Posts

Three Ways To Deal With Change

As we continue our preparations for the new TRID rules, the issue of change management comes to mind. In recent years, change has become the norm for our industry. TRID is just the next regulatory hurdle in a series of never-ending transitions we have to make in our organizations. Change is something we’ll have to continue to deal with going into the future. If it isn’t regulatory, it will be technological or economic. Change, as they say, is the only constant.

So, the question isn’t how to prevent change–it’s going to happen whether we like it or not. As leaders in the mortgage industry, the question we must ask ourselves is, “How can we deal with change?” The inability to deal with change can quickly break an organization. If there’s one small transition that goes awry, the ripple effects can quickly lead to your downfall. On the other hand, properly adapting to change can give you a competitive advantage where others aren’t so nimble. Change management can mean the difference between failure and success. So, how do we deal with change? Here are three ways…

Featured Sponsors:

[huge_it_gallery id=”2″]

The first and most powerful way to deal with change is to be prepared for it. Fortune favors the prepared. If you have plan for dealing with change as it occurs, it’s a lot less stressful and a lot more manageable. Being ready for change is partly about being vigilant–paying attention to what’s going on in the industry. The earlier you can catch wind of a change that is likely to occur, the sooner you can start making preparations for it. And, once you have a plan in place, the rest is just following through.

A strategy for dealing with change is to tackle it gradually. Instead of trying to force change in your organization abruptly and all at once, make small changes a little bit at a time. The answer to the question of how to eat an elephant? One bite at a time. If you can break the process of change down into small enough pieces, it doesn’t feel so much like change. Especially if you are trying to get your people to buy into the change, you’ve got to make it slow and give them time to digest it.

Featured Sponsors:

[huge_it_gallery id=”3″]

One final strategy you might employee in dealing with change is delegation. Just like change is easier when it’s broken down into small pieces across time, it’s easier when it’s broken down into small pieces across people. Instead of forcing everyone to deal with all the pressure and responsibility of the change (or taking it all on yourself), spread the responsibility for the transition out across your team. Distributing the tasks for managing the change will also keep each department of your organization happier throughout the process, because no single person or department will feel like they’re doing everything themselves. You have an entire team–let each member play a role in getting through the change. If you can get everyone to pull together and pitch in, you’ll be pushing through before you know it.

About The Author

[author_bio]

Proactive Response To Change

website-pdf-download

TME-RGudobbaThe upcoming August 1, 2015, deadline for the implementation of the Integrated Disclosures is a little over 4 months away. In January, I thought that this was the opportunity for the mortgage industry to embrace change, improve the process, and finally move toward a fully electronic loan. In February, I wrote that I believed that this development might turn out to be a missed opportunity. Why do I say that? I have a feeling that some are approaching this sea change as just another regulatory form update. They are missing the point.

Constant change is a business reality, and organizations must continually adapt to their environments to stay competitive or risk becoming obsolete. Nobody likes change. It can be disruptive. You become comfortable with the way things work. People believe that when they change they instantly become less competent, effective, and efficient. But change is inevitable. How you handle it depends on whether you look at it as a threat or an opportunity.

Featured Sponsors:

[huge_it_gallery id=”2″]

If we look through history at the 1960 presidential election, for example, we see how important it is to embrace change. In that election the upstart young Senator from Massachusetts, John F. Kennedy, beat the seated Vice President, Richard Nixon. The key turning points of the campaign were the four Kennedy-Nixon debates; they were the first presidential debates ever and were televised nationally. Much has been made since on Nixon’s preparations, or lack thereof, for what Marshall McLuhan has called the “cool” media of television. Cool media requires users to fill in more missing information than “hot” media based on what they are able to interpret. In this case, Nixon continued campaigning until shortly before the start of the first debate. Despite a recent illness and hospitalization, the Vice President declined makeup. I don’t doubt that these decisions seemed logical, even shrewd to Nixon at the time. Onscreen, however, Nixon looked pale and tired, and in the cool medium of television, many viewers used that visual information to arrive at two conclusions: that Nixon was unprepared and weary, which in contrast made it easy to interpret his opponent as confident, relaxed, and forceful in comparison.

Featured Sponsors:

[huge_it_gallery id=”3″]

Historians estimate that 70 million viewers watched the first debate. While Nixon made adjustments in the three subsequent televised debates (which included the decision to wear television makeup), there were approximately 20 million fewer viewers to appreciate the difference.

Why do I tell you this story? It shows how important it is not only to embrace change, but to embrace it as soon as possible. Nixon was not used to appearing on television, so he prepared as if he was running an old-school election operation, where making a few more campaign stops seemed like a better use of his time than televised debate preparation. In the end, we all know the result of that election.

So, how can you succeed in an environment of change? Well, it all boils down to the culture of your organization and how it manages change. A recent article by Eric Feigenbaum at Demand Media stated,Corporate cultures are very powerful things. Many businesses don’t even realize they have a culture because their management has never really thought about it—the attitudes and approaches were just shaped around the founders or core personalities in the business. Other companies’ managements take the time to sit down and strategize their culture in order to promote certain attitudes and values, such as having proactive employees.”

He goes on to say, “In order for employees to be proactive, they have to be empowered. Employees must feel they are trusted to do more, make decisions and take limited risks. The more people feel free to take action, the more likely they will do so. Managers should let their teams know they support an autonomous, empowered team. Cultures of empowerment are proactive cultures. By contrast, employees with very limited scopes and duties in a more bureaucratic or military-style culture tend to stay within their very specific duties and follow only clearly outlined procedures.”

Being proactive is taking initiative in anticipation of future events. Companies that are proactive are often trying to avoid a potential future threat or to capitalize on a potential future opportunity. Being reactive is when the company makes changes after some threat or opportunity has already occurred. Reacting to the past rather than anticipating the future is a very common strategy, or absence of strategy, that is sometimes referred to as fire-fighting. Of course, both proactive and reactive management styles can fail. But proactive management is preferable because success in business requires the willingness to take chances as well as the ability to manage risk appropriately.

The conceptual definition of risk involves change in mind, opinion, actions, places, etc. It involves choice and the uncertainty that choice entails. It concerns future events, both known and unknown, and the constraints of cost, schedule, and resource limitations.

As we continue this conversation we need to take a step back in time. Let’s identify a common problem in our industry and try to solve it using this train of thought. Let’s say the problem was a lost or misplaced original paper note. The solution was an electronic note replacing the paper note. It needed to look like the paper note, but have a data payload for hands-off processing. The challenge was to tie raw and unformatted data to the formatted presentation data that would be presented to the borrower. The concept of the Category 1 SMART Doc for the eNote was a gallant attempt. Its biggest accomplishment was to expose the industry to the concept of combining data and documents. MISMO V3 is a direct result of that effort.

This, in turn, led to the CFPB’s focus on the consumer and its work on the Loan Estimate and Closing Disclosure. The result is aesthetically pleasing documents that the consumer can read and understand, and more importantly, documents that can be compared easily.

Whether your organization is responsible for the solution for TILA/RSPA Integrated Disclosures (TRID), or you are relying on a third party to provide this solution to your organization, you have to ask these key questions.

  1. Is my organization proactive or reactive?
  2. How ingrained is the current culture?
  3. Are the leaders personally committed to the change?
  4. Who are all the critical stakeholders and what are their roles in the project?
  5. Does my organization have the capability and capacity to make the change?
  6. Will the change actually deliver the required documents?
  7. How is this change different, better, or more compelling than other propose changes?
  8. What is your Plan B if it comes to pass that Plan A doesn’t work?

In the end it doesn’t matter if you are building or buying a solution to this problem. The key is to be proactive and to embrace change. If you are using a third party’s solution, you need to know what that organization is doing and how that fits within your business. If you wait around, you’ll be the one left holding the bag. Similarly, if you are building something, you should be testing it now. The old saying goes: change is the only constant. In mortgage, that is so true. We all have to be ready to change on a dime these days. And in the end, how you react to change will make all the difference.

Next month we will tell you how MISMO should be part of your strategy.

About The Author

[author_bio]

A Changing Landscape

You Can Download This Entire Article As A PDF HERE

How do lenders adapt to changing regulation? A.R. Smith is an experienced executive consultant with over 25 years in mortgage banking, which includes all aspects of originations, operations, servicing, secondary marketing, human resources and technology. She has a proven track record in creating systems and models to achieve an organization’s strategic objectives, with an emphasis on applying technology and human talent to complex solutions. In this interview she talked to our editor about how the mortgage industry has changed and what lenders need to do going forward to remain both compliant and competitive.

Q: How did you get into mortgage banking?

A.R. SMITH: As the daughter of a dairy farmer in central Pennsylvania, I first learned about lending when taking a job at Farm Credit Services. I had responsibilities at a branch for doing all aspects of lending for mortgages and short-term loans. I also did title search work for the mortgages by taking weekly trips to the courthouse. Times have certainly changed, but I am so glad to have had the opportunity to understand the process of how to do all aspects of lending without the technology. It was an excellent foundation for what would become my career in mortgage banking.

In 1988, I was hired by a Savings and Loan Bank to migrate their manual processes (we were using typewriters and TIL machines in the 80’s) to an integrated software platform that would be a central customer database, print laser forms and perform the calculations for the disclosure documents. It was a transformational change to the organization. I remember going around the bank one night and taking away all the typewriters that were used to create application and disclosure documents so that the employees would be required to use the system to fulfill all the loan requirements for closing.

It was my first experience as a “hands-on change agent” for an organization. After completing that initial project, I took on additional responsibilities for the servicing portfolio and lead another platform change for managing all the activities of servicing as well as integrating multiple third-party vendors into the process. My responsibilities expanded to include managing all the operations as the bank’s COO, in addition to taking on the CIO responsibilities. With this experience, I was hooked on mortgage banking and applied technologies.

Q: How has the mortgage industry changed since your early days at Farm Credit Services?

A.R. SMITH: The changes in technology are light years from where it was when I started in the mortgage industry. Our company was a beta site for Freddie Mac’s automated underwriting system in the early 90’s. Technology is now a business imperative in the mortgage landscape.

Technology is touching every aspect of the mortgage process. There are now multiple investors for loan and servicing purchases resulting in the rise of pricing engines, and the automation of appraisal, credit, marketing, loan accounting and loan origination to name a few. There are more powerful LOS solutions for lenders of all sizes leveling the playing field while allowing all lenders to use today’s most advanced technology. In addition, the cloud has reduced the significant investment in hardware and technology infrastructure.

Q: As a former CIO, how has technology’s role in the mortgage industry evolved?

A.R. SMITH: With technology now being a business imperative, today’s CIOs need to be a part of the strategy for the organization delivering solutions that have a return on investment through creating efficiencies and competencies of the organization. Technology in the past was viewed as a “tool”, whereas it is now an integrated business solution. With the influx of technology solutions and the constantly changing mortgage and technology landscape, there needs to be a higher level of expertise and ability to create strategies for execution.

Q: How has the industry approached technology in the past?

A.R. SMITH: Often the strategy to solve one’s issues with integrating technology within an organization is by hiring IT staff, such as an analyst, developer, or CIO depending on the size of the organization. However, often it is advantageous to hire a person who has a broader understanding of the overall operations to ensure strategies are applied that optimize business processes through increasing revenue and efficiencies while decreasing costs. That person needs to be strategic, conceptual and have the experience to understand operational issues and how to solve them through applied technologies.

If that person does not exist within the organization, a consultant should be selected using the same criteria of a new hire to create and execute the integration of technology solutions to all facets of the mortgage process. Often organizations will settle for getting the fundamentals right that support the business, such as ensuring that the systems do not “crash”, having adequate response times and systems that do not cost much. However, the greatest return on investment for any organization is the integration of the technology to solve corporate and operational issues.

Q: You have transitioned from the lender side to now consulting, what lead to that decision? How has your experience as a former CIO/COO helped you in your consulting business?

A.R. SMITH: When working as a COO in a bank-owned mortgage company 20 years ago, one of the bank’s board members was an owner of a foundry who taught me the principles of “lean manufacturing” and its application to the mortgage banking environment. Those principles were not part of the LOS platforms at that time; however, we adapted our LOS system to create a workflow model for efficiency through the principles of lean manufacturing. We were successful in reducing turn times from application to closing, measuring performance of individual roles for productivity, identifying opportunities for growth and integrating support functions to include accounting and human resources.

I had the opportunity to be part of the group that founded American Home Bank in central Pennsylvania that originated mortgage loans in over 30 states, which included retail, wholesale, construction and correspondent lending. As a growth company, systems, processes and workflow were critical to facilitate our ongoing growth. After the sale of the bank in 2010, I began consulting to focus on assisting other mortgage company executives to incorporate those execution strategies using those lessons learned in developing processes to integrate operations and technology. It was my desire to assist other companies to adopt the power of technology to grow their business and view their technology platform as critical in executing corporate strategies.

Q: What are the biggest challenges that mortgage lenders face and how can they be fixed in your opinion?

A.R. SMITH: Mortgage banking in recent years has experienced a move by LOS platforms to workflow management similar to what other industries have done. However, the LOS is limited by the application of the workflow process in an organization if the strategy and employees of the organization do not embrace the power of the workflow to increase efficiencies and enhancing the customer experience.

Mortgage banking is at a critical stage as profit margins are being squeezed and costs and efficiencies need to be managed closely while balancing the needs of the regulated environment. The best strategies to accomplish this balance are through using technology that manages the customer experience and measures the cost of acquiring a new customer. In addition, efficiencies in operations and supporting functions such as accounting and human resources that reduces the dependency on manual or redundant efforts in the workflow process are strategies that address lenders’ biggest challenges.

Those solutions often involve third-party vendor solutions that must integrate with the core LOS platform. Mortgage banking is fortunate to have competing vendor solutions allowing price and suitability issues to meet those corporate objectives.

Q: How does an organization accomplish these goals of efficiency and integrated technology as a solution to tightening profit margins?

A.R. SMITH: A strategic focus and desire by the organization to diagnosis their workflow, systems and people that results in action plans for transformation change within the organization is needed. It is often difficult for an organization to do this process on their own because of lack of time and knowledge or because of high loyalty to existing employees who may be blockers to the much needed changes.

I tell clients that often a consultant is like surgeon. You may have back pain and try to resolve the pain through drugs, cold packs and targeted exercises. However, you often cannot fix it yourself, it requires the expertise of a surgeon to diagnose the underlying issues and set a plan of action for a full recovery, which requires change in our behaviors and willingness to accept the advice of the skilled surgeon. Often organizations try to resolve their technology and efficiency issues, but cannot get to the core issues without the assistance of a skilled consultant who diagnoses the core issues and can make recommendations for those transformational changes.

It is critical that the consultant is strategic and conceptual and has prior executive management experience in integrated processes in all aspects of mortgage banking. All aspects of the company need to be examined, including sales, operations, secondary, accounting, funding and servicing. In addition, the consultant should be able to provide assistance in execution through multiple disciplines in sales, operations and technology. I believe it is a good time to invest in technology and operational efficiencies to increase profit margins and prepare for the growth in origination in the next 2-5 years.

Industry Predictions

A.R. Smith thinks:

1. Mortgage banking will need to employ continued vigilance around meeting regulatory requirements and documentation of those policies, procedures and systems, which are critical in responding to the regulators.

2. Strategically deployed technology will drive operational efficiencies to compete in today’s market.

3. Mortgage banking will need to continue to introduce innovative technology solutions to the new generation of borrowers who are Internet savvy.

Insider Profile

A.R. Smith is President/CEO at AR Consulting Partners LLC. She is an experienced executive consultant with over 25 years in mortgage banking, which includes all aspects of originations, operations, servicing, secondary marketing, human resources and technology. She has a proven track record in creating systems and models to achieve an organization’s strategic objectives, with an emphasis on applying technology and human talent to complex solutions.

This Is The Moment

We all draw inspiration from different sources. A lot of my inspiration comes from my kids. I have two boys and I am a VERY proud Dad. It’s cliché to say that my kids make me a better man, but they really do. So, what’s happening in my family now worth sharing here with you? My older son is getting ready to audition to be in his first musical.

For me this is a particularly special moment. Why you might ask? As a boy my grandmother would take me to a different Broadway musical every year for my birthday, so I love musical theater. To see my son up there performing would be just amazing to me. But first comes first, he has to get a part. So, we’re trying out different songs for his audition. There’s a song called “This Is The Moment” from Jekyll and Hyde The Musical that I think would be perfect. It starts like this:

This is the moment!

This is the day,

When I send all my doubts and demons

On their way!

Every endeavor,

I have made – ever –

Is coming into play,

It’s here and now – today!

This is the moment,

This is the time,

When the momentum and the moment

Are in rhyme!

It’s an inspirational song about seizing the moment and realizing that now is the time to act. I know you’re asking: What does this have to do with the mortgage space? I see my son working hard to achieve his goals, in this case getting a part in a play, and I look back at a lot of the lenders active today and I ask myself: Why aren’t they doing the same?

Back when Fannie Mae published its electronic mortgage specifications a lot of us thought within 10, maybe 15 years, everyone would be doing e-mortgages. It hasn’t happened. Why? Because lenders are reactive and in most cases resistant to change. In this month’s Lending Laughs Cartoon you see a lender being dragged into automating. The statement made by the cartoon is sad, but true.

Most of us expected lenders to move on their own toward a more automated process because of the clear business benefits, but sadly that is not what happened. Now because of government mandates and a barrage of new rules, more and more lenders are realizing that they have to automate in order to just maintain compliance and still be profitable. As the song and the title of this article suggest, I guess now is the moment. Personally, I just think that it’s sad that the government had to intervene to get the industry to act.

About The Author

[author_bio]

Magazine Feature: A Balancing Act: People And Technology

*A Balancing Act: People And Technology*
**By Barbara Perino and Rebecca Walzak**

balancing-story***Wikipedia says: The word technology refers to the making, modification, usage, and knowledge of tools, machines, techniques, crafts, systems, and methods of organization, in order to solve a problem, improve a preexisting solution to a problem, achieve a goal, handle an applied input/output relation or perform a specific function.

****Businesses small and large need technology to thrive, survive, and be efficient. Technology allows businesses to grow and expand across countries by giving them the strength to spread their wings. Growing businesses create employment opportunities for people through technology. Technology has changed the way people communicate. Communication systems have evolved from pigeons carrying messages, pony express, telegraphs, telephones, e-mails and now instant messaging and social media. The role of computers and the Internet in education has made learning more interesting. Computers enable better storage (now through the Cloud) and presentation of information. Lectures and lessons can be uploaded on websites, as PDFs, and more and more common – through videos. Online degrees and training courses give flexibility to people’s schedules. Mobile communication is the fourth generation of technology through smart phones, tablets and cellular networks.

****At the heart of every piece of technology is automation. Technology automates the most complex of processes – communication, education, medicine, and in the mortgage industry through the ability to analyze risk, share data, approve loans, make collection calls and obtain external data in a matter of seconds. With the application of technology, critical and time-consuming processes can be executed with ease and less time. Laborious and repetitive tasks are completed by machines including robotic equipment. With automation comes efficiencies and speed.

****Remember back in the 90s when the mortgage industry relied on a bank of fax machines to process documents? How about the Motorola mobile phone that was as big as a small appliance. People out in the field would have to lug them into their cars and find a place for the machine to sit on while in use. Remember the boxes and boxes of files that would accumulate and then have to be stored in a storage room or sent offsite to a remote storage facility? Now files are scanned into a computer and stored remotely in the cloud and can be accessed anywhere by the simple click of a mouse. The mortgage industry hasn’t quite embraced the “paperless” environment quite yet but it’s heading in that direction. But … what about the “people” in the industry? Are they now just data pushers, intermediaries between parts of the technological elements of what we do? Who are we talking about when we say mortgage “people”?

****People Are More Important Than Technology

****One description of what “People” means is: “The body of persons who compose a community, tribe, nation, or race; an aggregate of individuals forming a whole; a community.”

****We can never forget the importance of the people in the organization regardless of how automated and technology savvy a company is. Someone has to oversee the processes, systems, communicate with each other, with customers, with clients and vendors. The people behind the scenes, operating and running the organization are by far, the most valuable resource the company has to utilize. The leaders, sales people, operations, managers, IT staff, customer service staff, support staff, etc., no matter what their jobs or responsibilities are they each play a very important role. Because of them the organization could not run efficiently or successfully. Their roles are essential to the effective and successful operation of the organization. The leaders set policy and create the culture and direction of the company. The sales people create new opportunities and strengthen the relationships with the customers/clients; the operations folks make sure the work gets processed in a timely and efficient manner. Management is responsible for creating an atmosphere of cohesiveness, making sure everyone is doing their jobs effectively and gives guidance when needed. The IT person/staff make sure the computer systems and platforms are updated and are constantly working properly. Customer service makes sure the client/customers products and services are being completed and are happy with the organization’s services. HR is responsible for hiring, firing, counseling and supporting the staff through policy and guidelines and protecting people where it’s needed. Support staff, the receptionist and the assistants support the workflow and communication within the organization.

****People are an invaluable resource or the “brains behind the technology.” There are some who come up with new ideas, develop new products, and devise new ways to handle different situations and problems, based on their own experience, through brainstorming, knowledge and various perspectives. These people (and a company should be open to listening to any one employee no matter what their position) are the ones who are responsible for helping the organization progress and come up with newer more innovative ideas. Without people, an organization has little to no chance surviving. Organizational leadership needs to take special care to ensure their employees, no matter what their role is, are satisfied with their work environment. People are the backbone of every organization and play a major role in the success or failure of an organization. Many, both in our industry and in others as well, caution those that are over-enthusiastic about the seeing and using technology as the all-encompassing means to corporate and personal success. Based on the emergence of recent organizations, some seem to be listening to their concerns.

****For example, the new company, Direct Valuation Solutions (DVS) heard the reports of numerous people regarding how automation in managing appraisals was creating a frustrating environment for obtaining appraisals and resolving issues and concerns. In response, they have launched their program that supports stronger relationships between appraisers and lenders. Utilizing the DVS platform, lenders can compliantly communicate with appraisers through the system. The system allows them to engage in conversations, communicating on various status milestones and to share questions and answers directly. All interaction is also tracked for auditing purposes. Mike Ousley, CEO of DVS shared, “We put people together, building strong relationships. We want to create a good experience for the borrower dealing with the appraiser and to allow better dialog with the appraiser and the underwriters. More times than not, the appraiser is treated like a number, paid poorly and discounted for the value they bring to the transaction. We want to change this perception and provide a higher quality experience for the lender and borrower as well.”

****Remember Millennials (Generation Y folks) and Technology?

****It is going to be very important going forward for companies to instill the value of establishing and maintaining relationships in the workforce through connections and human communication to the younger generations who are very comfortable communicating in the world of social media, text message and email. Yes, these modes of communication are efficient and convenient but they don’t take the place of relating to a human being. There is a perfect opportunity for the Baby Boomer generation in companies to build that bridge between the two as boomers are really good at relationship building. It will be up to leadership and management of companies to create the balance.

****Jeff Wuorio shared seven strategies in a blog on Microsoft’s Small Business website. He said “Recognize that balance works for your business – understand the differing dependencies on people and technology.”

****>> Find your balance and inform your employees – hiring the right kind of people for your culture. If your company is people centered, hire people who value interaction. If you are heavy on a technology focus, hire people to love to come to work and do nothing more than write code or interface with data all day.

****>> Technology shouldn’t exist just for the technology’s sake. Technology should be a means, not an end. Be sure of the outcome you expect from the new technology – monitor it at specific milestones to make sure you are on the right track.

****>> Follow up with training – commit resources so people can get the most out of new technical systems or products. Comprehensive, detailed training to make certain everyone is as comfortable as possible.

****>> Technology and people aren’t necessarily mutually exclusive. Leveraging technology such as personal online contact for employees working remotely is efficient and it brings parties together to share.

****>> Recognize the value of technology – approach technology as an attractive workplace element, which is particularly important for younger people who may place great emphasis on the latest technologies.

****>> Want to know if the balance is work?  Ask. Never assume that your perception of what’s happening naturally translates to an ideal tech/people balance. Ask your employees how they feel. Is the new technology a boon or a hindrance to their productivity and satisfaction?

****While we must continue to make progress in technology, the people part of the equation cannot be ignored.  It would be wise for anyone integrating technology and people to “Remember the 80/20 rule: if 80% of your clients and employees are happy about the system, you’re on the right track. If only 20% are happy, you may have some tweaking or re-thinking to do,” concluded Duperval.

Magazine Feature: The Audacity Of Change

*The Audacity Of Change*
**By Claire Hernandez**

big-claire***As the mortgage industry and economy begin to recover, lenders are increasingly reevaluating their technology options. According to a QuestSoft survey of 461 lenders nationwide, 18.7 percent of mortgage lenders are considering changing their LOS in the next 12 months. This is the highest percentage looking to switch in the six years QuestSoft has been conducting its annual survey.

****Change is not always a bad thing if it is handled well. Making the transition from a system users are comfortable with to a new system is not an easy process. The keyword here is “process.” The process involved in rolling out a new LOS involves many tasks, communication, decision-making and most important leadership. Whenever you engage in any activity where a certain outcome is expected, a degree of planning must take place and someone has to take the lead in determining what is needed to achieve the outcome. The first step to take when planning a new LOS rollout is to assign a Project Manager. The second step is to appoint a key representative from every department representing the loan process and form a team to assist the Project Manager in planning, organizing, tracking and steering the transition to the new LOS.

****Many mortgage companies don’t fully realize the role of the project manager. The expectation is that they can outsource the entire project and the project manager will implement the new LOS system without disrupting or involving staff resources. I often hear: “We are really busy right now and need someone to get the new system up and running.” Rolling out a new LOS requires the company’s owners and its upper management spending time up front building a plan with the Project Manager, defining timeline, business requirements, key resources available and setting controls. From originations to shipping, assigning key resources within the organization will help build the plan to deliver a new system that best fits the business needs. The Project Manager is responsible for delivering the new LOS by tracking, monitoring tasks and ensuring communication of progress or setbacks.

****The task of the leader is to get his people from where they are to where they have not been, said Henry Kissinger.

****The leader in a new LOS implementation project starts with the company’s owners. If all owners do not buy into implementing the new system 100% and proceed with rollout, conflict during the project will arise. Think about it, what user is ready and willing to start using a new system that will entail re-training? I have not met one yet, except for new hires during the implementation phase. New hires are great since they are just happy to be on-board at a new company and pose no resistance to change. When resistance arises among users, the Project Manager needs the support of the company owners to re-emphasize that there is no going back, we must work together to move forward.

****In all my first meetings with a mortgage company’s upper management, the very first question I ask is: “Are you all on-board with implementing the new system and do you have key people I can count on to help bring about the change?” I do not hide the amount of work or time involved and I stress the need for upper management to be involved. I have never had a response of “no we are not on board.” Most are eager to start and want the system deployed yesterday. Sound familiar?

****One clear example of a project gone wrong was one where one of two partners was not fully on-board. He was not comfortable replacing the system he knew despite knowing the system he was working with was not a good fit for growth. I knew this going in but he said he would support efforts to rollout the new LOS. My intuition told me to not to proceed with the project without 100 % buy-in from both partners and I learned I was the company’s second Project Manager. Nonetheless, I pushed forward and worked with key staff members assigned to the project. We hit many walls on discussions concerning business rules and compliance. However, we worked together and got to the point of testing.

****This is where the project fell apart. We were testing wholesale loans, the program had unforeseen limitations, I needed consensus on workarounds and the resources assigned to run test loans were backed up with work and wanted to go live with new system without my direction or testing. I was forced to fire out a memo to owners calling for controls and in the end the project had to be put on hold. Both partners opted to stay in the old system until production slowed down. Their decision was a huge disappointment. However, it would have been a losing situation to rollout a system not ready to go live. More work was needed and time was not an available resource.

****Users need to know from the leaders of their company that the new system will be implemented within an expected time frame and that their cooperation and participation is expected and required. Any roadblock or setbacks must be worked out and not used as an excuse to halt the project. If users do not see a consensus among the company’s leaders in rolling out the new LOS, they will resist the change and seek support from the company leader not on-board with implementation. When employees resist, owners must step in and enforce cooperation. This project’s outcome may have been different if the owners would have assigned more users for testing and pushed forward. Instead, roadblocks got in the way and the path of least resistance was chosen. If the project had had 100% buy-in, we would have worked through the bottleneck at the testing stage.

****Communication is key to rolling out a new LOS. The example above provides you an illustration of how a breakdown in leadership and the lack of communicating commitment to staff caused the project’s demise. No matter how good the Project Manager is, that role alone cannot make the change happen. I have had many successful rollouts of new LOS systems at mortgage companies, as well. One company stands out above all. All five partners bought into the project 100% and made sure their staff knew it.

****Do you all recall January 2010? Anyone in the mortgage industry knows the date well. Initial Disclosures now had timelines and there were new regulations enforcing compliance. The definition of what was considered an application and when to disclose was the hot topic in management meetings, at this one company, four months prior to January. The company’s owners had long considered switching to a new LOS, which would help streamline their business, but never found the time to put their thoughts into action. All five owners agreed that if there business was going to continue, they had to adopt a system which would help them monitor loans, generate accurate reports, interface with investors and major service providers, go paperless and maintain compliance. When the new system was selected clear timelines were set for planning requirements, setup, testing and training. The staff’s full cooperation was expected.

****In this case, all the managers were made aware of the deadline set and made the time available for meetings. If they were not available, they would send a second in command. Every department from Opening to Shipping provided input pertaining to business requirements. Going paperless led to some revolt in the group, in particular processing and post closing were not too happy with the way trailing docs were tracked in the new system, but we all knew our timeline of January 2, 2010 and no one pushed for delays. In four months’ time, the new system was configured, tested, users trained by managers and the company went live. The timeline set for this project was realistic, the owners communicated goals and required all staff’s cooperation, resources were managed and best of all testing was a communicated priority for everyone involved from receptionist to shipper.

****In order for a project manager to be effective, they need the support of upper management, full resources and access to critical employees/managers. Together the lender and a good project manager can configure a system to automate their business flow. A good process should start with all of the critical stakeholders working with the project manager. The project team needs to set controls on changes during implementation. The Project Manager needs to make sure that someone follows up with something that may or may not be working right. Employees can’t say that they don’t have time to work with the project manager or to learn the system after implementation. Further, once the system is implemented, there needs to be an evaluation period where an assessment is made as to whether or not there is a need to change the current course of action or whether or not to continue moving forward.

****You are always going to encounter some resistance. People will constantly say, “I do it a different way.” Remember, the point of implementing a new system is to streamline how you do it normally. Every bit of resistance has to be addressed and overcome. How does that happen? When everyone knows that they can’t stop the implementation and go back.

****The biggest opportunities for lenders to ensure success and growth moving forward are to make the time to plan for change. Don’t be tempted by outsourced service providers promising packaged solutions with quick turn times. Take the time to document, communicate, configure and formalize good practices so that your business stays in compliance and continues to grow.

****Change sometimes takes audacity. What do I mean by that? Audacity is defined by Webster as “intrepid boldness.” In order to change a process that has literally been in place for years and years, you have to be bold. With all the regulatory changes in particular, only the courageous lenders that have the boldness and audacity to change will survive and thrive.