And The 2018 Winners Are …

Prominent mortgage executives gathered to see who the Executive Team of PROGRESS in Lending named the top industry innovations of the past year at the Eighth Annual Innovations Awards Event. This honor is the Gold Seal when it comes to recognizing true industry innovation. All applications were scored on a weighted scale. We looked for the innovation’s overall industry significance, the originality of the innovation, the positive change the innovation made possible, the intangible efficiencies gained as a result of the innovation, and the hard cost and time savings that the innovation enables industry participants to achieve. The top innovations winners are:

Lodasoft

PROGRESS in Lending has named Lodasoft a top industry innovation. To address the CFPB requirements of improving the borrower experience, the first big wave of innovation has come out of Silicon Valley. Hundreds of millions of dollars have been invested in the consumer facing aspect of the borrower application. The term “digital mortgage” has been coined and a flood of shinny new mortgage websites and apps have been created to deliver borrowers an Amazon type borrower experience. However, the majority of dollars invested, have focused almost solely on the online application for borrowers. The problem is that mortgage lending is significantly more complicated than just a shinny new app. The right digital mortgage platform helps to drastically reduce the chaos in daily lending processes while improving communication to help lenders close more loans faster. Therefore, in 2017 Lodasoft introduced its truly innovative “Digital Mortgage Platform” featuring Intelligent Loan Manufacturing to address these industry challenges head on.

Capsilon

PROGRESS in Lending has named Capsilon a top industry innovation. A truly innovative mortgage process means more than borrower-friendly loan selection and document submission, it is an end-to-end solution that keeps all stakeholders in the loop throughout the process. In 2017, Capsilon introduced Point of Sale Portals (POS), enabling the creation and delivery of quality loan packages that streamline every process step from application to closing. Capsilon’s POS Portals are powered by Intelligent Process Automation to supercharge loan production from intake to delivery of complete and compliant loan packages. This is an industry first, dramatically improving loan quality and speed, while drastically reducing production costs. Lenders are pressed to meet the challenges of production, compliance and profitability, as well as soaring borrower expectations. Instead of simply streamlining the traditional loan process, in 2017, Capsilon launched Point of Sale Portals that are fully integrated with its patented back-end technology to deliver on the promise of a true digital mortgage.

WebMax

PROGRESS in Lending has named WebMax a top industry innovation. According to Inc. Magazine, Millennials make up 66% of first-time homebuyers and 66% of them plan to buy a home in the next 5 years. Moreover, the same report found that Millennials associate home ownership with the American Dream more than any other generational demographic. The October 2017 composite forecast of Fannie Mae, Freddie Mac, and the Mortgage Bankers Association for 2017 mortgage origination volume is approximately $1.8 trillion. If Millennials compose 50% of this mortgage volume, and two-thirds of them apply online via digital applications, that represents $600 billion in digital mortgage origination. This number is massive. Better yet, it’s conservative. Millennials expect mobile-responsive mortgage lending sites and applications with a responsive layout from their potential lender. They want their mortgage application to be as easy as buying a t-shirt from an online retailer. Therefore, WebMax developed its innovative point-of-sale solution in 2017, called START, to not only meet the demands of borrowers, but to exceed their expectations and revolutionize the entire process. With START, WebMax provides a single location for the loan to exist for both the borrower and loan officer. There’s no shifting documents back and forth or waiting for verifications. START’s integrations to mission-critical third parties allows for the technology to do the work, streamlining workflows, reducing costs, and minimizing frustration.

Paradatec

PROGRESS in Lending has named Paradatec a top industry innovation. Other OCR solutions typically expect relevant data points to consistently appear in the same locations (or ‘zones’) on a document. If the data shifts due to changes in layout (again, think of bank statements), the zone-based approach will fail unless another layout template is created, making for a greater administrative burden with these solutions. A high volume, scalable OCR automation initiative requires the flexibility of Paradatec’s Advanced Mortgage OCR solution to process an unlimited number of document layouts without needing to develop specific templates for each layout variation. This capability is unique to Paradatec and a vital feature for creating an effective unstructured document classification and data capture solution. Paradatec’s Advanced Mortgage OCR solution is designed to make mortgage lending faster and more accurate. In 2017, Paradatec’s Mortgage OCR solution processed over 1,500,000,000 images (representing over 2,500,000 loans), helping lenders and servicers streamline their onboarding and compliance obligations.

Asurity Technologies

PROGRESS in Lending has named Asurity Technologies a top industry innovation. In 2017, MRGDocs was acquired by Asurity Technologies and introduced MRGDocs’ cloud-based platform which revolutionized the security of its dynamic document generation software featuring a secure system infrastructure to increase the protection of consumer data and deliver safer, faster, and more user-friendly systems while maintaining the content and support quality that has long been the hallmark of MRGDocs’ services and document packages. This solves for several mortgage industry challenges: the costs to secure big data, protecting the myriad of personal identification information collected, and managing compliance through a hyper secure platform. In 2017, MRGDocs built a comprehensive data security capability on a robust foundation that allows for the type of growth and expansion needed to serve even the largest of financial institutions, implementing a hyper-converged, virtual server platform with 24/7 SIEM-managed security monitoring.

STRATMOR Group

PROGRESS in Lending has named STRATMOR Group a top industry innovation. MortgageSAT is an online customer satisfaction measurement program that allows consumers to provide direct feedback on their satisfaction with the mortgage process, and provides lenders actionable insights from the results, all available via an online portal. Put simply, it’s Business Intelligence based on consumer insights. Why did STRATMOR create MortgageSAT? For many years, mortgage lenders have struggled to capture actionable feedback from borrowers by means of post-closing email or closing-table-completed surveys. By means of its powerful borrower satisfaction management tool called MortgageSAT, developed in partnership with the CFI Group, STRATMOR has led the way to fundamental change the way lenders manage and apply borrower feedback. MortgageSAT is the first and only borrower satisfaction monitoring tool to score satisfaction at all levels of the organization as regards retail, consumer direct and broker production. As a consequence, many MortgageSAT clients tie their employee reviews and, in some cases, compensation both to these scores and a review of borrower comments. When everyone’s performance review includes a measure of their contribution to borrower satisfaction, a borrower-centric culture is fostered that is aligned with the emerging competitive paradigm of “optimizing the borrower experience.”

Maxwell

PROGRESS in Lending has named Maxwell at top industry innovation. No matter how digital the process, every mortgage is saddled with documents and data, over 500 pages, according to the Mortgage Bankers Association. As a result, an average of 20 days during the mortgage process is consumed by the search, preparation and review of those documents. Maxwell, the leading digital mortgage solution for small and midsize lenders, removes this friction with its platform. Sitting as the digital interface between the lender and their borrowers, Maxwell manages collaboration through the loan process, significantly reducing cycle times and driving delight. Originating teams on Maxwell are able to focus on what they do best, advising and coaching clients through the largest transaction of their lives, while Maxwell’s technology handles the rest. As one head of production attested, “Maxwell allows us to focus on what we love: working with real people. While loans get done faster and my team is happier.”

PromonTech

PROGRESS in Lending has named PromonTech a top industry innovation. The Borrower Wallet is the first offering from Promontory MortgagePath’s technology arm. From a lender’s perspective, the Borrower Wallet captures leads and fosters borrower/lender collaboration to drive enterprise efficiency and improve loan pull-through. In addition, its built-in collaboration tools deliver high-quality data and documents needed to feed and accelerate the downstream underwriting process. As a white-label offering, the Borrower Wallet makes the latest technology accessible and affordable to mid-size and smaller lenders, enabling them to compete with mega lenders. PromonTech’s culture of mutual respect between “techies” and mortgage industry experts made it possible to create a mass-market POS where both consumer and lender needs are equally important. The Borrower Wallet is not the first digital POS, but it’s the first to engage consumers while anticipating lender needs in such a balanced way. It combines creative design, industry analysis and data governance to create a unique user experience.

MCTlive!

PROGRESS in Lending has named MCTlive! a top industry innovation. Over the past year, MCTlive! developed a major mortgage technology advancement with the addition of what the company branded its “Bulk Acquisition Manager” (BAM) solution, which is accessible via MCTlive! BAM is a Digital Loan Trading solution. BAM completely automates the process of packaging and transferring bulk loan bids, which benefits investors, lenders and MCT’s team of in-house mortgage loan traders. The result is a much quicker pricing process for bulk bid tapes, greater data security, better communication between counterparties, increased transparency for all parties, process consistency for investors within their existing platform, and centralization of data. BAM helps facilitate digitize loan trading on the secondary market. The effectiveness of the BAM technology has already gained 100% adoption by the ENTIRE investor community on the secondary market — across the board. And the level of transparency it offers between buyer and seller is hugely attractive and makes investors and lenders feel at ease.

Ellie Mae

PROGRESS in Lending has named the Ellie Mae Encompass NG Lending platform a top industry innovation. The Encompass NG Lending Platform allows lenders, service providers, and independent software vendors the ability to build custom applications in the cloud, integrate external systems and data, and extend Encompass in order to meet any and all industry challenges. Mortgage lenders and mortgage service providers can build, integrate, or customize solutions, and get them to their customers and market quickly. Lenders, partners, and third-party providers gain access to data and systems across the mortgage ecosystem. In the end, all participants can easily view and share loan date, sales pipeline, loan events, documents, and order services. A shared system of record allows all parties in the loan process to see the same up-to-to-date information in the same format. Everyone in the ecosystem can easily share, interact, and collaborate without having to create and support new channels.

 

 

Digital Advances

There is always talk about the digital mortgage. It’s in high demand. Industry data shows that 67 percent of all closed loans by Millennial borrowers were conventional, the highest percentage in two years. Conventional loans continued to be the most popular loan product, although women were slightly more likely to take advantage of FHA loans. So, what does that mean? It means that more lenders need to embrace the digital mortgage to reach this new group of borrowers. How do lenders do that? Adam Batayeh, President of Lodasoft, talked to our editor about how he sees the digital mortgage technology landscape.

Q: How would you describe the state of mortgage origination today?

ADAM BATAYEH: I think we’re in an amazing place in terms of the evolution of the mortgage industry. The mortgage industry had been hit with a significant amount of negative press following the mortgage meltdown. What many people haven’t fully realized is all of the positive changes that have been made in the mortgage space since.

The crash may have pushed the industry into a sort of regulatory confinement period putting everyone behind the proverbial 8-ball, but great progress has been made over the last 10 years. While it may have even stagnated tech innovation, as lenders were busy with TRID, I believe that these 10 years have washed away the pretenders and the best of the best are now advancing the industry, which only leads to what’s best for the consumer.

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You look at the top originators list for example and it is no longer comprised of solely big-box banks with a 50-state brick and mortar footprint. According to Bloomberg, non-banks accounted for more than 70 percent of FHA loans just last year.

You’ve got true innovation that is taking place that has allowed for mortgage companies to come out of obscurity to a predominant role driving the industry forward. The retail space is truly diversified and you have a wholesale market in the midst of a major comeback.

Q: Interesting, can you expand on how technology is actually making its impact?

ADAM BATAYEH: For me, the best part of the innovation that is taking place is that lenders and brokers of all sizes can take advantage of the best technologies available. The strength and ubiquity of APIs is game-changing in and of itself.

Look at Fannie and Freddie for example. They’ve recently come out with products that incorporate features allowing for the automation of income and asset verification. However, those aren’t proprietary solutions. Really what they’re doing is integrating to the same technologies available to all of us.

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These pieces of technology have sort of become commodities that everyone can implement and benefit from. The best originators are using them to enhance speed, efficiency, transparency, etc. Everything that we’ve been trying to do for so long is finally coming to fruition and we really can attribute it to the rapid growth of new and innovative technology.

These new innovations are allowing for a level playing field. We feel this is contributing to the healthiest level of competition we’ve seen. Not to mention, cloud-computing and SaaS-based products are allowing all of us to be everywhere at all times without the need for as much costly brick and mortar and IT expense.

Also, I just want to say that you hear a lot about the “Digital Mortgage” and at first-glance it sounds like the easy button, but it’s not. If you look at DU and LP for example, they both assist in underwriting efforts. They are tools to help us make decisions, but they did not eliminate the Underwriter by any stretch.

Q: Speaking of “Digital Mortgage”, what’s your take on its status?

ADAM BATAYEH: It’s here and it’s here for everyone. Many vendors have been helping lenders deliver electronically signed eMortgages for what, 10 years now? The Digital Mortgage is really an extension of that effort.

The focus thus far has been on borrower experience and rightfully so. However, to truly deliver on the digital mortgage experience, lenders must not only provide a slick and engaging online point-of-sale tool, but they also must automate the backend mortgage process and communication touch points that impede a truly seamless mortgage experience.

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The good news is again, it’s here. There are solutions at every price point and if you do your due diligence and stay current, you can compete with the largest lenders with the biggest bankrolls. Whether you’re retail or wholesale, broker or banker, Community Bank or Credit Union — you can find a solution that will fit (especially if you keep a pulse at tradeshows and with industry sites and publications like this one).

Q: How would you say retailers and wholesalers differ in their need for digital solutions?

ADAM BATAYEH: That’s a great question because it would seem that an originator is an originator right?

One of the big differences is in adoption. If you look at some of the larger consumer-direct players, they have a bit of an advantage as they have more of a captive team. They are more centralized and can distribute and train fairly quickly.

Retail Community Banks and Credit Unions are similar as they are a little more centralized even though they may be branch focused. They are typically cross-selling other internal products and so flexibility and configurability is very key to them. Integration is also high on the list for many reasons especially for servicers.

Wholesale and Distributed Retail shops have some things in common and they’ve got a different set of considerations. For one, a branch model might be providing tools, maybe an LOS, but those branches may be on their own in terms of say lead, contact management, or even borrower experience.

Same goes with Wholesale Brokers as the lender may provide portals that offer pipeline management but may fall short in more front-end activity. Some high-producing teams like to do things their way, and that’s not necessarily a bad thing. Flexibility is needed at a different level here.

The best advice I can give is, try to partner with tech vendors at different levels. For example, consider a solution that comes 75 percent configured and offer your branch or broker some control in taking part of their own configuration. We’re all typically willing to integrate at various levels and have resources to help get your staff trained quickly.

Q: What are you currently solving for that Lenders haven’t addressed yet?

ADAM BATAYEH: For us, it’s really the difference in what we have chosen to focus on. We’re based right outside of Detroit and we all know stories of how Ford implemented the assembly line to drastically reduce costs and increase production. Well, there’s a lot to be said for how far manufacturing has come and it really lies within automating processes.

A great borrower experience is one thing, but if that experience transitions to a back-end process that is not transparent or communicative, that borrower experience may fall short in the end.

We’re incorporating workflow in a way that allows for centralized, automated processes, so that mortgage companies of all sizes can truly compete and enjoy similar reduction in costs and increased production to that of the largest lenders.

Q: What has had the biggest impact on how you develop solutions?

ADAM BATAYEH: Definitely the unique diversity of our team and our client feedback loop.

On the operations side, our team has closed thousands of loans over the span of 20 years. When we talk to mortgage people, they know we’re one of them. They feel it in the questions we ask and the thought around the downstream impact of implementing a certain capability.

On the tech side, our guys have been developing solutions specifically in mortgage either for lenders or vendors for most of their careers. They have also been cloud-computing since, well, before the word cloud-computing was a thing.

We don’t allow ourselves to just go out and create but at the same time our clients understand that they can’t just dictate their needs to us as everyone is different. So, when we add a feature, we look at it from all sides and then look to provide flexibility so that it may be configured for the various types of lending institutions we cater to.

Q: What is the most critical challenge mortgage business are addressing?

ADAM BATAYEH: I don’t want to just give you the “everyone is different” answer so I’ll try my best not to give you a non-answer. If I must choose one challenge, I’ll say, “putting out fires”.

It boggles my mind that we are an industry that still says “it’s the end of the month, don’t talk to me”. If you go to the doctor on the 30th, do they tell you to come back next week? No, you have an appointment and they are just as busy on the 12th as they are the 30th.

The tendency in our industry seems to be to stop the bleeding. If a borrower needs something, we surely don’t want them going anywhere else so we stop the presses and give it to them.

I don’t care how big or small you are, you have fires that tend to creep up and you can identify them. If you can identify them, you can plan for them. If you can plan for them, you can get ahead of them.

It’s what I was referring to around the assembly line. You can use automation for the sake of automation. Or, you can use it create as repeatable a process as possible.

INDUSTRY PREDICTIONS

Adam Batayeh thinks:

4.) Origination numbers will continue to spread as the playing field levels. Wholesale, Retail, Consumer-direct, etc. will all experience slight shifts in portfolio focus.

2.) The “Amazon Effect” will have more of a positive impact on housing supply as millennial and first-time homebuyer awareness shines even brighter.

3.) A greater focus in 2018 from a Digital Mortgage perspective will be on further automating backend processes. This will trend well into funding and servicing.

INSIDER PROFILE

Adam Batayeh is President of Lodasoft, the mortgage industry’s leading solution to help lenders eliminate complexity and automate the manual workflow involved in the everyday loan process. With more than a decade of experience in the mortgage industry, Batayeh has held executive sales, marketing, product and strategic partnership positions with key mortgage technology providers. He is responsible for overseeing the daily operations, growth of organization, strategic partnerships and long-term strategic vision of Lodasoft. You can contact Adam at abatayeh@lodasoft.com or to find out more about Lodasoft visit website www.lodasoft.com

Lenders Are Moving Forward

In covering the mortgage space for more years now I’ll admit, I’ve always been concerned about how slowly this industry moves. In recent months however, I have heard of lenders making some technology moves.

For example, to modernize its mortgage lending operation, Tinker Federal Credit Union (Tinker) has selected the entire product suite from Mortgage Cadence, an Accenture (ACN) company.

With the full Mortgage Cadence product suite, including Loan Fulfillment Center, Borrower Center, Imaging Center and Document Center with integrated eSign capabilities, Tinker will be able to provide its customers with an entirely paperless and seamless end-to-end mortgage process, from application to closing.

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“We owe our members the most convenient, transparent and intuitive lending experience available on the market today – and Mortgage Cadence’s product suite makes this a reality for us,” said Connie Wall, Tinker’s senior vice president of Lending.

Borrowers today expect a highly automated digital experience layered with the human-to-human connection that creates a highly personalized yet efficient experience. By enabling lenders to streamline the delivery of loans to their borrowers through a fast, easy and intuitive platform, the Mortgage Cadence suite of loan origination technology solutions will empower Tinker to deliver on its brand promise of providing customers with an exceptional borrower experience.

“This is exactly the kind of collaboration we had in mind when we founded Mortgage Cadence in 1999,” said Trevor Gauthier, Mortgage Cadence’s President and Chief Operating Officer. “Tinker needed better technology, seeking a comprehensive platform to serve its needs well into the future. I’m very pleased that Mortgage Cadence will be that platform provider and excited about the success we expect Tinker to enjoy for years to come.”

Tinker Federal Credit (TFCU) is the largest credit union in Oklahoma, with over 360,000 members and more than $3.6 billion in assets. For over 70 years, the institution has been helping its members achieve their goals and realize their dreams. As a not-for-profit, member-owned financial cooperative, TFCU returns profits to its members through financial education, competitive loan and dividend rates and low or no fees on service.

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Similarly, Pacific Union Financial, LLC, a government lender has partnered with Ellie Mae to leverage Ellie Mae’s Encompass. This new technology will enable joint customers to deliver loan data and documents in a streamlined, efficient, and secure manner.

This new process helps facilitate loan data and document delivery directly from Encompass to Pacific Union instantaneously. Joint customers will experience a seamless, simplified workflow to help ensure that the information is accurate, organized, and securely transmitted. Going forward, the process with Encompass will eliminate the need to download and upload loan data in multiple locations, and instead provide a seamless transfer of data and documents directly from Encompass to Pacific Union Financial.

“Through our partnership with Ellie Mae, we will improve our efficiency by offering a secure, seamless data and document delivery workflow from their system of record,” said Warren Little, Chief Technology Officer at Pacific Union Financial. “We look forward to working with Ellie Mae to offer digital mortgage solutions that enhance customer service and business operations.”

“At Ellie Mae, our mission is to provide our lenders and partners with a true digital mortgage, which encompasses everything from consumer interest through loan delivery,” said Parvesh Sahi, Senior Vice President at Ellie Mae. “We are excited to partner with innovative lenders like Pacific Union Financial, who share our vision of leveraging automation in order to improve the process while also ensuring the highest levels of compliance, quality and efficiency.”

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Pacific Union Financial, LLC is a full-service mortgage company located in Irving, Texas, with fulfillment centers in Texas and California and over 50 branches across the country. We originate and purchase residential mortgage loans through Wholesale, Retail, and Correspondent channels in addition to servicing a $26 Billion portfolio. Pacific Union Financial offers white glove service for borrowers with best to bruised credit.

And lenders aren’t just looking to swap out cote systems, they have their eye on a more digital process. For example, DocMagic, Inc., a provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that Deutsche Bank has successfully implemented and is actively utilizing its proprietary eVault technology.

“Deutsche Bank has an international footprint in multiple forms of lending and servicing, and having a company of their size select our eVault to safely and securely store sensitive loan documents speaks volumes about the bank’s confidence in our technology,” said Dominic Iannitti, President and CEO of DocMagic, Inc. “We are very pleased to partner with Deutsche Bank on a long-term basis to help achieve its servicing goals with our eVault.”

Using the DocMagic eVault, Deutsche Bank’s document custody group is now empowered to take full possession of electronically originated assets for clients as the loan market continues to transition to a paperless process. DocMagic establishes a legally compliant method to securely move original electronic files from one custodian to another, while preserving unique authoritative digital ownership.

Further, the eVault ensures authentication of original documents passing between owners, irrespective of how many duplicate electronic files there may be of the same record. The repository system within DocMagic’s eVault relies upon digital tamper-proof seals and a detailed, well-documented audit trail that ensures compliance and provides detailed reporting.

DocMagic also made available to Deutsche Bank the ability to leverage a unique dual-option solution that accesses its on-premise eVault installation to provide a gateway to seamlessly and securely connect to MERS via any browser, as well as by way of a direct VPN connection.

As a result of partnering with DocMagic, Deutsche Bank is now well-positioned to easily, compliantly and securely service loans housed in the eVault, creating newfound efficiencies and a competitive advantage for the bank. By providing eVault services to Deutsche Bank’s clients, they further cement themselves as a leader, innovator and provider of excellence. DocMagic’s eVault has been thoroughly vetted and is officially approved by Fannie Mae, Freddie Mac, and MERS to compliantly support eVaulting services.

So, lenders are moving forward when it comes to embracing technology. Are they moving fast enough? In my opinion, no. However, progress is progress. Things are improving. My only hope, as always, is that lenders would move faster.

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.

Lenders: Are You Unwittingly Violating The Consumer Credit Protection Act?

The Consumer Credit Protection Act. No doubt you’ve heard of it but, unless you’re a consumer protection lawyer or a masochist, you’ve probably never sat down and read it. Sure, everyone knows that law prevents “evil corporations” from taking advantage of consumers, but did you know that it also might penalize you or your company for trying to help your potential clients?

That’s right; you can be sued by the CFPB for providing assistance to your potential clients. This may seem counter-intuitive, but the way the law is written, if you or anyone in your institution attempts to help clients clear up some blemishes or inaccuracies on their credit reports with the goal of qualifying them for one of your financial products, you can be sued under a sub-part of the Consumer Credit Protection Act commonly referred to as The Credit Repair Organizations Act.

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At this point you’re most likely thinking, “I work for a lender. We don’t provide credit repair, nor do we work with any credit repair companies. This can’t be true.” The alarming part is that you are not alone in making that assumption. Although the law was drafted to protect desperate consumers from people and entities that would otherwise prey upon them, in practice, it could potentially have a disparate impact upon upstanding lenders and others that work in the financial sector.

A multitude of lenders often provide seemingly innocuous advice with the intent of helping potential clients when their FICO scores fall short of the qualifying range.

However, in doing so, they’re actually violating federal law and breaching contracts with vendors without even knowing it. This article will provide you with a basic explanation of the Credit Repair Organizations Act, give some examples of how it has recently been enforced, and provide some tips on how to avoid potentially putting yourself or your company at risk.

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Credit Repair Organizations Act

Overview

The Credit Repair Organizations Act (“CROA” or the “Act”) is a federal law, which falls under the broader Consumer Credit Protection Act. It was enacted to address growing concerns about unfair and deceptive trade practices in the Credit Repair Service industry. Specifically, the purpose of CROA is twofold: 1) to ensure potential customers have sufficient information to evaluate whether to purchase credit repair services; and 2) to protect the public from false advertising and deceptive business practices.

Prohibited Practices and Statutory Rights

CROA prohibits deceiving any credit reporting agency or any potential creditor, whether directly, or by counseling a consumer to provide misleading information. Furthermore, it specifically bars any credit repair organization from charging an up-front fee for its services, or otherwise defrauding potential clients.

In addition to prohibitions, CROA also dictates the manner in which credit repair companies must engage new clients. All credit repair companies need to provide a written service agreement to any potential clients prior to performing any services. Specifically, the service agreements must set forth the total amounts of any payments to be made, a detailed description of services, and estimated deadline for completion of services, and the right of the customer to cancel the contract within three business days of execution. Furthermore, the customer must also be given duplicate copies of any form that requires a signature.

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In addition to a written service agreement, credit repair companies must provide a separate list of statutory disclosures regarding the rights of the consumers. Among them are the right to access and correct information on consumer credit reports, the right to sue under the Act, and the right to dispute information found on consumer credit reports. The complete list of disclosures may be found under § 1679c of CROA. These disclosures must be provided to potential consumers independently from any service agreement or other documentation, and must be retained for two years after the consumer signs off, acknowledging that they were, in fact provided.

Penalties for Non-Compliance

CROA was drafted to be narrowly interpreted. What this means is that any contract that fails to strictly adhere to all requirement set forth in the Act is automatically void; it cannot be enforced in any state or federal courts. Furthermore, the consumer may not voluntarily waive any provision of the statute, and any attempt to do so will be void as well.

Aside from contract enforcement issues, the statute also allows consumers to sue credit repair companies if those companies violate the provisions of CROA. In addition to being liable for all fees collected under the service agreement, credit repair companies who violate CROA will be liable for any financial harm sustained by the consumer, attorney’s fees, and potential punitive damages. The punitive damages, as the name indicates, are meant to punish companies that violate the provisions in the statute. Although the statute does not set forth a specific amount, factors taken into account when deciding an appropriate award are: 1) how often the company violates the statute; 2) the type of violation(s); 3) whether the violation was intentional; and 4) the number of consumers affected by the violation.

So what? I already told you that I don’t do credit repair.

Many lenders have this reaction after being forced to read through the seemingly irrelevant, dense legalese, above. However, few ask the fundamental question that really puts everything into perspective: How does the law define “credit repair organization”? The answer surprises almost everyone who is not intimately familiar with this law.

A “credit repair organization” is obviously any person or entity that provides a service with the aim of improving a person’s credit. However, the law also deems any person or entity that provides any advice or assistance to any person with the goal of improving their credit is a credit repair organization. That’s right. If you, as a lender, provide advice or assistance to any potential client in order to help that person improve his or her credit to qualify for one of your products, your organization falls within the definition of a “credit repair organization”.

Lenders’ innate desire to help their existing customers and potential clients qualify for loans and other products may, unfortunately, lead them down a slippery slope that could potentially impute unwanted and unintended liability. Once a lender takes any action to land itself under the purview of the statute, not only are they subject to potential law suits from consumers and the CFPB, they are also at serious risk of losing the ability to pull credit for violating the terms of service agreements.

CFPB

The Consumer Financial Protection Bureau (commonly known as the CFPB) is a governmental agency that was formed after the 2008 financial crisis. The agency was established with the aim of protecting consumers from deceptive and unfair trade practices, and operates with the goal of acting as a watchdog and consumer advocate across a wide range of industries, which includes the prosecution of CROA violations in the credit repair industry. The CFPB has made itself a prevalent force in recent years by vigorously prosecuting violations of the law. When the CFPB gets involved, those companies that find themselves in its crosshairs are usually subject to hefty penalties. Below are two examples of recent cases in which companies were sued for violating the law.

CFPB v. Commercial Credit Consultants, et al.

In June 2017, the CFPB filed suit against three companies and two individuals in the U.S. District Court for the Central District of California. In its complaint, the CFPB alleged that the defendants charged upfront fees, made misrepresentations about their ability to remove negative entries on credit reports and ability to improve credit scores, failed to adequately disclose the terms of their “money back guarantee”, and misrepresented the costs of their services. On June 30, 2017, the Court entered an order granting an award of $1,530,000.00 against the Defendants.

CFPB v. Federal Debt Assistance Association, LLC, et al.

In its most recent filing against credit repair companies in Maryland, the CFPB coupled its consumer protection allegations with violations of the Telemarketing and Consumer Fraud and Abuse Prevention Act. In the Complaint, three companies and two individuals were accused of deliberately misleading consumers to make them think that the defendants were affiliated with the federal government, falsely advertising that they could reduce consumer debt by at least sixty percent, encouraging consumers to stop paying debts without advising as to consequences of non-payments, and collecting up-front fees for their services. This case is still pending as of the date of this publication.

Credit Reporting Companies

Credit repair companies are generally viewed in a negative light because of a few bad actors in the industry. Public perception is easily skewed when most publications and news outlets only report about companies defrauding their clients and/or cases in which the CFPB is prosecuting claims of statutory violations. In fact, this view is so prevalent, that some credit reporting agencies have even incorporated prohibitions on working with credit repair companies into their contracts with lenders.

Many of the largest providers of independent verification services in the financial services industry require lenders to certify that that they are not credit repair companies. These prohibitions are commonplace in the contracts across the industry, and have the unfortunate effect of preventing lenders from forming partnerships with credit repair companies to help their prospective clients begin taking steps toward credit-worthiness. This also means that if you or your company do, in fact, provide the type of assistance or advice contemplated by CROA, you could very well lose the working relationship with credit reporting companies and ability to pull credit, along with it.

Solutions

It would be very simple to just swear off companies that provide credit repair, altogether, and conduct business by only marketing to those consumers who already qualify for your products. The issue with this mentality is that, according to a 2016 study published by the Federal Reserve Bank of New York, over one-third of all Americans have a FICO score below 620. If banks simply refused to work with or help these people, they would be, in effect, writing off over 80 million potential clients. That is a very large, untapped market that can’t just simply be disregarded. So, how can you help these consumers qualify for your products and get the funding that they need without violating the law? The answer in short: responsible strategic partnerships that do not run afoul of the law.

Under federal law, not-for-profit companies are specifically exempt from being classified or designated as credit repair organizations. The rationale behind this carve-out is that the primary purpose of those companies is to aid consumers in need, rather than maximize revenue. Referring unqualified consumers to one of these non-profits is a great way to ensure that the your potential clients receive the help they need, while simultaneously growing your pool of qualified applicants.

When choosing a partner, it is imperative that you are able to identify and choose a reputable, full service company that not only provides credit remediation services, but also provides consumers with a wealth of resources such as coaching and education. The company should focus on educating the consumers so that they are able to understand ramifications of their financial decisions to ensure responsible borrowing in the future, which will help consumers and lenders, alike. By referring these potential clients to these non-profit companies, lenders can insulate themselves from potential liability and help consumers get the assistance they need to become financially healthy.

About The Author

Elizabeth Karwowski

Elizabeth Karwowski is the CEO of Get Credit Healthy, a technology company that has developed a proprietary process and solution, which seamlessly integrates with the lenders’ loan origination software (LOS) and customer relationship management software (CRM) in order to create new loan opportunity and recapture leads. Get Credit Healthy helped their partners create over $200M of new loan opportunities in 2017 alone, and plan on continued growth in 2018. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, and published in a number of financial industry publications.

Listen Up

When you think about it, a lot of times technology vendors sell lenders their technology based on features or functionality. And lenders try to sell borrowers with loan products. That’s not the right approach. Why? In most cases those items are not what really differentiate you as a technology provider or a lender.

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Conversely, what should be a differentiator for you should be your brand. In the article entitled “How Branding Can Help Your Customers Choose Your Business” written by Alex Schnee, he notes that when you are looking for new ways to encourage customers to find your business and be excited about what you do, you might need to take a look at how you are choosing to brand yourself. Branding might seem like something that you don’t really need to do in order to find success as a company, but you would be surprised to know how much it can end up helping you.

Here are some ways you might want to reconsider your brand and the type of audience you are reaching.

Branding targets customers

Do you know exactly who you want to attract as a customer and why? It’s not always easy to describe your ideal client unless you’ve taken some time to brand yourself properly and to know what type of customer would be attracted to your product or service. By developing a brand, you’re taking the time to know who you are reaching and why, what your buyer’s habits are, and how you can best market to those who will deliver results.

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Branding creates a recognizable image

Most companies that do well are ones that stand out a bit from the crowd. Either they have taken the time to differentiate themselves from the competition in the market, or they are seen as the top competitor. When you can easily recognize a logo or a business model, then a company is already one step ahead in terms of marketing and being competitive on the market. Having a recognizable face as a business can bring in new customers because they are already aware of your reputation.

Branding can create your marketing strategy

If you’ve had trouble putting together a comprehensive marketing strategy for your business, then it might be time to consider whether you are getting the message across through your branding. Your strategy should be based around what you are trying to convey with your brand and the types of customers that you want to reach. This can mean investing in better content, advertising, and the use of social media in order to achieve what you want.

Branding can create reputation

Some of the biggest names in several industries do not necessarily create better products than their competitors, but they do have a reputation to rest on. When customers know what to expect from your business, you are creating a brand name that has a connotation of caring for clients. Consistency tends to be key when you want to develop a brand that customers feel like they can rely on. Reputation can either make or break a business, so it’s in every company’s best interest to foster a positive one and to take the time to use branding as a tool for creating a quality reputation that will last.

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Branding deserves time and effort and evaluation of how you can approach new customer. Because it is such an essential part of a business and how you choose to market yourself, sitting down and developing a strategy can go a long way toward creating repeat and consistent business in the long run.

At NexLevel Advisors, we help clients all the time with branding so they can succeed in this mortgage market. When you think about your brand, Laura Lake points out that there is a lot of confusion around branding in her article entitled “Learn Why Branding Is Important In Marketing.” If you think about it, there are multiple definitions, so what is branding? Decades ago branding was defined as a name, slogan, sign, symbol or design, or a combination of these elements that identify products or services of a company. The brand was identified of the elements that differentiated the goods and or service from the competition.

Today brand is a bit more complex, but even more important in today’s world of marketing.

It’s the perception that a consumer has when they hear or think of your company name, service or product. That being said the word “brand” or “branding” is a moving target and evolves with the behavior of consumers, I think of it as the mental picture of who you as a company represents to consumers, it’s influenced by the elements, words, and creativity that surround it.

What Should a Brand Do?

Branding is not only about getting your target market to select you over the competition but about getting your prospects to see you as the sole provider of a solution to their problem or need.

The objectives that a good brand will achieve include:

>>Clearly, delivers the message

>>Confirms your credibility

>>Emotionally connects your target prospects with your product and or service

>>Motivates the buyer to buy

>>Creates User Loyalty

To succeed in branding, you must understand the needs and wants of your customers and prospects.

A strong brand is invaluable as the battle for customers intensifies day by day. It’s important to spend time investing in researching, defining, and building your brand. After all, your brand is the source of a promise to your consumer.

Your brand is a foundational piece in your marketing communication and one you do not want to be without. Branding is strategic and marketing is tactical and what you use to get your brand in front of consumers. That’s why it carries a great deal of importance within a business or organization as well.

Brand serves as a guide to understanding the purpose of business objectives. It enables you to align a marketing plan with those objectives and fulfill the overarching strategy.

The effectiveness of brand doesn’t just happen before the purchase, but it’s also about the life of the brand of the experience it gives a consumer.

Did the product or service perform as expected? Was the quality as good as promised or better? How was the service experience? If you can get positive answers to these questions, you’ve created a loyal customer.

Branding can be confusing, so how do you know if your brand is strong enough to give you the internal and external value that you need in your marketing?

>>Does your brand relate to your target audience? Will they instantly “get it” without too much thought?

>>Does your brand share the uniqueness of what you offer and why it’s important?

>>Does it reflect the brand promise that you are making to who you are targeting as well as to your internal audience?

>>Does your brand reflect the values that you want to represent as a customer?

Let these questions serve as a guideline in the development of your brand.  If the answers are not clear you may want to return to the drawing board and refine the branding process.  A brand should be an instant “ah-ha” it should require very little thought and contemplation.

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.

Engage With Your Niche

To succeed in the mortgage market, your first step is identifying your niche. Once you’ve decided on the best demographic target for your success, effective communication will take your message from blah to bingo. Here, we’ll cover 5 important guidelines that will make sure your niche listens and engages with you, effectively driving your mortgage business.

In my view, the five keys to effectively communicating with your niche include:

1.) Tailor your materials according to their needs

When it’s time to communicate with your niche, you have to think about what matters to them. If you don’t consider their priorities and challenges, you will definitely miss your target. When you’re writing your email messages, postcard, articles or other marketing materials, think about a few of these examples:

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Is your niche first time homebuyers? This niche will likely ignore retirement savings advice, vacation home or reverse mortgage products or construction financing tips. Instead, bring them “preparing for your mortgage loan” checklists, credit tips and down payment savings plans.

Is your niche single women-led families? This niche likely won’t care about lawn care advice or DIY remodeling projects. To become a valued voice for this niche, send them lists of “kids eat free” restaurants in your area, tips for paying down loan principles, and recommendations for ideal family neighborhoods.

You have to focus on solutions to your niche market’s real problems. This is what borrowers are really looking for, so you have to position yourself as a problem solver. If you have solutions that will truly help them, let them know and your message will get notices.

2.) Create a crystal-clear message.

Your niche is extremely busy and they are bombarded with marketing messages every second of every day. That may be an exaggeration, but only a slight one. Marketing is everywhere, and if you want your niche to take notice of you, the message has to be absolutely clear and very simple. Your marketing messages are not only competing with other mortgage lenders, but they are also competing for space in your niche’s brain against all the other advertisements your niche sees every day – whether it’s McDonalds or Beyoncé or American Express. Be clear, concise and to the point.

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Graphics can grab attention, but don’t let them overwhelm your marketing to the point where you message isn’t being communicated. Make sure your graphics are relevant to your message and will be noticed by your niche. Simple, clean design should enhance your message, not compete with it.

Again, people are busy. When you do get a few seconds of their attention, don’t squander it with unclear messages or irrelevant graphics.

3.) Deliver something valuable to your niche

When you communicate with your niche, always offer something of value and include a hook that will entice them to contact you. Simply put, offer additional (valuable!) information as an incentive to reach out and start a conversation with you or exchange contact info so you can more target them even more effectively in the future.  This extra value “hooks” a prospect, setting the stage for further communication.

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Here are a few examples of hooks:

>>Download a free step-by-step loan process guide

>>Download a neighborhood resources guide

>>Download a checklist for getting started buying a home

>>Call us today for access to your free mortgage loan calculator

>>Click here for warning signs of fraud

>>Call me for details

>>Call us for a free readiness assessment

All of these hooks offer something of value to an interested prospect. They will increase not only the attention your pieces get but boost your response rates and position you as the go-to expert for mortgages.

4.) Include a clear and concise call to action

You have to motivate your prospects with a strong “Call to Action”. Calls to Action (CTAs) are often the difference between prospects just eyeballing your content versus prospects that are converting into actual leads.  In today’s highly competitive mortgage market it is critical to convert potential borrowers into leads, which convert into actual borrowers.

You can create great content, new websites and professional marketing materials but if all a potential borrower does is read your materials you still have nothing to show for it.  Your CTAs must motivate the potential borrower to take action.   To get pre-qualified, to start the application process, to speak with a loan officer, because once they take that first step at contact, most borrowers stop shopping around.

So, what is the difference between a CTA that drives leads and action compared to the typical CTA that people just read but don’t act on?  There are a number of factors that impact the effectiveness of your CTA. They include:

Wording is critical: Use words that demonstrate an understanding of your prospect’s pain and what motivates them. Put yourself in your prospects shoes.  What would you be looking for throughout your home buying process? Ask yourself “What’s in it for me?” The prospect will eventually ask themselves this same question.

Proper design and placement: If you want your CTA to get the attention it deserves, you need to take advantage of basic design principles. To pop, your CTA needs proper white space, colors, shapes and other visual elements. This field has been studied to a science by marketing automation experts, so it’s critical to get their help.
Marketing automation experts know that seemingly small changes in design can have a huge impact on your response rates. They constantly test colors, shapes, sizes and placement to generate the highest returns, so consider a marketing automation platform to avoid losing out because of simple design principles.

Deliver value to your prospect: Provide your prospects with insights, trends and offers that the prospect can’t live without.  Put yourself in the their shoes and find out what motivates them to take action. Adding value for your prospect creates a higher need and increases the chance of taking your call to action.

There are a number of articles that provide key insights into the power of CTAs and how to get the most out of them in your marketing materials.  In an article by Wendy Marx entitled Calls to Action: “How to Motivate Your Audience”, she lists 10 Guides to Creating Calls to Action that Convert”. Check out the story for some additional tips on creating the perfect CTA https://goo.gl/Zd18pz.

5.) Consider a marketing automation system

There are several turn-key programs available that can suit your niche perfectly. “Set it and forget it” technology has dramatically improved marketing effectiveness and you don’t have to do this alone when there are experts with proven success. Once you’ve done the hard part of identifying your niche, you should lean on marketing automation systems that know how to get attention in your niche. They have ready-made content that’s already been proven effective, and you can consistently stay in touch with your niche with very little effort.

Choosing the right marketing automation system will give you a significant advantage over your competitors. Make sure your system has expertise in your niche market and understands the keys to effectively engaging your ideal audience. Backed with marketing automation, you will quickly make progress towards being the “go-to” mortgage expert for your niche.

Succeed with targeted, clear solutions

Effectively communicating with your ideal niche will bring the leads in that you need to grow your loan pipeline. Consistently deliver the messages they’re interested in, with clear language and hooks that further engage them, and you will become a trusted advisor. When your audience knows that you “get them” and that you provide valuable solutions, choosing a mortgage loan provider and recommending you to their friends will be a simple decision.

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.

Enhance Productivity Through Employee Wellness

As we reflect, it comes as no surprise that employers not only in the mortgage but across all industries are concerned with their employees’ health and wellbeing. Healthy employees are generally happy employees, have a better focus and have higher levels of productivity than unhealthy employees. As a result, they experience more success in business. Employee Wellness programs have become incredibly popular during the last few years, offering everything from paid gym memberships to company running groups and yoga classes to having fresh fruit bowls in the break room.

While many employees are currently taking advantage of these wellness programs, there remains a substantial number of non-participants, almost 60 percent according to the HealthFitness survey conducted between 2015 – 2016. What is holding them back? The survey pointed to inconvenient programs options, a non-supportive company culture, plus trust and privacy concerns.

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Employee health does have a significant effect on the success of companies. Employees at many companies in the mortgage industry, especially those in the technology space, have traditionally worked long hours, increased happy hour participation and not eaten a very healthy diet due to the nature of the job. The way an employee feels during the workday does impact his or her productivity and the quality of the work. In addition to the effect on the employee, poor health can actually impact the employer’s share of medical premiums. Employee Wellness programs have become a critical component to improving employee productivity and effectiveness and the company’s bottom line.

Chronic diseases and conditions are common among employees. They are costly, and in many cases, preventable. As reported by the Centers for Disease Control and Prevention (CDC), as of 2012, about 50 percent of all adults had one or more chronic health conditions such as heart disease, cancer, obesity, and diabetes, and 25 percent had two or more chronic health conditions. Between 2011 and 2014, 36 percent of adults were obese.

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When employees experience health issues, productivity and work quality is often compromised. The most obvious impact is the simple matter of showing up to work. When employees experience health issues, their attendance can suffer and service to customers and contributions to company initiatives can often be impacted. The significance of this can be demonstrated in the total estimated productivity related cost of diagnosed diabetes in 2012. The cost was $69 billion in decreased productivity according to the CDC. These productivity costs were a result of employees being absent from work, being less productive while at work, or not being able to come to work at all. In addition to experiencing staffing shortages, poor employee wellness can lead to low energy levels and moodiness, resulting in negative interactions with customers causing decreased sales. Poor interactions with co-workers that can result from a lack of employee wellness can cause even further sub-standard customer service.

The company’s bottom line is greatly affected by the state of employee health in other ways. Employers carry a large share of employee medical expenses by way of the monthly premiums they pay. According to the Bureau of Labor Statistics (BLS) in 2016, private industry employer costs for insurance benefits averaged 8.0 percent of total compensation. According to a 2016 Society for Human Resource Management Survey (HRMS), employers spent an average of $8,669 per employee annually on health care coverage. Chronic diseases account for a large percentage of health care costs in the United States. As reported by the CDC, total annual cardiovascular disease medical expenses were $189.7 billion in 2012-2013. Cancer care cost $157 billion in 2010. Diabetes and obesity have also been identified as chronic diseases common among people in the United States and the direct medical costs are significant. The total estimated direct medical cost of diagnosed diabetes in 2012 was $176 billion, and in 2008, $147 billion for obesity. Annual medical costs for people who were obese were $1,429 higher than those for people of normal weight in 2006. The main point I want to share is this – health insurers assign medical premium rates on employer plans in part based on the claims incurred by the employee population being insured. A company that covers employees with some of these chronic conditions will incur related medical claims and, as a result, significant increases in annual medical premiums.

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Employers can take the reins by working with employees to improve their health by addressing certain health risk behaviors. As reported by the CDC, “Four of these health risk behaviors – lack of exercise or physical activity, poor nutrition, tobacco use, and drinking too much alcohol – cause much of the illness, suffering, and early death related to chronic diseases and conditions.” According to their reporting in 2015, 50 percent of adults did not meet recommendations for aerobic physical activity, and more than one in three adults had at least one type of cardiovascular disease. They also revealed that 40 percent of adults ate fruit less than once a day, and 22 percent ate vegetables with the same frequency, while 90 percent consumed too much sodium. Their reporting also estimated that 15.1 percent of adults smoked, and many adults reported binge drinking an average of four times each month where they averaged eight drinks.

Companies can implement programs to address wellness in the workplace, and enhance the effectiveness of their overall workforce. At LERETA, we have done just that. The foundation of our program rests on our employees completing an annual confidential health questionnaire and biometric screening. We then utilize the results reported by each of our individual work locations to implement program components designed to improve the health behaviors of our employees. Some of the tactics we put into place include:

Confidential Health Coaching – certified health coaches work with employees whose biometric screening results reveal the presence of Metabolic Syndrome to develop strategies for improvement. Metabolic Syndrome exists if you have at least three of the following – high triglycerides (cholesterol), low good cholesterol (HDL), high blood pressure, high blood sugar or high waist size.

Healthy Nutrition Support – we have partnered with a vendor that utilizes the biometric screening results for each employee to suggest healthy recipes for every meal of the day. Employees can simply select a type of food they are interested in, or key into the web portal the ingredients they have on hand in their kitchen to find a recipe that sounds tasty. Employees can then narrow down the recipes to those that can be made in 30 minutes, or ones that are kid friendly for example. They are even directed to local stores where the ingredients are available on sale or that offer home delivery.

Exercise Programs – hosting daily group walks during breaks and lunches to increase energy levels, mobility, with the added benefit of enhancing employee camaraderie have been very well received. We provide fitness trackers to employees to motivate them to increase their daily steps and exercise minutes. They receive wellness-related rewards for achievement, and are proud to “show the off” to their colleagues.

Health Education Workshops – employees are offered virtual seminars on various health topics such as diabetes management, “stretch and flex at your desk” techniques, and stress management strategies.

Wellness Challenges – employees form teams to compete in competitions geared toward fitness, nutrition, stress management, and weight control. Participants get a daily snapshot of the progress of each member on their team to increase the competitive spirit and as a result, healthy behaviors.

Every company should encourage their employees to engage in a wellness program which in turn will also help their bottom line. In exchange for participating in a required number of these wellness activities, one idea that is popular at LERETA includes employees earning a discount on their monthly medical premiums. Overall, the health of every employee is critical to the success of your business and the service that you provide your customers. Health is a state of mind and wellness is a state of being. Which state would you rather your employees have? As the American author Greg Anderson said, “Wellness is not a ‘medical fix’ but a way of living – a lifestyle sensitive and responsive to all the dimensions of body, mind, and spirit, an approach to life we each design to achieve our highest potential for well-being now and forever.”

About The Author

Brian Blake

Brian Blake is First Vice President, Human Resources Director at LERETA. He leads the human resource team for LERETA. He has managed human resource and training functions in a variety of industries, including financial services, retail and healthcare for the last 30 years. Blake has made improving employee wellness a primary focus for the teams at LERETA.

The True Cost Of Buy Vs. Build

The age old question to build or to buy technology solutions seems to be more prominent and perplexing in the modern mortgage banking age than in past.

Once the digital revolution found its way into mortgage finance – despite valiant opposition – it has pushed technology strategy to the top of the agenda at board meetings.

Concerns run the gamut from seeking competitive advantage to regulatory compliance and everything in between. Then add the desire to improve the consumer’s experience.

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Therefore, it is no surprise that technology budgets are the fastest growing component of mortgage bankers’ expense profile during the last two years.

While much has been written about this classic dilemma, and even more money has been spent on consultants to assist in the decision-making process, there is no hard-and-fast template to guarantee the correct decision.

There are, however, some guidelines beyond the standard template that may be worth considering to ease the pain of the process and at least help management ask the right questions.

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Five Stages of Decision Making

In a recent conversation with the COO of a top 50 residential mortgage lender, he likened the decision making process of whether to develop proprietary technology for pre-funding QA and post-closing QC to the five stages of grief; denial, anger, bargaining, depression and acceptance. His honesty was as refreshing as it was revealing as he concluded, “Since we are now in the acceptance stage, you may expect an RFP in three months.”

It was a tortuous process to first recognize a technology solution was needed and then to finally conclude that for their particular situation, buy, not build, was the answer.

The COO went on to explain that one of the lessons he has learned over time regarding technology strategies is that changes in the business environment are often misinterpreted as temporary instead of longer-term solutions, Band-Aids are applied. For example, when the Dodd-Frank legislation passed in 2010, many companies did not appreciate the gravity of the change in federal regulatory oversight. In turn, these companies did not realize the need for technology from a strategic perspective to help with the implementation of Dodd-Frank rules as they should have.

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So, while some people may argue that exigency forced Excel spreadsheets, Access databases and other end-user programs to be deployed, their salve was temporary. The solution was temporary because it delayed a more strategic decision like purchasing software specifically designed for compliance.

Now, even eight years later, many companies are struggling again with decisions to build, buy or outsource regulatory compliance solutions, which go beyond federal to state, agency and investor.

Few of us with any experience in the industry have not been involved in these herculean struggles regarding the choice of a technology solution. And haven’t we all enjoyed providing evidence for the axiom that the time to make a decision is inversely proportional to the desired implementation timeline?

“Hurry up and wait” and “It must be in production by yesterday” are often-heard during group commiseration time.

We all have seen the various formulaic approaches to the buy/build question, which are a necessary part of a complete analysis: ROI, TCO and other metrics that live and die by the assumption.

So where is the edge? What could be done differently in addition to the normal analyses and decision making that will increase the probability of success?

What’s Mine is Mine and What’s Yours is Mine?

Notwithstanding the ROI on building proprietary solutions, a frequent variable that may get overvalued is retaining intellectual property and its corollary, establishing a competitive advantage. However, when it comes to cost in direct expenses and time associated with such an undertaking, companies have historically, and wildly, underestimated these projections.

Many times the build decision is driven by CTO zeal and not the discipline and self-awareness needed to make the best decision. Sometimes it simply comes down to an identity crisis: are we a technology company or a lender?

The CEO of a large correspondent lender explained the issue in the context of retaining and enhancing a legacy LOS or seeking an outside solution. “We have a stellar tech team that is capable of developing just about anything and if given the budget, they will.”

Outside of analytics that everyone uses, these leadership decisions are probably the most critical. It is incumbent upon business leadership to force the issue and really determine the need for proprietary compared to off-the shelf solutions despite the sometimes strong push from internal IT to build.

While IQ (intelligent quotient) is indispensable; EQ (emotional quotient) may be the final differentiator between a boondoggle and a successful initiative.

Key Considerations: Pluses and Minuses

Here are some key factors to consider when developing a strategy to implement new technology:

Third-Party Tech Solution

Plus: These systems are typically written by the vendor with domain expertise in the product they have built.

Plus: Release updates allows all uses to take advantage of ideas from other customers that would be beneficial to all.

Plus: Spread the costs of regulatory items across the entire customer base.

Plus: With multiple customers using the same core package, there is a better chance of one customer finding a bug (not all systems have bugs) that can be fixed.

Plus: Typically, there is a dedicated budget to enhance the system.

Minus: Could be a challenge getting your secret sauce request prioritized because the company must consider its entire customer base for prioritization of enhancements.

Minus: Once installed, the vendor could raise prices, and it could sometimes be difficult to change the application if your company has other pressing needs.

Home Grown

Plus: Typically, any enhancements can be implemented faster

Plus: Your great ideas can remain proprietary to your company and not shared across the industry; however, this is a factor that is only valuable for true differentiators. For example, there is no advantage to having the best bankruptcy solution because the same laws/process apply to everyone.

Minus: If in a highly regulated environment, the company must spend money to stay current with regulations and do so without the help from a third party.

Minus: As organization change occurs, budget allocations can change overtime and if a company does not invest in its homegrown application, it can become an inhibitor over time.

More Cooks in the Kitchen

Another common approach to turn the dichotomy into a trichotomy is to consider using multiple technology providers to deliver a solution. While this presents its own set of headaches, including two integration points that must be maintained and increased operational risk. There may be some benefits to different functional areas having more independence and the ability to apply a domain-specific platform to their world. The mortgage servicing industry is a classic example of this approach especially in the default servicing area where many companies have specialized in technology to assist with non-performing loans and there is now a market with mature products to assist servicers.

This trend is continuing where not only are there more specialized services for residential mortgage servicers available but, third-party service providers have developed enabling technologies to increase benefits. And this trend has gone beyond default servicing and includes other business activities that service bureaus could not provide and developing proprietary technology would be impractical.

For instance, some third-party providers in insurance tracking, loss-draft processing and performing loans that offer such services as bank reconciliation, investor reporting and billing have added technology to their services to bring additional benefits and cost saving to the servicers.

In the end, no matter where you land in determining whether to buy or build, your decision will only be as good as the questions you ask and the leadership strength you exert to coax out the best result.

About The Author

Camillo Melchiorre

Camillo Melchiorre is President at IndiSoft. Columbia, Md.-based IndiSoft, LLC develops collaborative technology solutions for the financial services industry. Its flagship products, RxOffice Compliance and RxOffice Vendor Management, enhance risk-based assessment and help companies, including servicers and sub-servicers with increased regulatory concerns. The company provides efficient, reliable and scalable solutions for companies that want to remain compliant, effectively manage workflow and maintain a competitive edge.

Digital Mortgage Hype

A close look at any mortgage industry conference or any mortgage publication will show you how much people are talking about digital mortgages. Clearly there is a great deal of buzz surrounding digital mortgages today. It all started a couple of years ago with that Rocket launching during the Super Bowl. Since that launch Rocket Mortgage by Quicken has propelled itself into the number one lender seat in the industry.

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This has only fueled the fire for people discussing digital mortgages and their impact on the mortgage industry. Numerous vendors across the industry claim to have digital mortgage solutions ready to help lenders propel themselves to higher origination volumes while providing a better customer experience.

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We have all seen the flashy demos, VC pitches and a whole lot of promises being made regarding digital mortgages. This has created a great deal of noise in the industry and confusion for lenders searching for solutions. It is a challenging time for lenders that do not what to be left behind while also being cautious to not getting caught up in all of the hype from a vendor who can’t deliver.

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So let’s cut through all of the hype and digital mortgage promises and see what lenders actually want and are using in a digital mortgage platform. So here are some of the things that top mortgage lenders have effectively implemented with their digital mortgage platform. Loan applications integrated with native apps, borrowers prefer to be online throughout the mortgage process, integration into core systems is critical for lenders, back office compatibility, ability to customize digital platform, mobile responsive and an easy way to share the application to increase referrals.

Check out the inforgraphic below to see how important these features are to lenders looking to successfully implement a new digital mortgage platform.

What’s A Digital Mortgage Anyway?

Everyone took notice as the digital mortgage first hit prime time with Quicken Loans’ Rocket Mortgage commercial featured during the Super Bowl a couple of years ago, jumpstarting the race for customer facing websites, slick 1003 applications, and the promise of an improved borrower experience. Several digital mortgage startups have spent a great deal of time, money and resources pitching to investors to gain funding round after round.

Over the last couple of years, all of the talk around digital mortgages has been about what the technology can do and how disruptive it will be. Technology companies from outside the mortgage industry claimed that they had a better way to do mortgages and that they were going to radically change the industry. Cleary there has been a lot of hype, and many promises have been made.

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What we have found in taking the time to speak with lenders across the country is that lenders are tired of being inundated with slick sales pitches and flashy product demos, what they want are real-world examples from their lending peers of how they are delivering on the digital mortgage promise. They want to hear what lenders are actually doing as it relates to digital mortgages, what type of results they are getting, and how they are achieving these results.

Instead of focusing on funding rounds and presentations, we actively listen to lenders and our lending clients. We firmly believe that lenders know mortgages far better than outside the industry technology firms looking to make a splash.

This is what lenders told us they were looking for in a digital mortgage solution:

Better Borrower Experience

Better Operational Efficiency

A Better Way to Partner with Realtors

A Better Recruiting Tool

Fully Compliant and Secure

Enhanced Integrations

Completely White Labeled

We focus on how new lending technology can enhance, rather than replace, the personalized service a loan officer provides borrowers during the mortgage process. We’re giving lenders the modern tools they want and need in the digital mortgage landscape.

Better Borrower Experience

Delivering a better borrower experience means making that experience consistent, across all channels, and points of contact. With SimpleNexus, information flows seamlessly between web, phone, and tablet. So, if your borrower starts a mortgage application on the website, she can pick up where she left off on any mobile device. The origination process is identical across all channels, as is the secure user login and password.

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If your prospects or realtors are in a rush, they don’t have to head to the app store to download SimpleNexus. Instead, you can text the app to them—either from your phone or originator dashboard. And, if you want to scan documents with the app but not assign these to a specific borrower file— no problem. When you’re ready, the documents will be waiting on your originator dashboard.

Make The Process More Convenient

With SimpleNexus, you make everything more convenient for your borrowers. They can start the application process anywhere. Instead of sending their W2s, bank statements, or tax returns to your office, borrowers can securely send documents using their phone. If they have a question or need to call, they can easily access your contact info in the app. If only the rest of life could be this easy.

Reduce Borrower Stress

What is the number one cause of borrower anxiety? Knowing the status of their loan after applying. With SimpleNexus, your borrowers never have to wonder. They’ll receive milestone alerts, reminders when something is due, and they can check their loan status in real-time. Ultimately, borrowers worry less and look forward to their home purchase more.

Get People Into Their Homes Faster

Who wouldn’t want to work with a lender who makes mortgages easier? Mortgage lenders who use SimpleNexus close loans up to 20 percent faster—which means borrowers get into their homes faster. With one straightforward system for borrowers to use, you can make everything easier and faster.

Better Operational Efficiency

If you’re in operations, you know the drill. Almost anything that makes the front end more efficient typically requires that you change your standard operating procedures—and that’s a challenging thing for you. While your front end is more productive, you have another hurdle to climb.

It doesn’t work that way with SimpleNexus. While, yes, our mobile app does make your loan originators more efficient, in our case, that means the back office gets what you need to do your jobs faster, too—all without having to change the processes you use today.

>>Alerts and secure, mobile document transfer gets information to processors faster.

>>Realtors and loan originators can upload changes wherever they are.

>>Everyone works more efficiently without changing current processes.

A Better Way To Partner With Realtors

No question, referral partners are essential to your ongoing success. Although you work hard to build relationships with the realtors in your area, so does your competition. Sometimes, no matter how good you are, it’s hard to stand out.

Now, imagine walking into your realtors’ offices to show them SimpleNexus. Once your realtors see the features, the co-branding opportunity, and how this one, easy-to-use app can connect them to their borrowers—and with you—they’ll be hooked. If they have a prospect in the office, you’ll probably get an introduction; which, no doubt, will be the first of many referrals to come.

Our customers tell us that using the app tripled their realtor engagements. Just think about what that kind of lift could do for your business.

Capture More Business

SimpleNexus helps your realtors turn their prospects into loyal customers. Not only can they engage prospects quickly by sharing the app, but it also provides them with a real value-add that few competitors can match.

Build A Personal Brand

With SimpleNexus, Realtors can co-brand their partnership with you. They can add their own custom links, customer reviews, and property search features for a seamless mortgage process.

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Gain Prospect And Customer Insight

With your shared app, realtors have the extra insight they need to better understand their customers—and know when it’s time for you to jump in with financing help.

Improve The Buyer Experience

The SimpleNexus features work together to improve the borrower experience, which means better reviews and more referrals for you and your realtor partners.

A Better Recruiting Tool

Recruiting top loan originators is critical to your organization’s success. Compensation and benefits are important, of course. But, with SimpleNexus, you can also offer a tool that helps originators close loans faster, so they can sell more, and make more money, without putting in more hours.

During the interview, show your prospective employees how they can custom brand the app or co-brand with their realtor partners. Then, tell them how SimpleNexus connects them with all of the systems and third-party providers they need to do their job from anywhere.

You become known as the company that helps your loan originators work more efficiently, earn more, and have a better quality of life. With SimpleNexus, LOs don’t need to spend their nights and weekends catching up at the office; they can close more and spend their off time with family and friends.

Fully Compliant and Secure

As much as we talk about speed and efficiency, at SimpleNexus, security is everything. From the beginning, we’ve invested in security to protect your borrower’s personal data and keep non-public information out of harm’s way.

We are AICPA Secure (SOC 2) and CFPB compliant, and meet all federal, state, and local requirements for securing borrower data. Data is encrypted at rest and in transit; and we conduct periodic, CEH penetration tests to check for vulnerabilities. Also, when you do loan calculations, APR is automatically displayed.

Enhanced Integrations

Your LOS. Your Processes. We Wouldn’t Change a Thing. It’s important to note that SimpleNexus isn’t an LOS, a CRM, or a replacement for any systems you currently have in place. Instead, we’re the connective tissue that brings these tools together in a single solution. So, your existing processes don’t change. However, your efficiency levels improve exponentially.

Completely White Labeled

It’s All About You, Not Us. Keeping your name front and center is easy with SimpleNexus. The app is white labeled, so instead of promoting our company, it promotes yours. You can brand the app with your information and offer your realtors their own co-branded versions, for that one-two marketing punch. Every interaction keeps your name at the forefront, building your brand as you build your client base.

Proven Success

This approach has proven to make a significant difference for lenders across the country.  While SimpleNexus might not be a household name like those overhyped digital companies, our platform powers 15 of the top 30 lenders, over 150 mortgage company customers, and over 14,000 users nationwide.

Our single-platform mortgage solution is the conduit that connects originators with their customers, realtor partners, systems, and tools they need to do their jobs. We’re the innovation that helps mortgage companies operate compliantly, efficiently, and a little more competitively than everyone else. We believe that when it comes to the mortgage industry, the combination of people and technology will always be more powerful than technology alone.

And, we’re proving it every day, one customer success story at a time.

About The Author

Matt Hansen

Matt Hansen is founder and CEO of SimpleNexus. SimpleNexus is the largest digital mortgage platform that nobody has ever heard of because they white-label their software. SimpleNexus now has 15 out of the top 25 retail mortgage lenders in the US using SimpleNexus. They represent over 200 brands across 160 companies, have over 450,000 borrowers use their app, with over $100B in transactions that have flowed through SImpleNexus. There are over 100,000 co-branded apps where Realtors, Builders, Financial Planners, etc… share with LOs to be kept up to date through the loan process and refer LOs business.