Tried And True Solutions

According to the MBA lenders saw a net gain of $224 on each loan they originated in the first quarter of this year – down from $575 in the fourth quarter of last year. The drop was due mainly to higher per-loan production expenses. These expenses – which include commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to a study high of $8,887 per loan in the first quarter, which is up from $7,562 in the fourth quarter. So, how do lenders streamline their origination process so it’s faster and less costly without giving up quality? Wayland Pond and Kelli Himebaugh of VirPack have some ideas. Here’s how they see the current mortgage market:

Q: Describe how you first got involved in the mortgage industry.

WAYLAND POND: My best friend from high school recruited me to VirPack when it was a startup. I remember interviewing with Michael Coar, VirPack’s founder and CEO, and I was struck by his passion for mortgage technology and his mission for VirPack to provide the mortgage industry with a platform for the paperless management of loan documents from origination through post closing, including fully indexed electronic loan delivery to investors and business partners. 17 years later, and I’m proud to say we have achieved that mission and our passion is stronger than ever.

KELLI HIMEBAUGH: Similar to Wayland, in 2003 I was recruited to a sales role in the mortgage industry by a personal friend that worked for a midwestern bank with a national home equity lending program. In 2007 when the market and economy started to collapse, I was fortunate to meet the owner of a small LOS technology company that was hiring for their first sales role. In 2008, I transitioned to a different LOS company that I represented in different roles until 2016 when I joined VirPack. I met Wayland and the VirPack management team in 2010 while exploring a vendor partnership, and I was extremely impressed with VirPack’s technology and the positive impact that electronic document management would make in our industry. When the offer came last year, I didn’t hesitate to accept the opportunity to join the VirPack team.

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

WAYLAND POND: There have been numerous changes over the last 17 years, but technology innovation and adoption are at the top of the list. When VirPack was founded, the Internet was a shadow of what it is today. VirPack’s first product was a desktop application that scanned loan documents, automatically indexed the documents (via barcode recognition) and stored the indexed loan files in our imaging system. A short time later, we pioneered electronic loan delivery with the release of the first version of our delivery application that provided lenders with the means to exchange data, documents and images with their investors and business partners. Fast forward to today, and the industry thrives on web-based, software-as-a-service (SaaS) applications such as VirPack’s Document Management and Delivery System (DMDS).

KELLI HIMEBAUGH: In the last 3-5 years the bar has been raised for technology automation expectations, a primary example is integrations. Today, lenders have higher expectations for integrations that both reduce human interaction and are triggered by a status or milestone change in the loan process. VirPack has responded to these higher expectations with integrations like our partnership with DocuSign. VirPack’s Document Management and Delivery System (DMDS) automatically imports and indexes eSigned documents into the borrower’s loan file as soon as the eSignature experience is completed, eliminating the process of manually importing these signed digital documents and filing them.

Q: What can you say hasn’t changed during the years that VirPack has been in the space?

WAYLAND POND: Despite technology innovation, the industry continues to struggle with reducing the cost to originate and service loans, and eliminating the manual processes associated with collecting, indexing and managing loan documents. The number of pages in the average loan file has soared in recent years. According to VirPack’s Mortgage Origination Loan File Statistics Report, more than half of all residential loan files now exceed 500 pages and 43% of all conventional loan files contain between 600 and 900 pages. Lenders need to deploy technology that will reduce costs and improve operational efficiency.

KELLI HIMEBAUGH: To provide an example regarding the struggle to contain and reduce origination costs, VirPack recently partnered with an independent mortgage banker that had been utilizing a different imaging solution for more than 9 years. The owner of the company shared in the very first sales call that the next stages in the successful growth of their business were dependent on a new solution to gain efficiency to deal with increasing loan file sizes, along with the need to automate the document workflow and improve the borrower experience. This requirement was key in their strategy to grow volume and profitability by mitigating costs, primarily the need to not hire more operational staff. VirPack’s DMDS definitely checked all of the boxes for their paperless needs, and our workflow and tasking functionality provided the answer for their cost containment requirements. Our rule-based workflow features provided the automation requirements they had been looking for.

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Q: What has VirPack learned from talking to lenders in the last year?

WAYLAND POND: Two things are consistent with our lender conversations over the last year. First, production costs continue to rise and lenders are not achieving the operational efficiency gains and ROI expected from the document management tool provided by their LOS. More often than not, it is private-labeled or bolted-on and the lender’s requirements and expectations are not being met. Second, many lenders prefer to leverage software solutions from vendor partners that are subject-matter experts and have a mission and culture that aligns with theirs. They recognize that through these partnerships they can close the gaps in their mortgage operations and workflow and avoid the disruption that comes with converting to a new costly, enterprise LOS.

KELLI HIMEBAUGH: Also, there’s no denying the digital mortgage race and its appeal to the millennial generation and tech-savvy consumers, but we’ve learned it’s not an all-or-nothing/one size fits all approach. Not all lenders are ready to fully embrace the digital mortgage and sacrifice the relationship-driven mortgage origination experience that is tried and true. Lenders are confident they can find a balance between the traditional approach and utilizing technology that will provide innovative communications in real time, workflow automation and improve collaboration between borrowers, production, and operations teams.

WAYLAND POND: VirPack’s journey with mortgage lenders over the last two decades supports this balance with the latest features in document management and workflow solutions, along with our portals designed for borrowers and third party originators that provide the real time data and document updates to improve the borrower/lender experience.

Q: Can you tell us more about the Rapid Deployment program that VirPack launched in 2017?

WAYLAND POND: Traditional document management technology implementations are often costly and time consuming, and I’m pleased to share that our rapid deployment program has streamlined DMDS implementations and our customers are up and running within weeks. We’ve accomplished this by harnessing best practices from lender deployments across the country and eliminating duplicate and labor intensive activities. By leveraging preconfigured document management software, lenders can quickly automate business processes throughout every step of the mortgage lending process while supporting retail, wholesale and correspondent lending operations.

KELLI HIMEBAUGH: And, because lenders are not starting with a blank canvas, they can readily turn their focus to leveraging additional capabilities and advanced functionality that further optimize their operations including — automated document recognition and indexing using optical character recognition (OCR), rule-based workflow and tasking, customizable web portals for third party originators and borrowers and deeper integrations with other technology partners.

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Q: What are the required capabilities that a lender should put on its document management technology evaluation?

WAYLAND POND: Lenders should pass on a technology provider that does not have a) document management capabilities that include OCR to automate the identification and indexing of documents, and b) integrated one-click delivery of loan files and data electronically to investors, HUD for FHA insuring, servicers, subservicers, QC firms and MI companies. For maximum functionality and efficiency, a vendor’s document management offering needs to have strong integration features, such as gateways to external data sources and web service APIs to exchange documents and data. These capabilities are essential to enable document management to be an integral part of a broader, cohesive loan processing and management solution.

KELLI HIMEBAUGH: Enterprise solutions like the LOS provide high value if their ancillary solution components are enterprise compatible and tightly integrated. LOS providers today are not focused on document management enhancements, but instead are focused to develop and implement all the regulatory changes required in their technology to mitigate risk for lenders, and rightfully so.  And, if their offering is a series of bolt-on technologies that are subject to secondary, delayed support services and are not designed to adapt to atypical scenarios, then lenders can lose thousands of dollars each year in what is perceived to be an included or “free” feature of their enterprise platform. Lenders have to consider technology like VirPack that solely focuses on its core competency and what it does best — developing and delivering innovative, feature-rich document management and delivery solutions that incorporate best practices and years of experience.

Insider Profile

Wayland Pond is senior vice president of sales and marketing at VirPack, where he has spent his entire 17 year mortgage technology career promoting the benefits of document management and delivery technology and collaborating with lenders, investors and technology providers to improve operational efficiency. Wayland was instrumental in pioneering the mortgage industry’s first electronic delivery of a loan package that included data, documents and images. In his role at VirPack, a leading provider of document management, imaging and delivery technology to the mortgage banking and financial services industry, he oversees the sales and marketing team and partners closely with the product management team to ensure customer and lender feedback is incorporated into the company’s technology solutions. Wayland also serves on the Board of Directors at VirPack.

Industry Predictions

Wayland Pond thinks:

1.) Lenders will continue to be cautious about compliance therefore page counts in files will continue to increase.

2.) More LOS and other industry technology providers will offer APIs to support their clients’ desire to integrate with best-of-breed technology providers.

3.) More investors are going to require electronic loan delivery and will not provide best pricing if delivered another way.

Insider Profile

Kelli Himebaugh is the National Account Executive with VirPack, a leading provider of document management and delivery technology to the mortgage banking and financial services industries based in McLean, VA.  Kelli is a proven sales leader who brings more than 20 years of housing finance experience and 10 years of experience in mortgage technology to VirPack. Prior to joining VirPack in 2016, she served as vice president of customer experience with Altisource Origination Solutions. In this role, she was responsible for managing client relations and operations support across four business units. Prior to her work at Altisource, Ms. Himebaugh spent 8 years with Mortgage Builder, a loan origination solutions provider, where she served as corporate vice president overseeing business operations, client services and sales.  She is also a member of the Executive Team at PROGRESS in Lending Association and was named in “the 50 Elite Women in Mortgage” by Mortgage Professional America magazine.

Industry Predictions

Kelli Himebaugh thinks:

1.) Home affordability and mortgage qualification will worsen due to rate increases and slow income growth.

2.) More non-bank owned investors will enter the secondary mortgage lending market.

3.) Rental home rates will continue to rise faster than incomes due to lack of inventory.

A New Generation

There’s a new generation in town and it’s one that employers better get ready for, because it’s 23 million strong and will be flooding the workforce by the end of the decade.

Ladies and gentlemen, meet Generation Z; a confidence-filled group that doesn’t want to miss a thing, has the shortest attention span of any generation and isn’t quite as open as its predecessors – the millennials – from whom they learned that not everything needs to be shared online.

If you try to treat those in Generation Z (born in the mid to late ‘90s, mostly to Generation X parents) like you treated Millennials (born in the early ‘80s to mid ‘90s, mostly to Baby Boomer parents), it will backfire on you. This generation is unique. And now they are starting to enter the workforce.

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Due to my role at College Works Painting, which offers internships that help undergraduate students gain real-life business management experience, I have gained a first-hand look at both the Millennials and Generation Z. And there certainly are differences between the two, such as:

>>According to best selling author and generations expert David Stillman, you won’t find those in Generation Z frequenting Facebook or Twitter as much as their predecessors. Keenly aware of software monitoring, they are more likely to share their worlds on apps such as Snapchat or Instagram. Often dubbed Digital Natives, Millennials are much more likely to share their lives in the open on platforms such as Facebook.

>>Being culturally connected is more important to those in Generation Z than to Millennials, with many more Gen Zers suffering from FOMO (Fear of Missing Out) than Millennials.

>>Stewart doesn’t see this as a hard and fast rule and says the experience Generation Z employees have at College Works Painting – and the impact they pride themselves on having – is much the opposite of FOMO. An example that Stewart says other companies can follow.

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>>Those in Generation Z have grown up with smart phones, tablets, 3-D, 4-D and 360-degree photography just to name a few of their norms. According to Stillman, keeping the attention of a Gen Zer is harder than ever. Their average attention span is eight seconds, compared to the 12-second attention span of Millennials. ?Millennials are driven to succeed by helicopter parents who watch their every move, while Generation Z finds encouragement from parents who encourage independent thinking, want them to achieve on their own and are fed up with not receiving equal pay for equal success at work.

>>According to Forbes, social entrepreneurship is important to Generation Z, a group that is driven to volunteer and choose a career in which they can make a difference. On the other hand, there are those who hope the Millennials will become more civic-minded as they grow older, but it’s something that hasn’t been witnessed as of yet.

>>Generation Z children were raised in classrooms that focused on diversity and collaboration. Despite this fact, they tend to be more private than Millennials, perhaps as a result of seeing many of the downfalls of previous generations in the Great Recession.

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>>Because those who are part of Generation Z feel pressure to gain corporate experience early, they are competing with Millennials who are more likely to wait to gain that same type of experience. The good news for Millennials, who are more likely to chase jobs in the corporate world, is that 72 percent of those in Generation Z wish to take what they learn and apply it to their own business, versus 64 percent of Millennials who have the same goal.

Future employers in the mortgage industry need to understand these facts as this generation comes of age.

About The Author

Matt Stewart

Matt Stewart is co-founder of College Works Painting (www.collegeworks.com), which provides real-world business experience for thousands of college students each year. The award-winning program also offers high-quality house-painting services for homeowners.

Lending In Today’s Digital Era

In today’s mortgage market, you can’t pick up a trade publication or attend an industry event and not see or hear something about digital lending. While there is a great deal of hype about digital lending, instead of adding more fuel to the fire, let’s discuss what borrowers are actually looking for and lenders are actually implementing in their digital lending solution.

Anyone who has gone through the mortgage process knows that it is extremely document driven, including loan files that can sometimes exceed 500 pages. For applicants, successfully navigating the mortgage process takes time and patience, as they struggle to fill out dozens of forms, dig up documents and financial records and then send in the mail, fax or scan them to their lender. Naturally, all this back and forth adds days of extra time, the potential for errors, and confusion to the closing process for the borrower.

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Providing dynamic and easy to use digital lending solutions enhances the borrower experience and provides originators with the chance to clearly explain product options and loan terms to eliminate confusion for the borrower. Lenders are eager improve the borrower’s experience while streamlining the lending process and reducing manual steps and costs. Let’s dive into some of the key components that lenders are seeking in their digital lending solution and how that improves the borrowers lending experience.

One group that is driving this move to digital is the millennial buyer. Lenders understand that the millennial generation represents a significant opportunity for the mortgage industry in the form of first time homebuyers. Studies have proven that millennials are more likely to start their search for homes and the finance of homes online.

By providing a unique digital lending experience, mortgage companies can easily accommodate the digital demands of the millennial buyer. This enables the loan officer to take more applications and spend more time creating and cultivating relationships. One of the main accommodations that millennials are hoping to find throughout their experience is being able to conduct business electronically using a single access point. They are also looking to be able to sign documents electronically and access them on their mobile devices, ensuring the process is as fast and transparent as possible. As part of a tech savvy generation, the last thing millennials are looking for is the inconvenience of sorting through hundreds of documents at the lenders office at a time of day that doesn’t work for them.

According to the Consumer Financial Protection Bureau, technology has helped individuals understand loans better. Because of this, they felt more confident about the digital process. This insight is important because it tells us that digital lending isn’t a service only suitable for millennials but almost any consumer. Increased efficiencies can reduce costs and these savings can be passed on to the borrower further improving their experience. Lenders can see a monetized value in this technology as well as new opportunities for lenders to expand their business and find ways to effectively communicate to the consumer. The right digital lending solution gives the lender control over that borrower experience so that they can continue to exceed expectations.

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Today’s advanced digital lending solutions enable lenders to provide borrowers with an enhanced level of service, one that is more timely, convenient and provides the borrower with the ability to interact with the lender when and how it is most convenient for them. The digital lending experience must bring together numerous data points from multiple sources into one location to deliver a seamless lending experience to the borrower while delivering key business intelligence to the lender. To be able to deliver on this promise, the right digital lending solution delivers the ability to easily integrate multiple systems. More and more companies are publishing application program interfaces (APIs) to accommodate this need for seamless connectivity.

APIs enable third-party developers to create helpful services and tools that customers can utilize. The introduction of API’s provides lenders and borrowers access to all data from all programs in real-time, ultimately providing them more accurate and up-to-date information. Through using this solution, customers are not only able to compare and save but also have access to more personalized resources for making the right decisions regarding their mortgage.

Constant communication is also key in creating a successful digital lending experience. Adding video technology and instant messaging provides informative information to the borrower through a distribution method that they are accustomed to using. Constant access to check loan statuses, upload the necessary documentation, sign documents electronically and maintain a digital system of records are key aspects that can give borrowers the digital experience they are seeking.

When done right, digital lending is a simple and easy to follow process that educates the borrower through each step of the lending journey. This allows the overall process to become more self-guided and enables borrowers to seek out information on their terms. This empowers the borrower and improves their lending experience. While the borrower is doing some of work themselves, the role of the loan officer is not diminished but instead allows them to be more accessible when critical questions arise.

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Loan officers can assist at any point in time and can confirm the accuracy of the borrower’s data. Digital friendly applications streamline the process even more and confirm that information remains secure throughout providing improved levels of accountability. Borrowers can read and sign off through any device to move through it seamlessly. Manual tasks are then reduced and costs are significantly reduced for lending companies because of error reduction while delivering a better lending experience.

The user experience is an important factor as potential borrowers are applying for a loan through different channels. Reducing the time it takes to complete loan processes and enhancing the overall loan experience for the borrower differentiates one lender over another.

Technology is providing borrowers a faster, more transparent, mobile-friendly experience. By leveraging design and directing to source connectivity, applicants can navigate a self-guided experience and be offered real-time assistance from their loan officers.  The right digital lending solution significantly enhances today’s borrowers lending experience.

About The Author

Curt Tegeler

Curt Tegeler is responsible for providing direction for action to all employees and business initiatives. Tegeler’s main responsibilities include communicating and implementing the company’s vision and mission; leading, guiding, directing, and evaluating the work of executive leaders; formulating and implementing the strategic plan; forming, staffing, guiding, leading and managing WebMax; evaluating organizational success; and represents WebMax in civic and professional activities.

A New Servicing Dilemma

Mobile homes by specific definition have always presented a challenge in the tax service industry due to the fact they are, well, mobile. Webster’s definition of a mobile home is “a dwelling structure built on a steel chassis and fitted with wheels that are intended to be hauled to a usually permanent site. Sometimes they are referred to as manufactured homes. They are different from modular homes, which are pre-cut but assemble on a particular site.

Mobile or manufactured homes are usually purchased very similarly to how you would purchase an automobile, boat or camper. A mobile home dealer has inventory on a lot, a buyer makes a selection, and the mobile home is then moved to the location where it will reside, either in a mobile home park or on a private piece of property. If placed on personal property, it can still be taxed as real property if permanently attached (home/land loan) or as personal property (chattel loan).

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Fannie Mae and Freddie Mac have announced that they are going to support the market for chattel loans on manufactured housing. This is happening because according to the U.S. Census, the average price of a manufactured house today is about $70,000 compared with $350,000 for a site-built home.  Fannie Mae and Freddie Mac’s principle mission remains that of meeting the housing finance needs of low- and moderate-income households. Their big question is how to provide financing for manufactured housing without incurring excessive risk.

There tends to be high loss rates because value tends to decline over time, especially if the collateral does not include the land which accounts for a large part of the price appreciation.  Also, if on rented land the owner is at the mercy of the landowner that may decide to raise rents or sell the property for other uses, this then requires the manufactured home to be moved.  The third point in impact value of manufactured home is that they tend to be vulnerable to natural disasters.  In 1992 Hurricane Andrew destroyed almost all the manufactured homes in its path, this compares to about one third of the houses built on site. Despite the three points that create increased high loss rates, manufactured housing can support the shortage of affordable housing. Federal Housing Finance Agency (FHFA) indicated that the percentage of new manufactured homes titled as chattel increased from 67 percent in 2009 to 80 percent in 2015.

This is the first hurdle for effectively servicing taxes on mobile homes, determining where the mobile home will be located. Usually when the original mortgage is secured a location is established. However, while the towing hitch, axles and wheels can be removed and the mobile home connected to utilities and placed on a foundation, the utilities can be disconnected, hitch, axles and wheels are reinstalled and that mobile home can be moved to another location. Sometimes the proper paperwork is registered and a moving permit is secured, other times that is not the case and the mobile home hits the road and finding its new location can be very challenging for lenders and servicers.

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Taxing jurisdictions throughout the United States have varying rules/regulations pertaining to mobile homes so it is very important to be knowledgeable of the ones that pertain to where your mobile home is going to be located.
If you are successful in accomplishing the first hurdle of determining the location, the second challenge is to determine how the mobile home is assessed and taxed. Is it carried by the tax jurisdiction as a personal property, treated as real property or licensed by a motor vehicle office?

Does your obligation specify only the mobile home or do you have a land/home loan? Ownership interests in the mobile home and land must be the same to be assessed for ad valorem (assessed value) tax purposes. If the mobile home is placed on non-borrower owned land, it would not be subject to assessment as real property. While some jurisdictions will tax the mobile home on the same bill as the land if the owner of land and mobile home are the same; some jurisdictions make it an option if the owner wants to have them taxed separately.

As an example of personal property assessment, most mobile homes in New York are placed in mobile home parks, the assumption is that they are on rented/leased land. This assumption could result in taxes not being paid if the homeowner applies/qualifies for an exemption beyond the basic STAR exemption (exemption from school property taxes for owner-occupied, primary residences), then the mobile home can be taxed separately from the mobile home park and the homeowner is responsible for a real property tax bill. Some servicing companies require a “Mobile Home Park Acceptance Letter” for New York. This document indicates whether the park manager or the tenant is responsible for their mobile home taxes.

If you have a chattel loan; you probably do not want to pay on the land unless the mobile home is assessed with the land. However because of taxation laws, you may be forced to escrow for the land as well if that is the way the mobile home is assessed according to the taxing jurisdiction and their requirements. In many cases, the payment of taxes for a mobile home that is considered personal property will have both a collection period different than what real property will have and also the same for the assessment period. Depending on the timing of the loan; the mobile home may not show on the assessment books for a number of months.

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Texas will carry the mobile home together with the land (assessed and taxes as real property) if a statement of ownership and location for the home reflects the owner as electing to treat the mobile home as real property and a certified copy of the statement of ownership and location has been filed in the real property records in the county which the mobile home is located in. Some jurisdictions taxation of the mobile home with the land only applies if the title has been purged/eliminated or a “Certificate of Permanent location” has been filed, otherwise they are taxed separately.

In Florida, if the manufactured home is placed in a mobile home park, it is assessed through the DMV. If the homeowner is purchasing a plot of land in the mobile home park, it will be assessed with the land as real property. But in the first year of placement, until the first assessment date, the mobile home will be taxed through the DMV registration regardless of whether or not it is going on the borrower owned land.

To further complicate the subject are the nuances of how each scenario is assessed. Assessment timing can also vary by state. It is critical that the servicer is aware when a mobile home will be on the assessment roll for the upcoming tax cycle. There are some states such as Pennsylvania, Louisiana, Georgia and Mississippi that can assess a mobile home at any time. This can result in an interim tax bill being sent to the mobile home owners within 90 days of placement. If the mobile home is treated as real property (considered an improvement on the land), the taxation piece is very simple, the taxes fall in line with the normal collection period for other real properties you are servicing.

In some areas the available exemptions for a mobile taxed as real property are the same as a conventional home. Other jurisdictions will levy the tax based on the age and square footage of the mobile home. In many states for a chattel loan the VIN/serial number is the way you will identify the correct mobile home, California and Texas use their own identifying factors to track the mobile home, California uses a decal and Texas uses a label, but both are tied to the VIN/serial number. These numbers are just like the VIN of a car, they are unique to the mobile home and the most important piece of information to verify that you have the correct collateral. A mobile home loan should contain that VIN/serial number. However, there are some states that do not use the VIN/serial number to track the mobile homes (Tennessee, Arkansas and Kentucky are examples), in looking for the mobile homes in those states, you will need to match the year, make and description as closely as possible.

In Illinois, mobile homes are billed under a “Mobile Home Privilege Tax.” The computation of mobile home tax also can differ from real estate tax. Tax bills can be issued to mobile home owners based on the age and square footage of the mobile home. This can even include values for appendages such as carports or porches.

Most jurisdictions do not have mobile home information on their websites or make it easily accessible to lenders or servicers. Determining all of the above usually requires contact with specific assessment and taxing departments across the country to ensure you obtain accurate information for the loan. California does have their HCD website which allows you to see the decal number/registration status for mobile homes in that state, also Texas TDHCA website will allow you to search for mobile homes titled in that state.

Mobile homes present a number of unique challenges in comparison to a stick built home. Knowing the location of your mobile home and the taxing jurisdictions procedures/requirements will go a long way in successfully servicing your mobile home loans as well as reducing risk of property loss.

About The Author

Fred R. Holstein

Fred R. Holstein is Vice President and National Tax Setup Manager for LERETA LLC, a provider of tax and flood services to the Mortgage Industry. He can be reached at fholstein@lereta.com. Since 1986, LERETA has provided the mortgage and insurance industries the fastest, most accurate and complete access to property tax data and flood hazard status information across the U.S. LERETA is committed to giving customers extraordinary service and cost-effective property tax and flood solutions. LERETA’s services are designed to increase efficiency, reduce penalties and liabilities and improve processes for mortgage originators and servicers.

Coping With Doc Management Complexities

The lending industry faces the challenge of managing very large volumes of unstructured documents that contain immense amounts of critical data. The process of classifying and keying data from these documents is labor intensive, time consuming and costly due to the sheer volume and complexity of the documents. In an industry where standardizing forms is not possible due to their varying sources and wide variety, an acceptable solution must be able to cope with this complexity.

Founded in 1993, Franklin American Mortgage Company (FAMC), a privately held mortgage-banking firm located in Franklin, Tennessee, is a full-service professional mortgage banker licensed to provide residential mortgages across the nation. FAMC, which offers a host of diverse, flexible mortgage packages for customers with a variety of backgrounds and needs, is committed to helping families and individuals achieve the dream of home ownership through its three divisions: retail, wholesale and correspondent.

FAMC offers borrowers, brokers and lenders the strength and security of a forward-thinking national mortgage company, dedicated to remaining an industry trendsetter. FAMC truly values its relationship with each customer and mortgage professional they work with, maintaining a company tradition of responsiveness and personalized service characteristic of a much smaller organization. This philosophy has enabled FAMC to become one of the fastest growing mortgage bankers in the nation.

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The Challenge

The Mortgage lending industry presents a number of unique challenges for manually classifying and managing very large volumes of disparate documents, which are ubiquitous within this industry.

>>It is common for a single mortgage loan to be comprised of over 250-500 pages of various size documents.

>>A mortgage loan may include over 275 different possible document types.

>>Manually sorting each set of loan documents can be a very labor intensive and error fraught effort.

>>When scanning loan documents, significant labor is required to simply establish the first and last pages of the multiple page documents. This is most often done using the costly process of inserting “document separator” sheets prior to scanning.

>>To compete in this extremely competitive business, organizations need to look at cutting costs and streamlining their processes.

Manually preparing a batch for scanning by inserting document separator sheets and manually classifying loan documents is a labor-intensive process. Not only is it critical that this process be done accurately, but also that it be done efficiently in order to allow downstream underwriting and servicing decisions to be performed in a timely way.

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Project Description

Franklin American Mortgage Company (FAMC) had been looking for an OCR technology vendor to streamline their ADR process and had spent a significant amount of time performing a due diligence process, which compared vendors of these technologies.

“We had attempted to use OCR in the past for Automated Document Recognition (ADR). Due to our prior experience and a variety of technical issues we were very skeptical about OCR.”

Because of the extremely large number of, and variations of forms FAMC encounters, they required the flexibility offered by a non-template-based solution. In addition, the ideal solution needed to offer pre-built mortgage logic that would “understand” the vast majority of the document types and variations FAMC was required to recognize. This logic would allow FAMC to rapidly develop a customized ADR solution to their specific needs using the ideal solutions copyrighted mortgage rules as its foundation.

Today, FAMC scans millions of pages of mortgage documents per month. They no longer require their employees to insert document separator sheets to prepare a loan for the scanning process.   Once scanned, the loans are processed using the industry leading OCR solution for automated document recognition.

Documents’ boundaries (first and last pages) are defined and their types are automatically identified. These processes are now done faster and with a fraction of the labor formerly required. To ensure extreme accuracy, sophisticated mortgage-lending business rules have been implemented as part of the solutions exception process.

Additional capabilities leveraged successfully at FAMC:

>>Verification provides list of very likely document types to further increase speed of verifying exceptions.

>>Ability to customize how documents are handled based on the division of business the documents come from.

>>Ability to quickly add new document types using the Paradatec exclusive automated learning objects.

>>Database lookups and business rule logic checks to ensure the highest degree of accuracy.

>>No scripting interface, easily configurable rules to manage FAMCs highly sophisticated ADR processing application.

Outcome

The project was completed and is currently in production. The system is able to achieve 80% document recognition while keeping error rates low. This has allowed FAMC to position itself for an anticipated future increase in incoming document volume and provides them with a powerful competitive advantage. Today FAMC is processing Millions of images per month and doing all this more accurately and with less production time than was formerly required.

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“We asked a number of vendors including the Paradatec team to help us perform an extensive due diligence process which included a proof of concept test with our own documents. Paradatec was the clear winner based on our comprehensive vetting process”.

Paradatec’s PROSAR-AIDA is an advanced and unique OCR recognition technology. It is unique in that it utilizes neural networks technology and Artificial Intelligence (AI). PROSAR-AIDA is able to read structured, semi-structured, and unstructured documents. It makes ‘decisions’ about document characteristics in much the same way as a human being does, only many times faster and without human intervention.

PROSAR-AIDA takes a very different approach than other technologies. Because the recognition engine (a Paradatec exclusive) incorporated in PROSAR-AIDA is faster than any full page OCR product on the market, it is able to process each image, in less than two seconds on average. It does this without making any assumptions about content location on the page or attempts at matching zonal OCR templates. PROSAR-AIDA is capable of processing thousands of documents per hour with a single processor core, and provides even further almost unlimited scalability by offering seamless utilization of the latest in multi-core processor technologies, and multi-server environments.

Because of Paradatec’s unique approach, and their ability to leverage a vast quantity of intellectual property, which they have built over the years specifically for mortgage loans, implementations can be completed in a fraction of the time normally required by others.

About The Author

Mark Tinkham

Mark Tinkham is Director of Business Alliances at Paradatec, Inc. Over the past twenty-five plus years, Mark has worked for technology companies that deliver innovative solutions to the financial services industry. For the past ten years, his primary focus has been bringing efficiencies to the mortgage market through industry leading Optical Character Recognition (OCR).

The Legacy Of Steve Jobs

Steve Jobs and Steve Wozniak founded Apple in 1976, with Jobs playing the part of strategic visionary and businessman, while Wozniak serving as the engineering expert who translated the vision into products. Neither brought any experience running a company into the Apple venture. Mike Markkula, one of Apple’s earliest investors and sources of business expertise, addressed this by bringing in his friend Michael Scott as Apple’s first CEO. Markkula himself became CEO in 1981 after Scott’s departure.

In 1983, Jobs himself recruited John Sculley from PepsiCo for Apple’s next CEO, even though he already saw himself as the right person for the job. It was clear that Apple’s board wasn’t confident in Jobs’s ability to lead. His reputation for managerial callousness and obsession with detail was well known and considered a liability for the CEO’s office.

By 1985, the power struggle came to a head. Jobs had led the initial development of the Lisa, the first computer with a graphical user interface (GUI). While a technical marvel, it was not a commercial success. His follow-up project, the Macintosh, had better sales, but nowhere near enough to shake IBM’s control of the PC market. It was the beginning of the end. Sculley, acting on direction from the Apple board, tried to limit Jobs’s efforts to launch expensive products in untested markets. After a failed boardroom coup attempt by Jobs, he resigned and founded NeXT.

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NeXT’s trajectory followed a similar pattern as Apple: technically impressive products—delivered late, priced beyond what most consumers could pay—failed to find market traction. In its first post-Jobs era, Apple saw remarkable success. The Mac offered color and the first PowerBook laptop was released. But there were flops as well and a costly strategic error in microprocessor technology that kept the price point of Macs out of reach for many potential customers.

Gil Amelio became CEO in 1996 and it was his idea to acquire NeXT and its NeXTSTEP operating system. The move returned Jobs to Apple as an advisor. It would also be Amelio’s undoing. The next year, an anonymous party sold 1.5 million Apple shares in a single transaction. As a result, Apple shares fell to a 12-year low. In the next weeks, Jobs convinced the board to fire Amelio and make him interim CEO. Jobs later confessed that he was the anonymous seller of the Apple stock.

By August 1997, Jobs brought in a new board and mended business fences with long-time rival Bill Gates. Microsoft announced a $150 million investment in Apple at the Macworld conference. In 1998, Apple introduced the iMac, its all-in-one computer, reinforcing the company’s turnaround. In 2000, Apple officially dropped the “interim” from Steve Jobs’ title of CEO. Steve Jobs said, ”Getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again. It freed me to enter one of the most creative periods of my life.”

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In his exclusive biography of Steve Jobs, Walter Isaacson writes about the man and the inevitable and often difficult intersection of personality and inventive success.

Let’s look at some of the traits Walter Isaacson considered the keys to Job’s success:

Focus: Jobs returned to Apple with something to prove, and he would prove it by focusing on the core business as he understood it. Apple’s product line was a mishmash of computers, gaming consoles, cameras, and printers. Jobs dumped products, slashed R&D projects from 50 to 10, and laid off over 2,000 employees. “Deciding what not to do is as important as deciding what to do,” Jobs said. “That’s true for companies, and it’s true for products.” Instead of making more products, he focused Apple on making only four computers, one for highly specific market segments. By getting Apple to focus on making just four computers, he saved the company.

Simplify: When designing the iPod interface, Jobs looked at every angle to reduce extraneous click for decisions that users shouldn’t have to make. One proposed navigation screen required users to specify if they wanted to search by song, album, or artist. “Why do we need that screen?” Jobs demanded. The designers realized they didn’t. As a result, the device does what a human brain will do: search all artificial categories (Is it a song? Is it an artist?) for any matches to the keywords supplied to it.

Take Responsibility End to End: Jobs was a controlling person, and while that made him dig in on decisions that were questionable, it also brought order to what could have been a disjointed product experience. He envisioned an Apple ecosystem that allowed for an intuitive, integrated user experience with connected Apple devices. This was not a matter of making an elegant product; it was about making the suite of products that worked together to create an experience greater than any single component.

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When Behind, Leapfrog: No company, regardless of its innovative leadership, will always be first with a new idea. The trick is to know when you’re behind and then use that position to catapult ahead. In Jobs’s own assessment, he missed the first wave of digital music technology by being blind to user behavior. The original iMac was geared to managing photos and video, but not music. Competitor PCs provided the avenue for downloading and swapping music and then burning personal CDs. The iMac’s slot drive couldn’t burn CDs. He could have simply upgraded the the iMac’s CD drive, but instead he created an integrated system (again, end-to-end ownership) that transformed the music industry. The resulting combination of iTunes, the iTunes Store, and the iPod allowed users to buy, share, manage, store, and play music better than they could with other devices.

According to Google, Steve Jobs is still the most interesting tech CEO. Steve Jobs may be gone, but clearly he’s not forgotten. The mythology around the man is so strong that even five years after his death he still dominates online discussion, more popular than Apple CEO, Tim Cook; the Tesla and SpaceX CEO, Elon Musk; Facebook’s CEO, Mark Zuckerberg; and Microsoft founder Bill Gates.

Steve Jobs said it best in 1995: “Of all the inventions of humans, the computer is going to rank near or at the top as history unfolds and we look back. It is the most awesome tool that we have ever invented. I feel incredibly lucky to be at exactly the right place in Silicon Valley, at exactly the right time, historically, where this invention has taken form.”

This article cannot begin to explore the life of Steve Jobs in detail, but I hope it will give you a snapshot and encourage you to read ”Steve Jobs,” by Walter Isaacson, the official biography published in 2011.

About The Author

Roger Gudobba

Roger Gudobba is passionate about the importance of quality data and its role in improving the mortgage process. He is an industry thought leader and chief executive officer at PROGRESS in Lending Association. Roger has over 30 years of mortgage experience and an active participant in the Mortgage Industry Standards Maintenance Organization (MISMO) for 17 years. He was a Mortgage Banking Technology All-Star in 2005. He was the recipient of Mortgage Technology Magazine’s Steve Fraser Visionary Award in 2004 and the Lasting Impact Award in 2008. Roger can be reached at rgudobba@compliancesystems.com.

Robotics In Origination

Over the past decade, mortgage originators have seen the average cost to originate a loan nearly double. As we all remember, the rush of post-crisis regulations required originators to quickly ramp up staffing, change processes and implement new technology to meet these regulatory demands. At least for now, the dust has settled on the regulatory front, and originators are now able to look more closely at other operational concerns and opportunities.

Today, originators are increasingly focused on identifying efficiencies that will enable them to decrease turn-times from application to close and to decrease the average cost to originate a loan without compromising service or compliance. When considering possible ways to accomplish these goals, originators are finding that advancements in technology show great promise – in particular, Robotic Process Automation, often referred to as Robotics.

Robotics technology leverages powerful decisioning, workflow and imaging functionality to enable more complex automation than previously available in the mortgage industry. Originators interested in taking advantage of Robotics technology will not have to look too far since some loan origination systems are already using this advanced automation. While many technology providers are offering a variety of pre-configured options to automate specific processes, originators can also tailor Robotics technology to address their specific preferences for managing back-office processes.

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The nearly unlimited number of automation possibilities using Robotics technology may make it hard to select a starting point – but early adopters have already started by automating highly manual processes where significant efficiency gains are most needed. These early adopters have paved the way for the rest of the market to more easily implement and begin taking advantage of this new technology. Some key use cases are as follows:

Automating Disclosures

While technology development played an important part in helping originators ramp up for the enactment of the TRID Disclosure rule, Robotics now makes it possible to take automation to the next level in the disclosure process. Robotics technology can automatically assess data that has been received to determine whether or not the originator has everything needed to systematically generate the disclosure package. If not, automatic notifications can be sent to the processor for intervention.

Automating Flood Zone Determination Evaluation

As soon as the originator understands the conditions for a loan and receives borrower payment, Robotics can enable the automatic ordering of a flood zone determination from a third-party vendor. When the determination is returned, the system reviews the information and based on predetermined rules, completes the evaluation task. For example, if the determination states that the subject property is not in a flood plain, then the evaluation task can be automatically checked off as completed and requiring no further action. If the determination states that the subject property is in a flood plain, the system rules can be programmed to alert the processor, and can further assists by automatically preparing the flood notification letter for the borrower.

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Automating the Appraisal Process

Similar to flood zone determinations, Robotics can also automate the ordering of an appraisal as soon as the loan conditions have been set and the borrower payment is entered into the LOS. Once the appraisal results are returned to the LOS, Robotics can enable the automatic gathering of all third-party service data needed for the appraisal review process, such as automated appraisal reports and the Submission Summary Report (SSR) from Fannie Mae or Freddie Mac. Once all information needed for the review is gathered, a member of the review team can be automatically alerted to begin the review process.

Benefits of Robotics in Origination

When originators employ Robotics technology to automate as many aspects of the origination process as possible, significant benefits can be expected. One of those benefits is risk reduction, especially when leveraging Robotics technology from within the LOS. Originators often operate in multiple systems, which is ineffective and inefficient.

By automating origination processes with Robotics, originators enable existing staff members to focus more on higher-level tasks and less on repetitive tasks. This has the potential to create a more engaging and rewarding work experience for employees. Originators can also scale their LOS to enable existing staff members to handle more loans. If existing staff members can manage more loans, the originator can lower its average cost to originate.

Further, Robotics technology eliminates human error in the processes it automates, improving overall accuracy within the origination process. The technology also eliminates bottlenecks and speeds up processes. Faster, more accurate origination processes can improve the customer experience, lead to more referrals, and ultimately increase revenue.

In the past, technology used to automate origination processes was not as robust as it is today, and required long implementation times. However, with Robotics technology, originators are finding a different experience. Since Robotics technology is already built into some LOS systems, there is no new system implementation required. Robotics functionality for common processes such as those previously mentioned is now easily accessed through the LOS. The same functionality is also easily redeployed to automate other processes.

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Not so long ago, originators had a stronger reliance on vendors for any adjustments to process automation. Now, Robotics enables originators to have more direct control over process automation with an entirely configurable client workflow. Although advanced decisioning functionality may still require vendor consultation, originators are more empowered to manage their automation than ever before.

Transforming the Origination Process

To thrive in today’s mortgage market, originators must find ways to decrease their turn-times as well as lower the average cost to originate a loan without negatively impacting their ability to ensure compliance and deliver a high-quality customer experience. Robotics technology built into loan origination systems is equipping originators with the tools they need to tackle this challenge. Originators leveraging LOS systems that use Robotics technology are quickly transforming their origination processes, experiencing multiple benefits, and helping to ensure that they are better prepared to scale for any growth opportunities that lie ahead.

About The Author

Richard (“Rich”) Gagliano

Richard (“Rich”) Gagliano is President of the Black Knight Origination Technologies Division, where he is primarily responsible for the direction of LoanSphere Empower, Black Knight’s loan origination system for retail, wholesale and consumer-direct channels; Empower Now!; LoanSphere LendingSpace, Black Knight’s loan origination system for correspondent lending; Black Knight’s LoanSphere SalesEdge lead management solution; and LoanSphere Quality Insight, a quality control workflow solution that supports greater loan transparency and data integrity. Rich has more than 25 years of experience in the financial services industry. For more information about robotics in origination, please contact Black Knight at 844.474.2537 or AskBlacKnight@bkfs.com.

Your Roadmap To Success

Now is your time. What do I mean by that? The mortgage lending industry is undergoing radical change. In the STRATMOR Insights Report, Nicole Yung, the company’s Senior Partner put it this way:

“While there have been many significant advances in mortgage technology over the years, most of were focused on improving lender processes and productivity, not on fundamentally changing the borrower’s experience,” said Yung. “But, as the publicity surrounding Quicken’s Rocket Mortgage and the Agencies’ stated commitment to Day 1 Certainty attests to, Digital Mortgage may well be a game changer that no lender can afford to ignore.”

So, the big question is: How do you as a vendor take advantage of these new industry trends? One way forward is to know what’s going on in the industry so you can use that knowledge to turn that lender into a high-value prospect. For example, in the late summer of this year Embrace Home Loans, a prominent leader in the mortgage industry, added industry veteran Patrick Mullen as its new Director of Recruiting. In his role, Mullen will spearhead the growth and expansion of Embrace Home Loans’ sales organization by developing a robust recruiting strategy.

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“My vision is for Embrace Home Loans to be the employer of choice for mortgage origination talent in the markets in which we serve. Embrace Home Loans is uniquely positioned for growth and I am thrilled to play a role in helping drive our future growth,” said Mullen. “I joined the team at Embrace to continue to build upon the great foundation the company has built over the past 3 decades. In my 15 years recruiting within the mortgage industry, I’ve learned mortgage originators desire a stable and secure company, a supportive culture and strong executive leadership; Embrace Home Loans is that company.”

How can this news help you? You can use this newsworthy trigger event at Embrace Home Loans to talk to them about how your technology will help them recruit. Knowing about these trigger events and using them to your advantage is essential to success these days. In the White Paper entitled “Hidden Gems: The Ultimate Strategy To Find High Value Prospects” written by Jill Konrath, she explains that many trigger events are newsworthy announcements. Companies share much of this information via press releases. They want to be visible. Sometimes the media writes about what’s happening. Or, people on LinkedIn, Facebook or Twitter spill the beans about what’s going on. All this is online, waiting to be found. You need to use this knowledge to adjust your thinking about how you sell.

If trigger event thinking is new to you, it’s important to broaden your understanding of these catalytic agents first. That means we need to take a look at the plethora of “trigger events” that can create a ripple effect within an organization. Here are just a few of the major categories:

>>Mergers, Acquisitions, Partnerships. With these types of activities, organizations re-evaluate many of their existing relationships to determine what Strategic Initiatives. >>Strategic Initiatives. When new corporate directives become a priority, there’s a shift virtually overnight in what decision makers are concerned about. They need to quickly determine if their status quo is sufficient to help them achieve their new objectives.

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>>Market Challenges. This broad category can include competitive activity, changing customer demographics, economic turbulence, rising gas prices and a host of other factors that can both positively or negatively impact future business.

>>Legal/Compliance. Any changes in government regulations or corporate litigation can cause an organization to undertake immediate action.

>>Reorganizations. Tumultuous restructurings change priorities and shift alliances virtually overnight. Existing business relationships are all in jeopardy too.

>>New Leadership. Anytime a new executive is brought onboard, they’re expected to deliver results quickly. Change is always in the air. Depending on what you know about the organization and position (e.g., CFO, VP Marketing), you can infer what might be forthcoming.

>>Financial Announcements. If an organization has missed their earnings expectations or sales growth is lagging, expect to see big changes in the upcoming quarter. Conversely, if growth was better than expected, watch for new initiatives to support their expansion.

These are some of the biggies. But there are also a whole slew of other trigger events that can catalyze change. They’re not earth shattering. But, if you’re aware of them, you can get your foot in the door to have a good discussion with a person who’s finally open to new ideas or vendors.

Knowing about these and other trigger events happening in the mortgage space can make that lender a perfect target for a sale. Today research shows the profound impact of this vital sales intelligence on the sales process. CSO Insights found that effective use of sales intelligence results in a 17% increase in revenue productivity/rep.

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Also, Aberdeen Group discovered that companies who support sales teams with sales intelligence tools see a 28.4% increase in year-over-year revenue. Additionally, Aberdeen Group found that 81% of companies who used a sales intelligence platform saw significant yearly gains in team quotas.

Leveraging sales intelligence yields compelling results. And, the key driver of these results is a trigger event that alters a prospect’s priorities. By using them effectively, you can initiate more opportunities, deepen existing relationships, shorten your sales cycles and minimize competition.

Selling via trigger events is not meant to replace your existing prospecting process. It’s imperative that you still target and go after your ideal customers. Instead, think of trigger events as an ideal augmentation strategy to find those hidden gems. It creates more opportunities for you. And, if you set up a system to do the work for you, your technology partner will alert you when something happens that could create a need for your products or services.

Sometimes finding the best way to use this new knowledge and marry it with your existing strategies can be tricky, which is where trusted partners like NexLevel Advisors can be crucial. If you think about it, this type of knowledge and expertise is valued by executives when making decisions. Executive leaders look to make informed decisions based on more than just internal knowledge, they seek information from trusted external resources. Fact based research, viability assessment, target market segmentation, and competitive analysis all provide a detailed view of potential opportunities, risks and rewards specifically developed for your organization.

As a trusted business advisor, NexLevel Advisors leverages years of experience in business strategy, corporate performance, strategic selling, and marketing to deliver customized solutions that help our clients take advantage of their unique business opportunities. These custom developed solutions allow you to obtain new insight and perspective, optimize sales & marketing effectiveness, and increase customer loyalty quicker and more strategically as you take your company to the next level.

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.

Attracting New Borrowers

In today’s hyper-competitive mortgage market with fluctuating rates, low inventories, and changing borrower expectations, it is vital for lenders to truly understand their target audience if they want to attract new borrowers.

In an article entitled “How to Define Your Target Market” by Mandy Porta from Inc.com, Porta addresses this topic and states, “To build a solid foundation for your business, you must first identify your typical customer and tailor your marketing pitch accordingly.”

“Given the current state of the economy, having a well-defined target market is more important than ever. No one can afford to target everyone. Small businesses can effectively compete with large companies by targeting a niche market.”

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“Many businesses say they target “anyone interested in my services.” Some say they target small-business owners, homeowners, or stay-at-home moms. All of these targets are too general.”

The mistake a number of lenders make is trying to appease every possible potential borrower instead of focusing their marketing message and materials to a specific or a limited number of target audiences.

In addition, Porta says, “Targeting a specific market does not mean that you are excluding people who do not fit your criteria. Rather, target marketing allows you to focus your marketing dollars and brand message on a specific market that is more likely to buy from you than other markets. This is a much more affordable, efficient, and effective way to reach potential clients and generate business.”

For example, “an interior design company could choose to market to homeowners between the ages of 35 and 65 with incomes of $150,000-plus in Baton Rouge, Louisiana. To define the market even further, the company could choose to target only those interested in kitchen and bath remodeling and traditional styles. This market could be broken down into two niches: parents on the go and retiring baby boomers.”

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By clearly defining your target audience, your marketing materials and value propositions can be much more specific, personalized, and meaningful to your prospective borrowers.

Porta goes on to state, “With a clearly defined target audience, it is much easier to determine where and how to market your company.” Here are some tips she provides to help you define your target market.

“Look at your current customer base.

Who are your current customers, and why do they buy from you? Look for common characteristics and interests. Which ones bring in the most business? It is very likely that other people like them could also benefit from your product/service.

Check out your competition.

Who are your competitors targeting? Who are their current customers? Don’t go after the same market. You may find a niche market that they are overlooking.

Analyze your product/service.

Write out a list of each feature of your product or service. Next to each feature, list the benefits it provides (and the benefits of those benefits). For example, a graphic designer offers high-quality design services. The benefit is a professional company image. A professional image will attract more customers because they see the company as professional and trustworthy. So ultimately, the benefit of high-quality design is gaining more customers and making more money.

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Once you have your benefits listed, make a list of people who have a need that your benefit fulfills. For example, a graphic designer could choose to target businesses interested in increasing their client base. While this is still too general, you now have a base to start from.

Choose specific demographics to target.

Figure out not only who has a need for your product or service, but also who is most likely to buy it. Think about the following factors:

>>Age

>>Location

>>Gender

>>Income level

>>Education level

>>Marital or family status

>>Occupation

>>Ethnic background

Consider the psychographics of your target.

Psychographics are the more personal characteristics of a person, including:

>>Personality

>>Attitudes

>>Values

>>Interests/hobbies

>>Lifestyles

>>Behavior

Determine how your product or service will fit into your target’s lifestyle. How and when will your target use the product? What features are most appealing to your target? What media does your target turn to for information? Does your target read the newspaper, search online, or attend particular events?

Evaluate your decision.

Once you’ve decided on a target market, be sure to consider these questions:

>>Are there enough people who fit my criteria?

>>Will my target really benefit from my product/service? Will they see a need for it?

>>Do I understand what drives my target to make decisions?

>>Can they afford my product/service?

>>Can I reach them with my message? Are they easily accessible?

While targeting is a very powerful tool to help maximize marketing dollars and results, it is important to prudently carve out your niche. Companies can get too narrow with their focus and have a very limited number of prospects to market to.

Porta’s tip, “If you can reach both niches effectively with the same message, then maybe you have broken down your market too far. Also, if you find there are only 50 people that fit all of your criteria, maybe you should reevaluate your target. The trick is to find that perfect balance.”

She concludes with, “Defining your target market is the hard part. Once you know who you are targeting, it is much easier to figure out which media you can use to reach them and what marketing messages will resonate with them. Instead of sending direct mail to everyone in your ZIP code, you can send it only to those who fit your criteria. Save money and get a better return on investment by defining your target audience.”

Knowing your target audience will not only save you money on your marketing but it will also deliver greater results as you look to attract more new borrowers in today’s highly competitive mortgage market.

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.

The New M&A Craze

There has been much talk about the digital mortgage. Many view the digital mortgage as a more seamless, customer-friendly, all electronic point-of-sale. To this end, we have seen a lot of new entrants to the POS market. However, a true digital mortgage goes beyond the POS, it spans the whole lifecycle of a mortgage.

To enable lenders to mover toward this “total” digital mortgage, we have seen a lot of mergers and acquisitions with this goal in mind. For example, Optimal Blue, operator of an industry-specific digital marketplace and provider of secondary marketing solutions, announced today acquired Comergence Compliance.

Why did they do that? Comergence is a provider of third-party oversight solutions for the mortgage industry. Founded in 2008, Comergence provides an array of third-party originator (TPO), appraiser, and social media risk management solutions that verify third-party compliance in real-time, a capability unmatched in the industry. Comergence has been widely recognized by the industry for its innovations in due diligence automation and ongoing surveillance services.

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“We are thrilled to welcome Comergence to the Optimal Blue family and we are looking forward to extending their network management platform to our customers,” said Scott Happ, CEO of Optimal Blue. “Comergence solutions help build trust and confidence among marketplace participants by verifying third-party compliance in real-time, a capability unmatched in the industry.”

“We provide the best due diligence and ongoing surveillance services in the industry,” noted Greg Schroeder, President of Comergence. “We believe that by being part of Optimal Blue we can bring the benefits of our technology and expertise to an even larger segment of the mortgage marketplace.”

Michael Stallings, Executive Vice President of Comergence said, “Recent Comergence innovations, including an analytics tool to help account executives identify new TPO opportunities and a breakthrough solution for social media risk monitoring, strongly complement Optimal Blue’s existing product offering.”

“Optimal Blue and Comergence are well-aligned around our principal mission of facilitating transactions between buyers and sellers of loans,” added Scott Happ. “We are very pleased that Greg, Michael, and the entire Comergence team will be joining Optimal Blue as we execute our shared growth plans.”

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Al in all, Optimal Blue is looking to provide a more “total” digital mortgage and they are not alone. Fiserv acquired the assets of PCLender, LLC, a provider of internet-based mortgage software and mortgage lending technology solutions. This acquisition will enhance the Fiserv suite of mortgage origination services, which enable Fiserv clients to deliver the experience today’s consumers and mortgage lenders expect. Financial terms were not disclosed.

Mortgage lenders operate in an evolving marketplace in which they are challenged to deliver a more efficient lending process in tandem with a compelling borrower experience. Fiserv is working to simplify today’s lending experience for financial institutions and borrowers, delivering powerful tools to originate, process, underwrite and deliver loans in a secure, paperless environment.

“Rapidly evolving consumer expectations require a seamless approach to banking experiences, including mortgage origination,” said Jeffery Yabuki, President and Chief Executive Officer, Fiserv. “PCLender provides Fiserv with a full digital suite of mortgage origination solutions for banks, credit unions and mortgage lenders. We welcome the existing clients and talented team members to our company.”

A complement to the existing Fiserv lending solution suite, these assets provide a set of simple, easy-to-use internet-based mortgage solutions for banks, credit unions and mortgage lenders. This fully managed, end-to-end solution simplifies origination, document collection and compliance reporting, streamlining consumer direct and retail mortgage and HELOC loan origination. The technology offers a feature-rich user experience and improved operational efficiency for mortgage lenders with existing resources. Supporting lenders of all sizes, PCLender provides solutions for lenders funding up to 5,000 loans per month.

“Joining Fiserv accelerates our ability to scale our solution, while simplifying solutions for every phase of the loan process to benefit our clients,” said Lionel Urban, Chief Executive Officer, PCLender. “We look forward to leveraging our combined expertise to deliver greater client value and an enhanced experience for their customers.”

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And more recently we saw origination vendor Ellie Mae follow suite by acquiring Velocify, a sales acceleration platform. With the acquisition of Velocify, Ellie Mae is accelerating its vision of offering a fully digital mortgage by combining Velocify’s lead management, engagement and distribution capabilities with Ellie Mae’s Encompass CRM’s unique approach to automated one-to-one personalized marketing and the Encompass Consumer Connect digital consumer experience. Together, the solution will meet the needs of today’s lenders by delivering a complete digital lead capture and conversion solution for creating interest, turning that interest into an application and then funding that loan quickly and at a low cost.

Velocify’s lead management solutions help sales teams keep pace with the speed of opportunity by driving rapid lead response, improving productivity and offering actionable selling insights. The company helps sales teams sell more by streamlining and optimizing the sales process from start to finish by enabling teams to accelerate lead engagement, and implement effective workflows, ultimately helping lenders find and convert more leads, faster. Many of Ellie Mae’s Encompass all-in-one mortgage management solution customers use the Velocify solution today.

“As part of our comprehensive strategy to deliver a “total” digital mortgage to the industry, we are helping lenders to originate more loans, reduce costs, and complete the entire mortgage process faster,” said Jonathan Corr, president and CEO of Ellie Mae. “The combination of Velocify’s solution with our Encompass CRM and Encompass Consumer Connect solutions will accelerate our delivery of the most robust digital mortgage solution in the market. The acquisition will enable us to provide the first combined solution that helps lenders turn consumer interest into applications by offering a personalized, high-tech and human-touch experience. Going forward we will empower lenders’ sales teams to keep pace with the speed of opportunity, drive down costs of origination through greater lead capture and conversion, and improve productivity through actionable selling insights.”

“A digital transformation is occurring across the financial services industry, especially in the mortgage vertical in which Velocify has a leading position,” said Nick Hedges, president and CEO of Velocify. “Successful sales teams offer an end to end digital experience combined with as much human touch as the consumer desires throughout their buying process. The team at Velocify has built the leading software solution for consumer sales engagement during the early stages of the sales process. By joining forces with Ellie Mae we are very excited to extend that capability throughout the consumer buying cycle.”

Under the terms of the agreement, Ellie Mae will acquire Velocify for $128 million in cash. The transaction is expected to close in the fourth quarter of 2017 and will have no impact on third quarter financials. Ellie Mae will provide additional financial details when the company reports its third quarter results.

The bottom line is that all of these acquisitions speak to the industry’s appetite for embracing a “total” digital mortgage, and in my view that’s way overdue.

About The Author

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.