Market Analysis: Ellie Mae Isn’t Wasting Any Time

*Ellie Mae Is Wasting No Time*
**By Tony Garritano**

***Usually when a technology vendor acquires another vendor you see a slow transition whereby eventually one product becomes more robust and the other is grandfathered. However, Ellie Mase is getting to work fast on making the most out of its acquisition of DataTrac. PROGRESS has learned Ellie Mae’s second major release of its Encompass360 mortgage management solution is now live. This release contains new functionality and enhancements designed to further increase compliance, efficiency and ease of use. It also introduces Encompass Originator, an integrated front-end technology solution specifically for users of DataTrac mortgage software. Here’s the scoop:

****The upgrade’s major enhancements include:

****>> Functionalities for complying with the new data delivery requirements, including the Uniform Loan Delivery Dataset (ULDD) and Uniform Collateral Data Portal (UCDP)

****>> Integration with DataTrac, through Encompass Originator

****>> New secondary marketing functionalities for Encompass360 Banker Edition clients

****>> New document recognition functionality with bar coding for all e-disclosure and closing documents

****>> New and expanded status online communications options

****>> Ability to process borrower credit cards in the appraisal solution center

****>> Numerous additional client-requested enhancements

****Encompass360 now supports ULDD requirements, enabling users to export one or more loan files to be submitted to the GSEs. The new UCDP service, which uses an integrated systems interface to the GSEs’ UCDP, allows users to submit electronic appraisal data files, receive status and findings, correct and modify appraisal file submissions, and request overrides should an appraisal not be accepted by the UCDP.

****This upgrade’s trade management and secondary marketing enhancements enable more flexibility with detailed viewing and tracking of mortgage-backed securities and assignment of trades. Rate lock and secondary registration enhancements include lock extensions and expanded functionality for buy side profit and price concessions.

****Among the many additional upgrades are enhancements to Encompass360’s electronic document management capabilities, which include additional bar coding, destination scanning from network scanners to eFolders, and eSigning of non-disclosure documents. New status online communications now further support and extend clients’ brands by enabling consistency and structure across outbound communications to borrowers and partners. Numerous compliance-focused changes have also been made to support USDA loans, and changes have been made to the HUD-1, the statement of denial, and other forms.

****Further, Encompass Originator provides single-click access between Encompass360 and DataTrac, creating a front-end/back-end origination solution built on the two technologies. With this integration, users of both solutions can now easily submit loans directly from Encompass360 to DataTrac, without having to re-key, import or export any data.

****Encompass Originator includes all of Encompass360’s front-end capabilities, including all the new upgrade enhancements. Now DataTrac clients can have access to Encompass CenterWise, Ellie Mae’s secure web and electronic document management service; a secure e-folder for paper-free document signing and exchange; numerous integrations with third party solution providers; easy-access customizable pipeline views; HUD integration; powerful tracking and alert systems; built-in compliance management tools designed to enhance RESPA and MDIA compliance; appraisal ordering and management, customer relationship management and more, all from the same company.

****“The industry’s changing regulations and procedures are putting a lot of new demands on lenders, and this upgrade provides the tools to respond to many of those demands, whether from regulators or investors,” said Jonathan Corr, COO of Ellie Mae. “At Ellie Mae, our clients feel comfortable about voicing their needs because they know we take action. This upgrade reflects the changing needs of our clients, while continuing our mission to build the most streamlined, easy-to-use technology for transacting the highest quality loans.”

Market Analysis: A New LOS Debuts

*A New LOS Debuts*
**By Tony Garritano**

***A New LOS has hit the market. Automated underwriting and loan pricing technology provider PriceMyLoan has launched LendingQB, a 100% web browser-based mortgage lending platform. “With LendingQB, we believe we are doing more than just providing a ‘cloud computing’ loan origination system,” said Binh Dang, LendingQB’s managing partner. “We believe we are fundamentally changing the way that lenders use technology.” Here’s the scoop:

****Since 2004, PriceMyLoan has been providing lenders with technology to automate the underwriting and pricing of their loans. Over the past seven years, PriceMyLoan has had the unique opportunity to work closely with their clients and carefully observe their utilization of technology. “Each one of our clients had a valuable LOS story to tell us,” said Gigi Campbell, national sales director for LendingQB. “What became evident is their desire for a ‘one-stop shop’ lending system, and a system that would adapt to the way they work.”

****To that end, LendingQB was built to include a list of features, such as electronic documents with e-signatures; a full complement of tools for loan processing, underwriting, secondary marketing, closing and post-closing; and specialized tools for wholesale and retail environments, such as broker website portals and online consumer loan applications. Naturally, PriceMyLoan powers the automated underwriting and loan pricing aspects of the LendingQB platform.

****But the most innovative feature of LendingQB is not their technology, but the way that they work with their clients, says PriceMyLoan. “Lenders need more than just a piece of software,” said Campbell. “They need a technology partner that is willing to listen and respond to their specific needs. That’s the true value of our web-based model. We can reach directly into a client’s system and instantly deploy any changes they request. It creates a truly customized experience that molds to their particular workflow.”

****LendingQB positions itself as more than a technology provider; they want to be an active part of a lender’s team. “As a lending quarterback, we want to take the field with our clients and help lead them to success,” said Campbell. “Give us the ball and we’ll execute the plays that lead to higher productivity, higher profits and better business performance overall.”

****We at PROGRESS in Lending will keep you updated on the status of this new development.

Technology Spotlight: Lender Demands Flexibility

*Lender Demands Flexibility*
**radius financial group inc. Profiled**

***With LO Comp, UAD, UMDP, Dodd-Frank, and all the rest, what is a lender to do? Well, of course, they have to automate more. But beyond just turning to technology, lenders need to and are demanding more flexibility from their vendors. For example, PROGRESS in Lending has learned that radius financial group inc. has chosen MortgageFlex Systems, Inc. for their loan origination needs. Here’s why they decided to go with Mortgageflex:

****The hosted LoanQuest system selected includes the enterprise-level loan origination system and a Web Consumer portal that allows consumers immediate access to loan status.

****“Our business needs required a system that is flexible enough to conform to our origination workflow requirements, not the other way around. LoanQuest proved that it was versatile and could be adapted as needed without significant programming resources,” stated Keith Polaski, principal, radius.

****“We understand radius’ business requirements and are confident we will meet and exceed their needs,” said Craig Bechtle, chief operating officer, MortgageFlex. “We’re looking forward to a long and beneficial partnership.”

****radius required a cost effective system that could be tailored to their specific needs. MortgageFlex met those requirements with a hosted option that is an exception among the “cloud” offerings in that each client has a distinct instance of the application and their own unique database in a secure, SSAE16 certified facility.

****This unique arrangement gives customers the flexibility to adapt the application without restrictions. This was a core requirement of radius’ LOS selection criteria.

****“Not sharing application code gives customers the advantages of premises installation without the hard costs,” said Bill Black, chief information officer, MortgageFlex. “We focus on providing the customer a secure and highly-available platform so the customer can focus on their business.”

****Customers have the ability to add fields as needed without programming, control and monitor workflow activities, and drive system performance using integrated business rules.

****MortgageFlex offers several hosting options, including transactional and SaaS. The transactional option allows lenders to “pay-as-used” on a per loan basis and is very beneficial for lending organizations that do not have technical infrastructure and support readily available. Hosted options also give lenders high levels of security with SSAE16 certified facilities and full Disaster Recovery sites.

****radius also required a system that could integrate easily with existing Xerox Blitz Docs software being used for e-signing and e-delivery. An established system-to-system interface with Blitz Docs has been in place for LoanQuest users for some time.

****“We are proud of our partner network and have been very deliberate when selecting our business partners. A strong partner is invaluable and can expand system capabilities exponentially,” Bechtle stated.

****Founded in 1999, radius financial group inc. is a full-service mortgage banker specializing in residential, commercial and private financing. Since its inception, radius has experienced year over year revenue growth, despite the recent credit and housing crisis, and was recently recognized by Inc. Magazine as one of America’s fastest growing companies in 2010, ranking #554 in the Inc 500/5000 list.

Market Analysis: We All Need A Good Laugh Once In A While

*We All Need A Laugh Once In A While*
**By Tony Garritano**

***Let’s face it, things aren’t great going into the holidays. But that doesn’t mean that your spirits should be low. Here’s something to cheer you up: Mortgage Cadence, LLC has produced a series of short films under the guise of “The Lender Blender” to the public. This series of shorts irreverently illustrates the dangers that come with mismanaged processes in the midst of an industry overhaul.

****Contrary to the light-hearted nature of these films, Mortgage Cadence is a solution-oriented system that continuously seeks to help lenders increase their return on investment and bottom line while maintaining compliance. The film portrayals of disarray and lack of compliance serve as a magnifying glass on some of the issues facing lenders today. Mortgage Cadence’s technology platform helps lenders minimize risk through the use of advanced technology. The product suite is proven to increase employee productivity through the elimination of paper and the creation of custom data-driven workflows.

****Along with a modern sense of humor, the videos strive to highlight the asset Mortgage Cadence can be for companies struggling with their lending processes. “The need for workflow automation to streamline processes and reduce risk is more important now than ever before,” stated John Levonick, chief legal and compliance officer for Mortgage Cadence. “Outdated processes and lack of compliance is unsuitable for a sustainable business where the risk of buybacks has never been greater. Despite the comedic nature of The Lender Blender, I hope it inspires lenders to reevaluate their lending practices to determine how they can increase efficiency while ensuring compliance.”

****By offering seamless automated workflow that is not only efficient and dynamic but also comes with a team of dedicated legal resources and subject matter experts, Mortgage Cadence can take your business from merely surviving to thriving. Staying compliant with the most recent regulations can feel like an added pressure, which is precisely why we are dedicated to focusing on the rules so you can focus on growing your business.

****You can find the video series located at or The videos are also on the PROGRESS in Lending iPad app that you can download for free on iTunes. I know you need a good chuckle. These videos will do the trick.

Our Point Of View: The Technology Shift

*The Technology Shift*
**By Ted Hicks**

***Let’s face it, there’s a lot of bad news circulating, the least of which is a 20% decline in origination volume predicted for next year. However, I choose to be an optimist. Surely we’re still waiting for the new “normal.” Nonetheless, with transaction volumes dropping, more of our accounts are focusing on technology in what I call the “technology shift.” Lenders simply need technology more than ever and they’re looking to technology vendors to help them automate their entire gamut of processes.

****As lenders realize the need for more streamlined automation, it’s only natural they start looking beyond their current technology to the “new and different.” That’s not always the best or the most cost-effective way to go. What we’ve been able to do with many of our lenders is introduce them fully to software they already use. We get shoulder to shoulder with them to help them define their processes and we find new ways for them to use their current technology to gain the efficiencies they’ve been looking for.

****We encourage our clients to talk openly with us so that we can evaluate their processes and technology usage. We can show them they don’t need new technology; they just need to optimize how they use what they have. By teaching them more effective ways of using their software, we help them solve business problems.

****For instance, sometimes there are internal disconnects that exist within a lender shop that can be resolved by implementing business rules or enforcing standards through template sets. There also may be departments that don’t “talk” to each other and the biggest culprit of all—technology systems that don’t “talk” to each other. With the difficulty level in the regulatory environment, it is unreasonable to have two systems of record that can result in inaccurate data and reporting. We help by identifying the disparities and showing them how to ensure data integrity by consolidating systems.

****Clients who adopt more streamlined operations realize greater efficiencies in overall workflow very quickly. A lot of it is about internal buy in. Also, there’s a lot of shock when they realize that it doesn’t cost anything because they already have the software; they’re just not using it to the fullest. So, the transition is effective, efficient and considerably less costly.

****To our lender clients, I advise you to take advantage of time. Make sure that you understand what technology you have and discover how best to use it. Be diligent in making these decisions and always look at return on investment. In most cases you don’t have to spend more money to solve problems so don’t be swayed by a flashy demo when you can get even better results by maximizing your existing technology. With origination volume on the decline, now is the time to heighten your business efficiencies with all the potential your technology offers—without spending millions in dollars or valuable resource hours.

Winning The Battle For The Borrower: Let’s Get Concrete About Technology

*Let’s Get Concrete About Technology*
**By Judy Margrett**

***We all know that the market is tough. You need technology to remain competitive and to stay compliant. But what technology do you really need? Do you need a new LOS or a new POS? Or can you do with something else? I’m sure these questions and others are circling in your head as you decide how to proceed.

****Also, during these difficult times, vendors are fighting just as hard for business as lenders. So, they’re breaking out their best slant to convince you to buy they’re technology. Remember though, good technology has to solve real business problems. So, if you’re looking for new business, you need automation that will help you better deal with the borrower. Still confused? Let’s look at two “real world” examples that illustrate enterprise marketing automation’s vast capabilities. You’ll see what I mean soon.

****Fast Start – Big Finish

****The moment rates dropped below 5% veteran originator Bill Smith* was in a hurry to reach his diverse database of customers. So, he selected an oversize postcard from his enterprise marketing automation’s extensive marketing library, then adapted the copy to meet the specific interests of several niche audiences.

****After making his copy modifications, Bill’s file was automatically forwarded to his company’s marketing and compliance departments to ensure it met all appropriate brand guidelines and regulatory requirements. Bill’s changes were approved within minutes and the cards printed – including a Spanish translation for some, plus Bill’s new photo and signature added that day – and mailed to over 1,500 clients.

****It took less than 24 hours for Bill to complete his mission, from the time he accessed his enterprise marketing automation site until the highly personalized cards were in the mail. Within weeks, as a result, he closed $10 million in new business.

****Expanding a Referral Network

****Sarah Jones, a top producing originator, developed a proactive marketing program that includes a regular series of birthday, holiday and other greeting cards, along with a special campaign to encourage Realtors, builders, customers and others to share referrals. She adapted postcards, letters, e-mails and other materials to include “I welcome your referrals…” messages for different audiences and scheduled them for automatic distribution at various dates.

****Sarah has found her enterprise marketing automation performance-tracking feature to be especially appealing. It enables her to measure how her business has increased over time and the number of referrals she is receiving from her professional partners.

****Of course I used fictional names, but the results are real. See what I mean about choosing the right technology to get you the results that you’re looking for now?

Technology Spotlight: It’s All About Service

*It’s All About Service*
**Riverview Community Bank of Vancouver Profiled**

***We all know how big compliance is. It’s top of mind for every lender. At the same time lenders want to be sure that in keeping compliant, they don’t compromise service. Because of these two factors more and more lenders are switching their LOS. For example, Riverview Community Bank of Vancouver, WA has selected Mortgage Builder’s platform for its mortgage lending business. Riverview Community Bank is a community-oriented financial institution and mortgage lender that provides local and personal service throughout Southwest Washington and in the Portland, Oregon metropolitan area just across the state line. Here’s why they made this choice:

****After researching several LOS providers, Riverview Community Bank chose the Mortgage Builder web-based LOS platform because of the company’s ability to quickly respond to regulatory changes in the mortgage industry, and also the company’s commitment to customer service, according to Chris Bell, systems coordinator with Riverview Community Bank. Mortgage Builder provides an end-to-end loan origination software platform that enables lenders to automate mortgage origination, loan closing, post closing and delivery to investors. The system offers built-in enhancements available on demand, including pricing and product eligibility, electronic document management (EDM) and electronic loan delivery.

****“Mortgage Builder was the most professional of all the LOS vendors we checked out,” Bell said. “They understood the mortgage origination needs of a community lender. The main deciding factors for partnering with Mortgage Builder were its excellent support services and its ability to respond quickly to regulatory changes in the mortgage industry, such as those included in the Dodd-Frank law.”

****Mortgage Builder’s online training library also impressed Riverview, Bell said. “The rollout of the new LOS and the integration process at the bank has gone very smoothly,” he said. “We’ve found Mortgage Builder to be very responsive, and quick to resolve any issues that arise.”

****Keven Smith, president and CEO of Mortgage Builder, noted, “Mortgage Builder specializes in meeting the retail origination needs of community banks. Everything is integrated in our LOS design, making it easier and more secure for Riverview Community Bank to not only originate loans, but also to track every component of a loan file with our reporting and document builder, the most robust on the market. With our end-to-end, fully integrated LOS and its reporting and tracking solutions, Riverview now has the origination tools to rival any large, national lender, while still maintaining a local touch.”

Powering Today’s Lenders: Ask The Bank That Owns One

*Ask the Bank That Owns One*
**By Daniel Liggett**

***The title of this article is a twist on a classic advertising slogan for a legendary automobile brand. The manufacturer implored the reader to ask the person who owns one and why they bought it knowing full well the satisfied owners’ words would be more convincing than any they could possibly dream up.

****This transparent approach is extremely powerful, but the manufacturer better have the utmost confidence in their product. If the owner doesn’t like what they bought, they’re surely going to say so when asked. This is more true today than ever, with the increased use and adoption of social media.

****At a recent technology symposium held in New England, lenders had the rare opportunity to hear from a group of decision-makers on why they chose their loan origination system and the reasons behind their decisions.

****The panel of lenders differed in asset size, loan volume, lending models, deployment and workflow requirements, but they were similar in certain aspects as well. They set the table by discussing the reasons that motivated them to perform their technology search. Most were prompted by upcoming regulatory changes and the lack of confidence in their present system or in their vendor to handle these changes. Fear is a great motivator, but most of the lenders had a detailed plan long before compliance deadlines became realities. The lenders’ plans all included a wish-list of capabilities they both required and desired and all echoed that it had to be an integral part of their banks’ overall growth program. It was here that their needs began to differ and requirements became unique to their operations.

****One adopter said that he wanted an internet-based solution in order to relieve his thin IT staff from the burdens of maintenance and upgrades while providing access to loan officers in the field. A second lender said flexibility, customization and ease-of-use topped her list. A third lender desired to mirror their present workflow and then improve upon it. One said a key component was the LOS’s ability to grow with their organization, and not just accommodate more bodies, but have true scalability. Another lender wanted one system to handle both mortgage and consumer lending on the same platform.

****Each individual then described their lending operation in detail; the nuances that they embraced and those that they wanted to change. What became evident was how the differences in each operation clearly outnumbered the similarities, meaning each one had a distinctly different way of lending and thus a unique set of requirements. They described how the chosen LOS allowed them to achieve their goals and the effort that was involved. They described future plans and outlined their growth expectations. They also included candid details about their implementation experience, including both the successes and pitfalls and described what they learned along the way.

****In an effort to share this valuable knowledge and insight directly from the individuals making these decisions, I will be adding a “Lender Spotlight” section to this column.  Come back next week to see how and why technology decisions are being made directly from the decision makers.

Understanding The News: Automate Financial Reporting For Reverse Lending

*Automate Financial Reporting For Reverse Lending*
**LOS Ensures More Accuracy**

***It’s all about making things simple and easy. Technology should improve the process, not complicate it. To this end, PROGRESS in Lending has learned that Mortgage Cadence, LLC simplifies changes to the HECM program using the ACE Rules Engine’s rules-based configuration. As financial assessments of all reverse borrowers take hold throughout the reverse industry, more lenders are turning to Mortgage Cadence’s advanced technology to easily implement the necessary changes.

****Over the past year, more reverse borrowers than ever before have struggled to meet the tax and insurance obligations set forth in their HECM loan. Because of this, FHA issued a HECM Program Update on October 5, 2011 summarizing the adjustments it has made to ensure the sustainability of the program. One noteworthy statement included in the update indicated that HUD does not prohibit additional financial capacity and credit assessment tests on HECM applicants.

****In addition, on October 27th, NRMLA issued its guidance on Limited Underwriting for Property Charges, which reviews an applicant’s capacity and willingness to pay property charges. Many lenders have already adopted, or are in the process of, implementing their own financial assessment tests. With quick industry adoption of financial assessments on reverse applicants, lenders must make the necessary adjustments to their underwriting process to account for the changes.

****Mortgage Cadence’s rules engine is equipped to easily manage NRMLA guidelines, lender guidelines and any future HUD guidelines by offering lenders a dashboard to continually modify programs as changes are made. In addition, the Mortgage Cadence Symphony loan origination solution will give lenders who sell to numerous investors the ability to support multiple guidelines.

****“In order to stand the test of time, reverse lenders must be flexible to meet changing market conditions,” John Levonick, chief legal and compliance officer for Mortgage Cadence asserted. “Mortgage Cadence is not only capable of offering a flexible solution to meet those changing needs but also continuously stays ahead of industry regulations to offer our clients the guidance they need to sustain their business.”

The Secondary Desk: A Paradigm Shift

*Navigating A Changing Market*
**By Ivan Darius**

***The mortgage industry is undergoing a vast and dramatic shift. It’s more than regulations or investor relations; we are looking at an actual shift in the paradigm of how the mortgage product is assembled. While process management still plays an important role, we are seeing a fundamental shift towards more active management and more intense verification of data.

****Most existing “Database-of-Record” systems are not designed for this paradigm; instead they are primarily used to capture the data. But it’s not good enough to just have static, end result, data. Particularly for compliance, mortgage bankers need to understand where the information came from, what the context was when it was collected, and how it might be needed in the future. Of course, if we can all agree that data quality is the key, the questions center around when and how the data is validated. Do a simple Google search on loan data quality and more than 20 million hits are returned, most of them from vendors promoting loan quality. And what is technology’s role?

****Reading some of the articles, it’s clear that most of what is written is based on the perception of how a mortgage is underwritten and processed. In reality, it’s more about the workflow, access to information in the form of data, open systems, seamless unification of platforms, and Software-as-a-Service, or cloud-based environments that promote greater agility to be able to assemble and validate information in an automated fashion. It’s also about drawing a line between the origination process and data quality. Origination focuses on gathering facts about the consumer and the collateral, processing the data, and efficiency. Data quality and validation is (should be) done in parallel. Working symbiotically with the LOS, constructing and validating the mortgage product and loan level information in a separate system or process, that can then be merged with information in the “Database-of-Record”, ensuring a validated loan file that has minimal repurchase and compliance risk.

****For lenders, it makes sense for that parallel system to be an adaptive product-eligibility, pricing and secondary marketing automation platform. In the last few years these systems have evolved from core pricing and eligibility engines, to a much more complex platform. In the early days of PPE’s, it was a loan officer product and search tool that included basic automation of the locking process. Today, the workflow has matured adding things like automated underwriting, mandatory delivery, hedging and loan committing, consumer point of sale, investor credit overlays, etc – all things that have significantly enhanced the origination and lender workflow functionality. This information is so fundamental to creating a mortgage that it needs to be accessible from the consumer to capital markets and any point in the workflow between. By continually validating the loan level data throughout these steps, a lender is ensured that the output is a higher quality and compliant loan. Investor credit overlays are a good example. All of the above allows lenders to manage risk from the standpoint of both origination and capital markets.

****As the mortgage process evolves, and compliance grows in scope and importance, it is imperative that the industry evaluates how the market is changing and adjusts accordingly. Today, alongside LOS and servicing systems, product, pricing and secondary marketing automation platforms are equally, if not more, relevant. In the proper implementation, these platforms work hand-in-hand, creating a workflow designed to support the industry’s move towards data verification and compliance.