ratings. In an automated process there is less risk of not meeting certain compliance requirements due to better tracking and audit controls. How do you factor that into your ROI? That’s priceless. Intangibles associated with ROI are equally as important to factor in as part of the overall ROI analysis.

****Another example of an intangible ROI factor is the competitive gain achieved by automating. You can capture more business and reinforce the strength of your brand with automation. You become a trusted source for the borrower. All it takes is one class action lawsuit to ruin your brand. Everyone’s fear is to be on the front page of the Wall Street Journal being called predatory. That’s what CEOs lose sleep over night after night.

****So, where are lenders in understanding the value of both tangible and intangible ROI? There is certainly more awareness. However, it is harder to articulate the intangible ROI to a board or to investors when trying to justify the technology buy and convince them that part of the ROI is based on potential fallout. But think about it, there is a lot of cost associated with a loan that is not saleable. The future cost of non-compliance has to be a part of the technology buying process, it just does. Too often it’s not in the final analysis in front of the deciding committee. People are talking about it but we’re not seeing it in many RFPs or RFIs.

****Lenders need to ask themselves: What future risk is offset by this potential technology purchase? Those facts are out there and they are real but they are not used to make technology decisions. What the mortgage industry needs is to understand the value of technology to drive measurable change. I joined PROGRESS in Lending Association to continue to drive that message within the mortgage industry.

Kelly Purcell is Executive Vice President, Global Sales and Marketing for eSignSystems, a division of Wave Systems Corp. eSignSystems is a provider of e-signature and e-vaulting solutions. She was co-founder of eSignSystems and has over 25 years of mortgage and technology experience. Kelly is recognized as an evangelist and advocate of e-signature and e-vaulting technology driving e-mortgage adoption. She held prior positions at GE Capital and Transamerica Financial Services. In 2009, eSignSystems was the recipient of Mortgage Technology Magazine’s Lasting Impact Award. She can be reached via e-mail at kpurcell@esignsystems.com

Market Analysis: See What I Mean?

*See What I Mean?*
**By Tony Garritano**

***Remember the industry scramble to be RESA compliant? Well, the new RESPA Rule has worked. It did its job. PROGRESS in Lending Association has learned that Ernst Publishing Company, an authority on land recording requirements to the mortgage marketplace, reports that a survey it conducted earlier this month showed that 57% of respondents think that the title and lending industry communicate “well” or “very well” in their efforts to comply with The Real Estate Settlement Procedures Act (RESPA). In addition, 35% describe the communication between them as adequate. Here are the other survey findings:

****“The ability for title agents and lenders to communicate is critical to compliance with RESPA, so that statistic is welcome news for the mortgage industry,” said Gregory E. Teal, president and chief executive officer of Ernst. “Moreover, it suggests that they are working to ensure that regulations are closely followed and complied with.” The Ernst survey was e-mailed to more than 8,600 clients of the firm, of which almost 6% responded.

****The aim of the study was to provide insight on how the industry was faring under several new regulations. “According to the survey results, many financial organizations have increased their ability to handle the new rules. For instance, 52% of respondents reported they were more prepared for the CFPB than they were six months ago,” said Teal.

****The survey also found that 65% of respondents reported they did not believe there is still a disconnect between RESPA requirements for the GFE and the closing table;  82% of respondents thought that lenders are able to meet RESPA requirements and provide clear instructions for closing; 84% reported that costs decreased or stayed the same when they implemented an automatic tool to assist with the GFE-HUD1 process; and 59% believe the combined GFE/TILA will make closing loans easier for them.

****So, while RESPA and other recent regulatory changes may seem like a burden, when the industry responds to these changes by further automating, everyone wins.

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.