The LOS Of The Future

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Founded by bankers — not technologists — OpenClose remains one of the top mortgage software companies in the country. The company was a pioneer in developing software as a service (SaaS) for the mortgage industry. OpenClose customers add components to their businesses as they grow while still preserving their initial investment well into the future. The company provides a variety of browser-based lending automation solutions for lenders, banks and credit unions of all sizes. OpenClose’s LOS is completely engineered by the same company, thus avoiding assembling best-of-breed applications or acquiring technologies in an effort to create an end-to-end platform. The company focuses on providing lending organizations with full control of their data and creating a truly seamless workflowJames P. Kelly, President of OpenClose, talked to us about the future of the loan origination software space. Here’s how he sees this sector evolving:

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Q: How has the industry changed since you started in mortgage lending?

JAMES P. KELLY: When I first started out in the mortgage industry back in 1994, I was a lender so I had an origination background and a strong understanding of that side of the business. From a technology perspective, it was archaic compared to today. It took over 24 hours just to get a credit report and most mortgage software applications required an install. Nothing was as streamlined and transparent as it is today. OpenClose was founded in 1999 and we’ve always had a through and through browser-based system. Now, the dot-com era helped drive the use of web-based technology, but it wasn’t widely adopted in the mortgage industry. That’s starting to change but there is still more work to be done, as there are still a lot of systems that require an install, which equates to being web-enabled/web-accessible.

Q: What should lenders look for when switching to new loan origination software?

JAMES P. KELLY: There are several things. It absolutely needs to be browser and SaaS-based. And make sure it’s multi-channel so you can easily add and grow wholesale, retail, correspondent, or consumer channels. Vet the vendor well. Ask the vendor about who does the configuration. The onus should be on the vendor, not the lender. In addition, make sure there is extensive training and good technical support. It is also important to look for a vendor that has staff with significant experience in the mortgage industry. It’s much more effective being trained by someone who has been in their shoes and understands the challenges of the mortgage process.   All too often, lenders buy a platform and have issues later with adding channels, having to maintain the system themselves, being challenged with getting enough training on the system, and getting adequate post implementation customer support.

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Q: In your opinion, what makes an LOS stand out as being truly innovative?

JAMES P. KELLY: A vendor that is innovative is one that truly listens to its customers. The customer often comes with up with some of the best feedback on issues they face today, which results in the creation of ideas to enhance systems and develop new products. The vendor needs to act on those ideas. Further, having a clear product roadmap and paying close attention to marketplace trending is key. Lastly, hire the right people. Make sure they are forward thinking and have mortgage technology experience. It makes a difference.

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Q: What do lenders have to focus on if they want to deliver innovation to potential borrowers?

JAMES P. KELLY: They need to focus on ways to improve communication to the borrower. This can be a very scary time for the borrower so providing the tools that keep them in the loop and set the proper expectation is key to achieving the ultimate goal of a happy borrower. You have to take enhancing the consumer experience very seriously. They want ease of doing business and they want to handle more of the process themselves. Moving technology to the point of sale for borrowers is becoming very important to allowing the borrower to have a place to submit and receive communication about their loan. And with the CFPB now encouraging lenders to implement an eClosing process, I think we’ll see greater adoption sooner than later. Mobile devices are also important. OpenClose is releasing an updated mobile app for LOs and also a consumer app that makes obtaining a loan much simpler for the borrower. Consumers, especially millennials, want to do things increasingly on their smart phones. In short, make lending as easy as possible by offering consumers the tools they need and expect.

Q: Define the next generation LOS?

JAMES P. KELLY: The next LOS should enable loans to flow effortlessly through the LOS workflow — for all business channels using a single LOS vendor. This lowers costs, decreases margin for error, facilitates faster loan processing, and ensures compliance adherence. The less manual intervention the better. It should be a completely workflow-driven process. Notable is that the industry is moving closer to achieving a true end-to-end, fully paperless eMortgage process that is getting closer to becoming a reality, and the industry will need the right LOSs that help enable it.

Q: In addition to your LOS, you offer a correspondent/conduit solution. How is it doing?

JAMES P. KELLY: Phenomenally well. We are picking up a lot of new business with our OC Correspondent module. We’re seeing investment firms increasingly come to us to kick-start a de novo conduit business as well as lenders looking to launch or grow a correspondent channel. OC Correspondent is web-based and can be used a standalone solution or as integrated with our LOS, LenderAssist. It’s turnkey and can be implemented in as little as 30 days, depending on configuration needs. It’s been a huge success for us and we don’t see the deal flow slowing anytime soon

Q: Can you share with us why it’s important for lenders to use a multi-channel LOS platform?

JAMES P. KELLY: Put simply, if you want to add a business channel or remove one, you shouldn’t have to add another LOS or scrap one if you exit a channel. Some lenders, especially larger ones, buy different LOS platforms to run different business channels. This is because most LOSs on the market purport to be truly multi-channel but they are not. The lender finds that out later. Disparate LOSs don’t talk to one another very well, if at all. The channels become siloed and as a result and there is a myriad of issues associated with that, not to mention a significantly higher cost to originate loans. Buyer beware. Make sure the LOS is truly multi-channel.

Q: What are some of the biggest challenges with LOS implementations?

JAMES P. KELLY: The effort the lender must put into the implementation is of paramount importance. It is key for the lender to put one person in charge of the implementation so there is ownership and accountability on getting the vendor the information and they need.   Additional issues can arise when too much burden is placed on the lender, with the vendor not assisting with the heavy lifting. That can become a huge issue, especially for lenders that don’t have the internal resources to do it. And sometimes the LOS isn’t as configurable as the lender thinks it is and certain functions must be custom-coded, which extends implementation time frames and raises costs. Additionally, user acceptance testing (UAT) is key along with getting users properly trained on the system. If you don’t know how to use it, employees in different functional areas will complain and that’s part of why lenders seek a new LOS. They just didn’t know the feature set they needed existed. And that’s really the vendor’s fault.

Industry Predictions

James P. Kelly thinks:

1.) There is no doubt that compliance adherence will remain near the top of every lending organization’s list.

2.) A decrease in lender profits will result in M&A activity picking up and a more consolidated market.

3.) As Rates start to increase, we will start to see a significant rise in non-QM loan volume.

Insider Profile

James P. Kelly is President of OpenClose. He has the responsibility for the overall direction, coordination and administration of all financial strategies, policies and controls for OpenClose and its divisions. He manages, motivates and develops a dynamic sales force to meet profit goals, while keeping the executive staff apprised of financial trends, based on timely and accurate financial and operating information, allowing the executive team to act promptly and intelligently in response to competitive market opportunities. He brings extensive experience as a mortgage banker as well, acting as President and Co-founder of Magellan Mortgage Group, a full-service mortgage bank with offices in Florida, Kentucky, Tennessee, Ohio and Indiana.

Is Your Tech Paying Off?

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What’s the key to maximizing profit and efficiency? Many lenders might say using technology or getting rid of paper and embracing electronic mortgages. And to an extent they are correct. A well-tuned loan origination platform, combined with state of the art document engines, compliance software and settlement services automation can dramatically reduce the time and cost needed to close a loan.

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However, too many lenders pay significant dollars for their technology systems without taking the time to learn how to use them to their maximum effectiveness. This is a simple idea, but the sheer complexity of LOS platforms makes it difficult to achieve, especially when considering the myriad of integrations to third party vendors that are available today. Implementing an effective mortgage lending system requires that lenders have a level support that results in optimal technology adoption and the flexibility to take advantage of best of breed vendors that can meet their unique needs.

Teach Me How to Use It

The key to an optimized lending environment is getting the most performance out of the loan origination system as possible. Too often, lenders continue using old processes with new technology because no one has shown them a better way.

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When evaluating LOS vendors, lenders should look for two key things to ensure they are getting the most out of their investment. The first is the initial consultation and implementation provided by the vendor. A vendor that is dedicated to the lender’s success will take the time to understand the way a lender currently works and identify key areas where the new LOS can improve performance. This allows the vendor to align the needs of the lender with the capabilities of the software and uncover best practices that will introduce changes to existing processes that result in efficiency gains.

Secondly, vendors should be evaluated on their ability to provide ongoing training and support to continue getting the most out of the system. Training and support should be more than a reference guide or manual. It should address specific tasks and processes by laying out prescriptive recommendations on how best to automate workflow. The best vendors will be proactive about training and support, with the acknowledgement that system adoption is a never-ending process because new features are continuously added.

But an important element that cannot be overlooked is a robust service department that is committed to helping clients. Quality service is not just for troubleshooting, but to fine-tune system adoption. Having experienced, knowledgeable and responsive support fills in the detailed usability gaps that documentation and training cannot satisfy.

Build a Technology Framework that Supports Optimization

Optimizing the use of technology will help lenders improve their efficiency, but to truly maximize their investment, lenders should look for technology that adapts to the unique needs of each company. The LOS has evolved into an extensible system that is augmented with best of breed integrations to quality service providers.

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In today’s highly specialized world of mortgage lending, flexibility reigns supreme and lenders demand tools that best fit their particular business needs. The right document engine, automated compliance module, settlement services, web portal and other key pieces of the loan process will vary greatly between lenders based on volume, loan products, business model and geography.

To this end, when lenders are evaluating their LOS provider, the first question they need to ask is, “does this system integrate with the services that I want, or am I being forced to use certain vendors regardless of their fit for my needs?”

Innovative lenders will look for LOS providers that foster a best of breed technology environment that is open and accessible, willing to work with the third-party providers to build strong integrations that help the lender truly optimize each piece of the loan process. LOS providers that promote an open API model for integrations provide a simple environment for third party partnerships, resulting in quicker integrations and the ability to fine-tune functionality to be as effective as possible.

In a tech-driven world, the mortgage lenders who will be the most profitable are the ones who can most effectively reduce the time and cost of closing each individual loan. By taking the time to select the right partners, and then learning how to use those systems to the utmost capacity, lenders can position themselves to grow their business and better serve their customer base.

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Lenders Need Secure Marketing Automation

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In order to survive and thrive in this mortgage environment of constantly changing rules and regulations, heightened competition for borrowers and extreme pressure to produce results, you must realize the need to identify high quality business opportunities. It is critical to identify leads quickly and efficiently and then drive them to the point-of-sale with compliant communications for converting them into borrowers. It’s equally important to retain these borrowers and to maximize their on-going value through repeat business and referrals.

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Engaging these prospective borrowers in real time across a multitude of channels such as the Internet, email, social media, print, video, and mobile devices highlights the importance of working with a proven mortgage specific marketing automation solution that can bring out the best in your marketing while easing your compliance burden.

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This requires a proven enterprise-wide marketing automation solution that supports you and your specific initiatives to address these market conditions. Each person in your organization that is involved with driving growth is empowered to focus on what they do best. For example, Loan Officers are free to close more loans, instead of trying to create marketing materials. C-level executives are presented with sophisticated, yet easy-to-use tools for more effective oversight and management, while marketing managers can demonstrate their marketing genius and compliantly maintain brand consistency across the organization.

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Marketing automation opens up the era of “Intelligent Marketing Solutions” by seemliness bringing together in a single easy-to-use SaaS platform:

>> Automated marketing activity

>> Interactive business analytics

>> Integrated production and fulfillment

>> Elegant database management

System Benefits

The right marketing automation supports all phases of marketing: lead generation, sales in process, customer retention and referral sources. It should deliver a highly sophisticated yet easy to use Software as a Service platform that directly boosts the bottom line by facilitating core marketing functions – driving revenue growth, reducing cost and reducing risk – and it needs be up and running in just a few days.

The right marketing automation delivers these powerful strategic benefits across the enterprise:

>> Prioritized sales opportunities

>> Enhanced budgetary control

>> Regulatory compliance

>> Automated execution

>> Brand consistency

>> Speed to market

>> Rigorous data security

>> Performance accountability

>> Superior management oversight

>> Smarter use of human resources

In today’s highly regulated and scrutinized lending environment it is vital to your organization to not only generate new business but to be able to do so in a secure environment. The right marketing automation solution drives new business while delivering the following security controls.

Security: Password Management

No staff user will ever hold or have exposure to clear passwords. All passwords are one-way encrypted. Should a user forget their password, the system will reset their password with a randomly generated one, send this new password in an email to the user’s email address and the user account is flagged to force a password change at next login. The next time the user logs in with the credentials sent via email, the system forces the user to change their password before any other functionality becomes available to them. All transactions should be conducted over encrypted HTTP connections.

Users should have their user accounts locked if more than five invalid login attempts occur within any 15-minute period. A password renewal policy can be enforced requiring new passwords to be created every 60 days and a non-repeat history of five-ten passwords.

If you have forgotten your user name or password

>> Open the login page of solution

>> Click the link: Lost or forgotten your user name and/or password?

>> You will be asked to provide a visual verification code and your email address

>> Click the button Reset Password

Clicking the Reset my password button will reset your password and you will receive an email shortly afterwards containing your user name and a temporary password. The first time you login with those credentials you will be asked to supply a new password of your choice. To guarantee your privacy and the security of your data, staff does not have access to your password, nor will anyone ask you for your user details.

To change your password

>> Login to solution with your current user name and password

>> Access “My security” tab and select “password”

>> Follow the on-screen instructions

Audit Trail

All actions, edits, views and instructions are logged in the audit and activity log. It reports on field changes, file upload attempts and page visits. Each time stamped session begins a fresh log file, which can later be reviewed by the individual or a superior within the client organization.

The audit and activity log is also used to derive a ranked list of system functions labeled “favorites” in the right margin of most pages. The system should order the functions by total hits and this becomes the ranked list.

The user can use this feature to gain rapid, single-click access to commonly used functions and information.

To review your audit trail

>> Access “My security” tab and select “audit trail”

>> Select a session from the drop down list.

>> A list of functions performed during that session will appear in the panel below.

User Roles And Access Rights: User Management

Each distinct human being setup in the system carries a unique user name and a strong encrypted password that even staff and system administrators do not have access to. During registration, company managers, loan data contacts, billing contacts and loan officers are created in the system. Users are created for each of these real-world roles.

In addition, a system role is also created and is linked to a user. This scheme allows for the same human being to fulfill multiple roles in multiple branches of not only the same organization, but also different organizations (e.g. Joe Smith can be the Manager of ABC Mortgage, a Loan Officer of XYZ Mortgage and also a Billing contact of MNO Mortgage) while only having remembering one user name and password.

A user with multiple system roles will be prompted to select a role immediately after successful submission and verification of user credentials. Once logged in, their home page offers a “fast-switching” method to switch between their available roles. A user with only one role is logged into the system in that role immediately after successful submission and verification of user credentials.

In addition to those users and roles created at registration, a client user may create additional users for other individuals within their organization (e.g. an assistant).

The right marketing automation allows corporate managers to drill-down through their organization to manage sub-ordinate organizational units and LOs, it allows office managers to drill-down and manage their LOs, it allows users to fast context switch between their available roles and it provides a coherent method for compliance officers to traverse the organizational structure reviewing all or any available details and data.

Role Management And Delegation

Each client can create named roles. Each role will carry a number of mandated permissions (access to activity and audit logs, the ability to log in and log off, access to their home page, reset password, etc.) and carry a subset of the creating user’s permissions.

The system offers a notion of delegation whereby if permitted, a user can delegate all and any of their permissions to another new user or role. A given permission may be delegated by one level only. Revoking a delegated permission or disabling the delegating user’s role will result in revocation of the permission across all delegate user roles.

Effective use of roles enables a company to exercise a fine level of control over what user roles exist, what permissions each of them need and offers a level of assurance that their data management and security policy wishes are being carried out.

Permissions Management

The solution should provide default permission sets for company manager, loan officer, loan data contact and billing contact can be overridden by company-defined permissions sets.

By default, a company manager has unfettered access to their office details, LOs and their details. If a parent company wishes to prevent branch managers from seeing LO details, for instance, they can define their own role with this and any other permission omitted. This scheme can be used to deliver client-specific functions and content to only specific users with specific roles.

Permissions most notably take the form of a tabbed group of menu items at the top of each page. Each function or page of the system belongs to a group. The groups a user sees after login (the tabs near the top of each page) are a superset of all groups they have access to a member function. Clicking or selecting a group or tab presents the user presented with all available functions in that group.

Permissions not only extend to being able to access a particular page (or function of solution) but also to individual features within a page. This is widely used throughout the system to enable (by default) read-only access to a particular page with optional additional permissions to make the page editable. If you have the permission, the edit button appears and once clicked, the UI presents additional options and features that are otherwise hidden.

During manual/automatic role selection the system retrieves the user role’s current permission set and displays the available features/content based on the permission of that role.

If a user is logged in and permission has been granted, the function will appear on the menu. If a user is logged in and permission has been revoked, the available menu items are refreshed to reflect the updated permission set.

Individual functions may occasionally be taken off-line for a short time to perform system maintenance. In this case the off-line function will appear in the menu with a strike-through and selecting it will yield a notification that the function is currently off-line and unavailable. Functions may also be highlighted on the menu to draw attention to new and important options.

It is not enough to just drive new business to the point-of-sale in today’s lending environment; it is critical that it be done in a compliant manner. The right marketing automation solution should deliver both.

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Mortgage Documents Are Not A Commodity

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Here’s why…

Loan origination and closing production are dependent upon some form of document preparation and, unlike some other products or services in the marketplace, the need for documents has often been reduced to shopping for the best transaction price as opposed to an evaluation of how the selection of a document preparation provider can effectively mitigate compliance risk in the origination process. The general assumption is that there are enough document preparation companies in the market that provide the same product and service so, consequently, the lenders must be able to get it at the price point they want. The reality is that there is a qualitative difference in the type of document preparation products and services available to the lending community.

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Insufficient Information

Lenders do not necessarily seek ‘in depth’ information about document preparation providers if they are basing their decision on price alone. Having knowledge about what a document preparation provider actually does is dependent upon a Lender’s willingness to complete serious due diligence, with the document provider and within their own organization, to ascertain the best fit for their business processes. Lenders should insist that the team responsible for making document provider choices is completely informed as to the nuances of document preparation.

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Maintaining Compliance Standards – Setting The Bar

The landscape of the regulatory environment is constantly evolving and changing. What lenders and vendors alike need to develop and program to create a completely compliant closing documentation process is now quite overwhelming. Questions that should be asked during the due diligence phase are: What constitutes accuracy? What is the guarantee that the document packages being produced are compliant (both with respect to federal and state specific regs)? Are there data validation and compliance tests run? Are the content, calculations and compliance tests in the document package legally auditable and defensible? Does the vendor have in-house experienced, knowledgeable industry attorneys and support staff to respond, in real-time, to complex issues and questions?

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The key to effective due diligence is to address these questions with each given document provider and to be certain that regulatory compliance is a core competency within the provider’s business processes. This enables a lender’s compliance department to use the document preparation process to manage regulatory risk and to foster a culture of compliance across the lender organization.

In addition, a powerful dynamic content engine with the rules to get the right product generated, into the right business channel, and deployed is paramount. If a lender is producing loans in one state or multiple states and any rules have changed, it can be a major undertaking to adjust a form or package of forms. The document preparation vendor’s software must be designed such that it is completely automated, no matter what the state, product, program or circumstances are. The ability to have the assurance of guaranteed compliance from disclosure through closing, and in sync, is critical, particularly in this de novo TRID era.

Exceptional Quality Service

Above all, no matter how automated the process is with respect to technology and compliance services there is no substitute for the human element. It speaks to the heart of what should always be taken into consideration. One simply cannot put a price on the depth, breadth and years of experience and knowledge that go into every aspect of the document cycle for any loan product or program.

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Three Steps To Winning New Customers

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The mortgage industry has had a long run of good luck thanks to the low interest rate environment and consumer demand for homes. With rates remaining near historic lows and home prices rising, lenders have been handed a great growth opportunity. But not all lenders have chosen to or been able to take advantage of this opportunity.

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We only have to look at the rankings of the industry’s top lenders, which used to be dominated by the big commercial banks. Now there are a lot of new names on the list, such as Quicken Loans and loanDepot, which either didn’t exist 15 years ago or were just a fraction of their current size. Not coincidentally, they happen to be the most innovative lenders in the business.

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How have these lenders been able to make this jump without the benefit of a large servicing portfolio or wide brand-name recognition? The answer, simply put, is technology. These lenders have embraced the latest automated systems to make the mortgage process easier and faster for their customers and more economically efficient, which has paid off in increased volume that has pushed them to the top of the league tables.

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But these lenders don’t have a monopoly on this technology. In this article we will review three strategies that any lender can easily employ with what’s available from today’s technology providers.

Consumer habits have changed …

First of all, we need to appreciate how consumer buying habits and expectations have changed drastically over the last 15 or so years. Most consumers now shop online for everyday goods, while many prospective home owners search for a home online without the help of real estate agents. Borrowers seeking to refinance a mortgage either apply for a loan online or call a lender’s 800 number.

Today’s consumers want to be able to shop on their terms and on their own schedule. Many home searches take place after regular business hours and on weekends. How do lenders respond to this? The companies we’ve mentioned have adjusted to these changes in consumer buying habits by leveraging technology in all aspects of their processes.

On the other hand, many lenders have not adapted to this new reality and have failed to take full advantage of increased originations fueled by low interest rates. They have not realized the substantial ROI yielded by new technologies that help them adapt to this new reality.

… and so has financial technology

Financial technology vendors are now offering all lenders what used to be only available in costly proprietary systems. Now any lender can simply pay a monthly fee to access the same technology that the top lenders have deployed. It’s both easy to use and has a huge return on investment.

How can lenders leverage this technology to grow their business?

One way technology can help is by creating customers for life. Lenders work hard to find each borrower and to close each loan. If you deliver good service and stay in contact with your clients going forward, they will likely come back to you when they need to refinance or when they purchase their next home, even if you don’t have the lowest rates. It’s all about having the best service and staying connected.

Automated marketing

How do you keep your name in front of them? The easiest way is to use a system that allows for lifetime automated marketing, whether through email, direct mail or a phone call from the loan officer. Technology can you help you do this by ensuring that your customers get the message you want to send, when you want to send it, automatically.

But the message is just as important as the medium. Lenders must communicate compelling, relevant content at the right time. Fortunately, there are many technology providers who can help with this. They have the content and a system that will automate the communication. Many can also help with your communications strategy, providing guidance on when and what to send to customers. This can seem like a daunting task if you try to do it yourself, but today’s technology providers and their pre-built campaigns and collateral can help you get started.

An additional benefit to using an automated system is compliance. With compliance being so important with today’s lenders, having uniform material and messaging can help ensure you are being compliant in your communications with consumers.

Credit triggers

Another tactic employed by many top lenders in holding onto existing customers is by using credit triggers. This involves monitoring all of your closed-loan customers to see if and when their credit report is pulled for a loan application. This can help ensure that when your customer is in need of a new loan, you are there to help.

Monitoring past customers is actually fairly simple. Several technology providers can monitor credit inquiries for you. Simply send them your customer list, and then anytime a credit inquiry is made, they will alert you, usually within 24 hours. It’s important to note, however, that if you monitor credit reports and get alerted of an inquiry, you must make a firm offer of credit to the consumer. So when setting up your program, make sure you outline your credit criteria, so only those customers who meet your requirements will be sent to you.

But you also must to be able to respond promptly. Using this data and integrating it into your customer relationship management (CRM) system can alert your loan officers when customers are in the market so they can quickly respond with an appropriate offer.

Getting new customers

So far we have focused on how to get more business from your past customers. You may now be asking, how can you win new customers? There is good news on that front, too.

One of the largest growth areas is in consumer direct lending. Today 50 percent of all refinances and 20 percent of all purchase transactions come through a call center. Purchase mortgage volume alone has grown 10-20 percent through this channel in just the past five years. What’s driving it? Consumer buying behavior has changed. Most people are very comfortable with buying things online or from a remote business. And that includes getting a mortgage.

What’s needed to take advantage of that change is adopting technology that can offer a better customer experience. It starts from the initial contact. It’s imperative to reach your prospect quickly and have a compelling script the sales agent can use. Once that’s accomplished, the process then moves to getting the application from the prospect. But whether it’s done online or over the phone, creating a great user experience is critical. An easy-to-use CRM can help you capture the application easily and painlessly.

Once you have the application, you will need to provide and collect disclosures and borrower financials. This, too, is an area that demands a better consumer experience and where technology eases the process. There are several vendors that can obtain the applicant’s paystubs, W-2s, tax returns, bank statements and many other required financial documents online instantly.

Whether you are trying to retain more of your past customers or grow new business, there are many technology options for lenders that provide the experience consumers demand and expect today. The fact is, though, that many lenders aren’t responding to this demand. Instead, they are sitting back and letting their competitors steal their business. That’s good news if you’re one of those companies that is embracing this change. Not only will you see your volume and profitability grow, but you’ll be eliminating a lot of the competition.

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Changing With The Times

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Let’s face it, the mortgage and lending industry is changing. So, everyone in the industry that wants to be successful has to change, as well. It just has to happen. So, where does that change start? Several vendors are changing their brand identity to reflect the evolving nature of our industry.

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For example, one month after being recognized as one of the fastest-growing private companies in the country, Land Gorilla has launched a new brand identity designed to carry its mission of making construction lending safe for all stakeholders far into the future.

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The new brand was unveiled Sept. 26, 2016, linking the idea of a gorilla’s natural strength and solidity to the business that has quickly made a name for itself as a foundation for successful construction projects through safe, reliable lending practices.

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While gorillas are often portrayed as majestic and solitary creatures, their rugged endurance is only possible due to their membership in a tight-knit group known as a troop or a band. Similarly, Land Gorilla knows that while a construction project may seem to stand alone, its transition from idea to plan to physical creation can only happen if a team of people work together in confidence and trust.

“We wanted a brand that is iconic, memorable, trustworthy, and timeless,” said Sean Faries, CEO of Land Gorilla. “If you encounter a gorilla, you know what you’re going to get: dignity, strength, a depth of intelligence, and a fierce devotion to anyone in its circle. Since we already operate on those same principles and with those same characteristics, it’s time that we acknowledged them in our brand identity.”

The re-branding also plays off of the concept that a gorilla is “built to protect,” using its physical, mental, and social resources to safeguard its territory and those who call that area home. From the Land Gorilla angle, the company is built to help protect anyone involved in the construction process by making lending a secure and efficient endeavor. Stakeholders will also have confidence that properly financed projects, once completed, have been built to physically protect the people who will be using them and interacting with them every day.

Land Gorilla’s troop is made up of members who can collectively claim more than 90 years in the business of construction risk management. Not content to use standard practices for projects being built with ever-improving technologies and new business models, the company has pioneered an advanced cloud-based loan management system. The system is well built, uncomplicated, and powerful, just like the king of the jungle.

Available construction-lending software and services include appraisal management, progress inspection, project and builder acceptance reviews, construction underwriting, post-closing administration, and program development.

Land Gorilla ranked 230 out of the United States’ top 500 fastest-growing businesses as reported in August 2016 by Inc. Magazine, posting 1,726-percent growth. The company is headquartered in San Luis Obispo on California’s beautiful Central Coast. For more information, call Land Gorilla at 1-855-887-3800 or visit landgorilla.com.

Similarly, LoanScorecard, a provider of automated underwriting, compliance and distribution solutions, unveiled its new brand identity and corporate website.

The new brand identity centers on the theme of “Solutions for Intelligent Lending,” the company’s new tagline, and better conveys the evolution and expansion of LoanScorecard’s solution-focused technologies. The new imagery and redesigned website suggest how the company helps its clients grow and features a more intuitive, engaging format that allows lenders and investors to shop for solutions based on their needs.

“Our company and our broad set of product offerings have significantly evolved over the past few years in order to meet the changing needs of our clients,” said Ben Wu, executive director at LoanScorecard. “Today, we offer banks, credit unions, TPOs, wholesalers and investors the solutions they need to not only meet today’s regulatory challenges, but also expand their businesses. We’re excited to have a brand that reflects how our intelligent solutions can help them grow.”

Branding is very important. According to marketing company Deluxe Corp., your brand impacts your business in these key ways:

Branding Improves Recognition

One of major components of your brand is your logo. Think of how we instantly recognize the golden arches of McDonalds or the simple, but powerful eagle of the USPS. As the “face” of a company, logo design is critical because that simple graphic will be on every piece of correspondence and advertising. A professional logo design is simple enough to be memorable, but powerful enough to give the desired impression of your company.

Branding Creates Trust

A professional appearance builds credibility and trust. People are more likely to purchase from a business that appears polished and legitimate. Emotional reactions are hardwired into our brains, and those reactions are very real influencers.

Branding Supports Advertising

Advertising is another component of your brand. Both the medium chosen and demographic targeted for advertisements builds a brand. Too narrow an advertising focus, and a company risks being “pigeon holed” and losing their ability to expand into new markets. Too broad a focus, and the company fails to create a definable impression of the company in the minds of would be customers.

Branding Builds Financial Value

Companies who publicly trade on a stock exchange are valued at many times the actual hard assets of the company. Much of this value is due to the branding of the company. A strong brand usually guarantees future business. Whether a company is in the position to borrow funds for expansion or rolling out to an IPO, being perceived as more valuable will make the process advantageous for the owner of the company. The greater a company’s devotion to build its brand value, the better the financial return from its efforts.

Branding Inspires Employees

Many employees need more than just work— they need something to work toward. When employees understand your mission and reason for being, they are more likely to feel that same pride and work in the same direction to achieve the goals you have set. Having a strong brand is like turning the company logo into a flag the rest of the company can rally around.

Branding Generates New Customers

Branding enables your company to get referral business. Would it be possible for you to tell a friend about the new shoes you love if you couldn’t remember the brand? A large reason ‘brand’ is the word used for this concept is that the goal is an indelible impression. As the most profitable advertising source, word of mouth referrals are only possible in a situation where your company has delivered a memorable experience with your customer.

The most profitable companies, small and large, have a single thing in common. They have established themselves as a leader in their particular industry by building a strong brand.

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Service As A Pillar Of Your Customer Ecosystem

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How often does a piece of technology break only to realize you now have to make the dreaded phone call to the 1-800 support number on the back of the device? For most, this is met with a monotone voice reading an infuriating script. Do they think we didn’t try to restart the device? Of course we did. Yes, the router was unplugged and reset, too. In today’s world, consumers expect a higher level of customer service. Whether they need to set up a new account, need help understanding the paperwork in front of them, or need help troubleshooting an issue, support must be seen as a trusted advisor.

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As organizations grow, the idea of a customer ecosystem is essential to ensure the longevity and scalability of the company. This customer ecosystem requires that the entire organization work closely to provide only the highest levels of support. What steps are you taking to ensure your customer-facing teams emerge on top of today’s demanding industry landscape?

Step 1: Scale Through Specialization

Growth within any organization can be a benefit and a curse. Rising to the demands of growth while also on-boarding additional resources can be challenging. In any complex business, it is difficult to replicate the knowledge of your existing subject matter experts. Introducing specialized roles can streamline the path for new employees, allowing them to flourish in any field quickly. Providing a protégé for your key players will ensure that you always have a well-versed employee available to assist customers.

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Specialization within your customer-facing team provides many benefits internally and externally. Focusing on an area of expertise allows employees to increase organizational effectiveness, while enabling the company to scale more efficiently as the time to train employees is reduced. Throughput also increases due to the comparative advantage that results from the specialization of each functional role and the organization’s ability to divide work appropriately. Through this method, I’ve personally seen ticket throughput increase by more than 250%.

This functional specialization requires diligence by the organization to ensure employee knowledge and career growth. Most importantly, any broad organizational change requires constant analysis and adjustment, ensuring your customers, employees, and bottom line are satisfied.

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Step 2: Single Point of Contact

Your company’s brand identity and messaging no longer come just from the marketing and sales teams. Instead, customers are speaking out about companies more than ever before, becoming brand content generators. What this means is that whether your customers are happy or not, they are going to express their experiences with – and opinions of – your company across social media outlets. Ensuring positive experiences is a difficult promise, but your odds of positive reviews increase greatly with a polite and informed dedicated representative. Within your specialized team of customer representatives, be sure to have a single point of contact for each customer. This will avoid the headaches of transferring departments for questions, comments, and concerns.

Scheduling regular meetings between customers and their representative is also critical to maintaining positive relationships. Customers almost always have suggestions that can further grow your business by better outfitting theirs. Additionally, regular meetings keep everyone up to date on any progressions, creating a sense of solidarity and reassuring your dedication to their needs. In essence, these dedicated customer representatives not only serve as the face of the company, but they also serve as the customer voice internally. This role is directly responsible for pushing the organization where and when needed to make sure the company is doing what is best for the customer.

Step 3: Benchmarking and Refinement

Customer satisfaction surveys are among the most common forums to generate constructive feedback. While surveys are certainly not revolutionary, when used properly, the feedback obtained can help drive innovation within customer service processes, ultimately making a world of difference to your customer base. Quantitative survey data is great for showing trends and identifying overall customer satisfaction. Qualitative data, aggregated by a small sample of customers through open-ended questions, however, will prove incredibly helpful in refining specific methods of client relations. This is also a great opportunity to touch base with a good portion of your customers. Some questions, so as not to limit the answers you get back, could be:

>> What made you choose us?

>> What are the top 5 areas that you would like us to improve?

>> What are the top 5 things you like about us?

>> Was there anything that wasn’t covered in the survey that you would like to discuss?

After compiling the data, organize it into charts. Rank responses by popularity, and include similar and outstanding customer concerns and praises. Data accumulated over a series of surveys will show definite trends that should be presented to key executives and managers. Results of the surveys will reinforce processes that are working well and identify what processes need refinement. Ideally, you would have a dedicated Project Manager to oversee the various improvement tasks that come from the survey results.

Step 4: Refine Over Time

One often overlooked component of any major organizational change is constant analysis of the results. Aggregated data can enhance any organization’s point of view, but without constant analysis of the results, it can become an Achilles heel. After deploying a major process change like those outlined above, it is imperative to compare the results to the baseline data. While the strategies mentioned above are tried and true tactics at Mortgage Cadence, each company should make the right decisions for their unique business and customer base.

Ensuring the most efficient and effective specializations are enacted is key. Analyzing both objective and subjective data is imperative to uphold precision, and the ability to make subsequent adjustments is vital to long-term success. Finally, integrated communication across all departments allows ideas from all levels of the corporate ladder. Challenging the status quo by freeing the minds of your employees to think within the realm of another department can often lead to great successes. Think about the possibilities when processes are challenged based on customer and employee feedback and data.

Through many of the tactics above, we have designed our support solutions team in a way that best serves our customers. By driving service and partnership, we know our customers and their needs better than ever before. This shapes the future direction and vision of the company in a way that is simply not possible without personal interaction and transparency. Every day, Mortgage Cadence aims to live out our vision of providing the last lending solution our customers will ever need through a commitment to partnership, service and technological innovation. Partnering with your customers creates a huge potential for growth with endless possibilities. Now is the time to tap into that potential. Your customers won’t just thank you for it, they might just become ambassadors for your organization.

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The Next Generation LOS

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The lending community has very little control over the many challenges and changes that seem to be coming at it from every direction. Last month we talked about the impact of the housing markets ups and downs on the mortgage market. We just spent over 2 years with TRID. Now we are facing the HMDA changes, and no one knows what’s coming next in the regulatory environment. This industry has always had the tendency to throw bodies at its problems, rather than implement technology or process changes. However, that approach is not sustainable in today’s rapidly changing marketplace.

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Financial institutions in particular are struggling to adjust to the shift in emphasis on mobile technology. SNL Financial reports that US banks and thrifts over the past 3 months closed 505 branches, with 120 in August, 236 in July, and 149 in June. Among them are these examples:

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>> USAA will close 17 of its 21 financial centers nationwide next year as it adjusts to the reality that most of its members only use its mobile app and website to do their banking. USAA says only about 2.5% of its 11.7mm members use its financial centers.

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>> BB&T plans to close an undisclosed number of branches by year end as it seeks to further downsize its network.

>> Fifth Third Bank will close 44 branches as it seeks to cut costs and adjust to changing customer behavior.

>> Comerica Bank (Texas) is laying off 450 employees as part of a plan to cut 9% of its 8,800 workforce over the next 2 years.

Mobile technology certainly impacts the pure mortgage lending organizations as well.

The business side of the organization doesn’t understand the challenges on the technology side and the technology side doesn’t understand the challenges on the business side. It’s a classic sort of chicken-and-egg question, as neither side can exist without the other. Each drives the activities of the other, but without synchronization of objectives and priorities, they are each hobbled and the organization stands still. And, unless all the other players on the field are also hobbled, standing still is the same as falling behind.

For an example of unrealized opportunity, we only need to look at the development of the MISMO standards. Those standards have significantly reduced the time and effort to exchange information between companies or within an organization. However, the adoption and vision for MISMO standards has always been about technology, with very little participation from the business side.

MISMO itself recognizes the problem and has recently established a business domain workgroup dedicated to better map the common activities over the life of the loan—from inception to disposition—in a format that ties the MISMO standards to the various business areas that benefit from standardization.

Historically, the mortgage loan process has had a linear flow—starting with the loan application, product and pricing selection, pre-approval, processing to gather all the relevant information, qualifying the loan using automated underwriting, and, finally, closing. The next step cannot be started until the previous step is complete, and not unlike an old-school automobile assembly line, any interruption can cause the whole line to stop and work to back up. Today’s automobile assembly lines are less brittle; multiple lines build a variety of sub-components and feed into a final assembly line. This not only allows manufacturers to easily produce variations in product offerings, but provides more flexibility in periods of disruption in a given sub-line.

As we move to a fully digital business world, we can integrate workflow, tracking, and audit trails. Today’s mortgage process flow should reflect this with interlaced, rather than linear data feeds.

Do you really need a Loan Origination System? In order to really understand this question, let’s look at the early solutions from 25 years ago. The data input screens were built to follow the flow of the Residential Loan Application (1003). Nothing substantial has changed over the years. In fact, in my opinion, the new URLA is just more data fields and proof that we are still focused on documents produced to capture data, rather than on the data itself.

Many very good Loan Origination Systems have not survived. There are number of reasons. One reason is mergers and acquisitions. Another reason could be the increase in business demands and technology innovations requiring major product rewrites. Some vendors have tried to develop new versions of their products, but remain hamstrung by demands to continue supporting older versions that they would prefer to retire. Some systems are targeted for a specific segment of the industry, which has forced some lenders to have multiple loan origination system(s) operating in different lines of business.

When I project what the next generation Loan Origination System might look like, I am reminded of this from the book Business @ the Speed of Thought, by Bill Gates. “A digital nervous system is the corporate, digital equivalent of the human nervous system, providing a well-integrated flow of information to the right part of the organization at the right time.”

Maybe it’s time to consider a central data repository. In fact, I already have a name for it: CADRE, or Common Analytical Data Repository Environment. Think of it as a hub that will connect all the various lines of business and market segments and eliminate all the silos of information to reduce data conflicts and inconsistencies. Certainly, this is not a new concept. A number of vendors over the years have undertaken the challenge to produce something similar. But this is a little different. Let’s take a high-level view.

Since the lender is on the hook for compliance and quality, it needs to own and control the flow of information. The core module (System of Record) will act like a traffic cop and manage the interactions. It will be entirely a digital transaction with two-way collaboration rather than just an exchange of data. However, taking advantage of the MISMO data standard will add the necessary structures to manage that interaction. There will be one common entry point for all applications, whether purchase, re-fi, or third-party originators. This will certainly eliminate the problems in the past when the servicing system couldn’t connect with the origination side of the business. Focusing on the data will allow you to make more informed loan decisions throughout the process and provide an audit trail, thereby reducing your overall risk. A huge advantage will be the ability to implement analytics, both historical and predictive.

Your current LOS, whether in-house or vendor sourced, may in fact be proficient in providing many of the individual features of a central data repository. What is important is that lenders have enough control of this data to drive the business and technology initiatives to meet the ever increasing demands on the organization—and that lenders have the ability to take action with that data in a timely manner.

Let’s not lose sight of the fact that there are only four classifications of customers: 1) prospects, 2) customers, 3) loyal customers, 4) former customers.

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The Impact Of Earthquakes On Housing

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ATTOM Data Solutions and Greenfield Advisors, an economic and real estate research firm, released an analysis of housing market trends in Oklahoma following the recent spike in earthquake activity in that state.

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The analysis was based on public record real estate data collected and licensed by ATTOM along with earthquake data from the U.S. Geological Survey and oil price data from the U.S. Energy Information Administration.

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The analysis found that statewide in Oklahoma earthquakes increased 375 percent between the four quarters ending in Q1 2014 and the four quarters ending in Q1 2016, when earthquake activity reached a peak of 336 earthquakes during the quarter.

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Foreclosure activity — including default notices, scheduled foreclosure auctions, and bank repossession (REOs) — increased 19 percent over the same time period following a nearly four-year downward trend. Statewide foreclosure activity increased on a year-over-year basis in five of the seven quarters ending in Q1 2016 following 15 consecutive quarters of year-over-year decreases in foreclosure activity.

But home sales volume and prices continued to trend higher during the two-year period ending in Q1 2016. Home sales statewide increased 12 percent between the four quarters ending in Q1 2014 and the four quarters ending in Q1 2016, and median home prices in Q1 2016 were up 9 percent from Q1 2014.

“Home sales and prices have consistently been trending higher in Oklahoma over the past four years, aligning with the national housing market recovery, but foreclosure activity in Oklahoma over the past two years has diverged from the national trend, rising 19 percent during the same two-year period where earthquake activity increased 375 percent,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

“Oil prices that plummeted 64 percent during the same two-year period could also be contributing to the rise in foreclosure activity across the state, although it’s important to note that foreclosure activity actually decreased 14 percent during the same time period in Tulsa County, where no earthquake epicenters were reported,” Blomquist continued. “Meanwhile in Oklahoma County, where earthquake activity increased 20 percent over the past two years, foreclosure activity increased 39 percent over the same time period.”

“While sales volumes and sale prices have been trending higher over the past four years, consistent with the overall housing market recovery, geographic scale is important when evaluating whether the earthquakes are responsible for loss of property value,” said Clifford A. Lipscomb, vice chair and co-managing director at Greenfield Advisors, a Seattle-based economic and real estate research firm. “Repeatedly, in our work, we see that state and county level sales data can mask what’s going on in particular neighborhoods. To tie earthquake activity to loss in property value, it takes a close examination of the affected area and control areas, or areas that are similar to the affected area in several dimensions.”

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Knitting Together The Real Estate Transaction Ecosystem

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Regulatory change brought about by the CFPB has forced those involved in the real estate transaction to evolve, with some taking on new responsibilities and others relinquishing what were historically theirs. Participants have had to adjust to new processes and procedures in the face of changing compliance rules, all while ensuring that consumers have access to the information they need to complete the transaction.

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As traditional roles shifted, one of the changes that triggered a fair degree of angst was the transition of responsibility for the Closing Disclosure [CD] from settlement agents to lenders. With this change, lenders became accountable for ensuring that the CD is accurate within permitted tolerances. However, when lenders began changing familiar processes to meet these new requirements, real estate agents lost visibility to information that was historically available to them via settlement agents. This information is important to real estate agents because they are accustomed to walking their clients through every step of the complex mortgage process.

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But today, lenders have the final responsibility for ensuring that the correct information is on CDs with the possibility of financial penalties should there be any mistakes. Understandably, they are very risk averse, given the potential for expensive fines and penalties – even when they and their partners have taken appropriate steps and precautions. As a result, lenders may not want to share CD information with anyone other than the homebuyer. For example, if a homebuyer’s real estate agent requests permission from his or her client for the lender to forward settlement information to the agent, the agent can use that information to provide helpful explanations to the customer. But since it is possible that regulatory or legal repercussions might arise from lenders sharing homebuyer information, some would rather err on the side of caution and send it to no one but the home buying consumer.

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Yet, the sharing of CD information with the real estate agent can offer important benefits to the homebuyer – the very kind of benefits that are seemingly in the spirit of the redesigned mortgage disclosure forms to begin with. How then can the industry achieve this kind of data exchange across multiple parties while conducting an efficient mortgage process?

Driving Friction Out of the Mortgage Process

For decades, the mortgage workflow has been carried out via the exchange of documents – first by mail/courier, then by fax, and now by email. The sheer amount of documentation required to obtain a mortgage is due to both the highly regulated nature of the transaction and the fact that so many parties are involved in the process. A mortgage is not just a transaction between the borrower and lender. It involves many other participants, including title insurers, appraisers, settlement agents, attorneys, inspectors and more. With so many involved and so much documentation to pass back and forth, there is the potential for significant friction in the mortgage process.

But as technology has advanced and information sharing has become more secure and auditable, lenders have invested resources to build system integrations with service providers to help reduce some of this friction. Today it is much easier for lenders to procure the many services needed and to send the documentation required in the course of originating a mortgage.

Now, to achieve even greater market efficiency, these system integrations must move beyond service providers and extend to the full set of participants in the mortgage and home buying process, namely the consumer (as buyer or seller), the real estate agent, the settlement agent and the lender. This is where the next wave of system-driven efficiency should occur. The most efficient mortgage market is one in which integrations have been put in place to connect loan origination systems to settlement service systems to realtor listing and transaction management systems and ultimately to consumer portals.

Consumer Transparency and Satisfaction

At the heart of this approach is transparency and greater satisfaction for the consumer. Imagine a scenario where consumers can log in to one portal, see the progress of their real estate transaction, be given prompts when their action is required (e.g. “Your appraisal is ready – Click here to forward to your real estate agent”), review documents as they are available and much more. Not only would this help satisfy the consumer’s need for both information and guidance, but also efficient interactions between all parties would be made easier, more cost-effective and secure.

The technology to create such portals is not new. Powerful but easy-to-use consumer portals already exist today. What is needed is a connection between all participants in the real estate and mortgage process, and this is where the industry should progress to next.

What could be better for the consumer or anyone involved in the real estate transaction? The greater the efficiency and simplicity in communications between all parties – with the right information served up at just the right time – the less friction there is in the process, and the greater the probability that consumers will be well-satisfied with the mortgage process.

Knitting Together the Ecosystem

The next logical step required to knit together the mortgage transaction is to bring in real estate transaction management platforms – not just with the lender’s loan origination systems, but with the entire eco-system of service providers and the consumer. With advancements in technology, the maturity of data standards such as MISMO and RETS, and the continuing evolution of real estate platforms, as well as the growing comfort of consumers with apps in general, a more fluid transaction is possible. Enhanced data standards and integration can help make the real estate transaction more transparent and efficient for consumers, creating a home buying experience which will likely lead to referrals and repeat business in the future for both lenders and real estate agents.

And that’s really where the rubber meets the road. Both lenders and real estate agents are interested in having their deals close with the greatest amount of efficiency and transparency to serve the consumer well. Personal referrals are the most powerful sources of new leads, and delivering an excellent consumer experience is one of the best ways to encourage them.

Enhancing the Role of the Real Estate Agent

Real estate agents are the oil that helps the overall purchase transaction machine function. Given that, as technology does a better and better job of enabling market efficiency, does that mean the role of the real estate agent as facilitator will diminish? Not by any stretch of the imagination. Real estate agents will continue to play a vital role as the trusted professional that provides strategic guidance for consumers who find the purchase or sale of their home complex, if not downright frightening. Real estate agents not only bring valuable expertise on a wide variety of topics, they become supportive partners who are readily available to serve the consumer’s best interests. For many new homeowners, their real estate agent becomes a trusted friend long after the transaction has closed.

Of course, this has always been the case on some level. But when greater connectivity across the real estate ecosystem is achieved, real estate agents will be able to reframe their role by spending even more time counseling their clients and deepening those relationships, rather than focusing so much time on ensuring that paperwork is where it needs to be and that all involved parties are working on their part of the process to get the loan closed.

Clear Benefits to Lenders

For risk averse lenders, connectivity and transparency across the real estate transaction ecosystem could help to resolve issues that might otherwise be concerns. In the example mentioned earlier – a real estate agent may ask for settlement information to populate their own system of record – but even if a homebuyer gives their lender permission to share that information, lenders may be reluctant to do so. However, in a connected environment, not only can consumers be prompted to provide their real estate agent with access to specific settlement information, they must proactively indicate their approval, which would help ensure that the information is only provided to the selected real estate professional.

System-based capabilities like this could help relieve lenders from the potential risk associated with sharing settlement information, but perhaps more importantly, it gives consumers the ability to decide when to share information about their transaction with others. While this may require some simple consumer guidance within the system such as prompts or other clear instructions, it does empower the consumer to participate more fully in the real estate transaction process.

How Lenders Can Help

While the consumer is ultimately in the driver’s seat of the real estate transaction, the lender certainly has an influential role to play and can help drive the industry towards a fully connected transaction ecosystem. In many cases, lenders already have the technology infrastructure in place that connects them with external partners such as service providers (appraisers, etc.) that are a necessary part of the real estate transaction. And of course, they are an important line of communication with real estate agents and can encourage their involvement and participation in the evolution of the industry.

As the real estate transaction continues to move toward greater transparency and simplicity, even as industry participants continue to focus on transaction security, procedural continuity, and regulatory compliance, the possibility of seamless, automated communications offers great promise. This knitting together will become quite important as early as next year when the GSE mandate for lenders to deliver not just the buyer’s CD but also the seller’s version goes into effect. An inter-connected real estate transaction ecosystem would not only make greatly increased efficiency possible, it would also bring the consumer to the table as a connected partner in a way that enhances transparency and should lead to greater customer satisfaction as well.

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