The Next Stage In Mortgage Evolution: The Robotic Mortgage

Technology has become pervasive in the mortgage industry, with paper loan files quickly becoming a thing of the past. One of the biggest drivers in these technological advances is the desire to improve the borrower experience. Technology presents endless possibilities, and the demand for new functionality is immense. How can lenders afford to adopt new technology and keep the cost of origination down? The answer, for some, could be the Robotic Mortgage.

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“Robotics”, or Robotic Process Automation (RPA), is the newest buzzword in the mortgage business, and it is changing the way we look at automation. To put it simply, RPA is technology that replicates repeatable actions or tasks that would otherwise be completed by a human, working in a single application or across multiple systems. Furthermore, with the use of robotics, tasks that are not linked by dependencies can now be performed simultaneously.

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Robotics is not a new concept; some industries have used robotics technology for decades. For example, manufacturing companies use robotics to complete tasks such as applying a coat of paint to the shell of an automobile. By utilizing robotics, they can speed up processes to increase production while maintaining high quality, thereby reducing costs.

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Mortgage Cadence’s Loan Origination Systems (LOS), the Enterprise Lending Center, represents the progress that robotics has made within the mortgage industry. A loan file was once hand-carried to every department throughout the life of the loan, and validations were a manual task. For years now, lenders have relied on their ELC to automatically drive workflow, task their users, condition a loan, interact with their borrowers and third party vendors, and, most importantly, originate a compliant loan. Borrowers can now apply, follow the life of their loan, upload documents, see conditions, and communicate with their lender, all online. So what differentiates robotics from current LOS technologies?

There are still many repeatable tasks being completed by individuals throughout the loan origination process. Loan set-up, data entry, document comparison, and sending notifications on incomplete packages are just a few examples of items that can be further automated with robotics. Just as robotics is redefining the loan origination process, the possibilities for enhancing the LOS implementation and delivery process through robotics are numerous. For example:

>>Customized Functionality – Imagine a “drag-and drop” graphical tool that lenders can use to create rules automatically, based on the selection of chosen functionality being dropped into the tool.

>>Test Scripts – Developing a test strategy is one of the most important aspects of a successful LOS implementation. Imagine lenders being able to generate automated test scripts based on their system’s customized configuration.

>>Configuration Design Tool – Imagine if configuration could be automatically generated based on the information a lender put into a business process map.

The technology exists to make these ideas real. Lenders that want to maintain a competitive edge are finding ways to use robotics to reduce costs, increase productivity, decrease turn times, improve quality, and provide visibility. Technological innovation will continue to disrupt the mortgage industry, and the Robotic Mortgage is leading the way.

About The Author

Regina Musyl
As a Professional Services Director for Mortgage Cadence, Regina Musyl focuses on organizational improvement through building ground-floor initiatives and process improvement. She joined Mortgage Cadence in 2015 as a Strategic Engagement Manager, responsible for the end-to-end implementation and delivery of the Enterprise Lending Center platform. After advancing to Professional Services Director, Musyl undertook the development of a Client Enhancement Services program supporting clients interested in subsequent phases of implementation or specific enhancements and has since transitioned to overseeing robotics initiatives. Musyl began her career in the mortgage industry in the default sector, followed by a focus on due diligence, compliance and credit risk management. Prior to joining Mortgage Cadence, Musyl designed and built a correspondent loan platform for an independent loan originator in Denver, CO.

Get The Information You Need From Tax Agencies, When You Need It

Obtaining accurate information from the various taxing agencies can be, in itself, taxing. Each agency operates differently, with some handling real estate taxes from end-to-end, while others manage only a portion. When taxes become delinquent or go to tax sale for example, many agencies will send the bill to a third party to be collected. To further cloud the waters, the different agencies may also use their own specific terminology for what happened to the taxes or where to locate the appropriate information. However, servicers can help expedite and streamline the information gathering process.

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When trying to obtain accurate and current tax information, servicers should prepare and organize what information is needed before calling the agency. This will prevent wasted time for everyone involved. Also, keep in mind that most tax agencies are extremely busy around collection time and are less willing to work with companies if they call without adequate preparation or a clear understanding of what is needed. Some agencies can go so far as to block a company from calling again. When this happens, companies lose the ability to gather the required material and must go through other, less efficient routes such as mailing the request in or even making an in person visit to the agency.

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Streamline, Don’t Complicate

By being proactive and working closely with the taxing agencies, companies can prevent an information bottleneck and ensure that communication is being fostered. Most importantly, it ensures that the information obtained is correct and up-to-date. Here is what you do before contacting an agency:

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1.) Gather all tax information available, such as the parcel number, homeowner’s name and address.

2.) If possible, familiarize yourself with some of the specific agency’s terminology. For instance, some other common terms for “tax sales” are lien, tax title, tax taking, in rem, tax foreclosure, forfeiture, tax deed, certified sale, tax suit, upset sale, judicial sale. Its important to stay abreast of what an agency uses to prevent miscommunication.

3.) Perform any website searches first to see if it can help you in the information gathering process. Be prepared to have information ready to validate with the tax office. When using a website, do not assume that all information is listed and up to date. It may be necessary to contact the tax office and ask:

>>Does the website provide delinquent tax and tax sale information? If the answer is no, you need to always call to verify delinquency/tax sale details.

>>If taxes are listed as paid, does the website provide the payers name? If the answer is no, you need to call to verify who paid the taxes.

>>How often is the website updated?

>>Are there other websites you should reference to obtain delinquent or tax sales information?

4.) Prepare a script to direct the conversation in order to get all the data needed in the most efficient manner. When calling an agency for the first time, open the conversation by being professional, positive and polite. If you can build a relationship with the person you speak to at the agency, it could result in help with future inquiries and a more streamlined process.

5.) Have questions prepared such as why are you calling and what you need from the agency? Try to stay away from stand-alone “yes” or “no” questions, and instead, ask leading questions for more detailed answers, such as:

>>Do you collect your delinquencies? If not, then you must get the name and phone number of the appropriate party to contact. If the agency does collect delinquencies, then the next question should be, “Are the taxes delinquent?” If you are told all taxes are paid, make certain to ask if taxes were paid at tax sale or by a third party.

>>Were taxes paid at tax sale?

If they were, then when were taxes sold?

Can we still redeem taxes?

When does the redemption period end?

What is the redemption amount?

6.) If time allows, and if the agency will comply, request that the agency send you a document that breaks out any amounts owed so that there is no room for error with the amounts being obtained.

There are a number of unique challenges when working with the different taxing agencies around the country, but understanding the organizational nuances and procedures can help to overcome these hurdles to ensure cooperation and success.

About The Authors

Louise Byrnes (left) and Shelley Lucas
(Left) Louise Byrnes, vendor manager, is responsible for the research of claims and lost properties at LERETA, a leading national real estate tax and flood service provider. (Right) Shelley Lucas, vice president, Tax Operations, has more than 25 years of industry experience. She currently oversees the management of agency and other proprietary information for LERETA, a leading national real estate tax and flood service provider.

Commercial Evaluations Could Be The Answer

The appraisal industry is rapidly changing, and these changes usher in challenges as well as solutions. A declining appraiser pool can sometimes lead to appraisal delays and contribute to industry frustration. A more lengthy appraisal process can also create a disconnect between the borrower and the lender. This concern is significant in the commercial lending space as well as the residential.

To counter this dynamic, viable substitutes to traditional appraisals continue to emerge within the marketplace for qualifying situations. These substitutes are most often referred to as Evaluations. Evaluations are typically administered by real estate brokers and agents and follow practices set forth by the FDIC’s Interagency Guideline (IAG). They are most suitable for small loan balances as well as due diligence, portfolio monitoring, loan modifications, default services and extensions of credit. Lenders may also use evaluations for origination purposes when valuing a commercial property under a $250,000 loan threshold.

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So, what are the key differences?

The evaluation process is governed by the Interagency Guidelines and offers an abbreviated set of standards to accommodate qualifying transactions, while the traditional appraisal process is governed by USPAP which outlines a comprehensive set of standards by which to operate. Prices for evaluations are often less than the price of appraisals. Commercial evaluations generally cost under $1,000, while commercial appraisals can cost anywhere from $2,000 to $4,000 for similar properties. The time required to complete an evaluation is also reduced. Evaluations are generally completed in ten business days or less, while commercial appraisals generally require three to four weeks.

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The commercial evaluation form contains several approaches to value which includes land values, a comparable analysis (three comparable listings; three comparable rentals; three comparable sales); line item adjustments; local market trends, including vacancy rates and the subject’s neighborhood; income approach; subject property transaction history; capitalization rate; operating expenses; current subject photos; and commentary. Field agents perform interior site inspections as requested. The reports address current zoning, site utility, construction quality, assessment information and highest and best use.

Because the standards are not as extensive for evaluations, it is critical for lenders to understand the processes their vendors use including the use of technology, data resources and manual review.

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Lenders that understand the differences in the products offered by the market and the appropriate application of each can, in many cases, lower costs and expedite the production of credible values.

About The Author

Audrey Clearwater
Audrey Clearwater is vice president of operations at LRES, a national residential and commercial mortgage services company providing valuations, REO asset management and HOA solutions for the mortgage and real estate industry. With more than 15 years of continued growth, LRES offers managed business processes for the origination and default markets. For more information about LRES, visit its website at www.lres.com.

Co-Borrowers Account For 23% Of Single Family Loans

ATTOM Data Solutions found that more than 2 million (2,033,296) loans were originated on U.S. residential properties (1 to 4 units) in the second quarter of 2017, up 27 percent from a three-year low in the previous quarter but still down 12 percent from Q2 2016.

The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by ATTOM Data Solutions in more than 1,700 counties accounting for more than 87 percent of the U.S. population. Counts and dollar volumes for the most recent quarter are projected based on available data at the time of the report (see full methodology below).

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The report also found that 22.8 percent of all purchase loan originations on single family homes in Q2 2017 involved co-borrowers — multiple, non-married borrowers listed on the mortgage or deed of trust — up from 21.3 percent in the previous quarter and up from 20.5 percent in Q2 2016.

“Homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”

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Highest share of co-borrowers in San Jose, Seattle, Southern California and Portland

Among 42 cities with at least 1,500 purchase loan originations on single family homes in the second quarter, those with the highest share of co-borrowers were San Jose, California (50.9 percent); Miami, Florida (45.2 percent); Seattle, Washington (39.1 percent); the Southern California cities of Los Angeles (31.1 percent) and San Diego (29.4 percent); and Portland, Oregon (28.8 percent).

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“Climbing home prices are forcing more and more borrowers to consider other options, such as leveraging a parent’s credit, in order to qualify to buy,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Given the ongoing concerns about the emergence of another housing bubble, it was encouraging to see that Seattle has the tenth highest average down payment in the U.S. at 14 percent. Such substantial down payments can act as a cushion in the unlikely event that home prices start to reverse the substantial gains that we’ve seen over the past several years.”

Cities with the lowest share of co-borrowers in the second quarter were Memphis, Tennessee (10.3 percent); Mesa, Arizona (12.5 percent); Oklahoma City, Oklahoma (14.2 percent); Gilbert, Arizona (14.4 percent); and Henderson, Nevada (15.1 percent).

Progress In Lending
The Place For Thought Leaders And Visionaries

Borrowers’ Short Attention Span

As a lender you are battling with rates fluctuations, compliance scrutiny, intense competition and inventory shortages. In addition, you are often dealing with potential borrowers who have a short attention span for any of your efforts to effectively market to them.

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Would you be surprised to hear that email may still be the answer? In an article entitled “The Short Attention Span Solution for Marketers” from Amanda Zantal-Wiener, a Senior Staff Writer at HubSpot.

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In her article she states, “Email marketing might be entering a mid-life crisis. According to Entrepreneur, 2017 marks its 40th birthday, with 1978 cited as the year when the first marketing email was delivered. The sender, the story goes, was Gary Thuerk, an employee of Digital Equipment Corporation — an infamous legend, of sorts, who’s referred to by some as the “father of spam.”

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She went on to say, “Yet — somehow — it seems that email marketing is doing a better job than a lot of other digital communication at prolonging a viewer’s attention span. The stereotypical “mid-life crisis” often involves change that comes after years of overall evolution and improvement. And in a way, email marketing isn’t so different. It’s gone through a number of modifications to make it better, more user-friendly, and less spammy since 1978. And now, Litmus reports, the average time spent reading an email has increased by nearly 7% since 2011.”

Further, “But how is that possible, given our oft-cited dwindling attention spans? As it turns out, email marketing might be an exception to that rule for a number of reasons, ranging from improved sending platforms to more mobile-friendly consumption experiences to generally better content.

Want the details? You’re in luck. Litmus breaks it down in this the handy infographic below.”

How to Cure a Short Attention Span With Email

About The Author

Brandon Perry
Brandon Perry is President at The Turning Point. Brandon oversees all operational and administrative activities of TTP. Brandon brings over 16 years of experience in various financial services industries to TTP which enhances the Company’s ability to maintain it’s position as industry leader in providing customers with an advanced marketing solution.

Take Your Business To The Next Level

In the beginning, entrepreneurs tend to focus deeply on just launching the business. But what happens when the launch and the subsequent water-treading and breath-holding period starts to subside? In the article “Ready to Scale Your Small Business? Do These 5 Things” written by Emily Richett, here’s what she suggests:

Build A Vision Your Team Shares

While scaling a business of any size takes strategic planning and focus, going from solopreneur status to a true team is a serious leap. Andrew Dymski co-founded the digital agency GuavaBox in his college dorm room. Fast forward to today, and he’s got a powerhouse global team making things happen around the world. His advice? “Spend time building out the vision for what you’re trying to build.” And that’s easier said than done–entrepreneurs notoriously, “keep their noses to the grindstone and never look up,” he adds.

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It’s an essential exercise especially during the all-important shift from one to more than one. “When you start scaling your team, you need to have a clear mission that others can get excited about.” And, as Andrew reiterates, that impacts you, too–not just your team. “Taking the time to focus on your vision can help you build the company of your dreams,” he says, “not just build out another job. You don’t want to finally lift your head up in 10 years and wonder why you wasted your time and energy hustling to build a business you don’t even like.”

Be Endlessly Data-Driven

When you’re scaling your small business, it’s essential to measure and analyze everything.

“When our digital agency went through its first growth phase in 2014, our client base grew 200% in less than three months,” says Lauren Davenport, CEO of the Symphony Agency. Like Andrew, Lauren launched her company in college. Now, she leads a team of 20. “We needed help–and we needed it now.” Their solution? They immediately wrote up job descriptions and brought in seven new team members, seemingly overnight. The only problem? They did it without any sort of hiring framework in place. And that was a problem.

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“We didn’t dig into the nitty gritty of capacity planning and profit margins,” she recalls. “Hiring more people solves all problems, right? Wrong.” In this case, bringing on new hires had the opposite impact–the quality of their product suffered big time. “I had the pleasure of learning the age old lesson of ‘be slow to hire and quick to fire,” says Lauren. “It wasn’t fun.”

The good news? “You can easily avoid this mistake,” she says. For starters, figure out your company’s key performance indicators that, specifically, drive growth and cash flow. And once you do, “measure them like crazy, and you’ll avoid the pitfalls that we learned the hard way.”

Get to Really Know Your Audience

Scaling periods are critical times to focus on who’s buying your products or services. By gaining clarity of who your audience is and where your business is going, “your employees will make decisions based on what is better for the business rather than themselves,” explains Jason Swenk, an agency growth coach and mentor.

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During his career, Jason successfully built and sold a digital agency and now he coaches other agency owners. “You need to drill down into a niche a couple levels where you completely understand your clients’ biggest challenge and what they want,” Jason says.

Don’t Be Afraid to Say No

When you first launch your business, it’s easy to fall into a ‘yes’ pattern, that is, saying yes to every client, every consumer and every opportunity that comes your way. It makes sense, beggars can’t be choosers, right? While no one’s advocating taking on clients who are going to endlessly drain your time and talent, entrepreneurs tend to be a little more lenient in selecting clients in those early days.

But, as your business begins to scale, that approach might actually hold you back. “At the end of the day,” says Andrew, “the clients that pay you the most money will bring the least headaches. The clients that pay you the least amount of money will bring the most headaches.” His advice? “When in doubt, charge more.”

Be Accountable

Most entrepreneurs, especially freelancers and consultants, “aren’t accustomed to being their own boss,” Lauren says. “It sounds like it should be fun, but holding yourself accountable can be difficult.” While accountability is always important, it’s particularly critical as you’re scaling. Lauren experienced this one first-hand. “When I hired my first business coach,” she recalls, “I couldn’t afford it, but I scraped up pennies and did it anyway.” And guess what? “It was worth it.”

About The Author

Michael Hammond
Michael Hammond is chief strategy officer at PROGRESS in Lending Association and is the founder and president of NexLevel Advisors. They provide solutions in business development, strategic selling, marketing, public relations and social media. He has close to two decades of leadership, management, marketing, sales and technical product experience. Michael held prior executive positions such as CEO, CMO, VP of Business Strategy, Director of Sales and Marketing and Director of Marketing for a number of leading companies. He is also only one of about 60 individuals to earn the Certified Mortgage Technologist (CMT) designation. Michael can be contacted via e-mail at mhammond@nexleveladvisors.com.

Partnership Automates The Calculation Of Title Settlement Fees

OpenClose has integrated with Timios, Inc., a national provider of title and settlement services to banks, financial institutions and mortgage lenders. The integration allows users to efficiently draw all title and settlement fees directly from within OpenClose’s LenderAssist LOS, eliminating data entry, saving time and ensuring fees are fully accurate and TRID compliant.

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Timios leads the title and settlement industry in pricing accuracy, successfully bringing the first RESPA compliant, free, instant guaranteed GFE calculator to market, and again delivering TRID compliance guaranteed pricing ahead of the industry. The company guarantees that all title settlement fees with Timios are disclosed accurately in the Loan Estimate (LE) for TRID compliance from the day of origination through the transmittal of the final disclosure to the consumer. OpenClose users can now leverage Timios’ proprietary pricing engine, instantly and seamlessly populating all relevant information within its LOS.

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“Timios is a natural fit with OpenClose, as our comprehensive solutions work very well together, providing transparency via their centralized fulfillment model to simplify the calculation of settlement fees,” says Vince Furey, SVP of lending solutions at OpenClose. “Further, both of our customer support models are very hands-on and responsive, which is a significant attraction to our mutual customers.”

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Trevor Stoffer, CEO of Timios added, “Timios is proud to partner with OpenClose to deliver the best pricing solution to lending partners throughout the country. Like OpenClose, Timios has built a reputation as an industry leader for innovation, and OpenClose is a natural partner in driving transparency and simplification into real estate transactions. OpenClose users will never face another loss from mistakes because Timios’ pricing data is instant, accurate, and guaranteed.”

Timios, Inc. is a California-based corporation and the country’s fastest growing title and settlement services company. Since its founding in 2008, Timios has serviced more than $30 billion in escrow closings and expanded into new markets throughout the country. In addition to fee calculations, Timios also offers a wide variety of title insurance products, escrow and settlement services, realtor and REO purchase, appraisal and valuation products and services.

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.