Sustained Winds Of Change To Continue


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

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

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

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

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

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

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

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

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

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

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

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

About The Author

Paul Wetzel

Paul Wetzel has led Product Development and Product Management activities through most of his 20-year enterprise software career – over the last 10 serving the Financial Services industry. In his current role, Paul manages both customer and industry requirements to drive product enhancements while also ensuring Mortgage Cadence leads the way in innovative loan origination technology. Paul began his career with Accenture in software development where he rose to the level of Director, Business Development for an Accenture subsidiary. Before joining Mortgage Cadence in 2009, Paul spent several years with FICO in product marketing and corporate strategy roles.

The Roundabout Mortgage Process


TME-RGudobbaLast month I talked about embracing change and why we are so uncomfortable with change. We like to stay in our comfort zone. We are slow to adapt, but once we understand the proposed change and recognize the benefits, we can’t change fast enough. Let’s look at an example outside the mortgage industry.

Traffic circles have been part of the transportation system in the United States since 1905, when the Columbus Circle designed by William Phelps Eno opened in New York City. Subsequently, many large circles or rotaries were built in the United States. The prevailing designs enabled high-speed merging and weaving of vehicles. Priority was given to entering vehicles, facilitating high-speed entries. High crash experiences and congestion in the circles led to rotaries falling out of favor in America after the mid-1950’s.

The modern roundabout was developed in the United Kingdom to rectify problems associated with these traffic circles. In 1966, the United Kingdom adopted a mandatory “give-way” rule at all circular intersection, which required entering traffic to give way, or yield, to circulating traffic. This rule prevented circular intersections from locking up, by not allowing vehicles to enter the intersection until there were sufficient gaps in circulating traffic. In addition, smaller circular intersections were proposed that required adequate horizontal curvature of vehicle paths to achieve slower entry and circulating speeds. These changes improved the safety characteristics of the circular intersections by reducing the number and severity of collisions. Thus, the resultant modern roundabout is significantly different from the older style traffic circle both in how it operates and in how it is designed.

In the United States modern roundabouts emerged in the 1990s. They faced some opposition from a population mostly unaccustomed to them. Americans were confused about how to enter and especially how to exit a roundabout. By 2011, however, some 3,000 roundabouts had been established, with that number growing steadily. Surveys show that negative public opinion reverses as drivers gain experience with them. A 1998 survey of municipalities found public opinion to be 68% opposed prior to construction; changing thereafter to 73% in favor.

The fundamental principle of modern roundabouts is that entering drivers give way to traffic within the roundabout without the use of traffic signals. Traffic circles typically require circling drivers to give way to entering traffic. Generally, exiting directly from the inner lane of a multi-lane roundabout is permitted, given that the intersecting road has as many lanes as the roundabout. By contrast, exiting from the inner lane of a traffic circle is usually not permitted without first merging to the circles outside lane. Roundabouts have been proven to safely decrease traffic delays and congestion. When selected and designed correctly, roundabouts can handle a high volume of traffic, including commercial trucks and large emergency vehicles. The single greatest benefit of roundabouts is that they eliminate perpendicular/T-bone crashes. Roundabouts can cost less than traditional signalized intersections.

So, how does this relate to the mortgage industry? Let’s start by looking at a condensed view of the current loan process. It typically has been a sequential process with the next step not started until the previous step is completed. Look at it this way:

  1. Origination: After the loan application, we start the process of validating the information, ordering the services, such as appraisal, flood, credit report, and underwriting. We produce the appropriate disclosures and the new loan estimate. Assuming the loan is valid and approved, we move to the next step.
  2. Closing: We produce the appropriate legal documents, such as the note, security instrument and the new closing disclosure in collaboration with the settlement agent. We schedule the signing ceremony with the consumer(s).
  3. Post-closing: We record the security instrument at the county, register the note at MERS (assuming it’s an e-mortgage). Lastly, we sell the loan on the secondary market, if it is not retained in-house.
  4. Servicing: Set up the loan for servicing, either in-house or to an outside servicer.

I realize this is a very simplified rendition, but what stands out is the interactions between the consumer, lender, loan officer, numerous service providers, closing agents, investors, county recorders, servicing, etc. and the documents and/or data that is exchanged.

So let’s use our creativity. Imagine the loan process as a roundabout. The center could be the repository and system of record. The parties in the process would be represented as lanes connecting to the center. The road in would be the request and the road back would be the response. The lanes around the center would serve as the link between the parties.

This is very IMPORTANT. This architecture is predicated on the full use and compliance with the MISMO V3.x standards for data and documents. The data is essential for the receiving party to electronically analyze, validate and make decisions based on the result. Documents by themselves may require some manual intervention. The ultimate goal is when the data and documents are combined (SMART documents). Let’s look at the contributing parties and what might be different with this architecture.

  1. Consumer: Today’s consumer wants to do business online. They want the capability to research and understand the mortgage process. They want to analyze and compare the metrics of different loan options. The robustness of the lender’s offering will either ensure a loyal customer or lose him to a competitor.
  2. Lender: As more of the processing functions (appraisals, verifications, etc.) are automated, the lender should see a significant reduction in the time and effort to approve a loan application.
  3. Service Provider: The advantage of the request/response model based on the MISMO standard is that you can access multiple vendors with the same integration.
  4. Settlement Agent: This will be one of the most challenging areas for collaboration between the lender and settlement agent. It is imperative that they get it right.
  5. County Recorder: The volume of eRecordings and eNotarizations will continue to grow. 20% of the counties account for 80% of the transactions. The challenge is with the other 80% of counties. A paper process will probably be in effect for some time.
  6. MERS: The adoption of the earlier MISMO V1 Smart Doc has been slow due to the unique characteristics of the document compared to the other documents in the loan package. Hopefully, MERS and the GSE’s acceptance of MISMO V3 documents will improve adoption considerably.
  7. Servicer: They have struggled in the past with re-finances. Having a complete loan package available and a connection back to the origination process will improve that process.
  8. Secondary Market: The investors are anxiously awaiting the ability to get a data-laden loan package so they can independently analyze the loan before making a purchase commitment.

I did not address the LOS vendors in this scenario, but it’s conceivable the same process could be accomplished in their solutions. See what I mean? I bet you never thought to compare our business to traffic. My point in writing this is that we have to all think differently about this process if we are ever going to improve it.

About The Author


Roger Gudobba

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

Magazine Feature: Managing People During Change

*Managing People During Change*
**By Barbara Perino and Rebecca Walzak**

shutterstock_89543446***Change is natural and necessary for companies and organizations to survive. And I daresay, the mortgage space has dealt with a continuous process around change for nearly five years. Now there are new rules, regulations, government implementation of policies and procedures, mergers and acquisitions. During periods of significant change, people experience very high levels of uncertainty, negativity, anxiety, stress, and fear. Their behavior can become unpredictable, sometimes a bit irrational and their morale, motivation and productivity can be affected.

****When change is being implemented, leaders and managers typically focus on the systems, processes and outcomes of the business but fail to understand the emotional impact on the people/staff. If employees are equipped both emotionally and physically to deal with change effectively, negative impact is reduced significantly. When people are supported and well prepared properly, they are more adaptable, resilient and able to stay more positive and proactive when it comes to doing something differently.

****For example,a large bank was downsizing an entire division including shutting down the facility. Management and leadership was relocated to a more central location in another state and the division being downsized, (hundreds of people) were literally on their own except for a couple of line managers and email and telephone communication being sent from the out of state office. Fear, frustration, anger, sadness, stress were feelings that were present for a lot of people, many of whom had been with the bank for 25+ years. The downsizing process was done over a period of six months, department by department. The people, who stayed to the end, did so to be able to leave with a compensation plan offered them. At the end, they simply finished their day and left. How could this transition have been handled differently? The existing managers could have been instructed to hold weekly short meetings with their staff for updates, check-ins and to be there as support for them allowing people to vent and make the transition a bit more tolerable. Upper management could have flown in for the last day to acknowledge those who were left, thank them for their service and wish them well.

****In another case an organization was going through major changes in leadership and processes. The mid-level managers (11), many of whom had been with the organization for 10+ years were not given any guidance on changes being implemented or notices that people were leaving or being transferred to different parts of the organization. The feelings of lack of trust, fear, frustration, anger were very present and it trickled down to the staff. Communication was severely lacking at all levels, which impacted the effectiveness of the organization. The new CEO knew something had to change and brought in coaching for her management team. This allowed for the company to offer clarity as to what needed to change, the definition of what their roles were and through brainstorming, the coach offer a way for the company to create ways to improve the culture, communication and buy-in of the organization’s mission.

****In the start-up phase of new companies, it’s common practice for everyone on board to gather together regularly and celebrate victories, talk about challenges and focus on the future. When companies start growing, increasing staff and expanding, often times leadership and management get so busy that they forget the importance of communicating, getting to know people, allowing others to offer suggestions and new ideas, etc.

****Managers play a key role in helping people deal with change. If the people feel listened to, valued, and empowered they are more motivated to produce, engage and be effective. The end result is less stress, less absenteeism, better job performance and the company’s service levels are maintained, despite the worries and upheavals that change creates.  So how can managers engage staff during change?

****Self-Management. Managers have to be managing their own feelings, thoughts and actions first before they can help others. Managers need to ask themselves how they deal with change; do they have any concerns about the changes; and how positive are they during transitions? Are they angry or upset; a target for blame and criticism from others? It’s essential that management is able to understand and manager their own emotions so that they don’t cause a negative impact on the people around them they influence.

****This doesn’t mean they are denying their feelings or are being superficial. By managing their emotions, they are behaving in such a way that they can put their own feelings aside so that they don’t cause damage to others. This is very hard for some people but important to understand and practice. How they manage this determines how they affect others.

****People will need to feel that they can trust management and rely on management as the steady rock during the change process. Management needs to manage their own thoughts, feelings, behavior so that they are cool, calm, collected and objective.

****Understanding Others. It’s vital that management understand and acknowledge people’s emotions. It’s important to learn to listen to people and take time to understand their specific fears: What are they concerned about? How strongly do they feel about what is happening? What is their perspective of the change—is it a good or bad thing?

****Everyone is different, so management cannot judge people by their own reactions to change. Things they don’t consider stressful or worrisome may be really scary for others. Empathy and understanding to the feeling and perspectives of others is really important. Management can really help people by being open to conversations on concerns, fears and allowing people to articulate their reasons for these. Not being critical or disagreeing is something to practice. Simply listening, acknowledging and asking open-ended questions is sometimes what people need the most.

****Range of Emotions. People follow an emotional path when dealing with significant change very similar to many life issues. The more managers understand this, the easier it will be for them to relate to how people feel. The feelings range from shock, denial, anger, frustration, depression, to bargaining, acceptance, moving on. It’s important that people know management cares; keep giving them information and updates that can be shared.

****And most importantly, managers need to be the guides and navigate people safely through the changes into the future. Involve people as much as possible so that they feel they have some control over change, which in turn will help reduce their stress, frustration and resistance to change. Managers need to be very clear and honest about the limitations of their own roles and influences. Get comfortable standing firm on what can and can’t be changed but communicate clearly to people, and it should be done in a non-confrontational style of conversation.

****Management needs to share with people what is not changing. This gives people one less thing to worry and stress over and it also gives them an anchor, something to hold on to in the face of uncertainty and change.

****Communicate, communicate, and communicate. Management has an essential role in helping people to understand. People want to know what changes are happening, when it will happen, how it will impact them and why (why is it happening now? why can’t things stay the same? Why is this happening to me?)

****As early as possible, define the change to staff in as much detail as you are allowed. Keep providing updates as things develop and become clearer and tell people what is going on. Rumors and innuendo can proliferate and can be extremely harmful, effecting morale. Being proactive in seeking or clarifying information for yourself is very important so that you can correct misleading information (misinformation) and address rumors before they blossom.

****Self-Care. Change is stressful for everyone, including managers. Management is probably struggling to accept the changes themselves and because they bear a huge responsibility to help implement the changes, they could feel torn between supporting staff and implementing directions from above. They may feel anger and criticism directed at them, and because of this, experience high levels of stress. It is therefore essential that they look after themselves. Managers need to figure out how to be mentally strong, emotionally resilient and physically healthy. Eating healthy, drinking lots of water, reducing alcohol and caffeine intake, getting proper sleep, exercising and using simple relaxation techniques make a big difference. They also need a support system possibly from a peer, a leader, colleague, friends and family.

****Harvard Business Review published an article by Rosabeth Moss Kanter – “Ten Reasons People Resist Change.” The article states that leaders need to understand the predictable, universal sources of resistance in each situation and then strategize around them. Her list of the most common resistance types are:


  • Loss of control – allow choices; invite others into planning and ownership
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  • Excess uncertainty – fear of the unknown needs to be dispelled
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  • Surprise, surprise – it’s better to plant seeds, sprinkle hints of what might be coming and seek input
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  • Everything seems different – wherever possible keep things familiar
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  • Loss of face – celebrate those elements of the past that are worth worry around skills being obsolete honoring but the world has changed
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  • Concerns about competence – over-invest in structural reassurance, providing abundant information, education, training, mentors, support systems
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  • More work – reward and recognize participants if there is more work
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  • Ripple effects – must consider all affected parties and work to minimize disruption
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  • Past resentments – heal the past before sailing into the future
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  • Sometimes the threat is real – be honest, transparent, fast and fair

****Diagnosing the sources of resistance is the first step toward good solutions. And feedback from resistors can even be helpful in improving the process of gaining acceptance for change.

****We win half the battle when we make up our minds to take the world as we find it, including the thorns,” said Orison S. Marden.

****Managers can’t waste time and energy wishing people were more predictable, rational, positive, etc. Instead they need to focus on opening and maintaining clear channels of communication with staff, so that they themselves understand what is coming; what it means to them as managers and how it will impact them as managers. Staff will appreciate management for it and will thus be more productive before and after the change(s).

First, Barbara Perino is Director of Business Development for Direct Valuation Solutions a new cloud based technology platform that is designed to streamline and enhance the appraisal fulfillment experience. Barbara has 23 years of extensive sales and sales management experience along with operational knowledge from all facets within the residential property valuation industry. She is also a professional certified coach. Second, Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry, founded and leads rjbWalzak Consulting, Inc. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.