***PROGRESS in Lending is proud to bring you this video by Mortgage Cadence. Are you addicted to paper? Many lenders are. Here’s what happens when you refuse to retire outdated processes:
***PROGRESS in Lending is proud to bring you this video by Mortgage Cadence. Are you addicted to paper? Many lenders are. Here’s what happens when you refuse to retire outdated processes:
***Mark Phlieger was among the first to evangelize on behalf of Web-based computing when he launched Avista Solutions. Now his thinking has gone mainstream. The trendsetting company celebrates its 10th anniversary. Avista celebrated other milestones and added a record 37 new customers in 2010, comprising 20 community banks, totaling $12 billion in assets, 10 credit unions and seven independent mortgage bankers. On March 25, 2011 there were 63,000 active B2B user accounts across Avista’s customer base.
****Other milestones include Avista relocating its corporate headquarters to Charleston, South Carolina in July 2010, a city that Phlieger said offers much support for the technology industry and cultivates high quality talent. Since signing on its first customer in 2001, Avista Solutions has: processed more than 100,000 loan applications in one month, reached a 28-day implementation time record. Mark Phlieger talked to us about what happens next now that the Web has gone mainstream.
****Q: As we see more institutions with depositories like community banks and credit unions enter the mortgage space, are you noticing that the bulk of your new clients are these types of institutions?
****MARK PHLIEGER: Yes, absolutely. We signed five banks this month. The market has shifted to depositories doing lending. What we’re seeing is mortgage bankers combining with these depositories. Also, it’s important to remember that banks are heavily audited, so when we talk about the differences between a bank and a mortgage banker, the banks are heavily accustomed to regulation. That is not an insult to the mortgage banker, it’s just that the banks are more used to being under regulatory scrutiny.
In terms of the sales cycle, they are longer these days. How long? Credit unions have the longest cycle, banks are in the middle and the mortgage banker is the shortest. We love dealing with community banks and credit unions.
****Q: Recently the MBA revised down its origination volume projection for next year. Originations are expected to be at their lowest point in 15 years. How do lenders and vendors survive this market?
****MARK PHLIEGER: Less volume means that we have to sign more customers. We are signing four or five a month, but hope to move that up to seven or eight as volume falls. Right now our largest customer is only 4% of our revenue. Our goal is to have a lot of customers in the small and mistier market.
There’s a general attitude that there is rapid change going on that we have to deal with. Banks know that they have to generate fee income to make up for other revenue that they’re losing, which is driving them into the mortgage market. They also don’t want to invest in legacy technology where they have to invest in a heavy IT staff, servers, Citrix, etc. They want to plug and play. They want to go out and find their people and just turn on the technology. We’ve grown a lot in this down market because of our cloud-based model. They also like the all-in-one solution. They don’t want to deal with 10 different solutions.
****Q: Avista celebrated its 10th anniversary this year. How has the mortgage industry changed in 10 years?
****MARK PHLIEGER: I had more hair and I weighed a lot less when we started Avista. Honestly, it used to be more go-go. It was all about volume, but now it’s about quality and compliance. It’s changed a good bit. There is a lot of opportunity for vendors that are interested in innovation and offering a top-quality tool. You want leading-edge technology so you are where the client wants to go. These days we talk about mobile and cloud-based solutions. Your technology has to solve the problems of your client. For technology like that, I think there will always be opportunity.
****Q: Avista was among the first, if not the first, company to come out with a completely Web-based solution. Now it seems like the market is where you were 10 years ago. How does that feel?
****MARK PHLIEGER: It’s nice to see. We were cloud-based before cloud-based was cool. We’ve been Web-based on Day One. Over the years it has gotten easier with Google and Amazon setting the bar for cloud-based products. We don’t have to evangelize as much. On the downside, there is more competition, but that’s ok because mortgage bankers are going to pick the product that best fits their needs. They want anytime, anywhere access. Just like we made the transition to everything Web, the next transition is to everything mobile. The reality is that I read and consume all my information on my iPad. That’s where we’re going next.
****Q: What does it mean to be cloud based?
****MARK PHLIEGER: Simply put, it’s about delivery as a service instead of selling a product. Think about it this way, you don’t care where the power plant is as long as you plug in your iPhone and it gets charged. We handle infrastructure, platform, etc. Once you sign with us we take you through implementation and set everything up for the client instead of giving them a box and saying: Here you go. It’s a different model. We charge based on the closed loan instead of by the license. When the model is more like a lease instead of a license, there is an incentive for everyone to work together to make the business a success. You have to care.
****Q: There has been a lot of consolidation in the LOS space and that is likely to continue. Most recently we saw Ellie Mae acquire DataTrac. What do you think about LOS consolidation?
****MARK PHLIEGER: This was predicted and it will continue. The players that ran a desktop or client-server model will get consumed. This acquisition validates the cloud model. Speaking of Ellie Mae, you see in their quarterly reports that most of their revenue is coming from cloud-based products.
I believe there is a lot of opportunity to be independent and have a leading-edge platform. Avista is end-to-end and we’ve built everything. So we can compete well with any other LOS. You need a solid infrastructure to support banks and credit unions. You can also be more nimble when you’re independent.
****Q: Avista also made headlines with its FHA Connection link earlier this year. How is that going?
****MARK PHLIEGER: We’ve always had clients that were heavy in FHA. We wanted to build a piece so that lenders doing FHA didn’t have to leave the platform. We’re committed to FHA and customers told us that this was important. FHA share remains substantial so we need to do everything we can to make it easier for our clients to originate an FHA loan. We’ve had a great response. We also enjoy working with FHA. FHA is very professional.
****Q: Continuing to talk about integrations, last year you did integrations with Kroll, Wolters Kluwer and Fannie Mae’s EarlyCheck. What is your integration strategy?
****MARK PHLIEGER: It’s based on what is required from a regulatory or delivery point of view. We also look to where we can get efficiency for customers. Lastly, it’s based on customer feedback. They tell us what companies they like to do business with. We put all that on the roadmap and partner with those companies. We will be live with UCDP within a month. It’s important to make sure that customers have what they need. Integrations are also almost done with Genworth and LogicEase from ComplianceEase. You touched on Wolters Kluwer. We were the first end-to-end product to offer their Expere product. You’ll see more closing doc integrations.
****Q: You talked about signing a record number of new clients last year. How is this year shaping up?
****MARK PHLIEGER: It’s solid. We will best last year in terms of the total overall number of customers signed up and the total value of the contracts signed this year is larger as compared to last year. It is competitive, but we’re seeing opportunity. It’s important to understand what banks and credit unions have to do from a compliance standpoint. It’s intense because they will make sure the vendor complies, but that’s ok for us. We do well up against due diligence scrutiny.
****Q: So, what does the next-generation LOS look like to you?
****MARK PHLIEGER: It’s about more access. People may be coming in from desktops, laptops, tablets, etc. In my opinion, the system also needs to be end-to-end and all-in-one. There is a focus on data quality. You need a common database and consistent process flow. It also has to be quick. The services also have to be baked in like credit, flood, compliance, fraud checks. Everything has to be based on Web services and MISMO XML to get that efficiency. We are a big MISMO supporter. It has been huge for us to reuse code to connect to more services. It’s about technology and customer service coming together. You also need 24/7 access, redundant data centers and thinking through the whole mortgage model.
****Q: How would you define the state of innovation in the mortgage space today?
****MARK PHLIEGER: I like change, but across the industry I’m not sure that’s the case. If the vendor wants to be relevant you have to innovate to solve real business problems. You also need to have an A team to go in and consult with customers. In a transactional model you want to help your clients adopt the technology. You have to go into every client shop to make sure that they are using every feature. You can’t rest on your laurels. In a cloud model we’re not shipping disks so we can roll out new features instantaneously, but we have to educate our clients about all that’s possible. In this market, that’s a big deal.
****Mark Phlieger thinks:
****1. You will continue to see expansion in vendors providing a cloud-based, all-in-one model.
****2. Mobile applications will continue to explode. People want information anywhere, anytime.
****3. Compliance and data quality will continue to be a focus, as it should, in mortgage lending going forward.
****ABOUT MAK PHLIEGER: Mark Phlieger is president and CEO of Avista Solutions, the Charleston, South Carolina- based creator of all-channel, Web-based loan origination systems. Co-founding the company in 2001, Mark has led Avista since its inception and has an impressive record of achievement in pioneering and development in the mortgage technology space. Mark was a team member on the Fannie Mae project that developed the groundbreaking technologies of Desktop Underwriter and Desktop Originator and later became responsible for their implementation and adoption as the industry standard among Fannie Mae lenders.
*Looking To The Future*
***Nancy Alley is not new to the mortgage space. She has been around the block. However, now she has a big company in Xerox Mortgage Services to shepherd. What does she bring to the table? Well, if Nancy’s history is any indication, she is ready to help struggling lenders forced to deal with decreasing volume and increasing regulation move their business to the next level.
****Back in the late 1990s Nancy co-founded a company that offered electronic signatures and electronic vaulting to the mortgage space. This technology is just now gaining its footing, but Nancy was there from the start evangelizing and doing her part to move the industry forward. She’ll bring that pioneering spirit to XMS. Here’s her take on the future of XMS and the mortgage industry:
****Q: For a lot of people, imaging and paperless are synonymous. What’s your take on how the definition of paperless has changed in the past five years?
****NANCY ALLEY: When you think about paperless and take a step back, it was really just about getting rid of paper five years ago. We are in a very paper-intensive industry. So, paperless started with just replacing paper. What did that mean at the time? People started scanning documents and it was limited to a few departments within the lender shop. I would argue that paperless is so much more. You can now manage, share and collaborate on images and electronic documents. Further, as we go into the future you’ll be able to manage, share and collaborate using data. We’re moving along this evolutionary path. We are not talking about how you get rid of paper with our clients because most have done that already. Now we’re talking about electronic collaboration. When you think about collaboration, it has to bust outside of the lender’s walls. It can’t just be internal. It has to be cradle to grave. That’s my vision.
****Q: Do you think the UMDP initiatives are going to help or hurt the industry?
****NANCY ALLEY: This is a hot topic. In the past couple of years, this industry has seen huge change. Change is always painful at first, but I’m a big supporter of these initiatives because they will push this industry to the next level. How? These initiatives will drive paperless adoption and true electronic collaboration. This forces us to go even further and move away from being document centric to being data centric. Right now lenders have data in different systems, but they may not talk to each other and that data may be in different formats. That now changes. To have the transparency to truly analyze everything that we’re doing is key. I think this makes that possible.
The other positive piece that is not specific to UMDP, but relates to UMDP, is that UMDP mandates the use of MISMO data standards. That’s a good thing. Historically we have always had proprietary systems and data formats that don’t talk to each other. So, we do have to get over the pain of change, but once we get passed that as an industry, this will be a great thing.
****Q: Let’s talk about you for a bit. You recently were named the GM of Xerox Mortgage Services. What are your plans for Xerox Mortgage Services?
****NANCY ALLEY: I’m excited to accept this position. I would have never agreed to do this if I didn’t think we had bright days ahead. Greg Smith coined a lot of phrases, but before he left he used to say that we don’t skate to where the hockey puck is now, we skate to where the puck is going. I agree with his philosophy. That’s what we’re going to do. We are going to skate toward the future. The future is about data. Part of what we’ll be doing is becoming more data centric so our clients can collaborate based on data and not just documents.
Also, the XMS Network is very important. The network is central to my vision for XMS going forward. You don’t want to limit yourself to a solution in your walls, you want to communicate out in a seamless way. That’s how you drive true ROI.
****Q: As the founder of what was Advectis and the BlitzDocs product, we all know what Greg Smith brought to the table, but what does Nancy Alley bring to the table? How is XMS going to be different under Nancy Alley?
****NANCY ALLEY: If you look at how Greg grew the company, you go back to the evolution of paperless. He did an amazing job of getting lenders to go paperless. I believe that one of the reasons Greg hired me was because of my tireless dedication to driving the e-mortgage. I am going to steer XMS down that road. I am going to make sure our clients have a roadmap to get to the full e-mortgage.
I also lead the efforts with BlitzDocs XE. My expertise around e-vaults has already shown itself within our product offering. I think Greg letting me develop XE was a test to see what I would do with his baby. We are going to continue to build that out.
****Q: Next year is the five-year anniversary of Advectis being acquired by Xerox. How has Xerox Mortgage Services leveraged its relationship with Xerox and its sister companies?
****NANCY ALLEY: Advectis was the original company. They had a great solution and great people. None of that has changed. However, we can now leverage Xerox so we can integrate services that we couldn’t provide PRIOR. For example, the goal of XE is to fulfill electronically, but we don’t live in a perfect world. If the customer opts out we can seamlessly deliver the package through the mail in paper form. We also see a lot of demand for business process outsourcing. We can offer that and work on the file to do things like data extraction. At our fingertips we have all these other entities that we can leverage.
****Q: The MBA predicts the loan volume to drop off significantly in Q4. How can lenders use technology to survive?
****NANCY ALLEY: If we in the mortgage industry have proven anything in the last few years, it’s that we’re a tough bunch. I have no doubt that the industry will survive, but we have to be more flexible, which is where technology comes in. Lenders need to be looking at solutions that drive automation and collaboration. As volume drops off you need to figure out how you’re going to make money. The solution also has to be flexible because volume changes. One thing to look at is volume-based pricing to tie costs with your volume. As an industry we can’t stop innovating, but when you buy technology you need to make sure that it goes cradle to grave and improves the whole process. Nobody can afford to do big pilots, they need technology that will improve their process now that can solve their problems. To this end, the technology should be able to manage exceptions and be agile. As volume dips, that’s where you get revenue and ROI.
****Q: What is the state of the industry and where do you see it going?
****NANCY ALLEY: We all read the papers and watch the news, there’s still a tremendous amount of uncertainty. As volumes drop we are warned that volumes will drop further. We’re also told that interest rates will increase. I don’t see light at the end of the tunnel, but it’s not all bad news. Lenders are getting comfortable working in these tight conditions.
Getting more granular, I like where we’re going in terms of the data requirements. I hope this is the push we need so we can effectively and transparently share and collaborate on docs and data. We are a member of MISMO and I’m excited about MISMO acceptance. The more we can share data and collaborate based on data, the better the industry will become.
****Q: With the rise in regulations and changing market dynamics, what are lenders’ biggest pain points and how are they leveraging technology to overcome them?
****NANCY ALLEY: Lenders struggle with the constant flow of new rules. There are always new rules being thrown at them. The politicians are always thinking of something new. Lenders are now worried about UMDP. Are they ready? Are their appraisals in the right format? Will they be able to send to the GSEs in the right format? That’s just one example. As I look at that pain points, that’s why you need to leverage your vendor. Your vendor has to make sure that you’re ready. So, lenders need to continue to use technology and expect that their vendor partners to step up to help them navigate these new rules.
****Q: Last question: How would you define the state of innovation in the mortgage industry today?
****NANCY ALLEY: As a technology provider we always want people to be proactive, but it’s a balancing act for lenders. During difficult times you are forced to look at how you do things, how you can do things better, and you’re forced to innovate. We are looking at how we can assess the market and provide a tool that solves business problems. Having said that, you can’t innovate just to innovate, you have to innovate to improve what you’re doing. For example, you may be innovating by providing electronic signatures on disclosures. That’s great, but you need to do that with all your disclosures, for all your loan types, with all your borrowers. So, we need to innovate, but we need to innovate comprehensively.
****Nancy Alley thinks:
****1. Lenders will spend their technology dollars on comprehensive solutions that can easily and seamlessly manage exceptions.
****2. The definition of paperless will progress from basic imaging capabilities to the ability to collaborate on documents and data from cradle to grave.
****3. Lenders will no longer define all-in-one, or end-to-end, by the software system they use, but rather by the extent of their vendor’s reach to other partners throughout the mortgage lifecycle.
****ABOUT NANCY ALLEY: Nancy Alley brings more than 20 years of financial services and mortgage industry experience to her role as the vice president and general manager for Xerox Mortgage Services. In her previous role as vice president of product management for Xerox Mortgage Services, Alley managed the company’s document collaboration solutions, BlitzDocs and BlitzDocs eXtended Edition. Alley also previously led the product management and engineering efforts of eSignSystems, a leading eSign and eVaulting provider; and spent eight years at GE Capital Corporation developing her product management and business development skills in the mortgage banking technology area.
*Innovate to Solve Real Problems*
***Certainly the tidal wave of foreclosures is overwhelming. How do servicers keep up? How do technology vendors keep up? Everyone is forced to keep up. However, in the midst of the deepest chaos, there is opportunity for innovation to take over. As such, companies like IndiSoft were born. IndiSoft is a technology development company that develops, licenses and supports the Software as a Service model for default servicing in the financial services industry. The company’s flagship product, RxOffice Legal is a collaborative platform that helps companies create efficiencies throughout the default life cycle, including loan modifications, short sales, deed-in-lieu, foreclosure, bankruptcy and REO management.
****Sanjeev Dahiwadkar, President and CEO at IndiSoft, is a true entrepreneur. He’s a glass-half-full kind of guy. Going forward he’ll share his ideas on how we as an industry can put this market chaos to an end and move closer to recovery.
****Q: How has the mortgage market evolved over the past two years after the crash?
****SANJEEV DAHIWADKAR: If I can say one thing, it is that there is a need for transparency and a need to measure quality, both internal and among external partners. That is a common theme. We’ve seen an evolution in our space over the past three years. I see three basic needs, connecting in real time, the need to measure the success of your outcome and transparency. Every regulator, investor, servicer, etc. is talking about implementing new processes and policies to know the facts. Trust and confidence has been lost so the last three years have been all about making every step of the process both more transparent and measurable.
****Q: How has IndiSoft evolved with the market?
****SANJEEV DAHIWADKAR: IndiSoft has totally changed. If you talked to me the day I opened IndiSoft, I would have told you that we were going to be the greatest technology consulting company in the market. What happened? The market collapsed, so we seized that opportunity to become a great product company. Right now we are totally product based instead of operating as a consulting company.
At the same time though, we have not lost that consulting component entirely, which is why we acquired Microteck. We want to maintain a consulting arm, which was the driver behind that acquisition.
****Q: For those people that don’t know about Microteck or how that adds to your offering, what do you say to them?
****SANJEEV DAHIWADKAR: Microteck is a consulting company that works on specialized applications, such as Oracle, for example. Those specialized tools that our clients need can now be delivered to them. We at IndiSoft offer specific products that talk to specific parts of our customers’ businesses. Our clients have a need for other specialized applications that we at IndiSoft couldn’t deliver, so Microteck fills that need. Now we can enter new markets that we previously ignored because it went out of our realm. Microteck will add complimentary services to allow us to offer talent and technology on demand.
****Q: Are you in acquisition mode? Are there other acquisitions in the works?
****SANJEEV DAHIWADKAR: We are looking at additional companies. We are in acquisition mode. We want to expand our footprint in a strategic way. Initially we relied on organic growth, but now we will also expand through acquisition. However, we want to expand in a smart way that makes our core foundation even stronger.
****Q: Describe to me what a future acquisition might look like? Are you going to buy an LOS, another technology consulting firm, specialty service providers? What are you looking at?
****SANJEEV DAHIWADKAR: Our primary focus will remain on the technology side. We will look at acquisitions that fill any gaps that we have. We want to stay ahead of others. We believe in leading by innovation. Any acquisition that can help us provide efficiency through technology will be our main focus this year and next year.
****Q: You say that you want to lead in terms of innovation. Explain to my readers what you mean by innovation exactly?
****SANJEEV DAHIWADKAR: We want to enable collaboration among all stakeholders. We used technology to enable collaboration even when the stakeholders had conflicting goals. Everybody claims to connect parties, but nobody connects as many parties as we do in real time. We have to all work together toward a common goal even if we have different ideas. We make that happen.
Also, you want to ensure efficiency and transparency. Efficiency and transparency that is measurable is a byproduct of our technology. Centralized case management integrated with documents and workflow is critical. All of that needs to be smooth and delivered from one application. Our integrations are so tight that it is seamless to our clients. Now everybody is talking about how their default platform is collaborative. We started that a couple of years ago.
****Q: From a product perspective, what’s next?
****SANJEEV DAHIWADKAR: We have not made this public, but we launched an auditing tool to allow our clients to do compliance validation and documentation. We are providing a clean way to document every piece of the process. Today you need to document your process and prove that certain steps were taken. Right now that tool is in use at one of our larger clients.
****Q: You also recently started ITShastra. Explain why/
****SANJEEV DAHIWADKAR: That is our development center in India. Any development work for clients that want outsource services goes through ITShastra. We have clients throughout the world that need development on different platforms like Java, .NET, etc. So, we have different groups working on technology in different verticals like health care, we helped launch some Hollywood movies, bioengineering, etc. We’ve done unique work in different verticals through ITShastra.
****Q: You’ve used market conditions to innovate yourself, but what advice do you give servicers and other technology providers that have been burdened by market conditions?
****SANJEEV DAHIWADKAR: From the user’s perspective, it is challenging out there. The market changes daily. One week we hear that home prices are going up and the market is coming back and the next day they say recovery won’t happen until 2014. Servicers have to stay focused. Servicers need to lean on technology to get better control over their process. It’s a new world and servicers have to take charge. They have to use technology to achieve their business goals and at the same time be as efficient and transparent as possible.
For vendors, they have to meet demand. They need to be able to tweak their technology so their users can rely on them. Servicers have to get things done. They can’t afford to go with a technology that’s old or unable to change with the market.
****Q: Shifting to market conditions, many say HAMP has been unsuccessful and the government has to revise its approach to dealing with foreclosures. What’s your take?
****SANJEEV DAHIWADKAR: I wish I knew the answer. What I can say is that the government is trying their level best. Has everything worked with a level of satisfaction? No. However, that doesn’t mean that real effort isn’t being made. There is no silver bullet. Now everyone is trying new things. It’s about trial and error. We have to acknowledge what didn’t work and try something new. There is an openness now and that will lead us out of this chaos.
****Q: We’ve also seen the government crack down harder on servicers with sanctions. Is that needed?
****SANJEEV DAHIWADKAR: The issue is very complex and above my pay-scale. Everybody wants accountability. There will be compromise. I’m curious to see where it goes and how it all turns out myself. We’ll have to see.
****Q: Back to innovation. What will be the next great market innovation in your opinion?
****SANJEEV DAHIWADKAR: The less we talk about technology, the better. The more transparent the technology becomes in that it can be easily used by the business user, the better. Going forward, you’ll see more and more people talk about getting control of their business using technology that is easy to use. It’s about crafting what I will call invisible technology.
****Sanjeev Dahiwadkar thinks:
****1. Tighten your belt. We’re on a roller coaster ride that isn’t over yet.
****2. You will see the consolidation and elimination of assistance programs.
****3. Technology will play a larger role in terms of promoting efficiency.
*New Business Opportunity*
to decline by 40% this year. More and more
lenders are turning to retail for means of
oversight and quality control. So, if lenders are doing
more to get their hands on less volume in a world
mired with more and new regulation, how can
they do that effectively? Surely automation has
to be part of the answer.
****Beyond technology, lenders have to do a better
job of cultivating relationships with new and
existing borrowers. Stephen and Judy Margrett
of The Turning Point turn this dilemma into a
competitive advantage for lenders. They share
their thoughts on how you can take advantage of
****Q: When people think of
automation to win the
for the borrower they think of CRM, but
do you define CRM? And how is that different
what your company offers?
****STEPHEN MARGRETT: You
great difficulty. You could ask
people that question and get 100
answers. CRM is fundamentally
managing and enhancing
lot of people in the mortgage
see it as a list where you tell the
something about each person in
list and enter a command for the
to take certain actions as it pertains
those people in the list. That’s
but it doesn’t do anything for
offer CRM embedded in a more
context. What do I mean by
The system uses business rules
helps the user identify an opportunity.
system goes on and executes
address that opportunity. The user
other dimension is that in today’s
market it is too dangerous to
loan officers just go off and do their
thing. There has to be corporate
We allow our companies to
permissions and we provide real-time
is almost the only word
matters in the mortgage industry today.
offer a compliance-centric marketing
that is fully automated.
****JUDY MARGRETT: CRM has
come to be
in the mortgage industry as a
management or a contact management
It holds information about a
that you can view and use to
out to those contacts in the future.
say that you need mortgage-specific
does that mean? Everything is
with mortgage rules. The system
data, understands that data and
what functions to do next. All of
is surrounded by accountability, control
compliance. The system tells you
can say what and what they can say.
contact management systems you
hold graphics and html and have
dynamically come together
the right LO, with the right state
etc. Those platforms are one
So, many lenders will build
functionality on top of this system
do all that they need it to do.
our system it can feed data from
system, hold all the graphics, permissions
legal procedures, and communicate
that out to the lender and the
CRM needs to
deliver for your institution
you get that business.
This all boils down to helping lenders get
business. What do lenders have to do differently
to get new business?
****JUDY MARGETT: Historically
we had a lot
different loan products to choose
Anyone could get a loan and there
the smarter bankers and
always placed an emphasis on
retention. The battle for the
has changed because the market
do I mean? There aren’t as
loan products or qualified borrowers,
you better hold on to as many existing
as possible. You have to
loyalty and referrals.
lender that wins will be constantly
with the customer,
they’ll also be controlling that
****STEPHEN MARGRETT: Mortgage
did not look
marketing as significant and life was
when the boom was going on. You
always make a good living in the
has most fundamentally
is that we are back to a place
it is much more difficult to find
keep a customer. You can’t leave this
loan originators anymore, you need
can’t win the battle for the borrower
brow-beating borrowers, you
to have good tools provided by
****JUDY MARGETT: Lenders
also have to
with a 60% attrition rate. There’s
that they need content control
and brand control.
need to know how their company
communicating to the borrower
what offers are being made. The environment
to be more controlled.
with new regulation lenders
to have a record of all their communication.
you can control and
marketing you can ensure consistency
can’t just offer originators tools
say, “Good luck, do what you need
do to bring more business.”
So, how has your offering changed as the
on lenders have changed?
****STEPHEN MARGRETT: The
vision is that there
three dimensions to the solution. You
to start with sales so loan officers
access solutions that help them do
you have a process dimension
links the opportunity to a
that can take advantage of
you have the corporate dimension
all the players can all play
part and see what’s going on with
else. When you’ve done all that
do you go next?
will all be driven by our clients,
we are also driven by new regulation
out of Washington, as well.
I predict that advances in
like mobile will be significant.
have to take an interest in all
factors so that our clients don’t
to. My motto is: Give me more
and I’ll give you better quality
integrate with new data sources
make marketing more powerful.
also integrate to various lead generation
****JUDY MARGRETT: For
example, we integrate
various AVMs. Why is that important?
you’re going to make an offer to an existing
you need to know the value
their home. You don’t want to reach
to a borrower if you can’t make them
in our library now we have
for social media. The company
needs to control these types of
You need to do things like
facebook or twitter. As technology
on, lenders and technologists
have to drive your business in
areas all the time. You need to say
like that and have the tools to move on
new technology and still have all the
controls to ensure compliance
the same time.
If you could leave our readers with one business
tip, what would it be?
****STEPHEN MARGETT: The
tip that I would
is that you need to work with a
solution that has as much
in it to alert you to opportunities that
may not be able to think up yourself.
need to realize that technology can
lot of that thinking for you.
the technology needs to address
opportunity and execute. The
and quantity of data will drive
level of automation and ultimately
you win the game.
****JUDY MARGRETT: You have to
automate and control your marketing.
your top 5 originators are doing
bulk of the business, you need to
technology should help them
communication in a consistent
When you do that you are elevating
brand and all your LOs, not just a
at the top.
don’t want to lose personalization,
you want to drive brand consistency
better business back to the
do you do that? Reach out and
the technology that is now available
****STEPHEN MARGETT: I
read an article entitled
Meets Marketing” and it was fascinating.
staggers me is that it was
as something new.
fact is, I guess, that for most
it is something new. The notion
technology doing something for the
world is relatively new.
is that? Because marketing
defined. However, IT is finally coming
the aid of marketing. We all need
wake up to the fact that technology
sure can help.
****1. Customers won’t be beating a path to
doors any longer: action will
required to drive them there.
****2. Marketing technology will come into
own as the only efficient means
implement and manage the required
****3. Regulation will impose increasingly
compliance demands on all
of mortgage operations, including
****1. Mortgage lenders are looking for
efficiency and every lender wants
be as efficient as possible.
****2. Lenders need to have more control and
over their business because
have no choice given new regulation.
****3. Lenders also recognize that their
is too siloed and they are
to bring their information together
in one location.
STEPHEN MARGRETT: Stephen Margrett is CEO of The Turning Point, Inc.
product is MACH3, a mortgage-specific CRM and automated
engine. With a master’s degree in consumer behavior
University of Minnesota, Stephen has been in the field of
marketing for more than 25 years. In 1986, he created
first full-service, data-driven marketing agency and managed
the mid-1990s, when he moved to the United States. He can be reached via e-mail
JUDY MARGRETT: Judy Margrett is President of The Turning Point, Inc. The
MACH3, a mortgage-specific CRM and automated marketing
With more than 20 years’ experience in mortgage banking, Judy
early advocate of technology-based marketing solutions, especially
nurturing key business relationships. Recognizing the demand
maximize resources within business enterprises, she works closely with
leaders to guide The Turning Point’s development of advanced mortgage-specific
solutions. She can be
reached via e-mail at email@example.com.
*The Course Forward*
market in the late
with one goal, to really
the conventional definition of a
origination system. He turned the
LOS concept on
ear and sought out to
what he coined an
lending system or ELS. Over
past 10 years Mortgage Cadence
from being an LOS to a company
has five different products that
an LOS, doc prep, imaging,
mitigation and compliance offering.
company now automates forward
reverse origination and
All of Michael’s hard work was
when Monitor Clipper Partners
in the company last
With that investment
him, Michael is ready
once again do his part to reinvent the
space for the better. He shares
insights on how Mortgage Cadence
others can help foster broad industry
With the extensive regulation requirements
taking hold of the origination industry, what will
need to do to better adapt?
****MICHAEL DETWILER: What
I see happening is
atmosphere of denial. What do I mean?
are a lot of lenders looking to the
saying, “I’ve never had to buy back
loan, I’ve never lost a license, I’ve never
any penalties, so that eventuality is
going to happen in the future.” What
say to them is the historical context of
they have experienced is not indicative
what they could experience going
all about the data. We’ve been
about the data since 2005.
we just started talking about
in 2005 even though that has been our
since 1999. What lenders are going
have to do is invest in technology
will enable them to support policy
is compliant. The system should stop
from making high-risk moves, or at
warn them when they are crossing
bridge. It’s also important for people
understand that systems that have been
like the LOS and the doc provider
need to come together. You’re going
see lenders wanting one system. Lenders
want to shoulder the burden
those two systems are not aligned.
****Q: Where will the opportunities lie for lenders
vendors in the coming year?
****MICHAEL DETWILER: Studies
show that lenders
spend 15% more on technology
year as compared to last year. I don’t
that origination volume will be under
trillion this. That statistic does not
into account the prime-jumbo market
I think will come back. I’m looking
at $1.4 trillion this year. Vendors
us need to drive home the message of
validation and compliance in a core
that also extends to documents. I
think there’s opportunity for lenders
do more with imaging when it comes to
and data extraction.
ask us how your system can
me stay compliant, how do your documents
me stay compliant and how
your imaging allow me to streamline
process? There’s a lot of opportunity
As a result of market conditions,
will move to consumer direct.
want to control their own destiny.
will look to better connect
their borrower using technology, cross
What new products do you believe will
introduced based on the requirements of
****MICHAEL DETWILER: In
our case, we are expanding
also see more Web-enabled
that are accessible through
smart phone. When you talk about
like e-delivery and e-sign, people
want to review and do those tasks on
phone. Lenders will embrace mobile
and social media, as a result.
two hot areas of technology are
together and lenders are moving
Mortgage Cadence also automates reverse
Will the reverse industry see a turnaround
****MICHAEL DETWILER: The
big issue with reverse
valuation. The reverse market
based on equity. As far as the macroeconomics
valuation is key. So, it’s a
question. When are the macroeconomics
the United States going to
together so the banks are confident
we’ve reached the bottom? You do
pockets of stabilization, but there still
overall confidence. Until that issue is
reverse will be impacted.
the same token, you are seeing
and more baby boomers retiring.
those baby boomers that lost out in
of their investments, reverse will be
big part of their retirement. The short
is we need valuations to stabilize
more education about the product.
reverse will be a big market going
as we have more retirees take
With all the talk about how HAMP is a failure,
you believe loan modifications will be around
****MICHAEL DETWILER: Another
You have empty homes on every
In most cases, those houses
not gone to foreclosure, but they
been modified either, and in some
are still occupied. Short sales have
not taken off the way most expected.
You’ll see more
programs by the Fed
by investors that include principal
give you an example. If you’re in
home, you’ve gotten notice of default,
owe $300,000 on your home, your
home was a short sale for
and the house down the street
into foreclosure and got picked up
$150,000, well if you get an offer from
servicer to mod into a 40-year fixed rate
at $300,000 the borrower won’t do
because they know their house is not
$300,000. So, there are challenges
people into a mod, but the servicer
want to evict. However, you are
going to get buy-in on a mod at the
value of years past.
just got an RFP from a servicer
does not expect that their mods will
until next year and won’t ramp down
2014. So, mods aren’t going anywhere.
talk that loan mods are over
overblown. The shadow inventory can’t
be pulled back onto the books of the
so we need to get more creative.
you keep foreclosing and doing short
you’re devaluing that whole neighborhood,
drives the whole market
What type of technology will be required in
back office to ensure documents are meeting
and are efficiently being managed?
****MICHAEL DETWILER: If
you have an enterprise
solution once a application comes
the system should be able to run analytics
determine what’s on that app is
You also need to work with
company that can dynamically generate
upfront. A lot of the doc
have a forms library and lenders
choose forms. It’s a point and click
That is very, very dangerous.
Mortgage Cadence Finale Document
Division, once an application
in analytics are run to ensure
it looks at the origination channel,
detects if origination guidelines
been met and it won’t allow the
to pull documents unless the compliance
are met. Being able to
and generate documents based on
data before you get a form is key. The
of dumb dc prep that is forms based
does not include analytics and dynamic
will come to an end. Companies
are hocking forms and don’t
a system that analyzes and works of
data will have a short life.
Given your new investment from Monitor Clipper
what can we expect from Mortgage
****MICHAEL DETWILER: We
continue to expand
products and services in both origination
servicing. We’ll continue to
in our intellectual property. You
expect to see acquisitions from us.
many? We’re talking to many companies
it all depends on opportunity.
will also see us moving down chain
the midtier and lower tier. You’ll also
continued expansion of our sales and
arms. When you look at the
licensing laws and liquidity requirements,
are looking for accountability.
have to protect themselves
that because it is a matter of life and
The risk is real.
Personally, what’s your biggest professional
****MICHAEL DETWILER: I
know you’re looking
a professional success, but my biggest
is being married for over 20 years
raising a wonderful daughter and a
son. That’s not a professional
but to be married all these years
have two great children is something
I’m very proud of. It’s important.
the biggest accomplishment
been building and managing
Cadence over the course of
years without any outside investment.
successful and profitable helped
establish a relationship with Monitor
Partners. It was a great reward
all of our years of hard work. Now we
take the company to places that we
before when we were privately
with that is the loyalty among
customers. We are thought of as a
Our clients don’t call us a vendor.
a big accomplishment, too.
the other side, I believe that business
all about the people that you bring
I need to work on doing a better job
finding the best talent. Our employees
a lot of longevity, but when we’re in
growing mode it’s hard to find the best
You have to be more patient when
looking for top talent.
it all, I’ve learned that it is
to achieve your goal if you work
it. We’ve delivered. I’ve learned that if
focus and get together the right people,
can really achieve anything.
What advice do you have for entrepreneurs
to improve their businesses in 2011?
****MICHAEL DETWILER: I
would say that the
finance market is a fundamental
of the U.S. economy. We’re still
challenges, but the market will sort
out. I don’t agree with the political
that said years back that owning a
is a right, I don’t know if it’s a right
but you should continue to have
that opportunity. So,
hang in there.
****1. Investors that understand the industry
come back into the space. For
Wall Street will re-enter offering
conduit origination through correspondents
mortgage products such
****2. Originators must embrace the new
paradigm and be prepared
deal with more regulation and transparency
market products and
geared towards a more savvy and
customer base. Therefore, the
channel will expand to
online, intuitive tools for the borrower
communicate with the lender.
****3. Servicers working with loan
move towards principal
as opposed to rate reduction
order to retain borrowers and prevent
They must also communicate
effectively with the customer by utilizing
technology that will
acknowledgement and confirmation
received documents through an
****4. Advanced imaging solutions will
needed so documents can be
through a variety of sources and
and then recognized, categorized,
and have appropriate data
into the system of record without
****5. Housing prices will continue to
MICHAEL DETWILER: As CEO of Mortgage Cadence, Michael Detwiler oversees strategic
for the overall operations of the company. He is responsible for
marketing and managing the Mortgage Cadence product suite
additional service offerings. Prior to his leadership at Mortgage
Michael was resident of 3t Systems. During his tenure as
of 3t, the company was recognized by Inc. Magazine as one
of the Top
500 Fastest Growing Companies for three consecutive years and ranked No.
3 for two consecutive years
on Deloitte and Touche’s “Colorado Technology Fast 50.”
*Business And Technology*
all they’re business people, not technologists. That’s the wrong
attitude if you want
to succeed in this or any other evolving market.
****Tyler and Todd Sherman are living proof that when done with an
eye on strategy,
technology can be a lender’s best friend. Why? These two
executives started a mortgage
lender, built their technology in house, successfully sold that
company and are now back at it again sharing their expertise
with the general market as technology vendors. Colorado-based
Motivity Solutions, founded in 2006, is a customer software
that offers a variety of mortgage-centric business intelligence
****Motivity Solutions flagship product, Movation Business
provides a real-time view across an entire organization by turning multiple data sources
into actionable information through dashboards, scorecards and
How do these two business-savvy executives see the mortgage market
today? They share
all in this
executive interview with Tomorrow’s Mortgage Executive magazine.
What was the biggest problem lenders faced
two years ago as compared to what they face
How does it compare?
****TYLER SHERMAN: I am not
sure there is any
way to compare the state of
industry two years ago versus today.
was transpiring two years ago had
been seen before and will probably
been seen again—hopefully. But, if
were to compare the two, I would say
two years ago mortgage lenders were
fighting for their existence. There
significant trust issues and a declining
estate market. What kept the industry
and helped lenders survive
FHA lending and the record-low
rates. Now, lenders are facing an
decline in originations for 2011,
is going to put the focus on growing
share and lowering the cost of
a loan. They are also facing
of regulatory concerns. What
going to rise to the forefront are age
free market concepts—innovation,
spirit, having the customers
interest in mind in order to build
loyalty, and brand affinity. These
values were always where the independent
bankers had the competitive
and I think we will see
return to this in 2011.
****TODD SHERMAN: I agree
that two years ago
biggest problem lenders faced was
for survival. From a technology
the focus was on doing more
less, but the majority of the industry
spending money on technology.
we launched Movation in 2009, just
than two years ago, we felt the timing
perfect because of its’ core values—
existing technology without
to replace it, its ability to help optimize
organization’s process, and the
to give a very clear understanding
the state of the business. This was all
doing more with less. Looking at
landscape today, compliance seems
be on the top of everyone’s mind. And
is something that should definitely be a
but I think the biggest problem
face now is going to be staying
on what is really important. The
that will continue to grow in 2011
the lenders that will be aggressive in
compliance, as opposed to being
reactive, and those that focus
what made the independent mortgage
successful in the first place. We
taken the first few steps forward in
renaissance and we are at a point in
banking we haven’t been at in
time—a point where anything and
is possible through solid business
and the innovative American
Similarly, how has technology changed in the
space over the past two years?
****TODD SHERMAN: In
listening to the focus
the mortgage banker two years ago,
to do more with less, vendors
trying to add functionality to their
that would help them with this
What a lot of vendors were trying
do was build that all-inclusive,
system, in order to acquire
they could within what the industry
willing to spend during a time of
There wasn’t a lot of open communication
vendors in an effort
build best-of-breed solutions. But that
new to the mortgage technology
It is why we built most of
technology in-house when we were
bankers and one of the primary
we started Motivity Solutions after
our mortgage bank. We wanted
build an open platform that worked
the lenders previous investment, in
training, etc., and encouraged
to work as partners in providing
that fit the needs of the mortgage
opposed to the mortgage
having to conform to the
of the technology. And we
seeing that come to fruition through
partnerships with Xerox, AllRegs,
Mar DataTrac, the Stratmor Group,
other select vendors.
****TYLER SHERMAN: And we will
other very exciting partnerships
well in the very near future. That isn’t
say that our segment of the industry is
we would like to see it. There is
very much a lack of trust amongst
in the industry, posturing, etc.
we won the award for Movation in
we said that we looked forward to
with everyone in that room, the
industry technology providers,
we meant it. We continue to drive
the path of creating partnerships
provide real value to mortgage bankers.
would also say that business user
something that we continue
enhance within our system, and
technologies are definitely more
of mind for the lender, and therefore,
vendors as well. We think mortgage
are beginning to understand the
of using business intelligence to
a healthy, competitive, and goal oriented
industry vendors are looking to us
our technology to bring that benefit
their products and others are looking
build it themselves—it all depends on
philosophy of the company.
****Q: As someone who has been
both a lender and
how was your view of technology as a
different and similar as compared to
you view technology today as a technology
****TYLER SHERMAN: We view it
in much the
way. Mortgage banking is our family
so we view ourselves as mortgage
today even though we don’t
loans. When we were a lender
focused on technology and processes
allowed us to bring value to our customers.
of what is being instituted
in regulations are policies that we
in place as mortgage bankers back
2004. We did it because we thought it
the right thing to do for the consumer,
ultimately lead to our sustainable
in becoming a top 10 FHA
The technology we developed at
is conceptually identical to
we have in Movation today. So, I
say that our view of technology
changed a bit from when we were
****TODD SHERMAN: I would
that. As a lender we understood
well who we wanted to use and for
service. Everybody was pushing an
solution but there were still
In business, you cannot try and be
things to all people and be successful
it. You have to stick with what you do
For us, as mortgage bankers, that
FHA loans. As mortgage bankers developing
for other mortgage
it is an open platform that manages
entirety of the business by filling
gaps, improving existing technology,
creating a performance-based culture.
cannot tell you how many product demonstrations
pitches we went through
there wasn’t one product that had the
we required. Some products
have been flexible, but the cost of
was prohibitive, and other
might have only been missing a
pieces, but they were core pieces we
live without. And none of it really
like it was being developed
the mortgage banker’s perspective.
we developed our own.
Talk about the role business intelligence plays
the mortgage market today?
****TYLER SHERMAN: The role of
the mortgage market today is
means to provide real-time insight into
business and highlight which areas
the business that need improvement.
real-time insight, lenders
know on a day-to-day basis who is
who isn’t meeting the goals necessary
accomplish the objectives of the business.
work with our customers from
ideology of what gets measured, gets
Business intelligence is how you
manage, track and drive performance.
intelligence allows lenders
vendors to focus on what needs
****TODD SHERMAN: In addition
to what Tyler
business intelligence allows you
go as deep as you need to in order to
the area of improvement. You can
the entire company, a department,
process, an entity such as a loan or vendor,
all the way down to the employee
We use business intelligence with
clients to understand first where they
and are not meeting their goals on a
level and then determine the
steps based on what is going to bring
highest level of value to the customer.
may be more business intelligence,
might mean automating a process, it
mean customer relationship management.
business owners, we may
we know what our company needs
do, but it is even better to definitively
if it is only confirming our
instinct. This makes it simple to determine
steps and creates a confidence
we are optimizing our time and financial
This would not be possible
business intelligence. Companies
take advantage of this technology are
to have a clear competitive advantage
those that don’t in 2011 where
market share through customer
referrals, and service as well as
a more profitable manufacturing
will be imperative for growth.
How can BI be used in creative ways to give
****TYLER SHERMAN: We have
about the edge lenders can
through business intelligence, so
look at some specifics. Business intelligence
lenders get more out of
systems, people, and processes. We
a customer who was really trying to
why underwriting wasn’t able
turn the number of loans per month
had all established as the corporate
They knew the staff was hardworking,
by a competent manager, and felt
though they had all of the tools necessary
meet the goals. And, they had
taken the approach of reworking
underwriting process a number of
Nothing they tried was effective.
we applied business intelligence to
the issue to see what
it showed. As it
out, the issue wasn’t in the underwriting
at all. We were able
help the lender discover that a certain
was creating a bottleneck because
the number of conditions it took
get the loan underwritten. The lender
then able to apply an additional step
the point of origination that really impacted
amount of effort it took within
underwriting department. And, the
was able to look back and measure
improvement, even tying it to
increase in loan and product profitability.
****TODD SHERMAN: Tyler
brings up a good
It isn’t just business intelligence
makes the difference. It is actionable
intelligence that makes the difference.
about the consultant that
in and says, “This is what you
to do. Good luck and have a fantastic
There is a measure of usefulness in
information, but it isn’t the solution.
business intelligence gives
the full solution. There is no shortage
creativity and innovation within mortgage
and our clients have proven
creative in how they measure and
their successes and failures. Business
is open from the perspective
how you apply it, but specific
delivering what the next step is—you
get the best of both worlds. Another
would be managing to the expectations
their stakeholders. Think of it
way, if you knew what questions were
to be on the test, why wouldn’t you
what you are going to study
on that? Our business intelligence
the lenders a method of tracking, in
the key performance indicators
know they will ultimately be held
to. So, when and if the time
for an audit, they already know
they stand because they have been
it the entire time. Preparation for
audit becomes easier and the audit itself
less intrusive on the organization
whole. You also build a tremendous
of trust with the stakeholder running
Motivity has entered into strategic partnerships
companies like Xerox, AllRegs and others.
goes into making those partnerships
****TYLER SHERMAN: In one
word, synergy. This
why we named our program the Synergy
It takes likeminded companies
understand the true essence
team work—that the whole is greater
the sum of its parts. Some vendors
want to admit their system has gaps
others don’t have the confidence in
product, which creates a level of
in partnering with a company like us.
best relationships are built on trust,
and a focus on mutually beneficial
Businesses are protective
nature, but at some point you have to
yourself to the effort of the team
order for there to be any chance of success.
work with our partners to accomplish
other’s goals regardless of
feature overlap there may be.
are very respectful of their customers,
brand, and their philosophies so
quickly arrive at the stage where we
solely focused on how we can create
****TODD SHERMAN: The last
one that we are personally very proud
is that we have created a technology
is very open to working with other
We have already discussed
but relative to what it takes to make
partnership successful it cannot be overlooked.
system was built with these
in mind. There is a lot of
out there that does a really
job and the more mature industry
markets are extremely competitive.
don’t feel it makes sense from
business perspective to try and reinvent
wheel and then spend the resources to
in a crowded marketplace. We,
our partners, believe that it makes
sense to work together focusing on
value to the industry. We feel
is plenty of opportunity out there for
of us and that together our businesses
end up in a better place.
Origination volumes are expected to decline by
in 2011. What advice do you have for struggling
****TYLER SHERMAN: I think
first and foremost
understanding what your identity is and
staying focused on who you are. Be
within your business while not
out of desperation. Stay confident
focus on longer-term objectives and
as opposed to just doing what it
to stay in business. Struggling lenders
to focus on both ends of the profit
market share and lowering
costs. They should
to affordable technologies like ours
assist them with this effort.
****TODD SHERMAN: Being
it comes to compliance, is going
be important so that these lenders can
on growing market share and lowering manufacturing costs. Independent
lenders have always been innovative
you have a competitive advantage
use it. And then determine where you
a competitive advantage and go get
Confidence cannot be overlooked, and
is very tough to be confident when you
struggling, but you cannot succeed
To continue discussing market conditions, new
isn’t going to stop flooding the market.
do lenders stay ahead of these new regs?
****TYLER SHERMAN: I think it
is important to
look at the differences between the
mortgage banker and the
bank that originates mortgages.
the independent banker, the
justifies the means—meaning that
long as the loan closes according to
guidelines, all is good. For the institutional
they focus more on process
procedures and the results are
they are. Both have their benefits,
both have their downfalls. I think
ideal scenario is adopting and automating
that ensure compliance,
that more compliance
going to come, and making sure
don’t eliminate the ability to move
Regulation isn’t going to touch
one piece of technology or the business;
is going to touch all aspects of
business eventually. Lenders should
to solutions like our business management
that can give them a
open platform from which they
manage compliance and all other elements
****TODD SHERMAN: I would say
figure out a way to incorporate the
regulations without being overly
to the organizations. This
be an easy task, but not an impossible
either. The key to that is being
Whoever handles the implementation
new regulations the best
have a clear competitive advantage
those that continually struggle.
is a check point you have to
through before you can continue on
the task of growing market share
lowering manufacturing costs. We
a solution that helps simplify the
of regulations, but that
mean it is right for everyone.
need to find something that
for them and create that competitive
Another hot topic is data integrity. What should
integrity mean to lenders and how can they
the integrity of their data?
****TODD SHERMAN: For
lenders, data integrity
mean being able to rely on your
as that one version of the truth. That
defining the data that is important
you and focusing on keeping the
of that data at the highest level.
are many ways to do this, but if I
them I would automate policies,
changes, limit the ability of anyone
can affect data quality, and create accountability
to the employee level.
data affects everyone negatively so it
to be communicated that everyone
part of the solution.
****TYLER SHERMAN: That
to the employee level is the key
there. If lenders make data
an aspect of an employee’s performance
I can virtually guarantee
the data integrity will remain
Those employees that don’t care
it will fall off leaving only those
do, thereby creating a culture where
has the utmost respect for data
And, yes, data integrity is all
you and your stakeholders being
to rely on it. This is a high-risk item
the focus must always remain on
****Q: Lastly, what’s ahead for Motivity Solutions in
****TYLER SHERMAN: Overall our
on helping lenders get more business,
get more out of their business—
systems and employees. We will also
lenders focus more on loan level and
profitability metrics. We will
announcing several new key partnerships
well-known, industry leading
This is going to allow Motivity
to be a part of some great solutions.
we will be rolling out a process
implementation that will elevate
focus on providing the highest level
value and ROI in the shortest amount
****TODD SHERMAN: On the
product side, we
going to enhance our business intelligence
making the software even easier
admin and customize. We will be introducing
enhancement to our mortgage-
CRM and we will be building
our work management and process
We are also enhancing our
quality functionality and improving
mobile platform. As Tyler mentioned,
sole focus for 2011 is helping lenders
more business, which is where
CRM comes in, and get more out of
business through performance driving
intelligence along with work
and automation to drive efficiencies.
will allow lenders to improve
both side of the profit
****1. Industry stakeholders will require
transparency throughout the loan
****2. Lenders will proactively change
to reflect ethical lending
before they are forced to through
****3. The majority of loan originations
shift back to the innovative and
because they have always been the
efficient originator of mortgages.
****4. Lenders will incorporate the
and guidelines by which they
be held accountable into all stages of
****5. Lenders will begin to put systems and
in place to create performance-
****1. Extended mortgage-related software
for mobile devices will
****2. An open marketplace is needed for
and digesting services and
to create more efficient distribution,
of the system of record,
on lender needs as opposed to
****3. Systems will be developed that rapidly
changes in the regulatory
through lender configuration
opposed to vendor re-programming
****4. Unified messaging will become more
to track all structured and
communication for any entity
email, phone, IM, system contact
etc. for loans, employees, customers,
****5. Systems will tailor themselves to the
set of the user and expand based
the growth of the user to limit training
the employee on-boarding process.
TYLER SHERMAN: As CEO of Motivity Solutions, Tyler Sherman is
the vision and long-term strategy of the company. Tyler
than 15 years of sales, marketing, and executive leadership
across multiple industries. Before founding Motivity Solutions,
a co-founder of Watermark Financial Partners, where he led
team. The sales and marketing programs developed by Tyler
Watermark to become one of the largest organizations of its kind.
TODD SHERMAN: As President and COO of Motivity Solutions, Todd
for all aspects of software development as well as the dayto-
operations and strategic implementations for the company. He
more than 17 years designing, creating and implementing
across several industries. Before founding Motivity Solutions,
co-owner of Watermark Financial Partners. Todd has built
small single-user systems
and large enterprise systems for thousands of users.
you ever had a problem?
we all encounter
in life. The bigger
is: How do you solve your
In order to overcome
adversity and move forward you need
a lot of
input from a variety of sources.
make snap decisions and
get a positive outcome.
you’ll get lucky, but in
snap decisions result in
the mortgage industry faces
a lot of
problems. Volume is down.
are thin. Investor confidence
been restored. New regulation
seems to stop. And these are
just a few
issues that the mortgage
faces. We know the problems,
we don’t know are the
we get at those solutions?
in Lending Association’s
Roger Gudobba and
Hammond talk about the
of industry collaboration.
that they discuss candidly
think are the industry’s
problems and propose some
solutions, as well.
****Q: Why does the mortgage industry need
PROGRESS in Lending Association?
****TONY GARRITANO: The
mortgage industry is
siege. What do I mean? There are
with the fact that there is really no place
the industry for technology thought
to happened openly and
That’s what lead me to believe that
was a strong need for something
PROGRESS in Lending. This is an
industry utility for people to come
get more quality information about
technology combined with sound
strategy can really help lenders
people involved throughout the
progress who are struggling
a very tough market because of new
but not only because of new
also because investors are
increasingly more stringent,
borrowers are scarce, because
is high and there is
strong need to be as efficient as
****ROGER GUDOBBA: I would
of the reasons I got involved
because I felt this was a different
of opportunity than everything
presented. Typically, most of the
are online newsletters
just news. They are all about
what’s happening kind of stuff
some of the feature articles would
a little on where they thought
future was going, but a lot of times
was written by people that were
promoting something or other even
it might have been very subtle. I
this as an opportunity where anyone
the industry can respond and speak
We are going to make more use of
and other forms of multimedia.
really gives anybody a
to talk about things. That’s the
idea. It isn’t like we are trying to
the whole strategy going forward, we
trying to be thought provoking and
thought provoking people involved
that other people can look at it and
“You know, maybe I should try this
that.” We are trying to stimulate their
ship if you will.
****MICHAEL HAMMOND: Roger
makes a great
PROGRESS is really about getting
to engage and share ideas. It
mean that everyone is going to
with every article or every stance,
that’s the benefit of PROGRESS in
in that people can share different
and different strategies about
they are using automation to handle
vast challenges that are happening
the market and by sharing more and
of those ideas and different ways of
we can come up with better solutions
whole and really collaborate
solve problems instead of just putting
on things and trying to keep
****ROGER GUDOBBA: This
industry has certainly
very reactive over the years and there
a lot of followers and not a lot of leaders.
everybody just kind of sits
and says let’s wait to see what the
bank does or big mortgage industry
player does. A lot of times they don’t understand
by being a small company
is a little more nimble, you have the
to move ahead. The big players
big ocean liners trying to turn
small harbor. PROGRESS in Lending
encourage people. We want to
people’s thought process.
****TONY GARRITANO: And
the more different
we can give people forums and
the better we will be as an
and the better the mortgage
is going to be. This is why we
off with the website and then we
a daily newsletter, then a video
now we are adding a magazine.
point is not to saturate the market
output strategies, the point is to
mortgage participants as many
to react to what goes
in their daily lives so they can help
peers move forward. Some people
more comfortable doing that in a
while some people prefer a
quick stories via e-mail. Others are
visual and would prefer a video. We
to come at people how they prefer
be approached and get some thought
going. Sometimes they are
going to agree with us
in a place where the
dialogue starts and I
that is what separates us from other
in that we are not telling
what to say or think. We are not
to put out position papers and say
involved in PROGRESS in
has to think like this. We are just
out content from as many people
the industry that want to participate
put out their ideas. Some of those
might be similar to those of the
involved with PROGRESS in
and some may be opposite but
is ok. That is why we are here to get
ideas out there
****ROGER GUDOBBA: When I
weekly column for the e-letter, I at
thought that having shorter columns
make it difficult to get ideas across,
then after having to write many of
I am glad they are short. It gives
an opportunity to carry thoughts
to the next one and keep people
back. Even if they miss an issue
our newsletter, the fact that when they
registered and click on read more, it
and shows all that has been done
date is a big benefit for the reader. If
missed a column or two you can
over to past columns and see how
idea came about. It doesn’t take a
of time to read. I can go through the
faster than in other publications.
get so bogged down navigating other
****MICHAEL HAMMOND: It
is important to keep
content to the length that makes it
easy to digest. We are bombarded with information.
many e-mail newsletters
you get? By keeping it short and concise
are allowing people to be exposed
lot of different content, and unlike a
of the other publications where you
one or two editors filtering information
way they think or through their
our content is coming from many
industry participants that are actually
the industry. With PROGRESS,
are so many different voices producing
content that it really gives a lot of
to different ways of thinking.
you agree, disagree or believe
should be more in-depth discussion,
triggers thought processing in a multitude
****Q: Transitioning for a bit to market conditions,
what do you think is the most prevalent trend
we are seeing in the mortgage market today as it
pertains to automation?
****MICHAEL HAMMOND: I
think that one of the
challenges—and it isn’t anything
how many rules and regulations
being thrust upon the industry. When
talk to lenders they are just trying
keep their heads above water. They’re
How do I manage and maintain
these rules and regulations? How do I
them? What is their impact on
I do? I think that using automation
allow lenders to better handle those
in a systematic process that is easily
that can have an audit trail, is
one of the key areas that people
very concerned about. Fraud is still
heavy issue, as well. What is going to
with valuation and where are we
to get proper valuation modules so
the housing market can stabilize is
hot. There are a host of issues, but
No. 1 issue is still how to handle all
rules and regulations.
****ROGER GUDOBBA: It is very
lender participation in the development
these rules and regulations.
minute you get people outside the
setting the agenda, you are in
because they don’t know our industry.
sad part of all this is the fact
these regulations were set in place
correct bad business practices perpetrated
people within the industry. We
right that wrong, especially when
think about lenders always being
instead of being proactive. In
when it was so busy they were so
about making all this money
making all these loans that they
didn’t want to change. They got
up in the same euphoria that the
did. Everyone thought, wow,
can buy this house for $100,000 and
it tomorrow for $500,000. If you
look at the history of
this industry, there
always times of rapid accelerations
an area that really didn’t have any
sense. Just follow the times. It
like the stock market in that there are
and downs. We are in a down period
we are going to pay some penalties
not paying more attention.
****TONY GARRITANO: The
big question is how
will this downturn be and how can I
recovery. You won’t stimulate
by sitting on your hands, you
to move. To Michael’s point, I think
are most interested in automated
because they’re still reacting.
they get that technology in place,
think it will be time for them to think
What really happened to cause this downturn
what needs to happen to turn things
****ROGER GUDOBBA: Lenders
have to do a better
up front in making better loans. Back
the old days when the local community
knew the borrower who sat across
the President of the bank and said
need a loan for a house, there was a
relationship there. That has all
disappeared, especially as you hear
more and more originators coming
the Internet. They don’t know
person and as I mentioned that,
Wall Street Journal stated that 48%
mortgage fraud is at the application
where the borrower had falsified or
That doesn’t necessarily mean
the borrower intended to defraud,
borrower might have just been doing
to get the loan, but the problem with
is it affects evaluating risk. You
to understand all the parameters
in risk evaluation and in doing
it is important that the information
correct. Lenders did a very poor job
validating data, from appraisals to
information, which are all
to evaluate that risk. Maybe they
have made some of those loans,
maybe the risk should have been
creating a higher interest rate
the borrower wouldn’t have qualified
the loan wouldn’t have got done.
just made a lot of bad loans and it is
to take some time to recover. The
right now is how to get out of
bad loans because obviously this
modification program has been a
for the amount of time and money
has been spent. For the few borrowers
made it, more have slipped back into
It has been a dismal failure as far
****MICHAEL HAMMOND: I
agree. As to Roger’s
loan quality is going to be an
that has to improve as it impacts
entire lifecycle of the loan. It’s not
about originating correctly and
a good borrower, it’s about
at better quality on the front
because the better that loan is for
secondary market, the more we can
confidence. I also think there is
trend that you are going to see because
is drying up, because there are
brokers in the market, the retail
are really going to enhance those
There is a strong fight for who
the relationship with the borrower.
Roger said, when the industry was
and people were getting loans
and right, they didn’t have that
connection. Lenders are now
forced to deal in retail, which
that they really have to focus on
owns the relationship, what tools
needed to get at the borrower, etc.
need mortgage-specific CRM,
data analytics to come together to
help foster a stronger relationship.
****TONY GARRITANO: If
we’re truly going improve
space we have to embrace data
trusted data sources. The more data
collect from a trusted data source vs. a
party, the better we’ll be. There are
lot of tools that validate data against a
of sources, why not use tools like
to collect the data in the first place
of asking the borrower or anyone
emotionally involved in the deal? It
make sense. I have no doubt that
industry will recover, though. This is
growing up period for mortgage. We all
to get used to a new world of globalization
find our place within that
Things change, now mortgage has
to, as well.
****1. Attaining the full e-mortgage is a big
of industry recovery.
****2. Lenders will rely more on data and
on third parties for loan-level
****3. More data repositories will emerge
make it easier for lenders to access
directly from the source.
****4. Lenders will invest in technology that
them to know everything
****5. Automated quality control will be done
in the process and at several
key stages out
****1. There will be more emphasis on
the borrower and the
****2. More companies will develop predictive
to help the lender predict
the borrower will be in the future in
of their true propensity to pay.
****3. Technology won’t be about features
forward, it’ll be about what it
for the end user.
****4. All lenders will be actively
processes and taking a more
****5. From those internal evaluations, we’ll
more action on the part of lenders
in terms of
****1. There will be a constant influx of
and regulations that will burden
****2. The battle for the “relationship” with
borrower will rage on.
****3. Borrowers will demand more online
including social networking
****4. Overall loan quality is key to market
****5. The role of analytics in the mortgage
continue to expand.
TONY GARRITANO: Tony Garritano is Chairman and Founder of PROGRESS
When asked why he started an industry group like
in Lending Association, Tony answered, “Going forward,
recent turmoil, the mortgage space is literally going to be
I formed this association to ensure that this transformation
is for the
better and not for the worse. Technology is going to play a
role in how mortgage lenders comply with new regulation, remain competitive,
profitability, and serve borrowers looking to get their piece of the American
Dream. That’s why this
association was formed.”
ROGER GUDOBBA: Roger Gudobba is Chief Executive Officer of PROGRESS in Lending
and Chief Strategy Officer of Compliance Systems. When
the industry significance of PROGRESS in Lending is,
believes, “The mortgage industry has always lacked strategic
It’s slow to embrace new ideas. PROGRESS in Lending
provides a place for thoughts and ideas to flow freely.
easier to move things forward when you’re in a group. This association is a
industry participants to have discussions about how technology can improve
MICHAEL HAMMOND: Michael Hammond is Chief Strategy Officer of PROGRESS in
and President and Founder of NexLevel Advisors. When
PROGRESS in Lending can do for the mortgage space,
noted, “There currently is a void in the mortgage industry
technology and business discussions can openly and candidly
to address industry problems. In the past year alone the
industry has had to adapt to business-changing regulation like MDIA and
example. Coming next year we’ll see the broadening of state licensing and
reform. All of these challenges call for automated solutions. I joined PROGRESS
be part of the solution.”
***All the talk these days seems to center around UAD. However, when you talk about UAD you need to talk about UMDP and MISMO and XML data standardization, etc. What’s my point? There are a lot of acronyms and terms in our industry that you have to keep up with. It can be tiring, quite frankly. So, when I stumbled upon an article that detailed must-know words, I knew that I had to share it with you. In the article entitled “10 New Words Every Business Owner Should Know” by Jason Fell, he selects what he considers the 10 need-to-know new words for every business owner. Whether or not you start using them in your own business dialogues is, well, up to you, but here they are:
****1. Light-bulb moment
****Definition: (noun) A moment of sudden realization, enlightenment, or inspiration.
****Example: “Sales at my company were plummeting, but then had a light-bulb moment and knew exactly how to turn things around.”
****Definition: (adjective) Denoting or relating to a system whereby people from different areas of an organization work together as a team.
****Example: “If we’re ever going to boost productivity, everyone will need to improve their cross-functional capabilities.”
****Definition: (verb) On the social networking service Twitter, to repost or forward a message posted by another user. (noun) A reposted or forwarded message on Twitter.
****Example: “My company is blowing up on Twitter. My posts are retweeted constantly.”
****Definition: (noun) The process or technique of identifying the location of a person or device by means of digital information processed via the Internet.
****Example: “Business is up at my restaurant since I started this geolocation-based mobile marketing campaign.”
****Definition: (adjective) Causing or relating to the contraction of a country’s economy.
****Example: “This darn contractionary economy has really stifled my business growth this year.”
****Definition: (noun) The use of electronic communication to bully a person, typically by sending messages of an intimidating or threatening nature.
****Example: “This person won’t stop harassing my business over Twitter. He’s practically a cyberbully.”
****Definition: (noun) Language regarded as characteristic of text messages, consisting of abbreviations, initials, emoticons, etc.
****Example: “If you even think about using textspeak in our marketing copy, I will not R-O-T-F-L. For the uninitiated, ROTFL stands for rolling on the floor laughing.”
****Definition: (noun) A short film, advertisement, or episode of a television series, made for online viewing. A blend of Web and Episode.
****Example: “For our next webisode on YouTube, let’s think of a way to incorporate customer testimonials.”
****Definition: (noun) A person who refuses to admit the truth of a concept or proposition that is supported by the majority of scientific or historical evidence.
****Example: “I’m the boss. I’m always right and you know it. Stop being a denialist.”
****Definitiion: (noun) An extremely large number.
****Example: “I’m an entrepreneur so, obviously, I have a bajillion things to do.”
****I hope you enjoyed reading about these new words as much as I did. My broader point in presenting you with these “new” words is to emphasize that things are always changing and we all have to keep up with the times. Sometimes just keeping up can be a full-time job, but we all have to do it.
***I always get nostalgic this time of year. September is the back-to-school season. Everyone is eager to learn and meet up with friends that you didn’t see all summer. It’s exciting. Kids are so attentive this time of year. Everything is new and fresh.
****However, that energy soon fades. In a few months parents have to remind their kids to do their homework, get up on time, well you know the drill. I remember growing up, every time my Dad called me by using my middle name, Kelly Ann, I would perk up as I was usually being reminded to do something, or worse yet was in trouble. I knew it was time to listen. Today there’s so much noise in the mortgage industry I’m not sure anyone knows when to perk up and pay attention. But there’s one thing that surely gets everyone’s attention. Want to know what it is? Read on.
****RFP. One event that gets us technology providers perked up is the “Request For Proposal” that we receive from mortgage participants looking for technology solutions. The RFP is the voice of the customer. I don’t need to hear my father calling my full name to perk up and pay attention anymore, an RFP will do just fine.
****It is very encouraging these days to see the volume of RFPs come past our desk. The number of RFPs for eSignature and eVaulting technology has certainly increased in the last 12 to18 months. As a technology provider we get RFPs all the time. We review these documents very carefully as there is usually good business content to give us insight of upcoming trends and confirmation of current business requirements. Others however, are very poorly written and leave us thinking that the potential client may not understand or have a plan for the technology after all the RFP responses are delivered. It is sometimes very frustrating as real time and energy are put into these responses.
****So, what makes for a good RFP? To start with timelines for the various RFP phases for both parties- that being the issuer and the respondent. The first phase is of course receiving the RFP. The respondent (the “v” word–vendor) is in the euphoric stage- must kind of feel like those reality stars- they get the letter from the network to potentially “audition” for the show. A lot of time and effort is put forth in this phase from the respondent reviewing the document and making sure it is a good fit from a requirements standpoint with the vendor’s technology.
****Phase two is of course the “audition.” This is the most important phase. This is where as the vendor you are invited to present for anywhere from four to eight hours to hopefully a group of decision makers. This is where the issuer has a real responsibility to make this as even a playing field as possible for all the vendors and have the decision makers available for the presentations. There is much time and cost put into this phase from both parties and it must be treated as such. The more detail regarding use cases, demo expectations, agenda, etc. the more effective meeting for all parties.
****Assuming you made it to the onsite audition – the phase post audition is where the communication starts to breakdown. At this point there are a couple of scenarios that usually play out. You may be told quickly that you are not advancing- usually with little to no feedback. Why is that? Don’t vendors deserve the respect to at least be told that their functionality wasn’t quite there, or pricing was off or your team wasn’t the right fit? So if you are lucky enough to survive (or you think you have) – then often times it drops into some black hole not to be seen again for weeks or worse yet months. What is that cliché- hurry up and wait. It would be nice if the issuer of the RFP would be held accountable just as the respondent is held accountable throughout the process. I realize many times the RFP issuer is more confused after receiving all the information- and it takes more time than anticipated to weed through the information, but this is where communication is key. Just keep us informed and we won’t have to keep “bothering you” trying to get status. The management of the RFP process is usually a very good indicator as to future deployment and success of the project.
****A couple of other brief points. It always makes me a bit nervous when an RFP is seeking responses for both business models- outsourced and on-premise software. Most companies know well before the RFP which avenue they are seeking. So I have to ask myself- are they seeking both bids to justify the real model of choice- and if that is the case who’s time is being wasted, mine or my competitors? Then of course there is the RFP that doesn’t clearly specify the business model- well let’s just say those are a challenge.
****Overall, the business requirements are usually well thought out and articulated in most RFPs. Any workflow documentation that can be included is always helpful, though. We want to know the current volume and cycle time of the existing workflow. It’s important to know your current process if you hope to improve it.
****As vendors we welcome RFPs. We realize that the RFP is the voice of you-the client. We perk up when we get one and we pay attention to the details, so please share what you can and remember communication and respect are critical to any successful project.