Fiserv To Acquire The Assets of PCLender

Fiserv has acquired the assets of PCLender, LLC, a leader in next generation enterprise internet-based mortgage software and mortgage lending technology solutions. This acquisition will enhance the Fiserv suite of mortgage origination services, which enable Fiserv clients to deliver the experience today’s consumers and mortgage lenders expect. Financial terms will not be disclosed.

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

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

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

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

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

Integrations Should Help Real People

We hear a lot about new technology integrations. They always talk about new functionality. That’s great, but these integrations should also be geared at helping actual borrowers. For example, Fiserv signed an agreement with CoreLogic to integrate its IntelliMod loan modification decisioning tool with LoanServ, a comprehensive servicing platform.

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“Facing default is a truly distressing situation for a borrower,” said Joe Dombrowski, director of product management, Lending Solutions, Fiserv. “The integration of LoanServ from Fiserv with CoreLogic IntelliMods enables a servicer to quickly – in real time – and accurately evaluate borrower information and present the appropriate loan modification package, thereby reducing default risk and greatly improving borrower interaction.”

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Loss mitigation demands rigorous adherence to federal requirements, and the integration means faster processing of information necessary for a rules-based analysis of workout options, including compliance with Fannie Mae and Freddie Mac requirements. Once the user selects the modification profile (term extension, rate or principal reduction), IntelliMods delivers a decision in a matter of seconds. With the integration of the IntelliMods decisioning tool from CoreLogic into LoanServ, Fiserv clients can now upload, qualify, process, route to borrowers and track loan modifications at an accelerated rate, trimming days off of the process. Follow-up of terms can be automated as well.

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“As a result of this integration with Fiserv, the CoreLogic IntelliMods platform enables servicers to take advantage of unique capabilities that provide real-time loan decisioning for Fiserv customers” said Sapan Bafna, vice president, advanced delivery engines, CoreLogic. “IntelliMods helps reduce the workload and risk associated with the evaluation of workout options, and provides further add-on solutions for data append, property ownership reports, title reports, compliant document generation, e-delivery, e-sign and recording services.”

Once approved, IntelliMods instantly generates the appropriate modification package, which can be sent to the servicer’s production house for printing, assembly and shipping or to FedEx for printing and overnight delivery to the borrower. The FedEx option includes a pre-paid return envelope and incorporates the outbound and inbound tracking numbers into IntelliMods, allowing servicers to track the package process through recordation.

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

New LOS Aims To Increase Efficiency

Fiserv has launched LoanLaunch,  formerly known as Common Origination Platform. LoanLaunch from Fiserv provides the framework for enterprise loan originations on a single platform. The solution supports consumer, business, mortgage and equity loans, giving lenders a holistic view of borrowers across all channels and products. This exclusive capability enables  greater transparency across departments, customers and business processes and allows lenders to originate and close more loans with fewer resources.

“LoanLaunch reflects our deep commitment to technology to address the credit needs of today’s borrowers, as well as our vision of delivering the next-generation lending experience,” said Kevin Collins, president, Lending Solutions, Fiserv. “LoanLaunch is a powerful solution that offers financial institutions greater control over their lending decisions, more flexibility to address product, policy and regulatory changes, and support that meets changing consumer expectations of customer service.”

As the new name suggests, the solution allows lenders to respond to continually changing business needs and easily “launch” new opportunities within the organization to address increasingly diverse borrower segmentation. With LoanLaunch, the power is in the hands of the lender through its optimized control over virtually all retail and business origination operations.

“As the complexities of lending evolve, LoanLaunch will give financial institutions the breadth and depth they need to respond to the needs of their customers, backed by Fiserv associates who are passionate about providing value to our clients’ businesses,” said Collins. “Fiserv continues to invest in a development strategy that focuses on supporting every step in the lending process. LoanLaunch is a key component in our plans to expand interactive customer relationships via broader, more digital product delivery and communications channels.”

Whatever the size or make-up of a financial institution’s loan portfolios, Fiserv provides solutions that allow lenders to react more quickly to changing markets and consumer expectations. Fiserv is the only company that offers a suite of products that support the full spectrum of lending: mortgage, home equity, consumer, business, direct auto, and indirect auto.

What Does The New CFPB Servicing Bulletin Really Mean?

The Consumer Finance Protection Bureau just released its Fall Supervisory Bulletin. It is the first bulletin released since the new Mortgage Servicing rules went into effect on January, 10. The CFPB in speeches, updated communications and in its Flagstar enforcement action has been consistent with the themes of – “Consumer Protection FIRST,” especially in sensitive processes like Loan Transfers and Loan Modifications. Here’s what you need to know:

According to a source at Fiserv, what is required to comply is “documenting the documentation and documents” to show evidence of compliance to the all of the servicing rules. This Bulletin is especially meaningful for its consistency with prior themes and its clear statements that bring clarity on what Examiners find acceptable practices in some of the grayer rules areas. And what the Examiners point out as flagrantly non-compliant findings. Here are some standout items that a source at Fiserv says are of particular note:

Supervisory observations – Good News!

Anyone in the Mortgage Servicing Industry knows that non-bank servicers have been under a heightened level of scrutiny. The Supervisory observations actually have good news regarding what they have found as they have examined these Servicers and point out what they like to see- increased compliance resources (FTE’s & technology), organizations structured to respond to compliance needs, active board level review and related to compliance and self-remediation. These CFPB statements are good news for the industry and indicate that the Bureau is noticing that we ARE taking the CFPB rules, exams and requirements seriously and making them part of our servicing culture.

New Mortgage Servicing Rules – Good News and Bad News

First, The Good News– The initial focus in the bulletin on the “New mortgage servicing rules” section indicate that we, as an industry, have made a reasonable first impression on our work related to Policies and Procedures. The CFPB also indicates what they find acceptable, clearly documented policies and procedures and intelligent ways that loan level information can be accessed and provided accurately to the right people. The examiners must see that current Policies and Procedures clearly document, who can access, what they access, when they access and where the access loan level documentation and data resides AND report on all of it. None of this is new info to our Servicing world. With the Bulletin, it is helpful to see in writing what level of detail is expected and that level is very deep.

Now, The Bad News– the second part of this section indicates that policies and procedures related to third party service providers need additional attention in the industry. What is particularly noteworthy is that the CFPB clearly expects that you, as the Servicer, own this relationship and are expected to know even more about the overall process than the service actual provider. The Bulletin indicates the servicer must have detailed Policies and Procedures about oversight, the third party process(es) that was outsourced and that there is documented policy and conduct of audits to your standards. This bulletin item is a “two for one” notice that they expect detailed policies and procedures for ALL process not just in-house ones and that a “robust and regular” third party service provider audit program is not optional.

Loss mitigation – Watch out!

We all know that loss-mit must be done right, documented in extreme detail and likely to be the most sensitive area for review. The Flagstar enforcement action and the Bulletin continue this theme into 2015. This Bulletin section goes directly into critical findings where borrowers (Consumers) were harmed by lenders who practiced unclear and, ultimately, self-serving and deceptive practices. When this is the case these Servicers have earned their enforcement action and must deal with their consequences.

As a takeaway for honest, diligent servicers who do loss-mitigation, the way to avoid the appearance of any “evil” is by maintaining ALL documentation and records about completed applications, ALL client exchanges and ensuring that the time in processes are recorded and associated with the modification documentation involved. This extreme level of documentation, data aggregation and reporting is not an easy task for people or for the typical technology involved. But it is the evidence of compliance that will keep us out of trouble.

We Have Industry Answers – Good News!

It’s becoming clear as we parse this Bulletin, previous Bulletins and even review the original rules in the light of time that the CFPB expects that we, as an industry, accept their oversight role and invest time in skilled people and invest dollars in technology. This is the combination that hardens processes and reduces risks of non-compliance. This requires an industry standard and a technology platform to support it. Good News, a standard “evidence of compliance structure” for the loan record is well under way within MISMO and the technology to support this effort is already available and deployed in the market.

Even Better News, Both MISMO and the Fiserv LoanComplete team are aware that the structure and the technology must augment a servicers current platform and cannot be “rip & replace” of a servicing system or a imaging system. In servicing, our inustry’s end-state vision must be the ability to produce a single (or many) loan records that clearly demonstrate the documentation, dates, versions, checks, audits and reviews that prove your job was completed accurately and by the book.

As adoption of this technology and industry standards accelerates the CFPB will see more and more of what it expects to see in 2015.

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

Exploring The Big Trends To Come

The ENGAGE Event brought to you by PROGRESS in Lending had record RSVPs this year. Despite the tough mortgage market, executives gathered to share their ideas about how to improve the mortgage industry. Here is some of what was said:

Tim-ENGAGE-2014When discussing the new regulatory environment, Michael L. Riddle, the co-founder and managing partner of the Middleberg Riddle Group, a preeminent mortgage banking law firm, noted, “There is a new level of consistency from a regulator that is organized and effective. We some times think the larger lenders have the most trouble dealing with change, but that’s not the case anymore. We as an industry just went through a cycle of huge change and we’re still living with that. Going forward, when we talk about complying with new rules, it’s not just about mechanical change, it’s about improving the whole process and how all the different parties interact.”

“Quite frankly,” added Tim Anderson, the head of DocMagic’s eServices Division. “Lenders are wondering when the next shoe is going to drop. Regulators are going after everyone. Everyone is liable. So, these new rules are forcing fundamental change. What should lenders do? I have one word: ‘e’. I just don’t know how you comply with all these new rules in a paper world.”

Lisa-S-ENGAGE-2014So, what’s next for mortgage lending? According to Lisa Binkley, Senior Vice President at Platinum Data Solutions, “2015 is going to be the year of integration. Vendors are going to have to work more closely together. We’re seeing those talks happen now. There’s lots of interest.”

However, when it comes to implementing new technology, lenders are still going to take things slow. “Lenders are risk averse,” said Lisa Springer, Managing Director, Chief Operating Officer at STRATMOR Group. “As a result, technology vendors have to be more transparent. To the vendors I say: Do what you do best. Don’t try to step outside of your area of expertise. Don’t dilute your focus.”

From the vendor’s perspective, lenders are certainly automating more out of necessity. Kelly Purcell, Executive Vice President, Global Sales and Marketing for eSignSystems, pointed out, “People understand that we’re not just selling technology, we’re selling compliance.”

Jennifer Miller, President of a la mode’s Mortgage Solutions Division, added, “With manual processes, things start to break down. The liability is with the lender so they have to automate.”

Lee-ENGAGE-2014All around, industry participants expect there to be a continued focus on compliance into next year. “Proof of compliance is going to be the big issue in 2015,” concluded Lee Gillispie, Managing Principal, Financial and Risk Management Solutions at Fiserv. “Lenders have to ask if they have the right data, documents, policies and procedures. Beyond that, everything has to be fully documented and executed. So, lenders shouldn’t just automate to be more electronic, it’s about being more efficient and proving that you did what you said you were going to do when it comes to putting together every loan.”


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

Technology To Enhance Customer Service

With an eye on customer service, Freedom Mortgage Corporation, a Mount Laurel, N.J.-based residential mortgage lender, has selected the Fiserv LoanServ platform to expand its in-house mortgage servicing capabilities and enhance the customer experience. Freedom Mortgage will convert its existing loan servicing portfolio to LoanServ to offer real-time servicing, and deploy the LoanLink self-service web portal to enable its borrower customers to access and update their loan information online.

LoanServ from Fiserv provides Freedom Mortgage with the scalability and functionality to achieve greater processing effectiveness, minimize risk, manage client expectations and grow its mortgage business. It will enable the company to service its mortgage loans in-house and acquire new portfolios at a more rapid pace.

“In Fiserv, we found a technology partner with the services and products that meets our needs,” said Carla Wise, executive vice president at Freedom Mortgage. “The LoanServ and LoanLink solutions will help us achieve our growth goals, while delivering exceptional service and a high level of customer satisfaction.”

LoanServ will handle all point-in-time and real-time reporting with flexible fee structures and payment options based on how borrowers manage their mortgage payments. Freedom Mortgage can implement automated loan boarding for processing single or bulk transactions, and use the integrated platform for loan servicing processes, payment collections and default management.

“Freedom Mortgage has a nationwide presence as a full-service lender that delivers outstanding customer service,” said Kevin Collins, president, Lending Solutions, Fiserv. “Our LoanServ and LoanLink solutions will provide Freedom Mortgage with the robust in-house servicing technology needed to support its goals of becoming a national leader in the mortgage arena.”

LoanLink is one of the newest LoanServ options, and allows clients to quickly roll out self-service websites that pull account information directly from the LoanServ system in real-time and enable consumers to access their accounts with 24/7 convenience.

LoanServ is an integrated solution that consolidates support for all retail loan products on a single platform, including mortgages, home equity loans and lines of credit, personal loans and lines of credit, closed-end and revolving installment loans and indirect financing. It integrates all loan servicing processes and automates payment processing, collections, default management, cashiering, escrow, and investor accounting.

All-In-One Servicing Automation

The Massachusetts Housing Finance Agency has opted to use Fiserv’s LoanServ platform to perform all aspects of residential mortgage servicing including new loan boarding, business-to-consumer and business-to-business web-based applications, and the disposition of real estate-owned properties.

The Massachusetts Housing Finance Agency (MassHousing) is an independent public authority that provides financing for the construction and preservation of affordable rental housing, and for affordable first and second mortgages for homebuyers and homeowners in Massachusetts.

“Switching to LoanServ is going to help us deliver on our mission to increase affordable housing options for Massachusetts residents by improving the speed and efficiency of closing, managing and servicing our loans, while minimizing the risk,” said Kevin Mello, director of HomeOwnership Servicing & Operations, MassHousing.

LoanServ from Fiserv is an online real-time loan management system that supports every aspect of a customer relationship and provides valuable insights and consolidated views of customer needs and credit-worthiness to help grow customer relationships. In addition, simplified reporting and regulatory compliance efforts make it easy to satisfy governance policies, while also providing risk analysis and added protection against defaults. The software helps increase staff productivity with process automation and enables servicers to more effectively manage operations because all critical information about each loan is in a central database.

“MassHousing’s selection of LoanServ demonstrates the diverse capabilities of the lending solutions Fiserv has to offer, including the flexibility required by government agencies in their role as stewards of public funds,” said Kevin Collins, president, Lending Solutions, Fiserv. “Quick access to loan information means greater transparency and more streamlined reporting, something that is critical to the GSEs and private investors.”

“Fiserv is proud to assist MassHousing with their loan servicing modernization and to be a part of providing the people of Massachusetts affordable lending,” said Ray Kalyustan, senior vice president, Government Solutions, Fiserv. “Our goal is to ensure that all who interact with the LoanServ solution will have a consistent, easy-to-access and satisfying experience.”

LoanServ from Fiserv is an integrated solution that consolidates support for all retail loan products on a single platform, including mortgages, home equity loans and lines of credit, personal loans and lines of credit, closed-end and revolving installment loans and indirect financing. It integrates all loan servicing processes and automates payment processing, collections, default management, cashiering, escrow, and investor accounting, and the rule-based workflow tools of LoanServ let users define processes according to their own business needs.

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

The LOS Of The Future

You Can Download This Entire Article As A PDF HERE

As other loan origination systems struggle to be all things to all people, Fiserv thinks that it has truly achieved that goal with its Common Origination Platform (COP). The system provides an end-to-end LOS solution that goes well beyond being just a document preparation system. The software is highly configurable and is built with open architecture that delivers efficiencies across business channels. COP supports the origination of mortgage, consumer, home equity and business loans on a single platform. With this solution, lenders can establish their own business standards, including operating procedures, conditions and limits, automating virtually every transaction and promoting consist processes. Lenders also can set compliance requirements and perform regulatory updates en masse without duplicating tasks or keystrokes, which frees up valuable time and resources. How does this compare with other LOS systems? And what does COP have in store for the future to remain cutting edge?Mark Deese, Product Manager for Lending Solutions, Fiserv, answered these and other pressing questions.

Q: How has the LOS space changed over the past five years?

MARK DEESE: The LOS has changed in a lot of different ways. Competition is disappearing due to some vendors closing up shop and others getting acquired. Regulatory items are also taking over as the No. 1 priority. Road maps, regardless of who you are as a vendor, have drastically changed. You have a little less sizzle, in a sense, and more emphasis on regulatory support. I’ve seen is a lot of User Interface changes. The idea that custom or homegrown systems are better is becoming an idea of the past, as well. A lot has changed in the LOS space.

Q: What do you expect the LOS space to look like five years from now?

MARK DEESE: All of the vendors have streamlined. Everyone in the industry is kind of on the same page with what the LOS can do. The look and feel might be a little different, however. The differentiators between LOS players is going to be very different in five years. As I see it the ability to offer a top-quality customer experience is going to set the best LOS players apart. If you think about it there aren’t many different ways to process a loan, and with new regulation, that’s forcing more best practices to the forefront. So, the lender that can offer the customer a better experience and better educate the customer will be the successful lenders. The best technology players will support lenders in this movement.

Q: On a separate, but related note, there have been a lot of LOS mergers and acquisitions. Do you expect that to continue and how do you think it’s impacting the space?

MARK DEESE: My first thought would be to say that mergers and acquisitions will continue, but then I take a step back and think about the lenders themselves. In my view, there were a lot of mergers going on in 2008 and 2009, but that has started to slow down, especially when it comes to the bigger names. So, I would anticipate that mergers and acquisitions might slow down. I don’t think it’ll ever stop, but you won’t see it in the news every couple of weeks.

Q: How critical is keeping compliant and having a good forms /doc strategy to providing a world-class solution these days?

MARK DEESE: I was at a conference recently, and someone was talking about regulations in 2020. Part of me thought that was so far away, but things are moving so fast. The LOS won’t be around in five years if they don’t keep up with compliance and regulations and having that proper document provider in place. It’s great to have the sizzle, the special enhancement, but if you don’t have the underlying compliance and rules in place to manage that system and manage your loans, as great as it looks, if there’s not an engine under the hood of that car, in a sense, you’re not going anywhere.

Q: Rules changes are happening at a staggering pace. How does COP stay ahead of these changes?

MARK DEESE: When we were at MBA Annual last year we were hearing that some vendors were saying that they would not have a solution for their clients ready in the next 30 days to deal with the January changes. That was a scary thought to me. For us, compliance is always at the top of our roadmap. We are always ready. Not only is compliance always going to be at the top of our roadmap, we’ve also started discovery function to look at future regulations. Complying with a new rule can happen in several different ways, but we at Fiserv want it to happen just one way. We want to incorporate best practices, not one-off practices. We always have a plan well in advance and we communicate that to our clients.

Q: What is COP’s biggest differentiator as you see it?

MARK DEESE: COP is one system that can handle a variety of loan types, that’s our value proposition. We offer one system that handles all of lending. When there’s a mortgage update to COP, that update goes across all of a lender’s channels. They don’t have to wait for the home equity update. Everything is in one system of record.

Q: Looking ahead, what technology does every LOS have to incorporate into the core system to stand out?

MARK DEESE: We are always looking to provide the best customer experience. We want to help our lender clients retain their current customer base by offering them other products that they might need. At the same time, we want to provide our lenders the right tools to expand their customer base, as well. You might have gotten a mortgage one place, but a car loan somewhere else. Why? Your mortgage lender should be able to offer you that car loan and it should be a really simple process. As a result, the lenders gets more business from the same customer and that customer leaves happy, which prompts him or her to tell others about their lender.

Q: When lenders ask about the ROI associated with migrating to COP, what do you tell them?

MARK DEESE: It’s one system to manage and maintain. Why is that important? You’re reducing your IT costs out of the gate. We’re finalizing a project on our side with some of our live customers that did a comparison of their prior LOS to COP. We are asking them: Where’s your time and cost savings? What systems did you eliminate that you were using prior? We’re hoping to have those results before the end of the year. So far the results early on have been astronomical. It’s unbelievable to be able to share that real ROI with the industry.

Q: As lenders look to get more purchase business, how can COP help them capture that business?

MARK DEESE: When we think of cross sales, a lot of times the lender is focused in on that one opportunity, but COP gives the users the ability to add on top of that, to add that second loan on top of a first, or maybe a home-equity loan, or a line of credit on top of a mortgage, or whatever. So, COP helps expand on any lender’s current portfolio. In the end, the system turns shoppers into buyers. And we’re not just talking about expanding a lender’s purchase business, we’re talking about expanding every business channel that lender has.

Q: How would you define an innovative LOS?

MARK DEESE: You have to be able to take things like maintenance, support and configuration and make it easy. A system that is able to be aligned with the lender’s business unit, but at the same time breaks down those walls within most financial institutions is innovative. If you are looking for a loan and you already have a mortgage with that company, you should get a streamlined process and the person you’re dealing with should know you. Innovative technology helps lenders achieve this type of process. When you get instantly approved for a home equity loan from your existing lender and they tell you once you apply, “Hello Mr. Smith, thank you for coming back to us. You’ve been approved and we can close immediately” that turns your bank into your hero.

Q: Why would you say that COP represents the LOS of the future?

MARK DEESE: In strategic business development here at Lending Solutions our goal is to look to the future, and we are on the leading edge with COP. Clients are asking for one system to manage and maintain. That’s what COP is. Other LOS players may be able to provide a fancy document talking about their system, but when a bank or financial institution gets into the weeds, they see that COP is truly one system of record. No other system can show the same results. Other vendors may be talking about providing one system and they may even be in development, but while that system may be out in four, five or six years, COP is already there.

Industry Predictions

Mark Deese thinks:

1.) We are going to see eight or more final rulings on different regulation changes in the next year or so.

2.) Lenders and vendors will become more comfortable with dealing with a lot of regulatory change.

3.) The way to earn new business will change. Ease of use, ease of maintenance and user experience will drive technology investment.

Insider Profile

Mark Deese is Product Manager for Lending Solutions, Fiserv. He has 10 years of experience working with loan originations and as a lender. He is the Product Manager for the Common Origination Platform in Lending Solutions from Fiserv and demonstrates to others how to replicate best in practice methods in loan origination. Mark has extensive experience; from small community lenders to top ten institutions in the country. Beyond lending, he has a vast understanding of financial institution environments and what is required, day in and day out, in the loan originations market.

The Future Of Innovation

You Can Download This Full Article as A PDF HERE

Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Fourth Annual Innovations Awards Event. We named the top six innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from each winning company to talk about mortgage technology innovation. Where do they see the state of innovation? And what innovation is it going to take to get our industry really going again? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

ADAM CAMPBELL: I think innovation can be either incremental or sweeping change, but I think it must result in a benefit that’s shared across an entire industry. Proprietary technology that doesn’t integrate with other software or that isn’t shared across the industry with open APIs and modern methodologies isn’t truly innovative in my opinion. Innovation has to contribute to our industry’s overall foundation of progress.

JAY COOMES:I would define innovation in the context of the value or significance of the impact its makes to those beneficiaries of the innovation, rather than the magnitude of the change.

KATHLEEN MANTYCH:While sweeping change may be the ultimate result of innovation, it is incremental change that helps maintain or improve a competitive position over time. The need for continual improvement on products with new features, adding new products and services as necessary and process improvement on service levels is critical, particularly in this chaotic climate. Creating and deploying incremental, breakthrough strategies via a well-executed plan for new customer growth and customer retention will create winning strategies, capture new growth opportunities and build lasting capability.

PAUL IMURA: My definition of innovation is not accepting the current status quo, finding a way to improve your process and opting to advance by taking risks. Innovation can be leveraged for success and is a critical component for the industry to thrive, survive and ultimately succeed. Innovation will be key to transforming the mortgage industry.

BRENT CHANDLER: If efficiency is improved, if a need is being met that was not met before, if a challenge has been overcome that seemed insurmountable at first—these are all signs of innovation. What you would call sweeping change is simply the resolution of an issue large enough to effect a lot of people. For example, a new challenge in the mortgage industry is meeting QM guidelines. Higher QC is being demanded, and more time has to be spent on each loan file. Lenders that don’t adopt a better way to process loans risk significant lost opportunities. Sometimes change is forced upon us, but everyone has a choice in how they respond. Do you innovate to succeed, or stick to what is familiar and hope it all works out?

SANDY NIETLING:Innovation starts with a step back from the traditional development or operational path. The traditional path is usually one of refinement: taking existing assumptions about a problem and user needs and building onto product concepts that are already in place. This type of refinement can make it possible for lenders to hold onto their spot, but it doesn’t move them forward, and it doesn’t position them to adapt easily to sudden or significant change. Innovation depends on a reassessment of the problems faced by mortgage lenders. Innovation creates a new perspective, and with it, new value and new opportunities for growth.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

ADAM CAMPBELL:I see examples of both thriving innovation, and decaying old methods still being used. There are many companies who seek to build upon the overall industry’s technology and those are the companies that will win out in the end. Old school technology companies that try to horde ideas or don’t play well with others will eventually be squeezed out.

JAY COOMES:I think it had been somewhat stagnant, but with the rebounding of the market and the continued regulatory pressure, this incentivizes innovation as an outcome of meeting the needs and demands of the current environment. As such, we are beginning to see a resurgence of innovation in the industry.

PAUL IMURA: Our industry is in a state of resetting against the new rules of the mortgage market, which includes cost constraints and regulatory requirements against a smaller origination market. Mortgage technology innovation is thriving because of the market opportunity for improvement and growth. In today’s market, there is an abundance of opportunities for process improvement that will drive a better consumer experience. For now, a significant focus on the compliance product development is a result of the newly mandated CFPB regulations.

KATHLEEN MANTYCH:In light of all the regulatory changes, there have been some outstanding and pioneering breakthrough technological advances to weather the storm and indeed, pave the way for continued automation and deliver true mortgage transformation yet to come. That said, the key word is transformation and an evolving need that drives the mortgage industry forward despite the current volatile market. This means the industry as a whole needs to start thinking outside the box for future technology innovation and advancements, which will propel long-term results. Emphasis on the fact that the reactionary must change to be proactive when it comes to the process of technology innovation advancement.

SANDY NIETLING:The term “innovation” is getting more airplay these days from technology providers, which is a direct reflection of momentum building in the industry itself to consider new thinking to address the mounting challenges lenders face. While it sometimes takes time for game-changing solutions to be readily recognized as such, real innovation is well underway.

BRENT CHANDLER: I definitely don’t think innovation in our industry is in a state of decay. The economic crisis was a wake-up call, and I doubt anyone out there thinks the way loans were handled before the crisis was ideal. This has led to an exhaustive review of the entire financial system, which has opened the door for innovation.

The mortgage industry is in a state of rebuilding, and there are a lot of smart entrepreneurs working on solutions to big problems. But change takes time. The larger and more regulated an industry is—and the more complex the regulatory frameworks are—the harder it is for innovations to receive acceptance. Innovation is happening, albeit slowly. Adopting new innovations requires thoughtful integration into existing workflows that must meet stringent guidelines, and sometimes that takes a mandate or government approval.

I remain encouraged. I believe we are breaking into in a new era for the mortgage industry. We are beginning to see the adoption of new innovations take place, which will form the foundation of a safer, more efficient industry for many years to come.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

PAUL IMURA: One of the biggest gaps in our industry is the availability of a single data repository for origination and servicing. This innovation would increase overall efficiency by mending investor confidence, delivering life of loan transparency, reporting industry loan data trends and optimizing efficiencies. Developing a single repository will create a sense of transparency and support the industry as a whole, as well as control costs, increase productivity and increase accuracy.

JAY COOMES:Re-evaluating the life-of-loan methods of communication that we have with the borrower is critical. We are behind the times with respect to managing that conversation using mechanisms that are borrower centric and not lender centric.

ADAM CAMPBELL:There are so many excellent solutions out there, offered by a wide variety of companies. But to really make a difference in an operation, those technologies have to work together. I think the most critical innovations over the next 12 months must include a focus on open standards development so lenders can layer the options that are best for them on top of the systems they’re already using. After all, it doesn’t matter how great a new tool is if it can’t be integrated with the workflow systems in your office. That’s where the real impacts of innovation can be put to a real world test.

KATHLEEN MANTYCH:Now is the time for the industry at large to reassess their systems and products to find new ways to improve the loan life cycle from an automation standpoint and the overall customer experience by creating products for the new mortgage market environment. Very few integrate technological change in their strategic or tactical planning. That said, from a tactical standpoint, the industry needs to focus on how it can streamline all pertinent and relevant loan data to a data centric environment where true data lives throughout the loan life cycle from point of sale to post close and remain intact all the way through. This will effectively deliver not just the necessary elements for accurate, efficient and simplified automation, but will enhance the customer/consumer experience by eliminating any associated risk of inaccuracy during and after the loan cycle.

SANDY NIETLING:The next big innovations will come in response to the regulatory forces that are being applied to lenders. In order to address ongoing regulatory challenges from a position of strength, lenders can no longer rely on technology that focuses on a narrow understanding of their needs. Lenders will demand solutions-based technology and partner relationships that manage transaction risk. Innovations that address those needs will propel the mortgage industry forward.

BRENT CHANDLER: We need sweeping adoption of tools that provide access to direct source data. Technology opens gateways to new sources of information in ways that enhance the consumer experience, improve the quality of data, streamline workflows, and of course save time and money. Technology and automation contain the keys to transform our industry, for individuals and businesses alike.

As Home Equity Lending Returns, Lenders Must Prepare

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rsz_anne-politisHome equity lending has returned, and while we would not call it a boom, the industry is starting to heat up. The vanishing refinance market is causing many lenders to turn to home equity lending. Some are reporting volume increases greater than 100 percent from Q4 2012 to Q4 2013. Industry insiders report that the secondary market demand for second liens far exceeds the supply, with higher demand driving stronger pricing.

Increasing Demand for Home Equity Loans

Before the financial crisis, home equity lending was a robust market, both on a standalone basis and as a counter-cyclical product to the refinance market. Home equity lending took a back seat during the financial crisis as home values declined, equity weakened and credit standards became more restrictive. As a result, equity loans were almost non-existent until recently. Today, the environment is much different with several factors driving increased demand:

  • More homes in a positive equity position;
  • Rising interest rates driving down refinance demand; and
  • A wave of existing, maturing home equity lines over the next three years.

Estimates are that more than 4 million homes returned to positive equity in 2013. The appreciating market has created more than $5 trillion in untapped equity and that number is growing. Increased equity has improved the risk profile for home equity loans and in response; credit standards have seen some easing. With both increasing equity and easing credit standards, more borrowers are eligible to borrow on a home equity loan or line of credit.

Interest rates also play a critical role and must be favorable for home equity lending. As rates increase, borrowers are prompted to leave the existing first mortgage in place to maintain the already low rate, making a home equity loan or line of credit a better loan product to provide access to equity than a first mortgage.

As a result of the interest rate increase that began in mid-2013, home equity lending has become a more attractive option compared to refinancing. More than 6 million homeowners refinanced in 2012. As rates creep up to the 5 percent range toward the latter half of 2014, forecasts predict that the refinance market will drop by 70 percent from the 2012 high, removing more than 4 million borrowers from the refinance market. The most cost effective option for tapping equity will be home equity lines of credit for the next several years.

The final factor driving demand is the wave of home equity lines of credit is the number of existing home equity lines of credit that will reach the repayment stage over the next few years, upwards of $176 billion. Home equity lines of credit written from 2004 through 2007 are reaching the end of their interest-only period and borrowers will soon begin repaying principal. Borrowers accustomed to low rate, interest-only payments are headed for big payment shock as these loans reach maturity. In fact, this “after-shock” of the financial crisis is a big concern for banks and the regulators providing lenders with guidance to develop plans for managing these loans. Modifying the terms is one option, but refinancing into another equity loan is also an option. As borrowers search for the most favorable option, additional opportunities for equity lending will naturally be created.

Differentiating in a Growing Market

As demand grows, the competition will increase. Lenders will need to differentiate by streamlining processes while remaining compliant as well as improving customer service. Technology and services investments will be required to save time and lower costs.

Perhaps the most significant challenge in a growing market is managing capacity. As the latest refinance wave has shown, staffing up in a cyclical business can be very painful in a downturn. Building capacity through business process outsourcing (BPO) should be a key focus, not just to increase capacity but to create a competitive advantage. BPO can include a single process or the entire process from origination through funding.

The need to build capacity will be coupled with pressure on margins. As the market improves, competition will increase. The temptation to reduce rates to edge out the competition will squeeze margins and the increasing cost to implement regulatory requirements will drive margins further down. It has become a mandate for lenders to look at ways to optimize cost. Many turn to BPO to help drive that improvement.

However, if you think BPO is simply about cost and capacity, think again. The BPO industry is more than 20 years old and the days of using outsourcing as a pure labor arbitrage are over. When BPO was first beginning, processes were shifted from the U.S. to low cost locations around the world. Most of the time, these processes were moved without change, so the result was the same process, good or bad, for less money. As the industry began to attain critical mass and the landscape became more competitive, BPO evolved and BPO providers began to differentiate through process improvements that drove incremental improvements in process and cost.

Today, these BPO providers still exist, but a new breed of “specialty” providers has emerged. The ability to execute a process is table stakes in the BPO industry. Successful BPO providers are defined by the value they deliver to their clients. These “specialty” providers have invested heavily in domain expertise and they differentiate through the transformation they deliver to create a competitive advantage for the client.

As the regulatory environment has reinforced, the mortgage industry is not for amateurs. The ability to transform a business model requires expertise and building expertise requires investment. In the case of mortgage, many times simply executing the process requires licensing. Specialty providers typically have both domestic and global presence because of the regulatory environment and the level of expertise required to manage the business. The domestic presence brings highly experienced U.S. based talent while the global presence provides a cost and time advantage.

Outsourcing with a specialty provider has become the “go to” strategy for both originators and servicers to cope with today’s market. Solutions are highly collaborative and focused on strategic business outcomes such as:

  • Increasing customer retention;
  • Improving cycle times;
  • Expanding operational capacity;
  • Optimizing working capital;
  • Creating new business capabilities;
  • Improving quality and compliance;
  • Enhanced change management capabilities; and
  • Transforming cost models.

Specialty providers use data and analytics across processes, including disparate processes, to develop recommendations and drive improvement. For example, in the effort to reduce lock to fund cycle times, the data gathered downstream can be used to make improvements at the time of origination to avoid cost and time consuming delays. Specialty providers use technology, often in the form of business process management (BPM) technology, to drive the process and to capture the data necessary to identify improvement areas.

The mortgage industry is not only dynamic, but complex with extensive oversight. While many lenders will (and already have) exited, others are adapting to the change and thriving. Home equity products are in demand and a great counter-cyclical product to the refinance market. The lessons that we have learned through the last refinance wave should drive the strategy to manage the growing demand for home equity loans. Outsourcing is a very effective strategy to manage not only the capacity needs and cost pressure, but to transform a business model to be more competitive.

About The Author


Anne Politis is Executive Vice President of Mortgage Fulfillment at ISGN. She joined ISGN in 2009 through its acquisition of Fiserv’s Fulfillment Service division, where she spent 11 years. Politis was the executive responsible for operations, including valuation services, title, closing, outsourced mortgage processing and home retention. With the completion of the Fiserv integration into ISGN, Politis is focused on providing consultative support to sales, solutions architecture and product development. With more than 28 years in the mortgage industry, she has experience across origination, servicing and secondary markets.