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Have You Heard?

The story broke yesterday, but just in case you haven’t heard yet, Optimal Blue, a provider of pricing, point-of-sale, compliance and secondary marketing automation services for the mortgage industry, has acquired one of its competitors, LoanSifter, Inc., a provider of product eligibility and pricing, point-of-sale and marketing solutions for mortgage lenders. Here’s the story:

The sale price was not disclosed. Optimal Blue is clearly looking to establish itself as the dominant standalone pricing solution having acquired another competitor, Sollen, just recently. And this is probably a smart move given that major pricing vendors like ARC Systems, NYLX, and Commerce Velocity have all either been acquired or gone out of business. Similarly, leading LOS companies realize that this function really needs to be a core part of their system and firms like Ellie Mae, Calyx Software and Mortgage Builder have all acquired pricing vendors themselves and have successfully integrated them into the core LOS offering. The days of the standalone pricing vendor having a viable business may just be behind us.

As a result of the Optimal Blue acquisition of LoanSifter, LoanSifter’s operations, employees and customer relationships will immediately become a fully integrated part of Optimal Blue. The new company will have more than 1,500 customers, 200 employees and three offices nationwide with headquarters in Plano, Texas. Terms of the acquisition were not disclosed.

Founded in 2004, LoanSifter provides content and technology that is used daily by tens of thousands of mortgage professionals to search loan products and guidelines from more than 185 investors. LoanSifter offers a diverse suite of services to mortgage bankers, credit unions, community banks and brokers, including a managed-content pricing engine, point-of-sale solutions, marketing and automated quoting.

Larry Huff and Ivan Darius, co-CEOs of Optimal Blue said, “This is a rare opportunity to combine the strengths of two organizations with exceptional track records and capabilities and focus on the same mission, which is to more effectively provide innovative products and services to our combined customers.”

“LoanSifter’s commitment to innovation has helped lenders grow their business and streamline their origination process,” said Bruce Backer, former president of LoanSifter. “That commitment continues with this acquisition.”

Advancing Price Locking Automation

*Advancing Price Locking Automation*
**Technology To The Rescue**

price-tag***LoanSifter, Inc., a provider of product eligibility and pricing solutions for the mortgage banking industry, has launched the initial phase of its new automated lock change management tool that enables mortgage bankers to automatically re-price loans when loan circumstances change, increasing their accuracy and compliance while saving time and money. Here’s why this matters:

****Mortgage lenders allow borrowers to “lock” a mortgage interest rate and points as protection against fluctuations in mortgage rates. But when attributes of a loan change over the course of the loan process, lenders face the challenge of requesting a change to the lock, checking rate sheets and re-pricing and re-qualifying the loan manually, which can be arduous and risky. Until now, there was little or no technology to ease the process of requesting a rate lock change.

****With LoanSifter’s historical lock-change management tool, originators can automatically retrieve historical pricing and eligibility, calculate the cost of a lock change, and submit change requests to their secondary departments, all within the LoanSifter platform at the click of a button. As secondary managers respond, the loan origination system is automatically updated and the originator is notified of the status of all requests. Each lender’s extension and lock-change policies are also supported.

****“In today’s lending environment and shifting economy, it’s not unusual for loan circumstances and attributes to change midstream,” said Bruce Backer, president of LoanSifter. “When this happens, lenders usually have to start over and re-price loans manually from scratch. Our new tools save them the trouble by automatically calculating the impact of the change and thoroughly documenting each step. Lenders have been asking us for help in these areas, so we’re very excited to add these tools to the LoanSifter platform.”

****Not only does LoanSifter’s automated historical change management tool improve accuracy for the borrower and the lender, but the platform documents all lock change and re-pricing details, including communication between originators and secondary managers. In case of an audit, the historical pricing tool can be used to show lenders acted in compliance with state or federal regulations. With LoanSifter’s documented 99.998% accuracy rates, lenders are now able to maintain pinpoint accurate pricing and eligibility throughout the entire mortgage process with a click of a button.

****The new lock change management and historical pricing tools are built into the LoanSifter platform along with LoanSifter’s industry-leading origination and marketing solutions, its Best Execution Mortgage Insurance Pricing Platform and product and loan guidelines from 165 investors.

More On Mobile Adoption

*More On Mobile Adoption Trends*
**What’s Next?**

***Yesterday we discussed how mobile technology is starting to pick up in our industry. Today, let’s continue that conversation by discussing who will be going mobile and who won’t.

****“Not every piece of the mortgage process is mobile-friendly – for example, I don’t think we’re going to see loans being underwritten on smartphones,” explained Mark Coupland, VP Business Development at LoanSifter. “But I think mobile devices will have a huge impact on the front end of the lending transaction. As a loan officer meets with a borrower away from the office, there is a growing desire to price, qualify, and initiate that transaction on a mobile device. In that same meeting, a borrower could submit a basic application through a lender’s mobile-friendly website to get the process started. Although mobile solutions add convenience and ease, compliance will be a critical part as you still must follow regulatory requirements, even when on the go. Mobile solutions must be well-thought out, to be sure. Appraisers and others in field services are using mobile devices with great success already, and I have no doubt originators will leverage them more in 2013, particularly as tablet devices become more prevalent.

****“We will certainly see a push to provide more mobile tools to loan officers, title agents, real estate agents, and consumers,” added Tim Armbruster, Chief Technology Officer of ClosingCorp. “I expect to see an explosion of these types of services in 2013 and 2014. Nearly every service provider is working on a mobile strategy or has already released mobile applications. With that said, there are still several issues that need to be addressed in the mobile space. Information security on mobile devices will continue to be a concern and a growth retardant for lender adoption. Much of the work in loan origination still happens on desktops, so mobile is still not the right fit for many functions in the space. There are also usability issues with mobile. For example, I don’t see borrowers filling out an entire loan application on a mobile device, but I do see that happening online.”

****But what do lenders think about mobile technology? Are they ready to embrace this technology? “Lenders are so busy catching up with the refinance volume, preparing to shift to a purchase market, and CFPB compliance management that they are not significantly focused on new technology that does not directly support efficiencies in those areas,” answered Daniel H. Jacobs, Managing Director, Retail Branching Division at Residential Finance Corp. “The first round of significant mobile integrations we will see will emanate from major LOS providers duplicating the most basic of functions of their core products. There is no widespread consensus on how to use mobile to enhance the consumer experience. Until the focus of mobile is on the consumer experience, we will not see any wide spread trending of integrating mobile technology into mortgage lending operations.”

Vendor Reports Speed And Accuracy Benchmark

*PPE Reports Speed And Accuracy Benchmark*
**Tackling Efficiency**

***As the saying goes: Time is money. However, you don’t want to be too fast that you compromise quality. There has to be a happy medium. That’s where good technology should come in. For example, LoanSifter reports that it has cut in half the amount of time it takes to conduct loan product and rate searches on LoanSifter, its flagship product and pricing engine (PPE), while reporting new benchmarks for LoanSifter’s accuracy and availability. Here’s how:

****According to company officials, the average search on LoanSifter fell to just 1.29 seconds in 2012, down from 2.22 seconds in 2011. In addition, LoanSifter’s system availability, or “uptime,” over the last two years has been over 99.97%.

****With managed content from over 140 investors, LoanSifter also reported that its real-time loan pricing and product eligibility information had an accuracy level of 99.998% between 2011 and 2012, ensuring lenders have access to fast, accurate loan products and pricing when they need them.

****The three tenets of LoanSifter’s recent quality initiative – speed, accuracy and availability – are detailed in a new service level report currently available to LoanSifter clients.

****As the mortgage industry continues to recover and as more lenders are relying on timely, accurate and available loan data to serve growing numbers of borrowers, LoanSifter is reporting these metrics on a voluntary basis—thus holding itself to a standard of performance that is unparalleled in the industry today. LoanSifter also continues to invest in the newest and most reliable technology, with redundant servers and multiple datacenters to ensure security and uninterrupted access to critical mortgage pricing tools.

****“We chose to use LoanSifter after an extensive search of the marketplace,” said Tony Blodgett, president of Mortgage Advisory Group. “We have found it to be the best PPE due to the number of supported lenders as well as its high level of accuracy and its timely updates. The interface was also much easier for our team to navigate and get accurate pricing to their borrowers.”

****Bruce Backer, LoanSifter’s president, said the idea for the benchmarking started in August of 2011, when a number of competing mortgage PPE providers all experienced service outages at the same time, causing tremendous losses among mortgage companies that couldn’t price loans or request locks. The problem started after a sudden movement in mortgage rates caused originators to flood the entire market with new pricing and rate lock requests for borrowers, in turn producing an extraordinarily high level of traffic and strain on other loan pricing engines.

****Planning, however, prevented LoanSifter from suffering the same fate. But according to Backer, there is always room for improvement. “For lenders in particular, business continuity and reliability are paramount,” Backer explained. “Loan officers rely on a lot of information and often run a borrower’s loan scenario though many different investors at many points throughout the life of a loan. Consumers need to know their options quickly, or they will quickly go to another lender.”

****This past June, LoanSifter successfully completed a SSAE 16 Type 2 examination, formally known as a Report on Controls at a Service Organization (SOC 1), in accordance with the latest reporting standards put forth by the American Institute of Certified Public Accountants (AICPA). The accomplishment provided assurance to lenders, banks and credit unions that LoanSifter abides by the toughest standards for financial reporting that exist in the financial services industry.

Understanding The News: PPE Gets SSAE-16 Certification

*PPE Gets SSAE-16 Certification*
**Vendor Ensures Security**

***PROGRESS in Lending has learned that LoanSifter, a provider of product eligibility and pricing solutions for the mortgage banking industry, has successfully completed a rigorous SSAE-16 Type II SOC 1 (Service Organization Controls Report) examination in accordance with the latest reporting standards put forth by the American Institute of Certified Public Accountants (AICPA). The achievement gives lenders, banks and credit unions assurance that their data is being protected by one of the toughest standards that exist in the financial services industry.

****The Statement on Standards for Attestation Engagements No. 16 (SSAE-16) standard is used to assess a company’s internal controls for data protection. Tampa, Florida-based BrightLine CPAs & Associates, Inc. independently conducted LoanSifter’s SSAE-16 examination for the period of September 1, 2011 through March 15, 2012.

****“The nature of the financial industry requires reliable partners with a proven history and a commitment to excellence, so ensuring the security of client data has always been of utmost importance to LoanSifter,” said LoanSifter President Bruce Backer. “The results of the SSAE-16 Type II examination validate the stringent controls and safeguards employed by LoanSifter to ensure the integrity of our data and processes across our platform. At a time when trust is at a premium in the mortgage industry, our users can have confidence that their data – and their borrower’s data – is safe with us.”

****A Type II examination – the type that LoanSifter received – determines whether a company’s policies and procedures were effective during the examination period. It is more demanding than a Type I examination, which only involves the examiner’s opinion on a company’s controls.

****LoanSifter received an unqualified report on the criteria described in its assertion statement, with no exceptions for any tested controls, demonstrating the company’s commitment to the highest standards of operational excellence for its SaaS-based mortgage platform.

Market Analysis: We’re Adding A New Service

*We’re Adding A New Service*
**By Tony Garritano**

***As the industry evolves, so must we. We have an obligation to provide new and different offerings to keep you in the know. To this end, PROGRESS in Lending Association has entered into a partnership to help all of our followers get real-time market. We think it’s important and we’re happy to bring this new service straight to you. Here’s the details:

****PROGRESS in Lending has partnered with LoanSifter to bring you real-time rate information as provided through AMRi. What’s AMRi? The LoanSifter Available Mortgage Rate Index or AMRi is the mortgage industry’s first complete, real-time mortgage rate index that is based on same-day rates and the only index that provides a realistic idea of what borrowers typically pay for a loan. Three main characteristics set LoanSifter AMRi apart.

****First, it provides the most accurate depiction of current and historical mortgage rates available on the market. It is the only index based on same-day rates. Rather than using past sources of information, the LoanSifter AMRi’s indices are created by leveraging real-time data from 25 wholesale and correspondent lenders. Second, the LoanSifter AMRi was created in partnership with the Federal Reserve Bank of Boston, one of twelve district Reserve Banks in the Federal Reserve System. Third, use of the LoanSifter AMRi is completely free of charge.

****The LoanSifter AMRi lists all relevant rate information all on a single page. There are two indices presented: the prime rate Index (for 30-year fixed rate conventional mortgages), and the FHA rate index, which covers mortgages for “nonprime” borrower scenarios. Each index is updated daily to demonstrate the most current calculated rate a borrower would receive from the average lender, based on the system’s given par scenario.

****Why is this significant? LoanSifter AMRi provides real value to so many of the industry’s constituents– lenders, borrowers, researchers, journalists and others – its significance is particularly broad. But most importantly, it personifies the definition of innovation – the creation of better and more effective products, processes and ideas. The LoanSifter AMRi provides an alternative, eliminating the industry’s need to rely on backward-looking data collection methods that rely on reported mortgage rate information, and replaces it with actual rate quotes. It replaces a quasi-information source that does not provide a true comparison of typical points from week to week with a real-time accurate snapshot that allows for variances and adjustments.

****Today you can get real-time AMRi data in the Data Center Section on our website in the right column. And starting next week we will also be providing AMRi data in or daily electronic newsletter. We see this as a great value add for our followers and we’re grateful to LoanSifter for sharing this innovative new service with us.