Future Lending Success


The Mortgage Bankers Association (MBA) announced that it forecasts $1.10 trillion in purchase mortgage originations during calendar year 2017, an 11% increase from 2016. In contrast, MBA anticipates refinance originations will decrease by 40%, resulting in refinance mortgage originations of $529 billion. In total, mortgage originations are expected to decrease to $1.63 trillion in 2017 from $1.89 trillion in 2016. Further, for 2018, MBA is forecasting purchase originations of $1.18 trillion and refinance originations of $410 billion for a total of $1.59 trillion. So, we sat down with Joe Dahleen, Vice President of Consumer at Axia Home Loans, to discuss how lenders can be successful in the current mortgage market. Here’s what he shared:

Q: What do you see as the future of straight through processing?

JOE DAHLEEN: Purchase certainty is important. DSD + STP= GPC, which means direct source data plus straight through processing equals greater purchase certainty. I am doing this at the point-of-sale today. I take the path of least resistance. I do the VOE and the VOD at the point-of-sale. if I get those two data points, I can get a good idea on if I qualify and I can turn the file very quickly.

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Q: How will things like outsourcing verification and calculation of income change over time?

JOE DAHLEEN: I outsource the calculation of income. I drop it into FACTCheck, The FACTCheck tax transcript report returns the proprietary FACTCheck rules engine analysis on all income sources in a detailed, interactive report that contains both calculated qualifying income and messages of explanation and instruction. These rules are designed to test for GSE compliance, as well as a borrower’s ability to repay (ATR) under Appendix Q. In the end, underwriting doesn’t want to see it until it’s a full file. So, my POS allows the customer to submit data, upload data and consent for us to get their data electronically. Once I get that I put it into FACTCheck. I do all of that at the point-of-sale. My assumption is that more lenders will jump on that bandwagon.

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Q: How does the mortgage industry craft a process where the user experience has no friction?

JOE DAHLEEN: My next goal is to eliminate fraud when you inject the driver’s license. Using technology you can scan the driver’s license and it will pull that data and populate the 1003 electronically. For U.S. driver’s licenses, Mobile Verify put out by a company called Mitek has the ability to find and decode enhanced security features. When this feature is found, a document is 100% authentic. When a document is authenticated by Mobile Verify, it is a genuine government-issued identity document. If fraudulent, it is immediately rejected. Documents that are suspicious are returned with warnings indicating that additional checks on the consumer are required. You want to do identification verification at the point-of-sale and pre-population that data. HELOCs will be big in 2017 and we can automate all of that at the point-of-sale. You want to get rid of any ambiguity during the process.

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Q: How will the recent governmental changes impact the mortgage market in 2017 and beyond?

JOE DAHLEEN: We’ll see some loosening of regulations. We won’t see too many changes in what has been activated so far. Only 44% of the rules promised in Dodd-Frank have happened, so some of those new rules to come may be eliminated or streamlined, but we won’t get rid of the CFPB or anything that has happened so far. I do think there will be better oversight of the CFPB, though.

Q: How do you think lenders handled this year’s regulatory challenges and what key lessons can we take from those examples?

JOE DAHLEEN: Lenders have gotten better at dealing with change. Deploying additional technology has gotten better. The pace of innovation on the mortgage technology side has caught up. I’d still like to see more adoption of the e-note. Change management has gotten better because the teams have gotten more used to change. The independent mortgage bankers have done a good job of pivoting to deal with new situations. We can’t fear change.

Q: When evaluating their technology strategy, what elements should lenders keep in mind?

JOE DAHLEEN: Lenders always have to consider the customer experience. They should be thinking: What is the customer’s journey? You need to make everything easier for the consumer. You better make sure they have a good experience. If your customer has to download a document, wet sign it and get it back to you, you’ve failed. We pester the consumer all through the process and we don’t have to do it that way. You may not loose the loan this way, but that customer is not going to refer you.

Q: What is perhaps the single biggest misconception lenders believe regarding technology?

JOE DAHLEEN: Some lenders still think that one solution can do everything. There is a fallacy that there is one solution that can automate everything. Lenders spend a lot of time and energy implementing end-to-end systems, but even those systems don’t do everything. No LOS can serve every need.

Q: What do lenders need to do in 2017 to remain competitive?

JOE DAHLEEN: Lenders need to lower the cost to produce so you can lower your rates and do more loans. You can’t spend $6,000 to originate a loan. The only way you get there is by lowering cost.

Industry Predictions

Joe Dahleen thinks:

  1. The adoption of e-note will lower the cost to produce by 25%.
  2. Verification of assets and income will be done at the point-of-sale.
  3. The confluence of title and appraisal as one quoting platform will be the next big innovation.

Insider Profile

Joe Dahleen is currently Vice President of Consumer at Axia Home Loans. Prior to joining Axia, Joe was Senior Vice President of Marketing at Primary Capital Mortgage, a Resource Capital Corp. company, and Executive Vice President and Head of Mortgage Originations at Elevation Home Loans, LLC, which was a start-up residential mortgage company acquired by Resource Capital Corp. Joe is a veteran of the mortgage industry who specializes in executive management and strategic marketing. He is known for being a strong advocate of technology and an expert in leveraging the latest communication methods to support successful growth.

It’s The End Of The World As We Know It


“It’s the end of the world as we know it.” — R.E.M., 1987

How many times has that thought run across the minds of those of us in the mortgage industry since 2008? That line seems to capture how a lot of people feel about the recent presidential election. Whether you’re keeping an open mind or you fear we’re headed for disaster, one thing is for sure: change is upon us. We don’t know what the coming changes will look like, but whether or not they’ll be regarded as positive depends largely on how we handle them. It would be foolish to speculate broadly or too specifically about what the new President will do once in office – just ask the pollsters and pundits who woke up with their heads spinning on November 9th. But both candidates spoke loudly of policies that need to be updated, redesigned or completely dismantled.

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The widespread election of Republicans at the national and state levels signals that the Dodd-Frank Wall Street Reform and Consumer Protection Act will be a target; it’s been on the (now) ruling party’s radar practically since the drafting phase. The mortgage industry may be in for changes TO the changes we’re still mastering and adjusting for. Lawmakers aren’t the only ones the mortgage industry must obey, for the consuming public is our ultimate boss. The industry must brace itself not only for what regulators may do, but what the public is demanding. Change is inevitable in business, but profitability and survival really depend on how those changes evolve.

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It took years to enact aspects of Dodd-Frank, like the TILA-RESPA Integrated Disclosure Rule (TRID), and whatever changes may come are likely far in the distance, meaning that widespread lender relaxation of compliance policy and procedure is not advised for obvious reasons. Companies and originators have been experimenting with all sorts of technology for marketing and compliance with varying degrees of success. The fear of Consumer Finance Protection Bureau wrath has mellowed of late and doesn’t dominate the industry dialogue as it once did. But canvass the nation and you’ll find a veritable mélange of systems and tools in use at different companies and branches to manage compliance and marketing. Companies must take a realistic approach to compliance and the diverse needs, attitudes and willingness of MLOs to adopt mandated technologies. Communication and leadership is as important as the technology choice itself, and implementation won’t be successful without buy-in from those affected.

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The need for new technology to manage business is well understood, however the entrepreneurial nature of the humans who originate loans must be understood as well. Management can’t assume that change – even if necessary – will be embraced. One size doesn’t fit all for top, mid and lower-range producers, and neither does one announcement or approach to getting the rank and file in line with what needs to be done. Dodd-Frank is still on the books for now and regulators have been nipping at our heels for years, but another key to our success and survival is also hard for lawmakers to keep up with: the digital age.

“The digital mortgage” has displaced “compliance” as the top of mind concern in virtually every area of the mortgage industry – and the public is clearly ready for it:

>> 89% used some form of online technology to help them with the homebuying process

>> 76% feel technology made them a smarter homebuyer

>> 69% said technology made them feel more confident

These figures were compiled by Versta Research in a survey of homebuyers commissioned by Discover Home Loans, and the Federal Reserve Bank recently released its 2016 Consumer and Mobile Financial Services report showing that 87% of adults are using mobile technology and 43% are using their devices for banking services.  The public is comfortable managing day-to-day household finances on mobile devices, and those transactions and records tie directly to the larger, more occasional act of getting a home loan. Since big and small lenders alike can execute digital mortgages, the fears that jobs will disappear and that the need for loan officer expertise will diminish are real. But there’s consolation in the Discover survey for the humans working in mortgage:

>> 67% of homebuyers said after using apps and the internet to explore real estate and financing, they still preferred to work with a professional

>> 33% of respondents found the financing process difficult

>> 31% of respondents found the financing process confusing

Feelings of panic over the rise of the digital mortgage are really the result of thinking that it’s “all about us” in the industry versus the borrowers we serve. As bosses go, consumers are tough:

>> Have you ever applied for a job where you were abundantly qualified, aced all the interviews, jumped through every hoop and still didn’t get it – like when you incubate a prospect through credit repair, mortgage planning and pre-approval, but they close with another lender?

>> Have you ever worked for someone who’s tough to please – like a borrower who took personal offense at what’s required to get a mortgage and was convinced their experience would have been different with another lender?

>> Have you ever completed a difficult task only to have the way you approached it dissected and criticized – like getting a loan closed against all odds and getting attitude instead of gratitude from the client?

Consumers don’t always know what they want, but they easily and eagerly opine about what they don’t. And unfortunately, we usually find out what those things are after a transaction is closed. Being the best has always been a challenge, but how do companies and MLOs win in a supercharged regulatory and increasingly digital environment? The Federal Reserve Bank and Discover reports reveal an attachment to the human element in addition to a growing appetite and demand for digital services and 24/7 access. Success in the next era of lending will require an understanding of how to deliver what consumers want – and deploying technology to deliver it when and how they want it. As professionals, companies and MLOs need to self-examine:

Automate. What’s your process from contact to close?  What tasks can be handled by automation – or “digitized” – keeping in mind that quality still counts? For example, a lot of marketing can be set on autopilot, but the messages must be current, relevant and motivate prospects to action.

After taking a thorough, honest inventory, update your process – and your thinking. Next, figure out how much time and manpower you will save by deploying technology when it makes sense. There’s a bright side beyond surviving in this increasingly digital world: we can generate analytics and derive crucial insight on the things consumers need and find important that we previously never dreamed of. Around the clock access to their transaction and the metrics on usage will reveal how often borrowers feel the need to check in on their loan’s progress…they’ll log in a lot more than they would otherwise call. Digital access also means answers will be delivered without MLOs having to take calls or answer emails. Decide how you’ll use your freed-up time to elevate your service.

Elevate. Decide what’s important and be there for it “live.” Whether it’s a call or face-to-face meeting, MLOs can spend the time to do what online mortgage calculators and websites can’t. Things like offering specific, expert advice on what a borrower can afford – not just qualify for, calming nerves over credit dings, reassurance about the benefits of homeownership, and counseling on reserves, household finances and how to manage the massive, multi-year commitment of a mortgage.

Change brings opportunity. We don’t know if a new presidential administration will declaw or dismantle Dodd-Frank, but we do know that innovation and technology are juggernauts that don’t care who the President of the United States is – or what political party is in control. The mortgage industry must never lose touch with the borrowing public, even if it feels like the digital trend is depersonalizing the service we provide or diminishing our importance. Companies and MLOs who embrace this progress will evolve and thrive in the next era of lending. When we acknowledge the things we can’t control, and carefully consider and respond to the signals and needs of the consumers we serve, the concept of “making it up as we go along” manifests as real, positive evolution.

There’s a lot going on in the mortgage industry and our country. With open minds and a connection to why we got into and stay in this business, we just might reach the conclusion that R.E.M. did in the last line of their ’87 hit: “I feel fine.”

About The Author

Building Bridges


Early in my career as a loan officer, I had a very important realization regarding business processes that led me to understand not just my job better, but also the tasks and requirements of my colleagues. I was lucky enough to work with outstanding team players who, unbeknownst to me, were completing my work. They were doing things I could have easily done but I simply was not aware that I needed to at the time. Not only was my lack of knowledge inconveniencing those working around me, it ultimately created a less than optimal customer experience as well. My loan processor would have to contact the customer for additional information, which inconvenienced the borrower and extended the loan closing cycle time. The result was decreased efficiency across the board. Despite the fact I was a high producer, I had yet to detangle myself from siloed work habits. Once I better understood the nature of the broader loan process and could see the effects of decisions on the people around me, it enabled me to become a much better and stronger employee who was a better colleague and could now provide better service to customers.

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Understanding the Ripple Effect

What got me to that point of understanding in my career was a simple conversation with my processor. She explained what she had been doing “behind the scenes” for me. In essence, what we were doing was breaking down the barriers of communication and expectation. This level of communications between sales and operations, for example, gives employees more context which in turn translates to a better understanding of how important it is for them to do their job well and how it affects the rest of the process.

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The mortgage industry has traditionally had an uninspiring reputation for proper training. However, with intentionality and focus this can change. There are some companies making great strides toward implementing job training programs combined with a strong focus on creating a collaborative culture within their organizations. It is this training and collaboration component that is going to remove obstacles between internal business efficiency and customer-facing experiences. What has been missing is training across job specialties.

Training across job “borders” will open the opportunity for everyone in a company to learn how their role fits into the process as well as the role of their colleagues. This does not mean that everyone will be trained to do everyone else’s job. Instead, they will gain a deeper level of appreciation and a better understanding of the total process, which we believe creates empathy.

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This level of training goes beyond having a better quality process and better quality loans; it actually improves the culture of the organization. With it, companies can remove the wedge between people in different roles and departments and create an environment where employees understand the ripple effect of decisions throughout the organization to ultimately work better together.

So, consider mortgage LAB training where it is not an experiment, but is a culture of collaboration where everyone learns across borders. This additional training gives us as an industry the opportunity to learn from different perspectives. Generally, people want to do a great job but simply don’t know what they don’t know. This level of collaborative learning across boarders creates a deeper understanding of the process and empathy between roles, which ultimately results in not only a great consumer experience, but a great corporate culture of collaboration that breeds high performance and long-term employee loyalty. This will not happen by accident, though. It takes an organized effort from the top down to ensure the mortgage LAB is a priority and specific initiative.

About The Author

How Mortgage Tech Innovation Has Evolved


Clayton Christensen, the Harvard Business School expert who coined the phrase “Disruptive Innovation,” has written what is sure to be one of this year’s hottest business books, “Competing Against Luck.” Christensen postulates the key to successful innovation is understanding the “job” your customers are hiring your product or technology to solve. Over the course of the book, he cites examples of how the “Jobs Theory” (in one form or another) has been applied successfully by leading companies, such as Intuit, Ikea and Airbnb.

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This created pause for me, and I began thinking about the “job” mortgage lenders and bankers are “hiring” loan origination systems (LOSs) and other technology products to perform. The job has always been: increase productivity, prevent errors, and take time and cost out of the origination process – from the 50,000-foot view. Many of us realize the sands have shifted and over the years and the issues customers have used LOSs to resolve have dramatically changed.

The Evolution of LOSs

When CalyxSoftware was launched 25 years ago and Point 1.0 was introduced, the mortgage origination process was completely form-driven. Most loan originators (LOs) were filling out loan applications with typewriters using pre-printed forms and carbon paper. Make a mistake and you could not just use “Wite-Out.” (Remember those little bottles?) You had to retype the entire form. Even if you were careful, aligning the typewriter or word processor with the fields on the pre-printed forms was a painstaking and painful process.

When you stop and think about it, the first job was to simply fill out the forms. The technology matched the need, and made the lives of the LO and processor easier. The software came in a shrink-wrapped box and resided on a floppy disc (it was totally rigid and contained less than 0.0008% of the computing power of today’s average smart phone). Updates came by snail mail, not miraculously from a “cloud.”

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In the early 1990s, our industry saw the first of a series of $1 trillion origination years—milestones that would have been unattainable without technology. The timing for innovation could not have been better.

Over the next two decades, LOSs were hired to do other jobs within the mortgage origination process. These jobs included connecting various parts of the process (production, underwriting, closing, QC, pricing/secondary marketing, etc.) and participants (originators, investors, GSEs, vendors, etc.).

Until the mortgage industry crash, speed and ease of use were the benefits users valued most. Post-crash, the wave of new regulations and fear of “buybacks” and penalties created a new job for LOS and tech vendors: automated compliance.

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The focus on compliance for the past few years has siphoned resources away from innovation—except for enhancements focused on compliance. Rules on ATR, QM, LO Comp, and TRID (which clocked in at 1,888 pages), and the updated HMDA and upcoming TRID 2.0, have highlighted the importance of tracking and retaining data to stay compliant. This has led to the development of data-driven LOSs.

A data-driven LOS allows originators to input all borrower and property information once, in a logical progression; then uses those data fields to populate multiple forms—simplifying the application process, as well as compliance with new regulations. Additionally, when a new form is mandated, a data-driven LOS only needs to add the new data fields and map them to the correct lines on the new form.

The current landscape dictates the LOS to be the system of record. Smart integrations between the LOS and document vendors now serve greater purposes. The integrations not only provide the resource to create the documents, record changes and chronicle why, but also store the documents, so they are easily accessible to lenders and regulators. This is a compliance-centric enhancement.

Going forward, compliance, accuracy, and transparency will still remain the priorities; however, the balance between compliance and innovation will ideally be a 50/50 split.

Jobs for LOSs

The advent of non-traditional FinTech lenders and imagination-capturing products such as Quicken’s Rocket Mortgage, have prompted some observers to question the future of LOSs. These new players and products will create new expectations from consumers, and raise the bar for traditional technology providers to provide enhanced offerings. However, when you look behind the curtain, these innovations handle only a portion of the process in the loan life cycle.

FinTech lenders appeal to Millennials due to ease of use at the beginning life cycle of a loan but the playing field evens up quickly at the underwriting stage. FinTech firms may experiment with new ways to qualify and underwrite loans but loans still need to be funded. At the end of the day, everyone (to and including the FinTech lenders) must still meet GSE underwriting standards.

Early adopters may be willing to give new players unfettered access to their personal accounts in return for less paperwork; however, the vast majority of homebuyers and owners are not there yet. By the time they are, these capabilities will be integrated into LOSs and into the consumer direct channels of traditional lenders.

Despite what the TV and online ads promise, many borrowers, based on their FICO scores and the complexity of their financial situations, will simply not qualify to utilize a Rocket Mortgage-type technology. Juggling early adopters and traditional borrowers will create challenges for FinTech lenders. They will need to offer two separate sales experiences: one for pristine, tech-savvy borrowers and one for everyone else.

Industry surveys continue to show a large percentage of homebuyers are more comfortable working with a LO rather than going alone online. The 2015 National Survey of Mortgage Originations, jointly sponsored by the Federal Housing Finance Agency and the Consumer Financial Protection Bureau, found that 70 percent of mortgage borrowers in 2013 used lenders/brokers “a lot” as a source of information. In addition, 77 percent of borrowers applied for a mortgage with a single lender or broker, instead of completing applications with multiple lenders or brokers.

Will this change over time? Probably. For the foreseeable future, the job of the LO and the mortgage broker appears to be safe. This is particularly true providing the LO continues to offer a high-level of customer service and differentiates themselves by focusing on non-perfect borrowers and non-vanilla lending programs/products.

As originators focus on these opportunities, this will create new jobs for LOSs and tech providers to complete. For example, they will look to product and pricing engines to source non-agency products allowing them to match these programs with their customers.

New technology for non-agency wholesale lenders already allows brokers to provide conditional approvals to their borrowers without having to send an entire package to the lender. This saves several days in the loan life cycle. Additionally, these loans are often more profitable for both lenders and brokers. Best of all, the LO is providing an opportunity for homeownership for unique borrowers that otherwise would have been denied.

The borrower experience, as we have seen, will take on greater importance. Younger borrowers will want to engage with their lenders throughout the origination process using their device of choice. Technological developments will play a major part in enabling this scenario.

The LO will need to ensure they are utilizing technology such as mobile applications, mobile pricing, and software allowing them to share updates with their borrowers or realtors at any given time. The LO will also want to focus on utilizing LOSs that are fully integrated with instantaneous verifications providers, such as The Work Number or FormFree, allowing reduction of time in the loan life cycle.

As vendors become more closely integrated in the LOSs, data integrity will continue to improve and advance the prospect of movement to truly paperless mortgages. This in turn will further enhance the customer experience, particularly the disclosure and closing processes.

LOSs are and will continue to be the hub of the mortgage origination process—connecting lenders with not just borrowers and vendors, but also regulators. True cloud-based computing (think: Microsoft Azure and Amazon AWS), not just today’s web-based solutions, will significantly expand end-to-end origination capabilities as well as workflow, loan review, and delivery options.

Over the past 25 years, the challenges and jobs within the mortgage industry have transformed dramatically. What has not transformed is our industry’s ability to resolve and respond with innovation to tackle the ever changing landscape of the mortgage industry.

About The Author

Tomorrowland In Loan Origination


Perhaps you’ve just added digital tools to your menu of origination technology or you recently switched Loan Origination Systems (LOSs), boosting the confidence you have in your organization’s preparedness for the future. But, Tomorrowland in the loan origination business may be more drastic than you think. How prepared are you to compete with emerging business models and how prepared are your infrastructure and platforms for the upcoming technology advancements?

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In the last five years, the traditional mortgage lending model has modernized and become more non-linear with the increased usage and availability of data. Significantly. Paperless processing, OCR technology, data verification innovation, eSignatures and smart automation have made its way into the archaic and complex mortgage industry, simplifying some of the most cumbersome, costly and time-consuming processes. Considering how far the industry has come in the last five years, mortgage industry participants should anticipate even greater advancements in the next five years. By remaining watchful of emerging trends, lenders can take practical steps to prepare for ongoing business and technology transformation. Here are the biggies:

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Focus on Creating Value: You may hold that belief that providing a loan for homeownership is value enough for a customer. But, by today’s standards, value creation is about what you can deliver to a customer above and beyond their expectation and beyond a single moment in time. Some of the most successful businesses have dissected the journey of their customers to identify and satisfy “wish list” items that come up before, during and after a transaction. Pay attention to what the customer really wants in their home buying experience and find ways to combine forces with partners and peers to answer those needs.

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Trailblazers are Practical: Business trailblazers in every industry are focused on designing for an improved customer experience and it is not without good reason; data suggests that the better the experience for the customer, the greater the revenue stream. Unfortunately, many businesses operating in the mortgage space are still reluctant to incorporate customer experience design into their overall business and technology transformation efforts, not realizing the correlation between customer experience and business efficiency. Designing processes and systems around customer experience can increase customer participation, which in turn, speeds loan processing, generates significant productivity gains for the lender and reduces overall costs. Investing in the experience is not only good business to build loyal customers, but it is practical.

System of Growth and Opportunity: As the world becomes more connected, your origination technology platform is required to do more than react to business-driven processes and tasks. Systems need to support strategic growth plans including new technology and service integrations and extensions, business channel development, rapid product expansion and value creation initiatives. It should also support customer interactivity from various touch points, including online, mobile and video assistance. As you progress into the rapidly evolving technology and business environment, ensure that your business systems and infrastructure are more than just a system of record but offer opportunities to grow, evolve and engage with your customers.

About The Author

A Look Back


As we finish up the fourth quarter, let’s reflect on some of the major industry highlights of 2016. We can’t learn from our mistakes if we don’t first recognize them. So, I like to end the year talking to industry experts about the last 12 months and what they think might be ahead of us.

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Not surprising, TRID was still a very big issue for the industry. “In addressing TRID, lenders had to re-evaluate their entire loan process,” pointed out Greg Marek, Chief Marketing Officer at Capsilon, a provider of cloud-based document management solutions for mortgage lenders and investors. “Lenders are grappling with how to produce compliant loans while keeping loan costs in check. Do you throw labor at it? And if you do that how do you stay profitable? Now that we’ve gone through TRID lenders are realizing that adding labor is not the right choice. We are seeing more interest in automating certain steps. For example, lenders want to automate file intake because quality starts upfront.

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“There is a lot of interest in technology that automates processes vs. database or repository technology. Think about it: What is the digital mortgage? When people talk about it they think of the rocket mortgage that is digital on the frontend. That’s great, but you also have to have a digital backend. If the consumer gets a quick upfront process, they want a quick process all the way throughout.”

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Lenders also looked more and more to cloud computing in 2016 to solve pain points. “More development toward the cloud happened in 2016,” said Brian Lynch, President at Advantage System, a provider of accounting technology systems for mortgage lenders. “Our clients are acquiring more and more branches and growing retail. Web development and browser-based deployment is critical. You need to provide the same experience regardless. Everyone also wants a dashboard experience. Transactions are happening daily and they want to see the data in real time.”

Advantage Systems is now supporting Microsoft’s SQL Server database for its AMB—Accounting for Mortgage Bankers product.

Advantage Systems had relied on the capacity and reliability of the Oracle database for almost twenty years but saw the need to support Microsoft’s database. Advantage Systems will continue to offer the Oracle database and in so doing provides lenders the choice between the two databases. Many lenders have demonstrated a preference for MS SQL Server, making this additional choice more convenient for them.

“Oracle’s database has served us and our clients well. The performance and reliability of the Oracle database has been the reason many Fortune 500 companies use this database,” said Lynch. “We are very excited about the technology we have developed that allows us to support different databases and believe that technology will be critical in the years ahead.”

Another big trend that dominated 2016 was the need for technology companies to form even tighter integrations with their client’s other technology partners.

“We’ve been trying to connect clients and service providers as tightly as we can,” noted Denis Brosnan, President and CEO at Dallas-based DIMONT, the largest provider of specialty insurance and loan administration services to the residential and commercial mortgage industries in the United States. “You’re seeing more companies embrace APIs so you can get true integrations. In general, there are a lot of people that a pessimistic about the economy. So, the banks are going to have to refocus on better serving the customer.”

Joey McDuffee, Director at Wipro Gallagher Solutions, a Wipro Ltd. company (NYSE:WIT), which is a provider of end-to-end technology products and services for mortgage, consumer, and commercial lenders in the United States and abroad, agrees that better serving the customer was a big priority for lenders in 2016 and that trend will continue into the future. “There is continued regulatory scrutiny for sure. At the same time, lenders want to increase and enhance the customer experience. We’ve seen a lot of interest in mobile technology. We are seeing wholesale come back and they want to provide a great experience. We’ve also seen an uptick in home equity business. We’ve been getting interest from new entrants to that space.

“As part of the portal entrance, you want to be omni-channel. You want to have a single source of data feed all your channels. In the end, you want to provide that great experience and still reduce your cost to originate.”

And going forward, the big trends of 2017 will be about embracing technology get rid of inefficiencies that drive up cost. “Lenders are looking at the bottom line,” explained Marek. “Lenders want to remove inefficiency and error through technology.

“As we move forward, there will be continued pressure on production cost and margins. In total, 70% of lenders think cost will continue to rise in 2017. How do you prepare for that? You have to analyze the process and genuinely improve it.”

Capsilon released a free eBook entitled “6 Key Steps Lenders Must Automate to Succeed.” The new eBook outlines how lenders can reduce the labor associated with mortgage loan production by up to 80%, and accelerate loan production, by automating several critical steps in the loan production process.

While striving to remain compliant with various new industry regulations, many lenders have added headcount, resulting in lengthening turn times and increasing loan production costs. In this eBook, Capsilon demonstrates how leveraging the right technology speeds loan turn times, increases loan quality, and decreases total loan production costs via repeatable, automated processes.

In response to these trends, lenders are looking for a fully integrated platform, said McDuffee. “We are seeing more scrutiny around data leakage. More folks are moving to the cloud, but the infrastructure has to support the new regulations.

“You’ll see further specialization due to regulation. Lenders and servicers are going to continue to look at how they do things so they can improve. There’s a lot of interest in big data. You need to select the appropriate data at the right times in order to succeed.”

“In 2016 the industry came together,” concluded Marek. “There was a lot of angst around TRID. The industry really came together to solve these problems. This was good for the industry moving forward and now we have to continue to optimize, optimize, optimize.”

About The Author

Producing Reliable Results


I started running again. Again, because I used to run every day and competed in numerous races. Everything from 5Ks, which is a 3.1 mile run, to marathons which are 26 miles, 385 yards. While I certainly don’t run as fast as I used to, or as far, one thing hasn’t changed, the need to track my times in order to find out how to make myself better. If you are a runner or have ever known one, you know that this is one thing we have in common. We know every data point about our running process. We can tell you how many miles we run a day, a week, a month or a year. We can tell you our average minutes per mile, our best times and even how many seconds we took off our time for every race we run. All of this data is important because it helps us get better, as well as, better prepare for the next race. We use our last achievement as the benchmark for the next and we are obsessed with making sure we have a reliable methodology for meeting those times. More than anything we want to know what to expect when we sign up for the next race or focus on beating our own benchmark.

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While those of you who are not runners may think those of us that are as overly focused on this need to develop a high level of reliability in our results. However, we are not alone. More and more companies, especially those that provide direct consumer services have the same passion. Companies that are in the business of providing call center support are a perfect example. These companies, such as the country’s most outstanding global “customer experience management” provider, track numerous data points on an on-going basis. Each of these data points has an acceptable level of performance which must be met on a quarterly basis. These results then become a critical part of their ability to attract new clients. The reliability of the company to continuously provide service at the expected level is what allows them to charge a higher price for their services. In other words, reliability generates profitability.

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Direct customer contact services are not the only entities that profit from the utilization of a “reliable process” approach. This concept is observable in manufacturing as well. In fact, most of the people reading this article have more than likely benefitted from it. Think about the products you buy. Clothes, cars, food and just about every other purchase you make. Most people will buy multiple times from the same manufacturer if they are pleased with the product they originally bought. For example, my daughter bought a Volvo over 10 years ago. The car has over 150,000 miles on it and is still the one she takes on long distance drives because she knows it will get her to wherever she is going and back. If fact, she is planning to give it to her son when he starts to drive so that she has excuse to buy another one. This is where reliability really pays off. Why? Although a new Volvo has not yet proven it can perform the same, the confidence built up from the steady performance of her old one is the determining factor in her decision to get another, regardless of the cost.

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So what brings about this level of reliability? Is it a special plan or a “secret” approach that some companies have developed? The answer of course is no. It is simply the ability of any company to make sure their operations, the processes which produce their product and/or service are performed consistently. How do they do that you may ask. They do it in the same way a runner manages the consistency of his or her performance. By measuring, benchmarking and comparing.

Whether you are originating loans, purchasing them, warehousing them or servicing them, every function within every organization has a process for doing what they do. Much of this process may be technology driven or may depend entirely on human involvement. It doesn’t really matter.  Where there is an operational process there is an expectation of what will occur as a result of that process. Once that output is identified and the results tracked, you can begin to develop operational reliability.

The term “operational reliability” has become well-known to most industries as the foundation of producing quality products. It means that a company whose products repeatedly perform as expected is much more likely to provide a product that meets your expectations the next time you buy it. In other words, it you contract with the call center company mentioned above, you can expect that your customers will receive the level of service that has been promised and is documented through their data results.

All well and good you say, but I have at least two, if not three customers. There is the consumer who expects strong and consistent support from my production staff as well as providing the information necessary to choose the best loan. There is also the investor who expects that the loans they buy will repay based on the credit risk identified in the credit policies. Both the investor and consumer expect that servicing operations will effectively handle payment processing, the associated activities and, if necessary, manage the foreclosure and REO process. Finally, there is the warehouse lender who expects that the loans will be purchased in a timely manner and will not stagnate on the line or have to be repurchased.

Developing operational reliability.

Most companies have more than one customer with different needs and expectations. However, when we drill down into what each of their differing customers want, the answers are all consistent. All of these customers expect to receive what you have committed to provide. In order to do so you must ensure the operational reliability of your entire operation. So based on these expectations, how does one go about The most logical place to begin is with the operations themselves. Start by identifying all the processes that go into “manufacturing” the mortgage loan. Of course the first operation is the contact between the consumer and the loan officer. What is your process for making this happen? When the loan officer meets with a potential customer, what is supposed to be the result? What are the inputs the loan officer provides? What are the expectations from the consumer? What is the final output supposed to be?   What actions and/or activities produce that result? Are these expectations documented and measured for at least a sample of loans originated for each loan officer? Once you have collected the data you can use it to identify where the process is working and where it is not. Unfortunately, many times lenders fall prey to the belief that these activities cannot be measured and use this as excuse for not attempting to monitor this piece of the process. However, this can be done. Other industries, such as call centers have done it.

The next set of operational activities include the decision-making and closing steps. Here, the actions taken are many times reviewed by others, such as QC or senior managers. Unfortunately, these measurements are not focused on whether or not the operations we perform actually support the customers’ expectations. For example, let’s look at the credit underwriting guidelines. Nowhere in these guidelines are there statement regarding how the loans produced using them will perform. We recognize that there are many different standards for underwriting, based on the risk appetite of the organization. The operational reliability of this process is making sure those are guidelines are followed and if an exception to them is warranted, it is properly documented and tracked. Tracking exceptions to guidelines is much more important than just having documented them. Imagine if an exception to a guideline occurred 35% of the time and this exception was tracked and found to have no impact on the performance of the loans. What could that mean to the purchaser of those loans? How could that impact the guidelines and streamline the operations of underwriting loans in the future?

Servicing, with its multi-faceted process is ripe for reaping the rewards of operational reliability. Since the mortgage crisis they have been inundated with new consumer requirements, especially when it involves interacting with the borrower. These actions, both on a service provider level and a collection process operational standard could use the operational reliability measurements that have been developed by numerous call center operations. In addition, the CFPB has developed a set of standards that are expected to be met by servicers. Yet how often does any specific servicer meet them? We don’t really know because there is no benchmark that covers servicers. Maybe the operational reliability standards set by CFPB are excessive? Maybe with the level that can be reached is lower due to the associated operational processes? How can any servicer demonstrate that the operational reliability of their processes actually meets consumer demand? None of these questions can be answered because unlike other industries, this benchmark is absent.

A recent item in one of the industry trade journals suggested that servicers are at the breaking point; that if they are required to continue to meet all these requirements their operations will implode. The writer of this article basically blamed it on the outdated technology. However, If this is in fact the case, why haven’t servicing managers identified operational practices that are failing, measured the failure rate and looked internally to change the operations. Instead many have implement manual reviews that are too little and way too late. These reviews tend to identify specific loan issues rather than the operational failures that produce unreliable results. The results should also provide more than just a dump of data but instead should provide an in-depth understanding of what a process is supposed to produce and the rate it actually produces that result.

Most lenders pay close attention to their warehouse lines but not to measure operational reliability. Instead they are reviewing the number of loans and the days these loans have been on the line in order to avoid interest penalties. Imagine however, if the origination operation was so reliable that the concern over excessive interest payments was not an issue. If the reliability of the product was such that the loans were always purchased timely. Could that result in lower interest rates from the warehouse lender? Now we will never know because the operational focus on this process is on a lack of reliability rather than on how consistently the operation works.

Managing for reliability

The CFPB requires in its statement of expected organizational management, that every company will have a “CMS” or compliance management system. Too frequently organizations see this as a mandate to ensure compliance with regulatory requirements. What it is really saying is that lending companies must have a system in place to ensure that what they say they are providing is what is actually occurring. This involves having data that updates all operational activities on a regular basis and in a meaningful format. If, because the data is not collected or not collected accurately, the results could lack the reliability necessary to make management decisions.

Unfortunately, most senior managers do not have the information they need to make effective decisions. While they get reports on volume, profit and/or problem areas, they have nothing to allow them to reconcile this issues with the overall operation of the organization. Getting a QC report that says a total of 1% of the loans had a “significant default” does nothing to help them understand the underlying operational process that caused the problem, the severity or impact of the issue and the priority of making management decisions on addressing the problem. Most of the time these reports rather than providing assurance to managers, make “mountains out of molehills” and result in wasted time and energy trying to fix random problems. In the desperate attempt to really understand what is going on in their organizations they demand more and more reviews and reports which only succeed in confusing issues and increasing operational costs. Despite the fact that attorneys at recent conferences pushed the need for companies to know more about their organizations than the regulators do this cannot happen if the data collection is focused on the wrong issues or is not statistically sound.  In particular managers must know not just such things as production counts or the turn times for handling complaints, but how likely they are to have the issues that are seen as a problem reoccur. This information comes from reliability measurements.

At the end of the day, organizations that want to produce reliable products and services, must identify, measure and report all facets of their operations. This means not only including every activity focused on the outcome, but having a means to measure its effectiveness and analyzing these results in a way that not only makes the operation efficient, but also ensures that the products/services produced are worth the highest possible price. This is what operational reliability is all about.

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Don’t Get Stumped


The Presidential Election has taught us that the power to communicate in a clear and concise message matters. Too often we are intimidated by a blank page or screen and have trouble getting the message started. For example, in the article “How To Write An Introduction: A Simplified Guide” by Amanda Zantal-Wiener, she calls it the dreaded cursor-on-a-blank-screen experience that all writers — amateur or professional, aspiring or experienced — know and dread. And of all times for it to occur, it seems to plague us the most when trying to write an introduction.

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Think about it: You already have a blog post you want to write. Can’t you just dive in and write it? Why all the pomp and circumstance with this dag-blasted introduction?

Here’s the thing — intros don’t have to be long. In fact, we prefer them to be quite quick. They also don’t have to be so difficult, but they do have to exist. They prepare the reader and provide context for the content he or she is about to read.

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Let’s break down exactly how to write an introduction that’s short, effective, and relatively painless.

1) Grab the reader’s attention.

There are a few ways to hook your reader from the start. You can be empathetic (“Don’t you hate it when…?”), or tell a story, so the reader immediately feels some emotional resonance with the piece. You could tell a joke (“Ha! This is fun. Let’s read more of this.”). You could shock the reader with a crazy fact or stat (“Whoa. That’s crazy. I must know more!”).

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For this intro, I went the “empathetic” route.

2) Present the reason for the post’s existence.

Your post needs to have a purpose. The purpose of this post is to address a specific problem — the pain in the butt that is writing intros. But, we have to do it, and therein lies the approach to something important: making writing introductions easier.

Just because you know the purpose of your post, doesn’t mean the reader does — not yet, anyway. It’s your job to validate your post’s importance, and give your audience a reason to keep reading.

3) Explain how the post will help address the problem.

Now that the reader is presented with a problem that he or she can relate to — and obviously wants a solution — it’s time to let the audience know what the post will provide, and quickly.

In other words, the introduction should set expectations.

Of course, there are other valid ways to write introductions for your marketing content — don’t feel the need to follow this formula for every single piece of content, as some are more casual than others. But, this guide should help provide a solid framework to follow if you’re just getting started, or if it’s just one of those days when the words aren’t flowing.

But what are some examples of great introductions in the wild? We thought you might ask — which is why we picked out some of our favorites.

3 Introduction Paragraph Examples to Inspire You

1) “Confessions of a Google Spammer,” by Jeff Deutsch

“Before I became an inbound marketer, I once made $50,000 a month spamming Google. I worked a maximum of 10 hours a week. And I am telling you from the bottom of my heart: never, never ever follow in my footsteps. This blog post will tell you exactly why …”

There are a few reasons why we love this introduction. Immediately, it grabs our attention — how the heck did this guy make fifty grand every month? And just from 10 hours a week?

But unlike some spammy comments that might contain a similar sentiment, he almost immediately serves us something unexpected — he tells us not to do that.

Then, he states the true purpose of the blog — to explain why we should “never, never ever follow in [his] footsteps.” In just three sentences, this introduction has captivated us and validated the story’s existence with a looming life lesson. The takeaway? Keep it short, but powerful.

2) “Announcing the public view of Azure Advisor,” by Shankar Sivadasan

“While it’s easy to start building applications on Azure, making sure the underlying Azure resources are set up correctly and being used optimally can be a challenging task. Today, we are excited to announce the public preview of Azure Advisor, a personalized recommendation engine that provides proactice best practices guidance for optimally configuring your Azure resources.

“Azure Advisor analyzes your resource configuration and usage telemetry to detect risks and potential issues. It then draws on Azure best practices to recommend solutions that will reduce your cost and improve the security, performance and reliability of you applications. In this blog post, we will do a quick your of Azure Advisor and discuss how it can help optimize youe Azure resources.”

Here’s a great example of an introduction that presents a problem and a solution to it. Sure, it’s easy to build apps on Azure, Microsoft’s cloud platform — but maybe you had some issues with its setup. Well, wouldn’t you know? Azure Advisor is here to address those challenges, and you can preview it for free.

But wait — there’s more. The introduction not only immediately presents a problem and a solution, but it concisely summarizes just how this product provides a fix. And, it explains why the text will be helpful, with the sentence, “In this blog post, we will do a quick tour of Azure Advisor and discuss how it can help optimize your Azure resources.”

That’s a best practice for brands that have made a mistake — even a small one. Technology is great, but it can come with bugs. That’s where an intro like this one can be so helpful.

3) “Taste the Season at Sushi Sora,” by Chris Dwyer

“The extraordinary spread of metropolitan Tokyo, all the way to the magical silhouette of Mount Fuji on the horizon, has few better vantage points than from Mandarin Oriental, Tokyo. From every room, the cityscape unfurls beneath you, while from the sushi counter at Sushi Sora, the vast floor-to-ceiling window offers uninterrupted views toward the Tokyo Skytree and far beyond.”

Strong introductions aren’t just important for blogs — they’re essentially to quality editorial pieces, too. That’s why we love this introduction to an article from Destination MO, the Mandarin Oriental’s official online magazine.

In addition to being empathetic or funny, visuals can be huge — not just an actual picture or video, but words that actually help the reader envision what you’re describing. This introduction does just that, with expressive phrases like, “the magical silhouette of Mount Fuji on the horizon.” Well, yeah. That does sound magical. But where can I go for such a view? None other than the “Mandarin Oriental, Tokyo,” the author tells me, especially “from the sushi counter at Sushi Sora.”

Here’s the thing about this intro — it gives the reader something to aspire to. Now get to work on your marketing message for 2017.

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Creative Financing May Be Coming Back


Following the subprime lending collapse in late 2008, there was a void in financing for low-credit borrowers with little or no down payments. Loans backed by FHA stepped in to fill some of that void, with FHA purchase loans jumping from just 3.3 percent of all purchase loan originations in Q4 2006 to 27.2 percent in Q4 2008.

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But FHA loans weren’t alone in their resurgence following the fallout of subprime lending. A lesser-known (although long-used) financing instrument called a contract for deed (see definition below) gained traction in the years following the collapse of subprime lenders, particularly for low-value homes in Rust Belt cities like Detroit, Flint, Youngstown and Indianapolis.

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New contract-for-deed data collected by ATTOM Data Solutions, curator of the nation’s largest synthesized property database, shows the trend.

More than 103,000 contracts-for-deed were recorded nationwide in the five years following the end of the Great Recession (2010 to 2014), a 10 percent increase compared to the previous five years (2005 to 2009).

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Some of the counties with above-average increases included Trumbull County/Youngstown, Ohio (136 percent increase); Wayne County/Detroit, Michigan (63 percent increase); Genesee County/Flint, Michigan (53 percent increase); Marion County/Indianapolis, Indiana (46 percent increase); Dane County/Madison, Wisconsin (26 percent increase); and Hamilton County/Cincinnati, Ohio (24 percent increase).

The average sales price for the 2010-to-2014 contracts-for-deed nationwide was $87,010, 38 percent below the average sales price of $141,423 for contracts-for-deed recorded between 2005 and 2009.

Over the same time period, average contract-for-deed prices were down 70 percent in Michigan, down 15 percent in Ohio, down 10 percent in Wisconsin, and down 12 percent in Indiana.


Sustained Winds Of Change To Continue


We’re all conditioned to think about change coming in waves with ample time in between to recover before the next wave hits. This is true in both our personal and our professional lives; we see it within a year and within a lifetime. But what happens when the waves of change become so frequent that it’s hard to tell where one ends and the next begins?

Since 2009, the US mortgage industry has experienced back-to-back changes. Not only have we seen typical purchase/refinance cycles, but we’ve also had countless compliance changes: RESPA, ATR/QM, KBYO, and so on. It’s not just the mortgage industry, either. Across seemingly all aspects of modern life, largely thanks to technology, the pace of change is quickening. For example, the VHS was introduced in the US in 1977, followed by the DVD 20 years later in 1997. However, Blu-ray entered the scene just 6 years later in 2003, and now we have the 4K revolution quickly setting in – something YouTube adopted in 2010. Now, with the election of a new kind of presidential administration, there is no reason (on top of all others) to think that the pace of change in the US mortgage industry will ease. There will be considerable uncertainty around regulation and interest rates. Add in innovations like those for borrower experience now further fueled by Fannie Mae’s Day 1 Certainty program and industry movement towards eClosing and the overall view can be daunting. Our new normal is nearly constant change. The question becomes: How is this constant change impacting your staff, and what can you do to support their needs in order to best serve your customers?

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It’s in our nature as humans to react to, and then absorb, a wave of change. We also expect that the dust will settle before the next wave of disruption hits. However, when change continues unabated, it can be stressful. As managers, it can be equally stressful to help your staff adapt to these times. One way to simplify the impacts change has on us is to think of change similar to the well-known stages of grief: denial, fear, acceptance, commitment:

>>Denial. With change often comes an unwillingness to accept what lies ahead. Fortunately, there are steps you can take to help your staff overcome this make-or-break stage. First, get buy-in from staff early on. By communicating what the change means to each team member long-term, you are more likely to advance through the four stages without as much resistance or push-back.

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>>Fear. Denial and fear often go hand-in-hand. Again, communicating regularly about what this change means for each employee and how you seek to make the transition as smooth as possible for everyone can make all the difference. Most important for this stage is establishing an action plan for addressing the changes. This step can significantly help your staff see the big picture and the “light at the end of the tunnel”.

>>Acceptance. By now, you should have buy-in from your team that the change is happening but is manageable thanks to the plan you’ve put in place. At this stage, you should encourage that acceptance and continue keeping the lines of communication open. Without ongoing communication, staff could very well revert back to the previous stages, thinking the plan established is not, in fact, being acted upon.

>>Commitment. Because the waves of change are sure to be constant going forward, the four steps can become cumbersome and hard to constantly manage. In order to gain true commitment from your staff, ensure you have a nimble “change-enabled” origination process in place. By creating systems and processes that can easily adapt to meet change, you can significantly reduce the impact of future changes on your staff and your customers.

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By better understanding how we, as humans, process change, while also taking our own advice by going through the 4 steps to accept that we now live in constant change, we can begin to best position our organizations for long-term success. The next step in riding the winds of change is to establish the processes and systems that will lead your staff towards long-term commitment.

While as an industry, we can’t avoid or ignore external change like required security or compliance updates, lenders and vendors alike can build vetting and prioritization processes to make sure that only the best changes/improvements are put in place to truly support where your business needs to go. If you have too much “self-introduced” or discretionary change, then you might add unacceptable levels of risk. On the flip side, if you have too little self-introduced change, then you’re sure to be exclusively reactionary and passed by competitors.

So what are common criteria for vetting and prioritizing change in the mortgage industry? Compliance risk, financial risk, impact to borrowers, impact to staff efficiency, level of effort and/or expense all are great starting points. For a given proposed change, many of those categories might be mixed (positive in some areas, negative in others). Some will be easier to quantify than others, but this should not mean that subjective measures can’t be used. For those that might fear bureaucracy, you can introduce a lightweight and flexible process. The point is that you collect additional facts only when appropriate to the size/impact of the decision. Frequently, you will decide based only on readily available information but still will take the time to capture it in a structured way. Having a transparent and fact-based process helps get the right discussions going between the right people and will make difficult decisions easier.

So a process around vetting and prioritizing change is essential. In addition to that, what aspects of an origination platform will help manage change? True flexibility is required, but what specifically in a technology platform provides flexibility? An open architecture that is extensible means having a developer’s toolkit and an API surface. An exposed rules engine is also important so that you can easily configure workflow, drive efficiency like automatically ordering services, kicking off exception processes, etc. Last but not least, delivering all this in a SaaS product model is critical to stay current on the latest releases. This is no longer optional thanks to regulatory changes and ongoing security enhancements to keep your borrowers’ data secure. Custom or quasi-product models allow for the customer to lag on an out-of-date version. When this happens, you’re not only missing the latest security and compliance updates, but you’re also limiting your ability to effect change because of the friction of moving your enacted change through multiple version upgrades.

As John F. Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.” By working with your staff, updating your processes, and advancing your technology, your daily concern will be less about adapting to change and more about anticipating the change. Let your focus turn towards the future, which is sure to look brighter than ever before.

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