What Will 2013 Bring?

*What Will 2013 Bring?*
**By Tony Garritano**

***Here we are on the cusp of a new year. So, what will 2013 bring with it? Here are three trends that I think will be big in the area of mortgage technology in the coming year:

****The Year Of The eSignature

****It’s about time. We’re finally seeing the last barriers to eSignatures drift away. “In light of the IRS’ decision to accept eSignatures I am very optimistic about 2013,” noted Christian Wright, Director, Mortgage & Financial Solutions at CIC. “I think we’ll see FHA approval of eSignatures in 2013. I also expect a renewed interest in the full eMortgage. The mortgage industry as a whole will become more comfortable with eSignatures rather than less comfortable.”

****Compliance Is Still King

****Ankush Dham, director of technology products and services at ISGN, concluded that he “expects the emphasis on compliance to remain at the forefront of technology initiatives. Technology will continue to evolve to provide more automation around tracking of compliance. When the final disposition of regulatory changes are announced, technology vendors will be busy implementing changes and designing functionality that will allow clients to effectively originate compliant loans.”

****Simply put, “Compliance tools will continue to emerge to support lending decisions and servicing measures,” added Kelli Himebaugh, Corporate Vice President, Mortgage Builder Software. “Experience has shown us that “best efforts” are not always enough to satisfy regulators, so additional tools and enhancements will increase visibility into all stages of the mortgage process, from origination through servicing.

****“Reporting and event tracking are perhaps the most obvious, with everything from email and conversation logs, to inspection and valuation reports open to regulator scrutiny. LOS solutions are well positioned to provide this, particularly as they include 4506-T results and every other conceivable document in electronic format. Digital document management will become a necessary part of the origination process in order to provide the transparency the new environment demands. Well-integrated pricing engines will record the loan program alternatives made available at the time of origination, bringing clarity into the fair lending concerns of various regulators.

****Servicing systems are under renewed scrutiny, and platforms aimed at the mid-tier segment will benefit from greater harmony with the LOS systems that create the loans they service,” concluded Himebaugh. “Presently, many of the steps required to transfer information from one to the other require intermediary steps where errors can occur. Systems that are designed to work together can enhance compliance by eliminating human error to a much greater degree.”

****Count Every Dollar

****Compliance aside, the other big issue for lenders in 2013 will be how they control their cost to lend. With refis making up less of the market, lenders have to smarter about how they go about creating the most cost effective lending process. “Leveraging technology to combat these rising costs is essential for all lenders, especially in the community bank market,” pointed out Daniel Liggett, Director of Client Services for Associated Software Consultants’ PowerLender Loan Origination & Processing System. “Sound business practice has these lenders turning to trusted third-party providers for their compliant technology solutions rather than attempt to maintain it in-house.

****“These lenders will continue to turn to technology providers that provide solutions that are flexible and cost effective and have the ability to deliver tested compliant solutions in an accurate and timely manner.

What’s Next For Mobile?

*What’s Next For Mobile?*
**Trends To Watch**

***We at PROGRESS in Lending launched a free iPad app over a year ago. You can download the free app in the iTunes store today. We believe in this technology. But does it have mortgage applications? Here’s the scoop on mobile trends in the mortgage space today:

****When ordering services like an appraisal for example, mobile is already big. Brian Coester, Chief Executive Officer at appraisal company CoesterVMS believes that “there will be a big push to integrate services on the vendor side and service providers will offer mobile versions of their application to their customers. They will have their app where people can order services from it, check status of files and request updates etc. At the same time, I don’t think mobile integration will be as revolutionary as the mobile devices were for consumers. Mobile devices essentially replaced the need for a desktop computer in most cases. People no longer go to their desktop, they just have an iPad, and they function off of that because they can access their email, think of the gaming industry which the $.99 game has almost replaced the $69.99 game that used to go in your XBOX.

****“The integration with vendor services into a mobile is not going to replace full version and it is definitely not going to replace the full system. Everything is still going to be online and desktop. The add-on value of a mobile application would be just a “Lite” version of the full application. You do get some basic functionality from it, for instance, checking reports, collecting basic data, signing forms, and ordering basis services.  However, there will not be anything more than that, and I don’t think that there ever will be. There are too many fields and elements.”

****Speaking of fields and elements, the keepers of those fields and elements is the loan origination system (LOS). And in 2012 we saw a lot of LOS systems incorporate mobile features. Kelli Himebaugh, Corporate Vice President, Mortgage Builder Software, says, “Mobile devices have already become an integral part of our personal lives and will continue to gain acceptance and popularity in the business world as technology companies recognize the need for mobility. In lending we have seen mobile devices start to come into their own for origination purposes and in field services. Loan officer and appraiser use will skyrocket in 2013, so mobile services will be as necessary as oxygen for the mortgage industry. The hardware arena is heating up with the addition of several new devices to compete with the iPad, and this will make things interesting.

****“As a technology provider, we see mobile devices as standard equipment right now, no longer a luxury option. We are making our software fully accessible to all kinds of mobile devices and see others following suit in 2013.”

****The bottom line according to Ankush Dham, director of technology products and services at ISGN, is that “consumers are increasingly using their mobile device to manage their lives on a daily basis, and mortgage lending and servicing is no exception. We anticipate this to be essential for mortgage lenders and servicers.”

Mortgage Builder Closes Another Acquisition

*Mortgage Builder Closes Another Acquisition*
**By Tony Garritano**

***It has been a big year for Mortgage Builder. The traditional LOS acquired a servicing system and just recently launched new versions of all of its origination technology, which now also includes mobile capabilities. Well, they are not slowing down. PROGRESS in Lending has learned that they have completed yet another big technology acquisition. The company acquired a PPE and CRM combined player. Here’s the scoop:

****Specifically, Mortgage Builder has acquired LXE Software Inc. of Denver, Colorado. LXE Software is a provider of CRM and product pricing and eligibility engine (PPE) technology, and is highly regarded as an innovator in its industry segment. The company has over 50 clients, several of which are also current Mortgage Builder clients.

****LXE Software’s flagship product, LoanXEngine, combines the essential services of lead management, product pricing and eligibility, and customer relationship management workflow into a single, easy to use platform. As part of the acquisition, Alan Johnson, the company’s founder and CEO, will remain with the company and become a senior executive within the Mortgage Builder management team. LXE Software’s other employees will also remain and the offices in Denver will form the nucleus of Mortgage Builder’s physical presence in the western United States.

****LoanXEngine will be integrated into Mortgage Builder’s new LOS platform, Architect, which includes an array of major enhancements and a new look. Importantly, LoanXEngine will continue to be available as a standalone product that works seamlessly with any loan origination software system. No sales price was disclosed.

****“LoanXEngine is very popular with its users, so we will make sure they can continue to enjoy its superior features with full support,” says Keven Smith, Mortgage Builder’s president and CEO. “It’s an incredibly dynamic product that brings great value to loan officers on the front end of the mortgage process, as well as to secondary marketing efforts.” Smith says.

****“Mortgage Builder stands alone as an independent company offering an end-to-end-to-end technology that blends loan origination and loan servicing within a common structure,” says Johnson. “LoanXEngine brings the very front part of the process into the equation, making Mortgage Builder the only ‘front-to-end-to-end-to-end’ company, with top quality CRM, PPE, LOS and LSS technologies,” he notes. “This is a first for the industry and our clients will be the beneficiaries.”

****LoanXEngine comes in standard and enterprise editions to serve organizations of all sizes and needs. It is web-based, supports Pocket PC and iPhone browsers, and features configuration options for retail, wholesale and online origination business models. The company’s LoanXWeb component turns lender and partner websites into dynamic 24×7 instant offer systems, while intelligently assigning loan officers, generating emails, finding best execution pricing and performing other critical functions.

****Kelli Himebaugh, corporate vice president of Mortgage Builder, will be tasked with expanding LoanXEngine’s customer base along with bringing its benefits to current and future Mortgage Builder clients. “Our clients will love what the addition of LoanXEngine will do for their origination efforts,” she says. “With the formal introduction of our new Architect platform at the MBA Annual Convention, and now adding this superb front end technology to our wide range of capabilities, we have a truly amazing story to tell at the Mortgage Builder exhibit in the Expo hall,” she says.

****Himebaugh notes that the initial integration into Mortgage Builder’s Architect LOS platform will begin immediately to enable Mortgage Builder users to take full advantage of LoanXEngine’s capabilities as quickly as possible. “It automates so many parts of the marketing and origination process that it truly harmonizes with Mortgage Builder’s service orientation,” she observes. “Both companies have raving fans, and together, we’re offering an even more compelling value proposition for our users.”

A Significant LOS Development

*A Significant LOS Development*
**By Tony Garritano**

***A few journalist were invited to a special event hosted at the Millennium Hilton in New York City. It was a wonderful location with a view of Ground Zero. I was excited to be invited. But I have to say, the company was even better. At the event Mortgage Builder, a loan origination and servicing software (LOS and LSS) provider, gave us an advance look at its newly redesigned origination platform. I know what you’re thinking. You’re saying, “It’s just another LOS.” In this case I beg to differ and here’s why:

****First off, the next generation Mortgage Builder LOS bears a new name – the first name change in 14 years for the company’s flagship product. Known since 1998 as Mortgage Builder, the new platform is called Architect. Mortgage Builder has been working on the new and improved platform for nearly two years in preparation for its industry-wide rollout next month.

****The re-architecture of Mortgage Builder’s core LOS solution includes a forward-looking plan and takes advantage of the most current technology available. The structure of Architect is built using WCF (Windows Communication Foundation), WPF (Windows Presentation Foundation), and XAML, all on a .NET framework. The new infrastructure of Architect will allow for continued growth in the platform as the industry and client needs change.

****Kelli Himebaugh, corporate vice president at Mortgage Builder comments, “With this new technology, we will be able to make swift changes for our customers system-wide as well as at the individual client level. This will greatly decrease time to delivery for product enhancements and client customizations.”

****“We took our time to make certain that we got it right,” says Keven Smith, Mortgage Builder president and CEO. “Architect builds on the popularity of the classic Mortgage Builder LOS and makes it even easier to use, with increased automation, a modern visual aesthetic that creates a more efficient working environment, and a seamless transition for current customers. At the same time, Architect is built to lower implementation timeframes and costs for new clients with its cloud-based engineering and additional features.”

****So, why do I think this is significant? LOS systems are being stressed these days. They are being literally forced to morph with new regulation and such. The problem is that it’s hard to make an old legacy LOS system more modern and up to date. The fact that despite all of the money Mortgage Builder is being forced to invest into their system just to keep up with change, Mortgage Builder has decided to invest even more in rewriting the system shows in my mind that this is a company dedicated to the business of lending, which is something that is not lost or dismissed by lenders looking for a strong LOS partner.

****Jamie Zaborowski, LOS manager at University Lending Group LLC in Michigan, and user of the Mortgage Builder LOS, comments, “Service is everything in our business, and Mortgage Builder’s been helping us deliver excellent customer experiences for a long time. With the additional ease of Architect’s new user interface and its increased automation, we’re looking forward to new efficiencies and a greater competitive edge. It’s an impressive platform.”

****The same foundation technology is also being extended to its loan servicing software system, G/Serv. These infrastructure changes for the G/Serv platform are scheduled for completion early next year.

****Architect is joined by Blueprint, its advanced electronic document management (EDM) module for paperless lending and digital file delivery ease, and Surveyance, Mortgage Builder’s web-based loan originator portal, featuring highly useful mobile applications components to maximize field time for loan officers and others. Both modules have been redesigned to work flawlessly within Architect, and have been renamed accordingly to reflect their recent enhancements and expanded functionality.

****“We’ve always understood the importance of fast response and ease of use,” says Smith. “We’ve designed Architect for lenders that need extraordinary performance at a reasonable cost in order to compete with their big bank competitors. It’s our focus and we never lose sight of it,” he emphasizes.

****On another note, Smith also teased us journalists at the event announcing that Mortgage Builder is in the throws of making another acquisition. As we at PROGRESS in Lending reported first, earlier this year Mortgage Builder acquired servicing company GCC to become a total lending platform. Smith said that another acquisition is likely to close within the next month and Mortgage Builder is looking at even more possible future acquisitions. Stay tuned …

Market Analysis: Keeping Up With The Times

*Keeping Up With The Times*
**By Tony Garritano**

***With the mortgage industry in such a state of flux, you can’t fall behind. And if you’re an LOS the pressure on you is even greater. That’s why the good LOS companies out there are always looking ahead. For example, Mortgage Builder rolled out its two latest technology updates at its annual User Conference this month to enthusiastic response. The redesigned and improved electronic document management (EDM) solution, Blueprint, adds sophisticated new features to the award-winning Mortgage Builder platform. The refined and enhanced web portal upgrade, called Surveyance for its increased vision and transparent utility, also brings highly developed mobile application capabilities to Mortgage Builder users. Here’s the scoop:

****The over-100 attendees at the annual Mortgage Builder User Conference, held at the Hyatt Regency in Dearborn, Michigan on June 5-7, were also given a sneak peek at the major platform upgrade Mortgage Builder will unveil later this summer at a special press event in New York City. The dramatically improved platform will carry a new name – a first for Mortgage Builder since its original release in 1998. It is designed to increase efficiency, provide seamless transitions for current users of the existing platform, and lower both implementation timeframes and costs for new clients.

****These announcements follow closely on the heels of Mortgage Builder’s acquisition last month of former sister company GCC Servicing Systems. The addition of GCC made Mortgage Builder unique among independent LOS providers in offering fully integrated origination and servicing platforms under a single banner. GCC’s flagship software, G/Serv, will share the upgraded look and feel of Mortgage Builder’s new LOS platform, adding synergy and precision for lenders who also service loans.

****“We wanted to tell our loyal clients about the new platform first at the User Conference,” says Kelli Himebaugh, corporate vice president at Mortgage Builder. “They were impressed with the new Blueprint and Surveyance features, so we knew they’d appreciate an early look at the platform these improvements were designed to complement. Our sponsors, our users, our vendor partners and the Lenders One team were most supportive and enthused,” she says.

****“I don’t think I have ever left a conference feeling as excited as I do about the future and Mortgage Builder’s new technology,” said Kelly Welch, a Mortgage Builder user from Equity Resources, Inc. of Newark, Ohio following the conference.

****The Blueprint and Surveyance features are available now and bring new levels of convenience and utility for Mortgage Builder clients. By virtually eliminating paper from the origination process and providing full support for the mobile devices that are rapidly becoming essential tools for lenders, Mortgage Builder users can perform their jobs regardless of location. “Blueprint and Surveyance are just the latest improvements to the Mortgage Builder environment,” says Himebaugh. “Much more is on the way,” she adds, “and we look forward to playing our part in making the mortgage industry more responsive, more efficient and more productive, both on the origination and servicing sides.”

Market Analysis: LOS Acquisition Ups The End-To-End Ante

*LOS Acquisition Ups The End-To-End Ante*
**By Tony Garritano**

***The loan origination space is heating up for sure. We’ve seen some noted acquisitions and today I’ve been given the scoop on another such deal. Let’s understand, LOS companies have to add value. In this case an LOS is not getting acquired, but rather is doing the acquiring to be able to offer its customers that much more value. I told you last week that I would bring you some exclusive news from Mortgage Builder when it was good to go. Today Mortgage Builder has acquired an industry mainstay. Here’s the scoop:

****Mortgage Builder has entered into an agreement to acquire GCC Servicing Systems, a leading loan servicing software provider that shares 35 years of history with its new owner. A sale price was not disclosed. GCC is the creator of G/Serv, a mortgage servicing software popular with mid-tier lenders, community banks, credit unions and mortgage companies, a market sector also well-served by Mortgage Builder. The teaming of the two technologies comes at a time when many lenders are retaining servicing rights and responsibilities rather than using subservicers and selling loans on a servicing released basis.

****“More lenders need servicing software now than at any time in recent history,” says Keven Smith, Mortgage Builder’s CEO and president. “With the acquisition of GCC, Mortgage Builder now offers a complete lending system that empowers lenders to control all aspects of the process,” he notes. “And with their common DNA, the platforms work extremely well together, making it far simpler for lenders to make smooth transitions into loan servicing.” The GCC staff will join Mortgage Builder and GCC will operate as a separate division with Jeff Augenstein, vice president of GCC, responsible for the day-to-day operations.

****GCC Servicing Systems was founded in 1977 as Glenn Computer Corporation by Glenn Liebowitz in Southfield, Michigan as a mortgage servicing, loan origination, and accounting service bureau. The loan origination product was spun off in 1998 to become Mortgage Builder Software. G/Serv brings Mortgage Builder a comprehensive loan servicing platform that automates all servicing administration functions, along with default management and full reporting capabilities. Like Mortgage Builder, G/Serv has evolved greatly since it was first released, and is now designed for Software as a Service (SaaS) delivery for fast, cost-effective implementation, and is hosted in a SAS-70 Type II/ SSAE-16 Type II compliant data center.

****“This acquisition puts Mortgage Builder into a unique class of technology providers,” says Kelli Himebaugh, corporate vice president of Mortgage Builder. “As a nimble, independent company, we are well accustomed to working with regional and mid-tier lenders” she says. “We can now bring our highly personalized approach to lenders choosing to become servicers to maximize returns and improve borrower service levels,” she says. “A new era is dawning for the mortgage industry and with the addition of GCC, we are able to provide a full range of exceptional technologies for America’s lenders.”

Market Analysis: Mortgage Builder Is Making News

*Mortgage Builder Is Making News*
**By Tony Garritano**

***The industry is still talking about the Avista acquisition. However, Avista isn’t the only prominent LOS making headlines. I talked with the executives at Mortgage Builder yesterday and they have some exciting plans for this year. When I’m able, I will tell you all about it. Stay tuned. But today I want to talk about a recent integration that Mortgage Builder completed that will really improve the appraisal space. Here’s the scoop:

****Mortgage Builder has completed a technology integration with InHouse Inc. of Jacksonville, Florida, the providers of the InHouse Connexions appraisal management platform. The integration came as a result of requests by Mortgage Builder clients that the InHouse technology be integrated with the Mortgage Builder LOS, as they preferred the appraisal management capabilities and flexibility InHouse offers. With the integration in place, Mortgage Builder users can conveniently access InHouse Connexions and its full menu of appraisal options.

****“InHouse Connexions was clearly the choice of several clients, including one of our largest,” says Kelli Himebaugh, corporate vice president at Mortgage Builder. “As soon as we started working with them, it was easy to see why lenders were wanting InHouse to be available directly from within their favorite LOS. The Connexions platform offers the ability for lenders to use their own appraisal panels, order from appraisal management companies (AMCs), or access InHouse’s own AMC when convenient,” she says. “The cloud-based technology provides full reporting and complete control over the appraisal effort with maximum flexibility.”

****Jennifer Creech, InHouse president and CEO, agrees that the integration with Mortgage Builder makes a great deal of sense for both companies because of their similar philosophies and reputations. “InHouse is a company with a flair for technology innovation,” she says. “Mortgage Builder is a proven technology company that has always invested in innovation and service enhancements to improve the experiences of its clients.  We’re following a similar path, and we’re finding that lenders strongly desire the control over their businesses that a wide menu of options provides,” she notes. “Mortgage Builder’s clients are tremendously loyal and the company’s service is legendary. InHouse and Mortgage Builder make a great team.”

****Both companies see flexibility as a key ingredient for success in today’s mortgage technology. Mortgage Builder offers an end-to-end LOS system in which everything is integrated, from product and pricing engines to electronic document management. Many features, including compliant loan documents, are available at no cost, and delivery options are completely flexible. Lenders can opt for Software as a Service cloud-based delivery, more traditional installed business models, or combinations of both. They can even choose to pay for services only when loans close successfully. InHouse provides a similarly flexible blend of options on the appraisal management side, allowing clients to identify and use appraisal companies in some areas and AMCs in others, all with fast, automated ordering and delivery. Full performance metrics and reporting on the overall appraisal effort brings complete transparency, and InHouse has one of the few direct connections to Fannie Mae and Freddie Mac’s UCDP (Uniform Collateral Data Portal).

****“Both companies clearly believe in giving clients the most for their technology investment,” says Mortgage Builder’s Himebaugh. “We are fortunate to be working with their fine team and our clients will appreciate the array of benefits our integration with InHouse brings to the table.”

Market Analysis: Getting Ready For ULDD

*Getting Ready For ULDD*
**By Tony Garritano**

***The Uniform Loan Delivery Dataset is a major change in the way the mortgage industry not only delivers loans between lenders and investors, but is also a significant development in how loan data is verified, analyzed and evaluated. By having the individual data elements of each loan available in a standardized digital format to compare and study, investors can more easily review files to ensure greater data integrity in each loan. Analysis and reporting are greatly improved, bringing much-needed transparency and quality to the capital markets, leading to greater liquidity and reduced costs for all stakeholders in the process. Initially applying to loan deliveries involving Fannie Mae and Freddie Mac, the ULDD effectively sets the stage to become the new industry standard upon implementation. And PROGRESS in Lending has learned that one LOS is already compliant. Here’s the story:

****Mortgage Builder has already received certification from the GSEs that it is in compliance with the new Uniform Loan Delivery Dataset (ULDD) requirements, well ahead of the April voluntary loan delivery date and the July 23rd mandatory delivery deadline. The agencies pushed back the mandatory date from March to July to allow vendors and lenders more time to prepare for the change, but Mortgage Builder clients can familiarize themselves with the changes immediately.

****By being early with its readiness for the ULDD, Mortgage Builder allows its clients greater preparation time to meet the requirements of the new system and its differences. “There are many new data fields and it will take clients some time to become acclimated,” according to Liz Fafette, Mortgage Builder’s vice president of operations. “We have made every effort to make the transition as seamless as possible for users by giving them an advance view of the changes as far back as November, so that helped,” she explains. “The upload websites for Fannie and Freddie are different, but we have worked hard to make the user experience as consistent as possible with the current Mortgage Builder environment.” She notes that more than 600 data fields were involved in the conversion to ULDD, and the newest version of MISMO-standardized XML (Extensible Markup Language, standardized by the Mortgage Industry Standards and Maintenance Organization) made the effort a significant undertaking.

****“ULDD brings greater standardization to the process for each transaction,” observes Keven Smith, president and CEO of Mortgage Builder. “ULDD brings improvements to the existing methods of electronic delivery that we anticipate will reduce issues around completeness and acceptability,” he says. “There is a checking feature that warns of possible problems or conflicts with Freddie or Fannie, and prompts users to fix them before uploading. This saves the GSE and the lender time, and the overall precision of the ULDD package will help boost transparency,” Smith predicts.

****Mortgage Builder was required to demonstrate that its system’s ULDD met the requirements and quality standards for the GSEs through a series of test cases with each agency. Now, with that process complete and Mortgage Builder duly certified, the company is releasing the new version for client download and implementation. “Our technical support staff is available to assist wherever required,” says Liz Fafette, but she feels that the effort put in by her operations department will make the transition remarkably painless. “With the implementation of ULDD by Freddie Mac and Fannie Mae, the mortgage industry is officially in the digital age,” she says. “We’re glad to help in the effort to bring new levels of data integrity and transparency to the mortgage industry, and Mortgage Builder is ready to go – months ahead of the deadline.”

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.”

Understanding The News: Are You Safe?

*Are You Prepared For Cyber Threats?*
**Cyber Crimes Are On The Rise**

***The threat posed by cyber criminals has become an increasingly real and growing concern in mortgage lending, and one that has attracted the attention of Congress, as evidenced by recent hearings by subcommittees of the House Committee on Financial Services. Fighting cyber crime is becoming a priority for more parties than ever before, from the Department of Homeland Security to private firms and insurance companies. As former Homeland Security Secretary Michael Chertoff recently said, “People often ask how much of a threat this is. It’s not a threat – it’s actually happening.” Chertoff’s consulting firm says cyber criminals cause over $100 billion in mayhem per year worldwide, and some believe it has exceeded drug trafficking in dollar volume. Here’s how you deal with these criminals:

****As a line of defense to protect its clients against loss caused by cyber crimes, mortgage loan origination software maker Mortgage Builder has carried “cyber liability insurance” (CLI) coverage for the last three years, well before the issue became public knowledge. It also has completed a SSAE 16 Type II audit. “We do not consider cyber liability insurance coverage to be just an option,” says Mortgage Builder Founder and CEO Keven Smith, “It’s a necessity. Cyber criminals have become more sophisticated as the amount of information available in cloud computing environments has grown. It is our responsibility to protect the sensitive information with which we are entrusted by both clients and borrowers.”

****A report by the Ponemon Institute, a U.S. based information security policy research center, states that the median cost of cyber crime increased by 56 percent over the last year and now costs companies an average of $6 million per year. (Source: Second Annual Cost of Cyber Crime Study, Ponemon Institute, August 2011). The information came from a self-report survey of 50 U.S. based businesses, and the company notes that many companies decline to report cyber crimes, implying the problem is actually far greater than previously thought.

****Bill Mitchell, Mortgage Builder’s vice president and national sales manager, notes that cyber liability insurance is not required for LOS providers, partially because the issue surfaced in earnest only in the last year. But more lenders, particularly the community banks that make up 70 percent of Mortgage Builder’s prospective clients, have become keenly interested in cyber crime protection. “A top-25 community bank that recently became a client found in their due diligence that many LOS providers lacked cyber liability insurance coverage,” he says. “It is rapidly becoming a requirement in RFPs (Requests for Proposals) among lenders when considering new loan origination software solutions.” Mortgage Builder carries the maximum policy available, Mitchell says, which includes coverage to $2 million per claim, but notes that higher limits may be available for lenders seeking supplemental coverage through their own providers.

****Mortgage Builder also sees a successful SSAE 16 Type II audit as an essential security safeguard, indicating that the American Institute of Certified Public Accountants has tested the organization’s ability to protect sensitive business data. This new audit designation replaces the SAS 70 Type II audit that represented the industry’s top audit designation up until this year. “This is another protection against information theft that is not required for LOS companies,” Mitchell states. “It involves on-site physical verifications of security measures, control objectives and activities by an approved, independent auditor. We recently passed our ninth consecutive audit with flying colors, and we are seeing more clients who appreciate the commitment it represents to safeguarding their information,” he says.

****“We hope for the best but we plan for the worst,” Keven Smith says. “Staying ahead of the requirements and keeping clients as protected as possible from cyber crime is our preferred method of doing business.”