Advancing Efficiency And Productivity

Floify is a digital mortgage point-of-sale solution that streamlines the loan process by providing a secure application, communication, and document portal between lenders, borrowers, referral partners, and other mortgage shareholders. Loan originators use the platform to collect and verify borrower documentation, track loan progress, communicate with borrowers and real estate agents, and close loans faster. Floify’s point-of-sale platform has been sown to improve the loan origination experience for lenders and borrowers via the solution’s automations, saving hours of processing time per loan. The company’s CEO Dave Sims sat down with our editor to discuss his vision for the future of mortgage lending.


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Q: Describe how you first got into mortgage lending?

DAVE SIMS:In late 2012 my wife and I moved to Colorado. We needed some short-term financing to get into a home and after that we wanted to refinance to get into a more permanent loan. As I was going through the refinance process I realized that there had to be a better way. That was the impetus for getting into Floify and mortgage lending. 


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Q: How has the mortgage industry changed since you first entered the space?

DAVE SIMS:The one consistent thing is that loan officers want to provide a great experience. It used to be about FaceTime, but now it is much more efficient. I talked to a top producer and told him about a mobile way to get the 1003 and he told me that he just sends the borrower to the Floify portal. 


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Q: As you see it, what does having a fully-automated mortgage business really mean and why should lenders embrace this process?

DAVE SIMS:At the heart of it everything is about staying competitive. By being more automated, mortgage professionals can stay focused on the more meaningful tasks. It means allowing top producers like the one I met yesterday that is pushing up to 500 deals a year be who they are. You never put away the human touch, but you have to automate to deal with that volume.


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Q: Floify believes that “good communication is fundamental to a positive borrowing experience.” How does Floify’s technology help lenders accomplish this goal?

DAVE SIMS:Communication is a fundamental piece of the mortgage process. We have really focused on customized automation. The customer should focus on a high level of production and we track things like loan status and keep everyone informed about those more mundane tasks.

Q: Specifically, you say that you offer a “Best-in-Class Digital 1003.” What does that mean for lenders using your technology? 

DAVE SIMS:There are many different 1003 options. We have 2 key differentiators. First we have an elegant interface so the borrower competes the whole 1003. The second differentiator is helping the borrower complete the application after the 1003. For example, they can upload docs on the weekend, which keeps them more invested in the process and the loan officer.

Q: Also, how can lenders increase operational efficiency and maintain loan file integrityusing Floify?

DAVE SIMS:Floify has a lot of functions that automate tasks that slow the process. For example we chase missing documents from borrowers. We also update everyone about the status of the loan. We also automate communication so everyone is informed. We also convert jpgs to pdfs because loan officers have to work in pdfs.

Q: Borrowers and agents are increasingly preferring mobile methods of communication and engagement. How is Floify making this possible?

DAVE SIMS:Everybody is on their phone these days. With us we are always sending out text messages with updates. Borrowers can also interact with the loan file on their phone. If you need to generate a preapproval letter for example, you can do that with your phone using our technology. Everything we do can be accessed on your mobile device.

Q: What’s next for Floify as a company?

DAVE SIMS:We want to bring back structured text and tasks to help lenders attract top producers. I want to make a more efficient work environment so a top producer doesn’t need an army of helpers that stops him or her from producing. We will continue to talk with top producers to help tem evolve and stay top producers.

Q: Speaking about broader industry trends, there’s a lot of talk about the digital mortgage. What’s your take on what constitutes a digital mortgage and what it will take to get broader adoption?

DAVE SIMS:Fundamentally the digital mortgage means continuous evolution. If you get off paper you can argue that’s a digital mortgage, but we want to continue to identify the problems that our top producers face and solve those issues even if they are off paper. We want our top producers to stay top producers in a very competitive market.

INDUSTRY PREDICTIONS

Dave Sims thinks:

1.) The disclosure desk experience for borrowers will be fully embedded in the point-of-sale.

2.) Hybrid Electronic Closing is coming.

3.) Our industry will embrace the Latino Community more comprehensively.

Early Tax Payments At Year-End

As if the winter months were not stressful enough with holiday parties, gift buying and all the fun things that go along with that time of year, mortgage servicing professionals are faced with the looming Dec. 31 deadline for mountains of work that needs to be completed before the end of the year.  


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Year-end reporting and property tax payments make up the lion share of that work, so preparation should start by late summer or early fall to ensure that customer expectations are met and to avoid those difficult calls after the first of the year when customers are preparing their income taxes. Approximately 40% of tax payments normally fall into the fourth quarter processing window. This includes payments to tax agencies with due dates in the current year, as well as those with tax due dates extending into the early part of the following calendar year. Nearly all servicers seek to satisfy customers who want to ensure an income tax deduction for the payment of their property taxes when the current year’s bill is due early into the following year. These are commonly referred to as “early year-end” or “false year-end” states or agencies.

Several factors weigh into the decision to pay tax bills earlier than an agency’s due date to secure 1098 reporting and the resulting eligibility for an income tax deduction for the payment of property taxes.  These include the potential customer demand for those payments, customary payments in the industry and the preference of the agency to receive payments early from mortgage servicers.


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The most customer-satisfying approach is to ensure continuity year after year. Interruption of the timing of payments from one year to the next will cause customer frustration and calls to customer service if a customer experiences a year without an eligible deduction, even if they have a year with two eligible deductions. To avoid this negative customer experience, the best practice is to select states or agencies where early payment is customary, and the historical demand has been presented to justify payment of all customer bills in those areas year after year. States with early year-end payments include Michigan, Mississippi, Nevada, North Carolina, Alabama, North Dakota, New York, Louisiana, South Carolina, Tennessee, Texas, Wisconsin and Connecticut. Timing of payments to agencies in these states can vary from lender to lender. Bills for some of these customary agencies are released in the fall but some can be released into the month December, which of adds some challenges for servicers faced with a short window to procure the bills and ensure disbursement by Dec. 31.

Wisconsin has state-wide requirements for customers where they are entitled to select payment options. Two of these options require the bills to be disbursed in December. Customers can elect to have their escrow funds for taxes paid directly to them by December 18 each year or elect to have their funds paid directly to the tax offices by Dec. 31. The third option requires the bills to be paid by the statutory date in January. Some servicers elect to minimize any customer concerns in Wisconsin by verifying the selected option by mail earlier each calendar year.


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In addition to Wisconsin, some states and agencies require mass payers to remit payment before year-end. Most notably North Carolina and Alabama have such requirements. 

Complications can occur if the loan boarding process is not aligned with servicing. If your business originates new loans, the servicing group should partner with the various origination channels as much as possible to ensure that the practice of determining when a bill will be paid at closing or not paid aligns with the servicing unit’s year-end payment practices. If an originator fails to ensure the payment of a bill at closing that is customarily paid by the servicer at year-end, the customer may miss out on a deduction for their property taxes during the year they closed on the loan. This will result in two deductions the following year. They may also face hardship if they pay a bill at closing that the servicer typically pays in the early part of the year. In this case, the customer would qualify for a deduction for the tax paid at closing but miss out on a deduction for the entire following year. For example, let’s say a customer in the state of Connecticut is closing on their loan on Dec. 20, 2019. To be helpful and to secure a 2019 deduction for property taxes, the title company elects to collect and pay the tax bill due Feb. 1, 2020, at closing. This servicer does not treat Connecticut agencies as early year-end payment agencies and therefore will not pay another tax bill until Feb. 1, 2021. This customer will then not have a qualifying deduction for the 2020 tax year.  


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Servicing acquisitions also create complications for year-end tax payments. There is a strong likelihood that the retiring servicer’s selection of states to be paid early at year-end does not align perfectly with those of the acquiring servicer. To avoid negative customer reaction, servicers must be cautious about their loan boarding approach for loans in these states and agencies. Due diligence and servicing transfer instructions always need to identify the states and affected loans where discrepancies exist from one servicer to another. Like the new loan origination example, variances from transferring to purchasing servicer can lead to customers who will lose a year of eligibility for deduction and/or a year with two eligible deductions.  

A consumer’s monthly mortgage payments will change if the scheduled date to pay taxes changes from year to year. Where a discrepancy exists, early communication to those affected customers will alert them proactively to the change and possibly prevent angry calls to customer service. It’s a good practice to send letters, notices or alerts where possible to customers both at the time of a service transfer and prior to the new escrow analysis. Running a new escrow analysis at the time of transfer can minimize the effect on the customer’s escrow account and reduce the risk of escrow shortages and advances.  

A related issue for customer service and escrow departments to face is related to what is and is not deductible. First and foremost, customers should be directed to their tax professionals for expert advice on filing their income tax returns. However, a correct 1098 report will minimize customer confusion and difficult calls.  

Generally, the servicing system should be set to ensure that the produced 1098 does not include bills paid from escrow by the tax department that are not eligible for deductions. Because the payment of bills other than ad valorem real estate taxes is commonly paid from escrow as tax bills, servicers must ensure that such bills are not reported as taxes on the 1098 form sent to customers. Per the Internal Revenue Service (IRS) Publication 17, state and local real estate taxes along with a tenant’s share of real estate taxes paid by a cooperative housing corporation are deductible. Taxes for local benefits, such as assessments for streets, sidewalks, water mains, sewer lines, public parking facilities and similar improvements are not deductible. In addition, itemized charges for services cannot be reported as deductible on the 1098 form. This includes items that are a unit fee for the delivery of a service, such as a usage fee per gallon for water usage, periodic fees for residential services, including trash collection or flat fees charged by a municipality for needed maintenance. These are not eligible for deduction even if they are paid directly to the tax authority. Homeowner association bills, which are often paid from a customer’s escrow account, should also not be included as a tax on the 1098. Under IRS guidelines, these fees are not eligible for deduction.

A final critical step is to ensure that taxes intended to be eligible for deduction be disbursed from the escrow account in that calendar year. This ensures that 1098 reporting, which is relied on for validation by the IRS, reflects a payment made in the appropriate tax year.  

Early planning for the tax year-end cycle can be a significant amount of work. Aligning dates, communicating with customers and ensuring proper system set up for year-end reporting can take time. However, done properly, the reduction of customer complaints as a result of this work can make for a very happy New Year for mortgage servicers.

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Is Your Mortgage Technology Losing In The Game Of Catch-Up?

If you’ve ever played Tetris, then you know the premise of the game is to arrange a random sequence of falling geometric shapes to form a solid horizontal line without gaps. When such a line is formed, it disappears and any blocks above it fall down to fill the space. As the player levels up, the shapes move faster. The game ends when the player is unable to keep up with the faster pace—the stack of shapes reaches the top of the playing field and no new shapes are able to enter. 


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Today, the loan lifecycle seems like a losing game of Tetris. As much as lenders and technology service providers want to ensure a smooth loan experience, keeping up with the demands for compliance with new regulations or risking stiff penalties in the post-Dodd Frank era has resulted in lenders and providers simply doing whatever it takes to keep the production lines moving, or playing catch-up, while not necessarily filling all the gaps.    

How We Got Here

Understandably, lenders and providers have not had much of a choice. After the 2008 crash, mortgage lenders needed to begin rebuilding trust with borrowers and society by ensuring compliance with new regulations like the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule and the TILA-RESPA (TRID) rule, followed by TRID 2.0. Many lenders quickly selected and implemented compliance technology, which required updates each time a regulation was introduced or changed. 


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However, ensuring regulatory compliance wasn’t enough. Lenders also needed to rebrand themselves as consumer-friendly. This required technology that could improve the borrower experience on the front end, such as a customer relationship management (CRM) system to connect with current borrowers and build relationships with prospects. They also implemented point-of-sale (POS) systems to enable prospective borrowers to complete an application, verify their assets and employment, and pre-qualify for a mortgage—all online. Now, lenders are navigating the muddy waters of e-notary, e-closing and eNotes. 

With all of the focus on the regulatory compliance and customer experience, little was done about the processes in the middle—the loan origination software (LOS). Trying to maintain an efficient workflow became even more challenging as all of the disparate technologies were attached to the LOS, and in many cases, created a less than ideal workflow, escalated errors and drove repetitive rechecks/rework throughout the loan process. 


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As a result, origination costs have skyrocketed over the past 10 years. According to the Mortgage Bankers Association’s latest Quarterly Mortgage Bankers Performance Report, the cost to originate a mortgage reached a high of $9,299 per loan in the first quarter of 2019, up nearly 300 percent from $2,345 per loan in 2009. Technology itself represents approximately four percent of that cost. However, this number fails to factor in the time and money spent on researching, implementing and regularly updating said technology.

Cloud-Based Imposters and How to Spot Them

If you think the technology behind your LOS is new just because it claims to be in “the cloud”, think again. Most of the LOS platforms on the market today are using the same foundation of server-based software with form-driven workflows that were developed more than 20 years ago, while simultaneously claiming to operate in “the cloud”. Don’t be fooled by these imposters. 


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For a LOS to truly be cloud-based, it should use a cloud computing service such as Microsoft Azure or Amazon Web Services for building, testing, deploying and managing the system. Regulatory changes and updates are made swiftly and easily—enhancement releases typically average an hour or less per release—with no software installations or computer downloads necessary. A truly cloud-based LOS is device independent for convenient access from any web-connected device and provides users with the advantage of consistent uptime. In fact, one of the most reliable cloud-based LOSs on the market even offers its users an uptime guarantee.

Now that you know what a legitimate cloud-based system is, ask yourself: Is my LOS provider truly cloud-based, or a cloud-based imposter? If you’re maintaining a server, dealing with software installations on your laptop, or if you cannot access the system on a tablet or mobile device, then the system is not truly cloud-based.

Data-Driven Configurability Is the Future, Customization Was the Way of the Past

Another benefit of newer LOSs is the ability to easily configure the platform to conform to each lender’s workflows, roles, organizational structure, compliance controls, business channel and unique needs. It should be noted that, although many people use the terms interchangeably, being configurable is completely different from being customizable. Your LOS should give you the freedom to focus on your business, not maintaining technology. 

A configurable LOS is designed from the ground up to enable maximum flexibility so each lender can use the system to run their mortgage business the way that benefits them the most without expensive upfront customization costs and the headaches of ongoing system revisions and maintenance to keep it up-to-date. Should a need arise in the future to make changes to roles within your mortgage operations or your organizational structure, such as a new branch acquisition or a company merger, the system configuration can easily be modified to pull the new entities together.  

The other advantage of a configurable system is that these modifications can be made without external software developers or retaining a large, internal IT department. 

In a customizable system, code has been written to perform a task, if something changes, the code needs to be changed. That code change usually has unintended consequences downstream and something breaks. Think about the URLA implementation and what the administrators of customized systems are facing. There is an entirely new data set that needs to be implemented, if there is extensive custom code written into an LOS, there could be long development times required and unanticipated problems to be fixed.

When you take the data-driven, configurable LOS and combine it with the newer and more robust APIs that are evolving, you have a very powerful combination. These APIs have developed from simple, one-way data transfers to enabling more secure, more complex, two-way data transactions. If a lender, for example, needs to get pricing for a particular loan file, they can simply click a button to connect with their product and pricing engine (PPE). This pushes the loan parameters to their PPE and, based upon those loan parameters, the PPE pushes program and pricing options back into the LOS. The lender can select one of those programs and lock it in real time. With robust APIs, “a lender is no longer constrained by what a single vendor—most notably the LOS—has to offer because they can now use APIs to incorporate their best-in-breed capability into their platform,” according to STRATMOR Group’s Andrew Weiss.  

The LOS of the Future

As you can see, the majority of LOSs in the market today have not been able to keep pace with software design and technology advancements due to regulatory requirements and mandatory updates and this problem will only become more prevalent in the future. The ultimate goal is to leverage automation to ensure accuracy, eliminate redundant activities and speed processes while minimizing or eliminating human errors within a loan file as it is being processed or manufactured within the LOS and then provided to the secondary market. Ideally, once the borrower data comes from the POS, it automatically flows into the PPE and an automated underwriting system (AUS), to the auditing technology, and then ultimately to the document generation technology for the closing package. Of course, processors, loan officers and underwriters will still have important roles to play, but, because the process would be more intuitive, they would touch the file less, which will help streamline processes, increase efficiencies and reduce costs, all while improving the borrower experience. The talk of a digital mortgage that can close in 10 days has been around a long time, however it is truly closer than you can imagine now.

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Digital Is No Longer A Differentiator. It’s Just Table Stakes.

The word ‘Digital’ is almost cliché now. Everyone knows about it, and they have all jumped on the bandwagon. If you are an established bank or a lender, you must have already incorporated digital into your long-term strategy, and you are most probably thinking: “Oh, you mean that ‘everything-online,’ ‘integrated customer experience’ and ‘connected enterprise’ thing? Yes, we have a plan for that.”

Unfortunately, the brash new startups that are entering the lending scene are not thinking that way. For them, online and connected are already a given, the bare necessities. For them, ‘Digital’ is a means to ‘Disruption.’ You have surely come across some of the more famous ones among these upstarts, right?


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Are you familiar with ‘Kabbage,’ the lending platform that offers nearly instant loans to small businesses, based on creative, alternative data – like the number of UPS packages sent or received by the industry?  Or ‘Tala,’ which approves microloans for borrowers from underserved economies who lack credit history by crunching out myriad data points ranging from financial transactions to mobile games played? And what about the aptly named ‘Upstart,’ which uses data such as education, employment history, and whether applicants know their credit score to underwrite and price loans? Upstart’s algorithms are supposedly so well-trained that they now approve 47 percent of loans with zero human intervention and yet manage to have one of the lowest default rates in the industry.
Get digital already. 

Going digital is no longer the endgame. It just places you at the start-line for the sprint towards innovation and disruption. Therefore, if what you have is a long-term, multi-year digital roadmap, you have lost the race even before you have started. You need to go digital right now—within weeks—so that you can compete on level terms and give yourself a chance to race with (and fend-off) these new-age disruptors.


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If you are a bank or a lender with HELOC offerings, product suites can help you do just that. It offers a ready-to-use toolbox of services, integrations and interfaces that propel you instantly to a fully digital-ready enterprise within weeks. Do not waste your time and energy on determining how to get digital. Tavant has that covered; you can now focus your precious resources on figuring out how you will unleash the power of digital for innovation, disruption and market leadership.

Customers don’t need to be wowed. They’re incredibly busy. They just desire a streamlined experience, at any given moment with quick and seamless resolution. Needless to say, they are looking for an easy, personalized, connected and consistent experience. The value of focusing on your customers’ journey can’t be understated. Done correctly, it helps make your marketing feel more like matchmaking and builds a lasting relationship between your customers and your product.


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As the old adage goes if you don’t understand the customer journey and evaluate how, why, when and where customers are interacting with your brand, you cannot influence them. This holds true with today’s digital customers; ultimately, you will fail miserably to meet their evolving needs. Thanks to digital and social media, the customer’s intolerance to brands that get their engagement strategies wrong is growing significantly.

Digital age customers expect hyper-personalized user experiences when they interact with a particular brand, including high-value communication across multiple channels and devices. Customers are now much more savvy, more agile, more independent and more complex in terms of what they look for to help make their purchasing decisions and their behaviors are increasingly inconsistent and harder to predict – in contrast, the marketer’s traditional approach to defining their target audience, planning and executing campaigns is struggling to keep up. A consumer’s real, personal journey of self-improvement is constant throughout that individual’s life. The need to understand the customer journey through your product and service experience has been widely heralded as a fundamental component of marketing for years. Those companies who fail to unravel the mystery behind the customer journey cannot strengthen their bond with their customers.


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However, the actual term customer journey is broken.This sounds cliché, but the complexity of customer journeys coupled with multiple broken, disconnected channel partner networks is impeding organizations from delivering personalized customer experiences.

In today’s data-rich world, the customer journey is undeniably too high level, too generic, and too prescriptive. It’s incomplete, rarely actionable and hence it is said to be broken.The focus of tomorrow’s marketer, therefore, needs to be less linear, segment focused and personal. Delivering a seamless experience at every phase of the customer lifecycle can bolster a brand’s relationship with its audience and it requires an ample amount of data and a thorough understanding of the customer journey.

While its fashionable to focus on a digital customer journey, and indeed the last 48 months have seen significant investment in digital and self-service options, the mortgage industry is unique in terms of customers requiring a balanced, and appropriate, combination of the digital and human experience. Providing mortgage loan originators with digital tools that drive higher touch with higher efficiencies could change the customer journey: building a high-touch experience without being intrusive, with the high-tech environment when consumers demand it.  

Dynamic Capacity Management

Technology spending in the fintech industry has put pressure on even the biggest banks to compete with the likes of J.P. Morgan’s commitment to spend $10.8 billion on technology in 2018. The SunTrust, BB&T merger created the sixth biggest U.S. bank and was driven largely by the need to compete on technology. 

A recent study by the Federal Reserve Bank of New York has found that the market share of fintech lenders jumped nearly 6 percent in recent years. Mortgages offered by fintech lenders close about 20 percent faster than others. Additionally, the default rates for loans issued by fintech companies are 38 percent lower for purchase loans and 29 percent lower for refinances.

These lenders also appear to alleviate capacity constraints during periods of high mortgage demand. The mortgage market isn’t helping productivity, swinging as it has quite dramatically in the last six quarters. This last year and half has been a wild ride – interest rates increased and as these rates go up refi opportunities go down, and in a lot of ways so does the purchase market. That market alone has seen a total swing of negative 41 percent in the past six quarters. These switches require organizations to rapidly move focus from one channel to another, necessitating a complete recalibration of services, which puts a tremendous amount of pressure on operations. Managing huge workflow swings and recalibrating skills and operations to anticipate for 25 to 40 percent market swings is a hard problem for which to solve . 

Dramatic market swings require dynamic capacity management. And in this vein, automation, and even more so AI, are key. Being in a position of agility and flexibility with the ability to very quickly move from one market to another is a very difficult position. A lot of the time, the folks working these shifts are in a “manufacturing” state of mind: working the same function to produce the same result over and over again. Encouraging these folks to shift can be a challenge. 

While the lending industry has shown a lot of excitement about AI, actual adoption is low – less than 1 out of 4 lenders have even experimented with AI. Robotic process automation has reached slightly higher levels but is also at its nascent experimentation stage. Both AI and automation require some basic plumbing: open architectures supporting standards, driven data APIs combined with an engineering approach to assemble processes and data across diverse systems.

Changing the Customer Journey

Integration among disparate systems can unify the mortgage loan originator experience. This single pane of glass system is a critical driver towards LO efficiency. Well-integrated systems that present a single view of customers and processes can help resolve both the efficiency of loan originators and the experience for customers. An average loan originator operates across at least three different systems, often moving data or waiting for data to be moved within CRM systems, product or pricing platforms, LO POS and LOS. This is without counting the productivity systems and company portals, IVR systems, and company portals for financial, HR etc. 

Nine in 10 lenders do not have personalized mortgage loan originator driven marketing activities. In addition to this, five out of 10 lenders do not execute a closing call by the LO – this singular exclusion results in a 50 percent drop in the “willingness to do business again” indicator. 

Lenders tend to take a loan-centric view of their ecosystem which percolates into the way different departments steward the loan process. Because of this, lenders can miss out on stewardship of the customer experience. It is possible to influence consumer behavior through a well-engineered journey that keeps the focus on that consumer. This requires integrated communication interfaces between systems to share status, data and messages, as well as intelligent automation that reduces the orchestration required as control moves between channels.  

Indeed, a well-integrated solution would need to support multiple channel models with multiple broader financial services LOBs: at least two to three major departments with different outlooks towards the process they operate would need to be supported. Any solution must have the flexibility to support integrations to diverse systems, both internally and externally, throughout the customer lifecycle. A scalable, performant, and secure method that makes it easy to deploy, manage, maintain and tweak for variations in the customer process.The human element must be combined with a sophisticated digital experience delivered at the right time, with insightful and engaging components. Lenders can change the customer journey with high-touch and high-tech while reducing the sales and marketing costs that continue to drive the largest part of origination costs. 

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Implementing Artificial Intelligence

Buying software?  So far you’ve seen all the features the new software has to offer.  You’ve read about the benefits to your operations and financial results and you’ve made the commitment to buy.  Then comes the problem!  You have to implement this software into your process so that it works the way it is supposed to.   It seems implementation of new programs always disrupts people and processes as it occurs and in many cases long after.  Ultimately if the improvements in technology don’t fit in the process, the process has to change.  Changing processes is not easy for any technology advancement but with the growing use of Artificial Intelligence (“AI”) and its advancement in the industry it is much more likely to have a much more significant impact than any experienced before.


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Artificial Intelligence implementation is so much more detailed, far-reaching and impactful on the industry than just a change in the process.   It brings to the industry a whole new “adaptative process” approach.  This process, as opposed to what was manual and then technological, is defined as a symbiotic relationship between man and machine.  AI work produces better outcomes for both customers and companies. This means a new process; different job functions and skill sets must be developed while creating an intermingling of external and internal databases with human activity.  It also requires the elimination of isolated knowledge sets that are prevalent in today’s processes.  Today, performing a job means knowing what and why we do certain things without the knowledge of how the entire process flows together or understanding the downstream impact.  This lack of a comprehensive knowledge of the organization’s work often results in dissatisfied consumers and the creation of unacceptable loan packages.  So how does an organization go about implementing something as significant as the changes that will occur with the expansion of AI into an organization.

Even before contemplating how AI will be used within an organization, it is critical to understand that its greatest power is augmenting the capabilities of humans. It has the power to handle labor intensive work such as collecting data, organizing it, identifying gaps, conducting an analysis of the acceptability of a loan using information from huge data sets. The freedom from these routine procedures allow humans to do that which they do best; resolve ambiguities and inconsistencies, make judgement decisions and address issues raised by customers.  


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Begin with a vision

A well-known Chinese proverb states, “Any road will take you there if you don’t know where you are going.” Because we are at the very beginning of a new type of process, knowing where you want to go is actually very complicated.  Without the structure provided by “the way we always do it”, senior executives struggle with this new combination of machines and humans and what it will ultimately look like.  Adopters of this business approach find that they are imagining innovative ways to make processes faster, individualize products and increase profitability.    

Once a company determines that implementing AI is the right choice, they must first create the vision of where they want to go.  In other words, can a process that is performed by a series of steps, each occurring before the next, be transformed so that all steps occur at the same time, or data needs limited by what is expected for the customer. It might be the ability to increase profitability or the opportunity to expand acceptable loan products. It might be a risk management program that reduces defaults by identifying the earliest possible performance indicators.  Or maybe it is to become a one-stop consumer lending company that includes, not just mortgages, but all types of consumer loans such as student loans, auto loans, marine loans or whatever any type of lending needed by your customer.  


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Whatever the vision, implementing AI means senior management has the opportunity to adapt all aspects of the product and/or service and develop their own concepts about how it will work, what the process flow will be, what sources must or can be included and how the collection and integration of this data will be utilized.   Most importantly it does require personnel with the ability to envision a new way of doing things be deeply embedded in its development. 

The critical next steps

Because AI uses an infinite number of data sources, once the vision is set it is critical to identify those that are critical to your process.  Today the industry databases, such as servicing results, are held tightly by those producing them.  In addition, sharing of information is under attack from individual privacy perspective. In combination, these issues make it difficult to obtain all the data needed.  Furthermore, there are data sets available, but the realization that this data is beneficial may not have occurred.  As a result, the more database accessibility the better.  


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The implementation process itself requires that implementers must re-think work.  What work actually has to be done and by what means?  With the technology collecting data, comparing datasets, calculating figures, reviewing documents, what is left to do? Other processes that exist today have to be considered as well.  How much of the ancillary and post-close functions can be done completely with AI programs and what will still require human contributions.  Quality Control will no longer require separate processes as AI can conduct this review while the loan is being originated.  Servicing functions must be evaluated in the same manner. Are their multiple functions within a servicing operation that can be completed simultaneously without input from staff?  Will default management require additional call center staff or will AI provide chat box conversations that answer questions and take requests?  

Ideas such as how staff will interact with consumers or with applicants needs to be explored and a determination made as to when this contact is made.  Will the process include loan officers actually interacting with these individuals before any data collection is begun or will contact be made after a preliminary decision has been made?  Will better service be provided if all consumers are routed to a call center when complex issues and unique questions require individualized attention by human staff?

What will people do?

Determining what actual tasks need to be conducted by humans and who will do that work is another critical part of the implementation process.  As has been stated many times over, people are not going away.  In this “adaptative process”, humans and machines each have roles to play that use the best source of completing the task.  

Tasks to be completed by humans are those that conduct machine training so that the less complex tasks can be done by machines.  This function is most critical since without this training the technology does not work. As part of this training effort, humans must ensure that the tasks machines are trained to do remains current and that the knowledge based used in any task is current.  Explaining items and results that must be used in completion of these AI tasks is also part of the human requirements as well.  

The complexity of the underlying pieces of the process must also be addressed.  For example, pricing.  The numerous items that play into how a loan is priced can be programmed but explaining it to a confused consumer is the job of a human.  Call centers with personnel that have a comprehensive understanding of the entirety of consumer lending will prove most valuable in these centers.  These along with such technology as Chat Box and Skype will bolster a company’s service level significantly.  

One of the most critical new roles is that of analyst.  While AI will find random patterns, analyze results and provide access to numerous databases, the results produced by this technology requires humans to utilize these results to judge various attributes and outcomes.  These results from such analysis of performance results based on all types of attributes.  Humans will also be needed to determine if the resulting information is beneficial to the organization, needs to be improved or should result in how the technology does its work.  Other analyses may be devoted to identifying the need to expand the attributes that until now have not been incorporated into the underwriting decision.  Human analysts will also help determine in the development of company growth.  

Risk management is also a unit within the organization that does not go away with the implementation of AI and its associated processes.  This unit must be part of the vision and process of any organization associated with lending.  These individuals must be able to use the data analyzed by AI technology and make judgements on the areas of risk and its probability of causing harm to the company whether it be performance, legal, financial or any other risks that they handle today.  

Preparation for Implementation

Once this new process has been created those individuals involved require training.  Those that will assume the function of training these machines, must first be taught how it is done.  This can begin as soon as a determination is made that AI will be a vital part of the company’s vision.  

Other training programs include a comprehensive study of how the industry functions and who and how each function interacts to produce the end result.  Today, because of the bifurcation of production and servicing, many staff understand only one piece of the entire process.  Since the complexity of this process is confusing to consumers, an individual who handles communication with applicants, consumers and current customers, must be able to address anything that comes their way.  

For those individuals who are charged with addressing issues that are more complex than the program is trained to handle, there must be training on what they are or are not supposed to do.  This also includes an escalation program and feedback to programmers on handling future issues.  One area that is critical for this staff is addressing problems that concern regulatory requirements and controls.  

Common Sense is Key to ImplementationAt the end of the day, implementing any AI program will be one of trial and error. With the transition of the processes used today into a program with new processes, changing job functions that are vital to a new vision of consumer lending, it is most likely that problems and issues will occur.  Those managing this implementation will hopefully have identified the most egregious roadblocks prior to beginning the project.  However, when others appear, successful managers will have to “think outside the box” to solve them.  How much support is driven from senior management will be a key factor in determining whether the move into the future of lending will ultimately meet the vision and determine its success. 

About The Author

Optimal Blue: The Impact Of Rate Movement And Loan Characteristics On Servicing Value

In terms of the secondary market, a mortgage loan is essentially made up of two separate parts, the loan asset and the servicing asset – which may be split up, packaged, and sold separately. The largest of the two pieces is the loan asset, which is cashflow of the loan itself, including most of the interest paid. The smaller piece is the servicing asset, which is part of the interest rate that is separated out in order to pay the servicer that acts as the monthly payment collector. The servicing asset, or servicing “strip”, is usually 0.25% on conventional loans and 0.19% to 0.565% on GNMA loans. There is an entire industry built around the servicing strip, which lenders can choose to sell or retain.  


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Servicing is valued by examining the present value of the cashflows associated with the servicing strip and adjusting those by the probabilities of prepayment and/or delinquency/default. This combination of simple financial accounting with relatively complex probability modeling, forecasts, and simulations, allows for a reliable valuation of very uncertain assets. This value moves with changes to the underlying assets, such as partial prepayments or delinquencies, as well as changes in the market. 


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The two primary risks to the servicing asset are prepayment risk and default risk. Prepayment risk is the risk that the loan pays off sooner than initially expected. Default risk is the possibility that the loan stops paying for some other reason. In general, prepayment risk dominates, being substantially more pervasive than default risk. However, default risk also presents substantial costs to the servicer (collections, advances, recovery, foreclosure, liquidation, etc.). Further, the magnitude of these risks fluctuates by credit worthiness. For instance, borrowers with good credit are even more likely to prepay (refinance or purchase another property), while those with poor credit are more likely to default as refinancing or purchasing another home may not be realistic possibilities.


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In our current rate environment, the borrower on a loan originated only one year ago, will, in many cases, see substantial savings when refinancing at today’s rates. If the borrower does opt for a new loan, you also want to know the probability of recapture[1]. Finally, it is important to recognize the costs associated with servicing delinquent loans, such as advances, increased collections, foreclosure/legal fees, etc. These factors can have a substantial impact on the profitability of servicers.Below, we show how values changed over the last six quarters by note rate, holding other factors fixed.

Bear in mind that rates plummeted in the second half of 2019. Low note rate loans (e.g. 4.5%) have higher and more stable value because the prepayment risk is mitigated. However, borrowers paying higher note rates (e.g. 4.75%) are more likely to be “in the money” for a rate/term refinance, substantially increasing prepayment risk.


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The servicing strip is a significant piece of the loan and its profitability, but all of this is often an afterthought. Careful consideration is necessary to avoid losing a lot of money if retaining servicing or buying servicing rights. However, there can be substantial profit in retaining servicing whether it will be serviced in-house or a sub-servicer is utilized. Having a strong servicing business connected to your origination channel can help steady the ship when the economy dips and origination volume dries up. 


[1]How likely the owner of the servicing asset is to originate a refinance or new purchase loans from the borrower.

Automated Borrower Intelligence Enables Mortgage Lenders To Work Smarter, Not Harder

The summer of 2019 closed with a bang for mortgage lenders thanks to a sharp spike in refinance volume. In fact, the Mortgage Bankers Association’s Senior Vice President and Chief Economist Mike Fratantoni reported, “The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume, bringing the index to a reading over 2,000 – its highest over the same time period.” Fratantoni cited the Federal Reserve cutting rates and trade tensions with China as contributing factors. 


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Talk about incredible news for the mortgage industry. However, for loan officers, manually sorting through thousands of borrower records to see who qualified for these lower rates likely proves to be a daunting task. It is also safe to assume that some qualified leads fell through the cracks and weren’t contacted due to the time constraints of sifting through customer information. 

Utilizing an automated borrower intelligence system during the boom led to a far greater opportunity for mortgage lenders. Thanks to technology that performs on-going monitoring of leads, customers, and past customers, and provides real-time notifications, loan officers using automated borrower intelligence didn’t need to waste time checking in on leads who aren’t ready or are still unqualified. 


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Automated Borrower Intelligence Defined and Applied

Strategies surrounding the use of customer intelligence data have been in practice for well over a decade in other industries. However, as with most things technology-related, the mortgage industry is behind the adoption curve. 

Automated borrower intelligence keeps loan officers informed when a pertinent event occurs, such as a change in credit score, qualification for a lower rate, or loan-impacting life events—with no manual labor required. Notifications are delivered directly to the loan officer and tasks are created to initiate appropriate follow-up actions based on the status of the lead, ensuring loan officers stay front and center with their customers through all stages of the customer life cycle. 


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For example, a borrower that lists his or her home for sale, improves their FICO score, or undergoes a divorce, becomes eligible for a specific loan product. The loan officer is notified by the system of that change and can then reach-out to the borrower with timely, relevant information. Essentially, the use of automated borrower intelligence technology plugs potential gaps in the customer journey, helps loan officers communicate with their customers at appropriate touchpoints, and ensures that no opportunities are missed. 

Are You in the Top 40 Percent?

According to STRATMOR Group’s Originator Census Study, “The top 40 percent of originators account for more than 80 percent of total volume, a measure which has not changed by more than one percent in any given year. That means that 60 percent of an average lender’s sales force produces only 17 percent of total volume. The bottom 60 percent close less than one-half of one loan monthly.” 

This statistic is a perfect example of why utilizing an automated borrower intelligence system is not only a competitive necessity, but an absolute business imperative for mortgage lenders to increase volume. And clearly, based on the information from STRATMOR Group, a large percentage of the lenders need to help with loan volume. 


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As we roll into the last quarter of 2019 and look to the start of 2020, it’s essential for mortgage originators to think about how they plan to keep loan volumes up. Does it make sense to triple marketing budgets? Rely more heavily on realtor referrals? No, it absolutely does not. 

You’re Living on a Farm: The Smart Lender Approach

Let’s take a moment to think about your database as a farm and your loan officers as farmers. If as a farmer you work your land, harvest your crops, and retain seeds for the following year, you have become self-sustaining. Further, if you utilize machinery to harvest, you become more efficient and are thus able to yield more crops in less time. 

Smart lenders are becoming experts at “farming” their database to make sure that when business slows down and the cost of producing one new good opportunity triples or quadruples, they have a steady stream of business coming from their own database. Smart lenders know that their database produces the most profitable deals, happier customers, and ultimately referrals. Incidentally, referrals are the least expensive source of new business. 

Fortunately, automated borrower intelligence systems are now available to help mortgage lenders properly farm their databases. Using automated borrower intelligence technology, mortgage lenders are notified the moment an unqualified lead becomes eligible, or when existing borrowers qualify for better interest rates or new loans. Essentially, turning databases into an evergreen resource of leads. 

Similar to farmers cultivating their land to support future crop cycles, mortgage lenders need to realize that their database is one of their greatest assets. However, for that resource to provide ongoing leads, technology needs to be utilized to address several gaping holes in the lending system:

>>Awareness of when an unqualified lead becomes qualified.  

>>Eliminating the need for previously ineligible borrowers to repeatedly undergo the loan application process.

>>A means to notify existing borrowers when they qualify for a better interest rate.

Borrower Intelligence is a Must for Smart Lenders

Artificial intelligence may sound like the last thing you want in a business that is so dependent on trusted, authentic relationships, but systems that utilize AI can manage the behind-the-scenes work, freeing up time for mortgage lenders to build rapport with leads and customers. As noted in a survey conducted by Fannie Mae’s Economic and Strategic Research Group, “AI appears to be gaining traction in the mortgage industry, as well, as our study shows that about one-quarter of lenders surveyed say they have started using it for their mortgage businesses.”

Spurred by low mortgage rates, the current competitive landscape for mortgage lenders is intense. To remain viable in a saturated market, lenders must leverage automation to not only attract top talent, but to also improve borrower loyalty and retention. 

Previously, monitoring the client database has been a manual and labor-intensive process that yielded mediocre results at best. With automated borrower intelligence, loan officers are often the first to know when it’s an ideal time for the consumer to enter the market, and because there is a previous relationship, connecting with the consumer is much easier than a typical lead. 

In closing, automated borrower intelligence provides lenders with an avenue to build relationships, increase revenue and keep customers coming back long after their first transaction. By replacing “guess work” with data driven actions based on meaningful data, mortgage lenders can work smarter and more efficiently to increase loan volumes and keep the sales pipeline plentiful.

About The Author

Median Home Prices Are Jumping

ATTOM Data Solutions released its Q3 2019 U.S. Home Sales Report, which shows that single-family homes and condos sold for a median price of $270,000 in the third quarter, up 2.9 percent from the previous quarter and up 8.3 percent from a year ago — reaching a new high.


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Meanwhile, the report shows that homeowners who sold in the third quarter earned a median profit that ticked up to a post-recession high of 34.5 percent, up from 34.4 percent in Q2 2019 and 34.3 percent from Q3 2018.

Average homeownership tenure hit a new high of 8.19 years, up 3 percent from last quarter and up 3 percent from Q3 2018. Homeownership tenure averaged 4.20 years nationwide between Q1 2000 and Q3 2007, prior to the Great Recession.


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“The seven-year U.S. housing boom is back in high gear. After a series of relatively small price increase quarters, home prices saw quite the uptick, seller profits rose and the problem of distressed sales continued to fade, helping to make the third quarter the strongest in four years,” said Todd Teta, chief product officer at ATTOM Data Solutions. “That all happened as mortgage rates sank back to near-historic lows, which clearly powered the market upward along with stock market surges and a continued strong economy. There had been signs before the latest surge of a cooling market, but they seem to have diminished, at least for now.”

Annual home prices rising in major markets

Median home prices increased year-over-year in 148 of the 155 metro areas analyzed in the report (95 percent) in the third quarter of 2019, led by Lansing, MI (25.1 percent increase); Green Bay, WI (18.1 percent increase); Johnson City, TN (16.7 percent increase); Hickory-Lenoir-Morganton, NC (13.7 percent increase) and Spokane, WA (13.5 percent increase).


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Metro areas with at least 1 million people that saw the greatest annual home price appreciation in the third quarter of 2019 included Philadelphia, PA (12.3 percent increase); Jacksonville, FL (10.8 percent increase); Detroit, MI (10.6 percent increase); Salt Lake City, UT (9.8 percent increase) and Milwaukee, WI (9.8 percent increase).

Only three major metros saw annual price drops: Kansas City, MO-KS (9.4 percent decrease); San Jose, CA (3.3 percent decrease) and Hartford, CT (0.3 percent decrease).

Prices in four of every five metros now above pre-recession peaks

Median home prices in 122 of the 155 metro areas analyzed in the report (79 percent) were above pre-recession peaks in the third quarter of 2019, led by Kennewick, WA (99 percent above); Greeley, CO (89 percent above); Shreveport, LA (84 percent above); Denver, CO (79 percent above) and Nashville, TN (75 percent above).


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Metro areas other than Denver and Nashville with at least 1 million people and Q3 2019 median home prices at least 50 percent above pre-recession levels included Dallas-Fort Worth, TX (73 percent above); Austin, TX (73 percent above); San Antonio, TX (62 percent above); Houston, TX (55 percent above) and Oklahoma City, OK (52 percent above).

Average home seller gains continue to increase

U.S. homeowners who sold in the third quarter of 2019 realized an average home price gain since purchase of $68,686, up from an average gain of $66,995 in Q2 2019 and up from an average gain of $63,750 in Q3 2018. The average home seller gain of $68,686 in Q3 2019 represented an average 34.5 percent return as a percentage of original purchase price.

Among the 164 metropolitan statistical areas analyzed, those with the highest average home seller returns in Q3 2019 were San Jose, CA (82.2 percent); San Francisco, CA (72.0 percent); Seattle, WA (64.9 percent); Salem, OR (60.6 percent) and Salt Lake City, UT (59.6 percent).

About The Author

Lending Data—Make It Your Friend

In today’s fast paced mortgage environment with ever-changing rates, fluctuating volumes, heightened competition, margin pressure and introduction of disruptive technology, lenders are continually challenged to maximize profitability.  The speed at which lending decisions need to be made continues to accelerate if lenders want to remain competitive and sustainable for the long run.  This speed highlights the importance of data and more importantly, the ease at which data is accessible and usable to make informed business decisions.


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Historically data access has been challenging.  The typical LOS has fifteen to twenty five thousand data fields.  Lenders are hard pressed to easily access this crucial lending data — trying to pull the appropriate fields from their LOS and other systems.

 “Our industry mostly relies on static historical data. The residential loan application is a picture in time, not a video of a consumer’s journey up to the moment of truth: financing a new home. The same type of data is involved in the loan servicing space. It’s a snapshot of prepayments and non-performing loans, not necessarily identifying the patterns and the financial journey of a borrower making mortgage payments each month. I think the key data elements such as trending data; demographics and predictive analytics will provide information that is disruptive to the mortgage industry” Maylin Casanueva, COO of Teraverde is quoted as saying in Disruptive Fintech: The Coming Wave of innovation in Financial Services with Thought Leadership Provided by CEOs.


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The ability to use lending data in a meaningful way puts a lender at a distinct competitive advantage.  This disadvantage is exacerbated during times of big swings within the industry such as rate changes or volume increase.  

Many lenders are reporting record volume months.  What do many lenders do in this situation?  They begin to hire more underwriters, loan officers, closers, to meet volume demands.  This works short term, but is there a better way?


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So, what are lenders to do?  Accessing a lender’s data effectively creates a major competitive advantage. The key is not just in the technology but also in partnering with an expert that can help lenders learn how to apply technology, data and best practices to solve today’s most challenging lending issues.

When lenders turn to an industry expert to show them best practices on how to easily access their lending data for up-scaling while fully utilizing their technology, they will be able to increase profits. The guide can show them solutions on how to better optimize and easily access their loan origination data while allowing them to keep the data in one powerful system. 


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Thousands of lenders have turned to Ellie Mae for their mortgage technology needs.  They have selected the leading cloud-based platform and now, through a partnership with Teraverde, can maximize their investment.  This dynamic partnership allows lenders to easily access the key data elements from over twenty-five thousands data fields within Encompass. Teraverdehas the unique combination of mortgage banking experience, highly skilled technical resources, and Encompass domain expertise to help a lender develop profit intelligence.

The seasoned Teraverde industry executives have seen and worked through major challenges in the mortgage lending and banking industries. Our executives first began working with Ellie Mae in 1995 and have used Encompass from its inception in 2006. Our experience, in-depth understanding of lenders’ Encompass needs, and innovative expertise allows us to accurately identify the appropriate methodology the first time, maximizing the Encompass investment.

We partner with lenders to provide industry insights and best practices that impact the bottom line. Teraverde has worked with over 300 mortgage lenders and banks to identify and strategically leverage their new technology and operational processes, combined with our innovative expertise and profit intelligence platform to drive ROI.

The combination of Ellie Mae’s Data Connect and Teraverde’s Coheus Profit Intelligence platform allows lenders to easily access critical lending data. Encompass Data Connect provides lenders secure access to their cloud-based, encrypted data at any time and from anywhere. This enables lenders to maximize the utility of their existing reporting, business intelligence, and visualization tools to gain actionable data insights, expand competitive advantage, and innovate faster.

>>Access all Encompass loan data fields in near real-time without impacting Encompass performance

>>Audit multiple loans simultaneously without restrictions

>>Get 3 years of historical data right out of the box

>>Reduce manual efforts with automatic database schema updates synced with changes in Encompass

>>Maximize existing business intelligence tools using structured data provided by Data Connect

Teraverde’s Coheus Profit Intelligence is the first solution of its kind that absorbs all data sources and provides analyzed visual data of the entire lenders organization in near real time including; Encompass data fields, Secondary Marketing Data, Accounting and General Ledger Data, Servicing Data, QC- Pre Funding and Post Funding Data, and Data Warehouse. This allows the lender to take this actionable intelligence and make swift business decisions to gain a competitive advantage in the marketplace. The ability to identify and eliminate performance problems, waste, and revenue leakage is crucial, especially in today’s challenging lending environment. 

By having this profit intelligence solution absorb all the data sources, lenders are able to access Encompass data near real time with a full overview of their lending operation. With a few clicks they can dig into their data all the way to the loan level. With the power of the solution and partnership lenders can now easily identify revenue leakage. Lenders can now identify the most profitable team based on profits by Product, Branch, Loan Officer and Underwriter. The solution provides a heat map, demonstrating all branches in the entire country and illustrates which ones are driving the most revenue. 

Going Beyond Expectation for Lenders 

Ellie Mae and Teraverde have partnered to provide lenders the ability to tap into the true potential of data and do more with the data insights. Teraverde, Ellie Mae’s Pro Elite Partner, are working together to provide lenders the most efficient transition to Encompass, a centralized system for loan origination. 

With the mortgage industry rapidly moving towards a technology, data driven approach, more lenders are turning to Encompass to have all loan information in one place and have a less paper intensive process. Ellie Mae has the confidence in the value the Teraverde family can bring to lenders. This transition, made a huge benefit for the lender: 

  • Bringing all data sources-Maximizing ROI
  • Optimizing teams and products to drive profitability 
  • Perform extraction, translation and data loading quickly and easily for all data needs for reporting and business intelligence- one could quickly pull a report with near real time data, reducing the resources and human labor needed to create an Ad-Hoc report. 
  • Assist lenders in managing data easily for reporting, business intelligence and related uses.
  • Built by and for mortgage bankers to easily build access to Encompass and analyze the data they want without the need of an IT personnel. 

“Our industry is increasingly relying on data to make decisions and create competitive business advantage. There are three aspects to a meaningful data analysis. Ability to solve the right business problem, ability to trust the data and ability to contextualize the data. Lenders are starting to analyze everything from operational efficiency, profitability to even product mix based on analytics. But the power of analytics comes from reliable, real-time data that not only includes the loan data, but also other relevant datasets like demography trends, and income data. Moreover, ability to benchmark against peers and industry will provide the right context and help lenders identify real opportunities.”

Manish Garg,Vice President, Product Management Ellie Mae

Lenders must consider technology solutions along with experts that can help lenders in the mortgage industry. The right collaboration of technology can gain access to critical lending data and visually define the important data for executives to make data driven decisions. Lenders can transform lending data to a friend and create better business opportunities. 

About The Author

The Power Of Association

Who you become in the next 2 to 5 years is going to be directly related to the people that you associate with. If you associate with lazy people, average people, people that believe in mediocrity, more than likely that’s where you’re going to end up in the next 2 to 5 years. 


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According to Colin Powell, “The Power of Association is too real: The less you associate with some people, the more your life will improve. Any time you tolerate mediocrity in others, it increases your mediocrity. An important attribute in successful people is their impatience with negative thinking and negative acting people. As you grow, your associates will change. Some of your friends will not want you to go on. They will want you to stay where they are. Friends that don’t help you climb will want you to crawl. Your friends will stretch your vision or choke your dream. Those that don’t increase you will eventually decrease you.” 

He went on to state, “Don’t follow anyone who is not going anywhere. With some people you spend an evening: with others, you invest it. Be careful where you stop to inquire for directions along the road of life. Wise is the person who fortifies his life with the right friendships. If you run with wolves, you will learn how to howl, but if you associate with eagles, you will learn how to soar to great heights.


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A mirror reflects a man’s face, but what he is really like is shown by the kind of friends he chooses.”

So, the people you associate with are critical to helping you accomplish what your goals are moving forward, whether that’s in fitness, whether that’s career goals. The Power of Association is going to have an incredible impact on where you go. So, let’s talk about four ways that you can associate with and accomplish what you’re trying to accomplish.

Number 1 is the books you read, the blogs you’re reading, and the periodicals that you’re reading.  People state, “I want to associate with key executives and leaders, but I don’t know John Maxwell, Jon Gordon or Andy Andrews. I don’t know those people, so how am I ever going to associate with them?”  Read their books.


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I’ve read every book that John Maxwell has ever written, so I could probably finish some of his sentences. So, there’s a sense of me understanding how he’s thinking, how he would approach things, and I can apply that to my life. If that person has something that I want and I can learn from them, great things can happen.

Number 2 is podcasting, which is enormous now, and there are several great podcasts out there that you can listen to.  There are great podcasts like “A Minute with Maxwell” by John Maxwell, or “Optimized +1” by Brian Johnson. It is one of my favorites, which I listen to every day. He provides philosopher notes and other great insights that are quick, easy to digest information, but something that I can learn and grow from him every day.  I enjoy “The Garyvee Audio Experience,” and the list goes on an on.

There are also several excellent industry podcasts.  The first place I would start is the Industry Syndicate (http://industrysyndicate.com): which hosts great podcast such as “The Voice of Social Sales” by Chelsea Peitz, or “Mortgage X” with the incredible Christine Beckwith and Jason Frazer, or “Mortgage Marketing Expert” with Phil Treadwell, and “Lykken on Lending” by Dave Lykken.  These podcasts and many others are another way that you can associate with people even if you don’t know them directly.


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Number 3 would be through social media. Whether it’s through LinkedIn, whether it’s through Instagram, whether it’s Twitter, you can start interacting with individuals that maybe you’ve never met before. A great example of this for me, especially over the last few months has been on LinkedIn.  I’ve had the fantastic opportunity to meet and interact with people like Kevin Peranio at PRMG,  Raquel Borras of Main Street Home Loans, Sue Woodard of Total Expert, Laila Khan of Guidance Residential, Ginger Bell of Edumarketer and Josh Pitts of Shred Media to name a few. 

People that maybe I haven’t personally met, but now I’m starting to develop a relationship with and get to understand, “How they think? How they approach things? What are some tips I can learn from them? What are a few tips that I can pass on to them?” so it’s very, very engaging, and compelling.

Number 4 would be events, conferences, trade shows.  It can be any type of event that is going to help bring out the best in you. For instance, I attend a men’s prayer breakfast every Wednesday from 6:00 to 7:00 AM at Our Lady of Good Counsel. It helps me grow in my faith and meet like-minded men.  We now have over 250 men show up every Wednesday. There’s high power in that and what it does is that it challenges me to be the best version of myself. 

There are industry events that are incredible to attend.  Some of these include the Housing Wire engage event, which was fantastic. It had a great lineup of speakers, and I made several new connections, which shared tips and insights that I’ve been able to implement.  The NEXT conference by Molly Dowdy and Jeri Yoshida, is doing some fantastic things for women that are changing the face of the industry. 

The Digital Mortgage conference by Source Media allows tech companies the opportunity to present the latest and greatest in tech innovation. The Vision Summit by the amazing Christine Beckwith,  I was humbled and honored to have the opportunity to be presenting at that event on the Media Mogul panel.   The summit shared incredible tips, techniques, but more importantly, people got the chance to network and meet so many of these people that are moving the industry forward. 

That’s what the power of association is all about, and it’s about building lasting relationships, it’s networking, its sharing ideas, and concepts. What you’ll find by meeting so many of these fantastic people that I referenced above is the fact that they are willing to share, they want you to come along and succeed with them. 

So, if not you, then who? If not now, then when? The Power of Association can make a massive difference in who you will become. Let’s go out there and connect as we move the industry forward together.

About The Author