Innovating The Origination Process

Black Knight Financial Services, Inc. is a leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. The company is committed to being a premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. To this end, Richard (“Rich”) Gagliano is President of the Origination Technologies Division for Black Knight, talked to us about how he sees the future of mortgage origination and what Black Knight is doing to innovate. Here’s what he said:

Q: What are a few of the most impactful changes you are seeing in the mortgage lending industry?

RICH GAGLIANO: The impact of regulatory change continues to plague the mortgage industry with higher operating costs. While the pace of regulatory change has slowed, mortgage lenders have not seen their costs decline accordingly. To put this in perspective, the average cost to originate a loan today is nearly double what it was in 2007. Still, we believe that in time technology and process innovation will help to normalize costs.

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Digital technology has and will continue to have a significant impact on the mortgage industry. From an operational perspective, it enables innovation that can result in greater efficiency, as well as expanded product offerings. It can also help deliver the “have it your way” experience that customers expect by enabling them to interact with their lender and receive updates on the mortgage loan process from any internet-connected device. This continuity of experience has become a standard expectation from consumers, and digital technology is helping lenders meet and exceed those expectations.

Q: What is Black Knight doing to help lenders address these changes?

RICH GAGLIANO: On the regulatory front, Black Knight has been at the forefront in terms of working in close partnership with our clients to ensure that we adapt and innovate to meet their changing needs as new regulatory measures unfold. As a result, we have a highly collaborative and productive working relationship with our mortgage clients, and are in lock-step with them to address regulatory changes when they arise.

We also deploy robotics technology within our core loan origination system to deliver advanced automation in support of more streamlined origination operations. This innovative approach enables mortgage originators to improve operating efficiencies and drive down costs.

Taking advantage of the capabilities of digital technology, Black Knight is delivering a front-end (consumer-facing) loan application that lenders can deploy so their borrowers can enjoy a user-friendly, branded experience. Data that is entered into the application is collected and tied back to our loan origination system for efficiency and speed.

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Q: In what ways are these innovations helping the lending industry evolve?

RICH GAGLIANO: Innovation is greatly helping to expedite the gathering and validation of borrower information through fintech companies for key factors such as income and assets. This accelerates the speed and fluidity of the origination process by giving lenders increased validation certainty to support decisioning.

In turn, this gives consumers the ability to self-fulfill the mortgage origination application online, without the need to track down supporting documents and other onerous tasks that can contribute to an unpleasant mortgage origination experience.

The result is not only a more satisfying customer experience, but also a lower abandonment rate, decreased costs to originate a mortgage loan, and the opportunity to approve and close more loans overall. This offers a critical advantage to mortgage originators of all sizes.

Q: Black Knight is perceived as a technology provider for larger banks; what is the company doing to support mid-market lenders?

RICH GAGLIANO: Today, Black Knight offers a pre-configured origination solution called Empower Now! that is sized specifically for the mid-market lender. Empower Now! delivers all the functionality a mid-market lender needs, including automation capabilities and a process orchestration engine that helps support a lender’s future growth. It enables lenders to operate more efficiently and deliver a more responsive customer experience.

The system can be deployed within 4-6 months – more quickly than our robust Empower enterprise system. Additionally, Empower Now! scales to support future growth, so mid-market lenders don’t have to settle for less robust options because of their size.

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Q: How has your previous experience in the mortgage industry prepared you as President of Black Knight’s Origination Technologies division?

RICH GAGLIANO: My industry background has included both mortgage origination operations, as well as technology strategy and development. I have run mortgage origination businesses, including executive management, sales, and operations. This has given me a good understanding of the challenges associated with the origination business, including cost and margin management. I’ve also spent many years working as an underwriter, as well as in corporate finance and secondary marketing. I also have experience in business engineering, helping to identify opportunities for operations to be more efficient across people, technology, and processes. Finally, I have a great deal of experience in regulatory and compliance, and have been working closely with our mortgage clients on their readiness initiatives and risk mitigation programs.

Insider Profile

Richard (“Rich”) Gagliano is President of the Origination Technologies Division for Black Knight, a leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. As the division’s leader, Rich is primarily responsible for the direction of LoanSphere Empower, Black Knight’s loan origination system for retail, wholesale and consumer-direct channels; LoanSphere LendingSpace, Black Knight’s loan origination system for correspondent lending; Black Knight’s LoanSphere SalesEdge lead management solution; and LoanSphere Quality Insight, a quality control workflow solution that supports greater loan transparency and data integrity. With more than 25 years of experience in the financial services industry, Rich offers a wide range of lending-product knowledge and insight. He supports Black Knight’s efforts to provide advanced, high-performance technology and data solutions to help clients succeed in the evolving mortgage industry.

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Is Your Service Provider A Partner Or A Vendor?


Brad-ThompsonOver the past decade, I have been directly or indirectly involved in thousands of software implementations and IT projects. Most succeed; some fail. While any number of circumstances can lead to an unsuccessful project, one theme runs throughout: a lack of partnership between the organization and its provider. With 2015 IT spending on enterprise software up 5.5% over 2014, according to Gartner, there is much at stake from the very beginning. New technologies are emerging, promising differentiation, efficiency and better customer service. The big question becomes, how do you know you’re signing up with a true partner who will help you succeed?

Platform replacement is expensive. In my experience, 90% of project failures occur when the software provider is seen as nothing more than a vendor. When this happens, things are bound to fail. The next step organizations take, logically, is to begin looking for their next vendor. “Are we looking for a partner or a vendor?” ought to be the first question asked at the beginning of every search. The answer often determines the project’s destiny. This might seem simple, but the partner/vendor distinction is a multi-layered issue that should be discussed with, and agreed upon by, every member of the team. Deciding that a partner is needed means getting far more from your software provider.

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There are several ways to work through an implementation project with a software provider. One takes the purchasing organization’s approach: Do it our way. On the other end of the spectrum is to completely abandon all existing practices in favor of vendor-designed processes. Neither approach produces satisfactory results; in fact, both approaches are likely to lead to failed implementations. That’s because both of these scenarios approach the project without regard to best practices both the organization and the software firm bring to the table. Neither approach accepts the fact that both bring essential ideas to the project. The result, all too often, is mutual frustration.

I recommend embracing the partnership approach. This approach has both the organization – in our case, lenders – and its chosen provider working together to maximize platform investment. Implementing new technologies to support nothing but old practices minimizes investment return. The same can be said for attempting to go live with all new processes.

Meeting in the middle produces the best result because it recognizes that both parties bring great ideas to the project. The lender knows its own business better than anyone. The software provider knows its software best, and the best technology experts know the industry extremely well, too. We meet with lenders constantly, implement systems daily and study lending performance regularly. True partnership implementations and subsequent go-lives are an amalgam of experience. They also help lenders realize value from their technology investment, with such value including customer experience, efficiency and compliance improvement.

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Are you ready to partner? Is your provider?

I’ve made the case for partnership; it’s the way our firm works with our clients. We see it as a win/win approach, especially for the client. How do you look at your vendor relationships? Here are some key questions to ask:

Are your providers treating you like you treat your customers?

Great partnerships continue long past implementation and long past go-live. Great customer service, for example, seems simple, but is often overlooked. Handling the simple things like returning phone calls, providing quick answers and sending follow-up emails make all the difference. Going above and beyond for customers should be standard operating procedure in a true partnership.

Lenders should expect to be treated by their providers the same way the lenders themselves treat their borrowers – meeting each individual’s unique needs, while having open lines of communication throughout the process. Assuming that’s true, then you already have a great foundation and should start leveraging that right away to build on the partnership.

Is your provider offering you solutions or just products and services?

Offering products is the easy part. Transitioning to services is the next, slightly more difficult step. Providing solutions is the giant leap, one that can truly transform a business. Not many providers have the ability or the desire to do this. Many providers are quite satisfied with a client that is on auto-pilot. They know the relationship can’t last forever, but will do just enough to keep the status quo for as long as possible or until they are no longer addressing business needs. Are you on auto-pilot? The quick test is anticipation: when your provider is keeping you ahead of the market and regularly coming to you with new ideas, you’ve got a forward-looking partnership.

Providers can truly enhance your business and make it better by working with you as partners. True partners will continue to improve, not only for your business but for all the businesses they serve. When leveraged correctly, partners can, and should, become an extension of your business, working as trusted advisors focused on making your business better.

I was recently a part of one of the most successful client partnerships in the history of our organization. Accenture Mortgage Cadence successfully completed a massive software implementation for a top retail lender just last month. Choosing to purchase and implement a commercial application, instead of enhancing and upgrading their internal proprietary application, was a difficult and risky decision for them.

This client had held complete source code control of their internal application for many years, so the prospect of giving up that control and moving to a commercial application was daunting, to say the least. They also needed this implementation done in time for TRID, a massive undertaking for any lender, let alone for one of this size. In under 10 months, we were able to deploy our core application, with multiple internal integrations; train and on-board more than 2800 users nationwide; and, as of last month, roll 100% of their volume onto the platform.

In describing this assignment, I use the words “we” and “our” on purpose, and not simply as a reference to my organization. The client and Accenture did the work together, as partners. Was it easy? Of course not. There were some very challenging hurdles along the way, and many times we both thought we were trying to accomplish the impossible, but we were successful through our partnership. Together, we overcame all of the reasons why this project should not have worked.

How did we deliver this monumental project in such a short amount of time? We did it by starting off on the right foot. Before we even signed contracts, we did something that I have rarely seen happen: We talked about our partnership. We talked about it a lot. I had many different people from the client tell me, “We want to be your partner” and “We want to help make your business and product better.”

We discussed and agreed upon communication methods, project methodologies, change management and escalation processes. I know that many of these things seem like standard discussions in any project, but what was not standard was that the discussion focused on both the client and on us. The client gave Accenture as much say and input in each of these areas as they had.

We even went so far as to discuss travel and the impact that it would have on the personal lives of those working on the project. Much to my surprise, the client suggested that they travel to our offices to work on this project as much as they expected us to travel to theirs. Their reasoning? It was only fair that they ask their people to be on the road and away from their personal lives as much as they were expecting us to be.

We (Accenture, that is) had the ability to escalate and change as often as needed to keep things on track and be successful. We were not relegated to being simply a vendor. We were a trusted advisor, and this client truly embraced the partnership approach. We had — and still have — a seat at the table. Because of all of these things, this partnership continues to thrive and grow.

Business is hard enough without the additional stress of using service providers that don’t share your same vision and desire to succeed and exceed. If you find yourself struggling with your current providers or constantly find yourself in the process of looking for the next vendor, take the time to evaluate what you have today. Do you relegate these providers to vendor status? Maybe it’s time to reflect on how you approach these relationships. Do you have providers that could care less and only work to keep the work minimal? Maybe it’s time to make a change. If you find yourself somewhere in between, you have an opportunity to start out the right way with new providers and an even bigger opportunity to cultivate your current relationships into true partnerships. Your business will reap tremendous rewards, I promise.

About The Author


Brad Thompson is EVP Client Services at Accenture Mortgage Cadence. Brad and his team are responsible for overseeing the client management, technical implementation, document compliance and business development for Accenture Mortgage Cadence. Prior to joining Accenture Mortgage Cadence, Brad served as the Director of Financial Services for 3t Systems where he was responsible for managing and delivering IT consulting services to the financial sector spanning small regional banks to large multi-national financial institutions.

Vendor Tries To Advance Origination

VirPack has unveiled its Originator Portal product. The innovative web portal enables lenders that use VirPack’s Document Management and Delivery System (DMDS) to provide originators new web-based capabilities that improve originators’ efficiency and make borrower’s non-public personal information (NPI) more secure.

The Originator Portal is a web-based, intuitive, customizable tool that provides a downloadable list of the documents required for a particular loan, based on predefined rules. With a single click, an originator can upload a required document or a batch file of loan documents in a secure manner directly to the lender. Originators can also access a list of outstanding documents as well as monitor a loan file any time they want, from wherever they are, in a secure manner.

“VirPack created the Originator Portal to increase efficiencies for originators and reduce the time they spend on a loan during the origination process, enabling them to close more loans and generate more revenue for themselves and the lenders that provide the web portal to them,” said Cy Brinn, chief operating officer at VirPack.

Moreover, because VirPack’s advanced Document Management and Delivery System is integrated with the Originator Portal, TPOs can communicate through a secure message feature with lenders and other business partners, and loan data is synchronized with the data in the loan origination system. Lenders using DMDS can more easily and efficiently comply with regulations and cooperate with audits because an electronic audit trail is created and that makes it faster to review and audit an mortgage transaction.

“The Originator Portal was developed with the aim of extending the benefits and efficiency gains from VirPack’s Document Management and Delivery System as well as improve the efficiency of the document management and communication process with originators,” said Brinn.

About The Author


Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Mobile Technology Enhances The Borrower’s Experience

When done well, mobile technology can really make for a better lending process for the borrower. For example, Franklin, Tenn.-based Wipro Gallagher Solutions (WGS), a Wipro Limited company, released the second version of its Enterprise Mobile Origination app (e.MO), a native iOS lending productivity iPad app designed to enable sales teams in the field to originate mortgage loans from any location.

e.MO v2 now pulls borrower credit in real-time using basic data provided by the borrower, which offers the loan officer a more accurate sense of whether or not the borrower will prequalify for specific products. This feature allows the mortgage loan officer or broker to act as an advisor to its borrower clients while keeping them engaged throughout the process.

In addition, e.MO v2 offers both a short form application as well as the full 1003 by which the entered data instantly synchronizes with WGS’ NetOxygen LOS, providing all the tools to keep sales staff informed and connected to the borrower.

e.MO v2 also offers users greater customer service tools including the ability to save contact details of a prospective borrower on the iPad using the saved applications functionality. Also, loan officers and brokers can more quickly access a loan from an iPad using the app’s new Search Loan tool.

“The latest version of our e.MO application further nurtures leads and helps brokers and loan officers establish rapport with the borrower, allowing the sales team to move the borrower further down the loan process upon first interaction,” said Teresa Blake, practice director at WGS. “The flexible e.MO tools position loan originators as consultants to their customers and synchronize efforts between the customer-facing sales team and back-office processors, which speeds the transaction process and ensures accurate and efficient communication with the borrower.”

About The Author


Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Cutting Through The LOS Clutter


The LOS is the straw that stirs the drink for lending operations. Lenders that are in search for a new LOS platform and vendor partner, one that they can rely on and grow with for years to come, whether they know it or not, are hard-pressed to make the right buying decision amid a vastly different, ever-changing lending landscape.

We know that the cost to originate loans has risen substantially over the past year and keeping pace with changing compliance rules is here to stay. And given that the industry is so fluid with vendor consolidation, marketplace shifts, compliance adherence and varying technologies, how is a lender to know where to begin when evaluating a new LOS? What should a lender focus on? What works and doesn’t work?

SVP of Business Development and Strategic Alliances Rob Pommier of LOS provider OpenClose shares his perspective.

Q: End-to-end LOS platforms seem to have become a must have. What’s your take?

ROB POMMIER: People used to be of the mindset that no one vendor could be good at every piece of the lending process and thus best-of-breed was the optimal approach. While there is some merit to this viewpoint, it has waned significantly as end-to-end providers have advanced their systems over the years and no longer have the need for many partnerships and integrations. What’s more, maintaining lots of integrations often compromises achieving seamless interfaces. And, with an onslaught of constantly changing compliance rules, it gets really tough to ensure that multiple vendors being used are keeping up with implementing new rules and updating existing rules.

As a result of the aforementioned, over the last couple of years lenders have been leaning toward using a single platform to run their business because it gives them more control over their data and in the end it is more cost effective. Before the mortgage industry was hit with a myriad of new compliance rules virtually overnight, folks didn’t really understand the importance of data flows within a single system and how it interacts with compliance rules (i.e. QM, ATR, CIC) to ensure the consistent funding of quality, compliant loans. Using a single system with a single code base makes a huge difference in today’s market. On the other hand, using a mishmash of disparate technologies can create inefficacies, integration challenges, a propensity for errors, and compliance exposure.

Now, every LOS provider is going to require some type of integrations, but not like in the past. At OpenClose, we’re very discriminating about the vendors that we integrate with. We want our clients to get the best value from our system and if an integration is week, the product is sub-standard, or the company offers poor support, it’s not a partner we want to work with, which is in the best interests of our clients.

Q: What kind of LOS due diligence process should lenders use in today’s market?

ROB POMMIER: Before even starting to look at a new LOS, lenders really need to first understand what shortcomings, gaps, and bottlenecks they have not just in their current system, but within their own workflow and in different functional areas within their organization. Look closely at 1) Are we having issues because this is the way we have always handled the business? Or, 2) Is it actually a shortcoming of the software? This should be the first part of the due diligence process: understanding the needs of your own organization. Lenders have to open their minds up to developing better processes and ways to do things from a business perspective, and then rely on software to automate and run the business efficiently.

Selecting and implementing a new LOS is a big decision. If the wrong platform is installed that fails to meet your specific technology requirements along with your short and long-term business objectives, then you’ll be searching for a new LOS again. As a rule of thumb, I recommend that lenders don’t just let one or two functional areas make the buying decision. Involve all areas. How will the new LOS affect production? Underwriting? Compliance? Processing? Closing? Shipping? Secondary marketing? Servicing? IT and support? How does it function within each business channel from retail to wholesale, correspondent, consumer direct? What is the bottom line ROI from the CFO’s perspective?

Form a committee that involves all of the key areas/departments in your organization to work together to make an informed buying decision that effectively addresses all needs and pain points for your people. You don’t want to buy a platform only to find out that it isn’t satisfactory for some functions because you didn’t consult your people for input.

Once you’ve defined your processes and workflow, and involved the right people to help make the buying decision, then you can start evaluating LOS platforms.

Q: What is the value of using an RFP/RFI in selecting a new LOS and/or using a consultant?

ROB POMMIER: This is sort of a double edge sword. The use of RFPs/RFIs and consultants are good in some instances; however, they can often bring the selection process to a crawl and create “analysis paralysis.” We all know the usual RFP/RFI type of questions that are asked. In many cases they are just template-based. Typically, using an RFP/RFI doesn’t ask the right questions to effectively extrapolate the needed information to find technology that supports the business needs.

All too often we see companies send out large questionnaires to vendors, and once we get them, it’s clear they didn’t think through the right questions to ask. They don’t fully understand how to interpret the results, let alone use them as a basis to make an informed buying decision. The utilization of RFPs/RFIs can be helpful, but only if it is well thought out and provides useful information. More often than not, however, the RFP/RFI is done wrong and becomes but a time consuming exercise in futility.

When it comes to engaging with a consultant to help evaluate LOSs, as well as other mortgage technologies, we’ve found that some have a solid approach to due diligence that is very focused on and geared to a lender’s unique business needs. But generally, we simply see canned questions and suggestions which aren’t applicable to specific lender workflows and isn’t an optimal way of doing business for their clients’ unique needs.

In addition, some consultants end up slowing the selection process and in doing so spend more of the clients’ money by dragging it out. But in other situations we see consultants that are very efficient and really work to find the right software to fit the needs of their clients. Lenders also need to be cognizant that some consultants are impartial to just a handful of LOS providers. This could be because the consultant is more familiar and comfortable with those systems; or, in some cases, they may actually be incentivized by the software company to recommend their products. In any case, the wrong consultant can steer you in the wrong direction.

Q: Talk to us about mortgage banking experience combined with technology experience.

ROB POMMIER: There are a lot of LOS providers that employ staff that has software experience but not lending experience. Engaging with an LOS provider that has people who have worked in both mortgage technology and also for an actual mortgage banker makes a big difference. This is the type of human capital that you want as your vendor partner, starting with the salespeople who are courting you on through the technical people that will be implementing the platform and supporting you. Someone that just has software experience doesn’t fully understand lending.

It’s also important to look at the length of tenure and depth of experience of the vendor’s developers, architects, and support staff. Are they loaded with technical experience and possess a deep understanding of the mortgage process having worked at multiple organizations? It counts. At OpenClose, we employ staff that possess not just mortgage technology experience, but also mortgage banking experience working at actual lenders. As a result, we are able to better assess unique client needs and deliver a tailored solution with the business side in mind. We take a consultative, solution-crafting approach to our clients, from the lender’s perspective.

Equally important is that those involved on the lender side during the evaluation and implementation process need mortgage domain experience. They need to fully understand the lending workflow in order to get it right the first time.

Q: What is OpenClose’s value proposition?
ROB POMMIER: OpenClose offers a single solution software platform for all lending channels that doesn’t require multiple interfaces to make the software work. This provides for the cleanest and most efficient dataflow between all departments to ensure that valuable, clean data is delivered to all departments without re-keying or missing information. With OpenClose, loans effortlessly sail through the lending process without manual intervention, thus increasing employee productivity and reducing cost per loan. It allows for a highly efficient and effective workflow. And, we do this very well for all lending channels. I like to use the phrase, “Let technology run your business, not people run your technology.”

Our software is extremely flexible and configurable, which enables us to successfully reach a level of customization that most LOSs are unable to achieve. Every single one of our screens is extremely intuitive and user adoption is quick. We are proven to work well for both medium and large size lending entities and can easily scale up as they grow. You won’t outgrow our LOS.

In short, our system is easy to implement, easy to learn, feature-rich, uses a single code base, is very configurable and customizable, and establishes a completely seamless workflow and puts the lender in control of their data in all areas along with complete transparency. The system keeps clients in full compliance, maximizes organizational productivity, and scales as lenders grow. Our customers tell us that OpenClose is the last LOS they’ll ever need.

Q: How is OpenClose different than its competitors?
ROB POMMIER: First and foremost, our entire platform is 100 percent browser-based. There are no software installs. All components of our LOS can completely be accessed via a Web browser anywhere, at any time. Most LOSs have some sort of an install and often term themselves as “Web-based/Web-enabled/Web-accessible,” which is done to tip toe around not being a system that only needs a simple browser to operate off of.

We developed and utilize one code base throughout our entire system, which allows us to easily customize seamless workflows and enable straight-through processes for all business channels. It also allows us to implement much quicker than other systems. And, we do all of the configuration for the lender. We don’t put the onus on the client; we do it for them.

Notable is that OpenClose is owned, funded, and operated by the same founding principles. We’re not a big, slow-moving software firm that is controlled by a large acquirer. We are an innovative, nimble company with ample resources and very responsive customer support. You’re not just a number at OpenClose; you’re a valued, long-term partner.

In addition, OpenClose employs people that have both technology as well as mortgage banking experience working at lenders. Our people fully understand lending and are thus able to handle implementations in a consultative, subject matter expert fashion.

OpenClose is a true end-to-end platform. Sure. Every vendor lays claim to this in today’s market that now has end-to-end solutions in high demand. But many LOS providers have merely attempted to assemble a comprehensive solution using best-of-breed integrations, or simply by way of vendor acquisitions. Either way, they are disparate technologies that don’t always work well together. Everything is completely native to our system. We don’t have these technology issues.

Q: Do you have any “buyer beware” recommendations for lenders looking for a new LOS?
ROB POMMIER: I have quite a bit to say on this topic. First, make sure the LOS you select handles the top three components that are most important to your organization. Don’t settle for something less than you desire that has deficiencies in some areas. Take your time. Peel back the onion. Kick the tires and look under the hood before buying. Don’t just let the vendor give you a canned sales demo and make a buying decision off that. Watch them run a loan through the system from start to finish. Some tough questions to ask and key things to consider are below.

A good, mature, robust LOS should address all business channels, and should do it very well. Make sure the platform is centralized and fully automates each channel from soup-to-nuts. Look for a long-term LOS partner with strong customer support, not a vendor where you’ll potentially become “just another number” in a big software organization.

Is the LOS technology contemporary or elderly? What code was it built in and are there other types of code intermingled with it? Is the vendor a continual innovator and do they listen to their customers? How scalable is the software and how flexible is it? The application needs to be proven to handle increases in volume given lender growth. Make sure the vendor’s staff that you’ll be working with has deep mortgage domain experience and the company’s employee attrition rate is low. What is their customer support like? What are their average response and resolution timeframes? What is their average implementation timeline, specifically for a company similar to your size? Are there any lawsuits pending? If so, why and what is the nature of the litigation?

Corporate and management structure is also important. Some LOS providers are run by just a couple of people at the top calling all the shots. That’s a big red flag. Your LOS partner needs to have a formal management team in place that has mortgage experience.

Unfortunately, it’s a survival game right now for vendors that have older technology and are just trying to stay afloat in today’s ultra-tough business climate. There are vendors that dodge questions, sugar coat responses, and even outright lie. It’s up to you to perform the deep dive due diligence necessary to ensure that you invest in an LOS and long-term vendor partner which will grow with you for years to come.

Lastly, I’ll leave you with the age-old saying, “If it sounds too good to be true, it probably is.” There’s a lot of lipstick on a pig out there.

Q: Where do you think the LOS space is headed?

ROB POMMIER: Without a doubt, the entire LOS space is headed toward the software-as-a-service (SaaS) model. We can look at a couple of cycles here. After the crash, lenders stopped buying multi-million dollar platforms that took long implementation time frames, required significant resources to maintain, and had a high total cost of ownership (TCO). Less expensive LOSs began to gain momentum mostly due to them simply being cheaper. Lots of those LOSs claimed to be SaaS but really weren’t. It was just a buzzword they worked into their marketing speak.

Lenders’ appetite for technology was largely predicated on price. And who could blame them for looking at price first? Many didn’t even know if they could secure a warehouse line and keep the doors open, so why buy or continue to maintain expensive systems that they had to manage themselves? Given terrible market conditions at the time, it didn’t make sense.

That was then and this is now. Moving forward, I see the next wave of LOS platforms as all being genuine SaaS-based models. It’s shocking to me how many LOS vendors represent that they are SaaS but are not. Lots of “me too” LOS vendors are out there, so buyer beware. Lenders don’t want to be in the business of technology. They want the software to be completely managed for them and only a true SaaS model can do that. This will force vendors into extinction who claim to be SaaS but actually require installs of some sort.

We’ve had lots of recent consolidation in the LOS space with some good acquisitions and also some really bad ones. When the smoke clears, those LOS vendors that are antiquated will wane and those that are actually SaaS or are working to develop new platforms to be SaaS will be become the dominant players.


Rob Pommier thinks:

  1. True SaaS-based LOSs will dominate the market and vendors with antiquated technology will die on the vine.
  2. Vendors will get better at managing compliance, and lenders will leave it to technology to handle.
  3. Both vendor and lender consolidation will continue, but not at the rapid rate that we have seen in the last couple of years.


Rob Pommier is SVP of Business Development & Strategic Alliances at OpenClose. A veteran of the mortgage industry, he has extensive domain experience holding executive management positions at GenPact, Del Mar Database, Lender E-Source, Fiserv, South Pacific Financial Corporation, and OpenClose. Rob understands both mortgage technology and mortgage banking through and through, drawing on knowledge from working for software firms as well as banks and lenders. He has successfully driven numerous technology initiatives and helped launch innovative solutions. Rob is a regular thought leader in the media and participates on various mortgage panels and roundtable discussions.

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Open Close

Founded in 1999 and headquartered in West Palm Beach, Florida, OpenClose® is a leading provider of an enterprise-class, purely browser-based end-to-end loan origination system (LOS) that delivers its solution on a software-as-a-service (SaaS) basis. The company provides a variety of Web-based solutions for lenders, banks and credit unions—from loan origination software to decisioning, reporting, website design and social media marketing. OpenClose’s LOS is completely engineered by the same company, thus avoiding assembling best-of-breed applications or acquiring technologies in an effort to create an end-to-end platform. The company focuses on providing lending organizations with full control of their data and creating a truly seamless workflow for comprehensive automation and compliance adherence. For more information, visit or call (561) 655-6418.

Progress In Lending
The Place For Thought Leaders And Visionaries

LOS Players Have To Step Up

You Can Download This Entire Article As A PDF HERE

TME-TGarritanoWe all know this story: origination volume is going to decrease this year and interest rates are going to rise. In fact, the extent to which volume decreased in the first quarter was not predicted, it took a nosedive. Also, we’ve now transitioned away from a refi-heavy market to a purchase-heavy market.

What does this mean? It means that lenders are going to have to work harder for every deal. As a result, the good LOS systems are stepping in to help out. Recently we’ve seen prominent LOS players buy CRM systems and roll them into their core offering. Why are they doing this? Lenders need advanced CRM technology to help them win the battle for the borrower.

But it’s not enough to just buy a CRM, you have to tightly integrate it and repeatedly update it. For example, Mortgage Builder recently acquired LoanXEngine and have updated it quite a bit. LoanXEngine 7.0, the new and improved version, represents the culmination of the platform’s six years of highly praised and innovative work in bringing efficiency and cost savings to the mortgage origination sector and its borrowers.

LoanXEngine, launched in 2007, was acquired by Mortgage Builder in October of 2012 as the front end component to round out the company’s full mortgage lifecycle array of offerings, joining Mortgage Builder’s Architect loan origination system and its Colonnade loan servicing system. With LoanXEngine providing lead management, CRM and PPE functions, Mortgage Builder is one of the only technology firms providing “front-end to end-to-end” solutions for lenders of all sizes.  LoanXEngine is also available as a standalone cloud-based platform, easily used with other LOS systems.

LoanXEngine 7.0’s enhancements include:

>> Updated FHA mortgage insurance premium changes;

>> Closing cost filtering support features to allow lenders to customize fee charges according to the requirements of individual states, lenders, loan amount ranges, conventional and government loan products and other considerations;

>> Redesigned and improved non-qualifying product reporting, including detailed failure to qualify reasons and website links for further investigation;

>> Enhanced mobile device viewing, for tablet and mobile phone viewing ease;

>> Improved wholesale channel home page and workflow for greater functionality for third party originators;

>> Integration with LendingTree’s LoanExplorer, the all-new version of the company’s popular consumer-facing mortgage comparison and leadsource engine. LoanXEngine is among the very few PPEs selected to work with them on this product.

“We’re very excited about LoanXEngine 7.0,” says Kelli Himebaugh, corporate vice president of Mortgage Builder Software. “It represents a whole new class of PPEs for the mortgage industry with its highly innovative lead management, CRM and improved functionality in products and pricing. With LoanXEngine, lenders of all sizes have access to the best front end technology available today,” she says.

“It is part of the complete mortgage lifecycle suite of products that let lenders handle every step, from prospect quotes through origination, secondary marketing and servicing, all on a common platform that is easy to use,” she explains. “Whether using LoanXEngine, our Architect LOS and the Colonnade LSS together or independently, lenders now have options for excellence they never had before.”

Mortgage Builder is not alone. Ellie Mae also recently acquired a CRM, MortgageCEO and have been aggressively updating it. Ellie Mae launched Encompass CRM, an advanced customer relationship management (CRM) and marketing automation solution.

Encompass CRM, formerly MortgageCEO, is a scalable suite of automated sales and marketing tools that allows mortgage lenders to manage and market contacts in a compliant manner, leverage lead management and lead distribution capabilities and develop and manage relationships with Realtors, third-party originators or other trusted and valued relationships. Encompass CRM streamlines the process of converting leads to loans and eliminates the need to update multiple systems that can create data inconsistencies and introduce compliance and audit concerns for lenders.

Encompass CRM allows mortgage lenders to:

>> Promote compliance in all borrower communications.

>> Build and manage referral partner relationships with Realtors, homebuilders, financial planners, attorneys and others.

>> Manage future, former and current borrower contacts.

>> Manage, nurture and convert mortgage leads within Ellie Mae’s Encompass mortgage management solution.

>> Gain efficiencies with automated marketing campaigns.

>> Generate more purchase leads with online homebuyer marketing tools and interactive websites.

>> Stay in contact with clients across multiple loan channels.

>> Track the effectiveness of marketing and sales campaigns with comprehensive reporting capabilities.

>> Recruit and retain top mortgage professionals.

With Encompass CRM, a loan originator (LO) can quickly create marketing campaigns for prospects, customers and referral sources. Campaigns and emails can be automatically triggered at key milestones in the origination process or over the life of the relationship. Relevant, audience-specific content is available through a library of professional email templates or can be easily created. Online scheduling makes LOs more productive and prompts follow-ups and tasks. All contacts, marketing materials and scheduling can be accessed securely via any mobile device.

Encompass CRM helps lenders demonstrate the steps taken to oversee sales and marketing compliance. In the event of an audit or complaint, a lender will know who created the marketing piece, who approved the marketing piece, who sent it and who received it. This gives lenders much greater insight and visibility into their entire sales and marketing organizations.

Encompass CRM also tracks what prospective clients are doing on company websites, what pages they are visiting and what they are searching. This enables proactive companies to identify potential borrowers at the earliest possible opportunity.

Business managers can use Encompass CRM to build realistic forecasts, gain greater insight into their sales pipeline and monitor the effectiveness of individual and branch performance as well as marketing campaigns.

Unlike standalone CRM systems, Encompass CRM can be integrated into the Encompass platform so that data can move seamlessly and is stored in a single, secure system of record, eliminating data integrity issues. Currently, Encompass CRM is integrated through Ellie Mae’s software development kit. In the future, it will be fully integrated into the Encompass mortgage management software.

“Mortgage lenders are scrambling to make the transition from a refinance to a purchase market, but many do not necessarily have a specific plan of how to get there,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Advanced CRM and automated marketing tools are no longer nice to have, but rather, are a necessity to be competitive and to thrive. With Encompass CRM, mortgage lenders can be more productive, build relationships and drive purchase conversions. Furthermore, the capabilities within our CRM solution and our single system of record helps our clients stay compliant.”

So, the good LOS systems are expanding their capabilities to help lenders through these changing times.

About The Author


Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

A CFPB Compliance Success Story

We talk a lot about new technology designed to keep lenders compliant in the face of new Consumer Financial Protection Bureau (CFPB) rules. Today I want to switch gears and talk about how some of that technology is actually working. In this case, origination vendor OpenClose has implemented the functionality necessary for lenders to adhere to the CFPB’s new Qualified Mortgage (QM) and Ability-to-Replay (ATR) rules. The company’s client base is successfully processing QM loans. Here’s the scoop:

OpenClose began adding numerous lines of code to its LOS well in advance of the CFPB’s QM deadline of January 10, 2014. While at the point-of-sale, the loan officer takes the 1003 application, selects a product, and clicks a QM button that returns a decision if it’s a QM or non-QM loan. If it meets QM guidelines, an evaluation report and ATR certification are provided for the lenders’ records.

Once the loan has been decisioned, it seamlessly moves through OpenClose’s LOS workflow where the loan is continuously checked in the background on a screen-by-screen basis for any changes that affect QM requirements. If a change is detected, an alert appears on the screen that the user is working on, which provides a pass/fail indicator along with messaging as to why there was a QM fail so the user can address it and proceed.

Custom business rules can be configured within the LOS to meet lenders’ specific workflow preferences and easily implement any new rules the CFPB introduces. As a result, lenders are able to turn on a dime and remain QM compliant given changes to guidelines or the introduction of new rules.

“A lot of technology vendors are just jumping on the band wagon and touting QM readiness,” says Rob Pommier, SVP of business development and strategic alliances at OpenClose. “But there are lots of changes to LOS code bases that vendors must design, implement and test before being rolled out into a production environment. That’s no easy task. It took us many months of development and making alterations to our graphical user interface (GUI) in order to ensure that our end-to-end system is what I term ‘bulletproof QM ready.’”

“The work that OpenClose has done to their LOS to meet QM rules has made our jobs incredibly easy,” said OpenClose client Colleen Thingelstad, director of real estate lending at Horizon Credit Union. “We don’t need to think; the system automatically does everything for us. It has literally saved us countless hours of work, and our investors are very comfortable with accepting the system’s findings.”

Pommier adds: “One of the problems technology vendors have been encountering with QM implementations has to do with using multiple disparate applications that must have code added to them. Some vendors used a best-of-breed approach to create an end-to-end platform while others simply acquired various technologies. In either case, these formed solutions aren’t native to the vendor’s core platform, and thus, they are challenged to seamlessly control data throughout workflows. There is also a bucket of vendors that have antiquated software or are resource constrained, which limits them from implementing QM functionality.”

About The Author


Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Closing The Page On 2013

Origination vendor Ellie Mae released its Origination Insight Report for December 2013, as well as an infographic of key mortgage statistics and trends for 2013. The report draws its data and insights from a robust sampling of the significant volume of loan applications that flow through Ellie Mae’s Encompass LOS and the Ellie Mae Network.

“Purchases represented 54% of closed loans in December 2013, which was double the share of at the beginning of the year,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Meanwhile, refinances ticked up by 1% over November to 46% in December, helped in part by the average 30-year note rate staying below 4.6%.”

To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the September 2013 applications) to calculate an overall closing rate of 54.3% in December, up from 53.1% in November 2013.

“HARP-related refinancing activity increased for the second month in a row, as conventional refinances at 95%-plus LTV rose to 12.1% in December, the highest they’ve been since August 2013,” said Corr.

The Origination Insight Report mines its application data from a robust sampling of approximately 57% of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.

Corr added, “2013 closed with the loosest credit requirements of the year. The average FICO score for all closed loans last month was 727, 11 points below the 2013 average of 738 and 21 points lower than December 2012, when the average was 748. Last month, 31% of closed loans had FICO scores below 700, compared to 21% in December 2012.

“In addition, both back-end DTI (39%) and average LTV (82%) for December were at their highest points for 2013.”


Progress In Lending
The Place For Thought Leaders And Visionaries

Mortgage Auld Lang Syne

You can Download this article as a PDF HERE

TME-DGreenAs we start the new year there’s no disputing we’ve sung our last Auld Lang Syne for at least eleven months. But there’s something about the song that bears thinking about.

First penned by Scottish poet Robert Burns in 1788, it asks, “Should old acquaintance be forgot?” Should we forget the past and the people from our past? Being rhetorical, we don’t have to answer, or do we?

So much of mortgage lending’s future hinges on its history. Sure, most of us would have preferred a clean slate these past few year-ends with the option to simply look forward. But circumstances didn’t allow. However, times have changed and 2014 is different.

Delinquencies and foreclosures are declining. Home prices are slowly rising. The employment picture is improving with all signs pointing to the return to a more normal economy and a steadier and potentially growing purchase money market. Assuming the next twelve months proves this, why look back when we have so much to look forward to? Because some of the answers to future success predate the housing crisis.

Getting borrowers more involved in the mortgage process to the point of enabling them to self-serve online dates back to the turn of the century. The first to finance their homes using the Internet found it a novelty. Today’s borrowers expect it. A recent survey by Accenture reveals sales of mortgages via the Internet increased 75% while sales at branches fell 16%. It’s clear: borrowers meet their mortgages and their lenders in the digital, rather than the physical world.

It is also no secret borrowers are a fickle lot. Long in the habit of changing lenders mid-stream, they do so for at least two reasons. The first is obvious. This is an intensely competitive business where every loan counts. More production is better; going all out for every loan separates winning lenders from all others. Borrowers, for their part, often do not know how to compare one loan from the next. Switching in the middle of the mortgage process, therefore, is often due more to perceived rather than real advantage.

Today’s borrowers are more emboldened than those from the early days of Internet lending. The housing crisis made real estate information ubiquitous. Borrowers, therefore, are savvier than they were and they now have a better idea how to compare loans and lenders. This is partially thanks to technology as well. Consumers increasingly live in the digital world. Always available information makes learning new subjects much easier and comparing options much simpler than it was even 10 years ago.

Fickle and emboldened, those financing homes this year and beyond also have greater expectations than their predecessors. All consumers, regardless of the good or service they are pursuing, want all possible information immediately, available wherever they happen to be on whatever device they have in their pocket, briefcase, backpack or purse.  A home loan is no different. If borrower allegiance were in question prior to 2007, no doubt today’s fickle, emboldened borrower is likely to be even less loyal.

Good to know, but what’s a thriving lender to do? Adapt to borrower behavior and aggressively convert applications to closed loans at much higher than historical rates. How? Transparency throughout the entire mortgage process that provides regular pro-active borrower contact from origination through closing.

Today’s compliance environment, too, has its origins in the housing crisis. On January 10 the industry awakens to lending under the Ability to Repay (ATR) and Qualified Mortgage (QM) Rules. Ability to Repay is the law; compliance is mandatory. Qualified Mortgages are optional. Lenders are free to lend outside the QM Rules. While there are implications to doing so, the reason to consider this move is opportunity.

Mortgage volume is projected to drop by more than $575 billion in 2014. Estimates of the percent of non-Qualified Mortgages being made today range from a low of 25% to as much as 60%. Using the lower-end estimates for the sake of argument, non-QM lending could help offset market contraction. Looked at another way, if the market shrinks by one-third and non-QM loans account for another 25% of market volume, what lender can afford to see its lending activity decrease by 55%? Non-QM lending bears serious consideration.

The Know Before You Owe (KBYO) Rules, too, go way back. When disclosure requirements changed in 2010, the lending community knew additional changes were coming. They arrived on November 21, and while they do not take effect until August 1, 2015, a good deal of work throughout the industry by all players will be required between now and then

Efficiency, and its analog cost-to-originate, is a subject that is as old as mortgage lending itself. It is also very much in the news as all lenders know. Costs have been rising steadily for many reasons since 2007. It is safe to say there’s general agreement that the time to rein efficiency in is now.

Returning to the fundamentals is one of the ways to do so. Successful lenders will cast their mortgage operations in a manufacturing light, building efficiencies by focusing on objective, repeatable processes. Unit-based measures become essential for both management and comparative purposes.

Loans have no concept of their size though the industry tends to focus more on dollar than unit volume. Total production in 2014 will be roughly 5.7 million units, the level at which the market is predicted to settle through 2015. Not only is overall volume lower, more than 60% of these loans will be for the purchase of a home, an almost exact swap with refinance from the year before.

Fewer, harder loans. Purchase transactions are more complex in that they typically involve more parties, often requiring more documentation and taking longer to close, all which conspires to drive down efficiency while increasing costs. Successful lenders, consequently, will diligently measure and track unit-based efficiencies, squeezing every possible improvement from tightly controlled loan manufacturing processes. The one metric to watch: closed loans per employee. The higher it rises, the lower cost to close typically falls.

These concepts are not new. They alone are a very good reminder of why forgetting the past is a poor idea. With last decade’s dawn of Internet lending came a renewed emphasis on measuring performance. This happened partially because it became easier with technology of all kinds spreading throughout the industry. It also happened because, for a brief time, the numbers got very good for those lenders that not only used the technology to its highest and best purposes, but also adapted strategy to take full advantage of their new tools. Then they paid relentless attention to performance, attentions that had to be diverted for obvious reasons. The time is now to study these lessons of the past and put them back into practice.

Technology, the newest of it, had its origins in the early 2000s as well. It is safe to say that in the space of less than 10 years, more tools were thrown at the mortgage lending process than in the previous five or six decades. Just as it’s time to focus on efficiency, it is also time to re-focus on technology. Winning lenders will likely be those who employ single, comprehensive systems that manage the mortgage origination process from application through closing. One system to rule them all – origination, processing, imaging, underwriting, papering, closing, funding and secondary marketing – is likely to drive efficiencies as well as aid compliance. This should reduce the cost-to-close as well; managing one system has its advantages.

Should auld acquaintance be forgot and never brought to mind? In the mortgage industry as in life, it is simply not possible. Simply looking at all the lessons learned from the past and drawing from them to enhance future performance is good enough of a reason to remember. Burns and the folksingers who begat the song knew that, too, though it is good to be reminded at least once a year, as we have, each year since 1788.

About The Author


Dan Green
As Executive Vice President, Operations for Mortgage Cadence, Dan Green works with the team to create greater efficiencies in all areas and coordinating efforts that enhance service quality and teamwork. Formerly, Green served as Chief Operating Officer/Chief Marketing Officer of Prime Alliance Solutions followed by Marketing Lead for Mortgage Cadence. Prior to that, he had an eight-year career with CUNA Mutual Mortgage where he was responsible for origination, servicing, lending technologies, process reengineering and education. With over 30 years of financial services and mortgage experience, he’s keenly interested in lending performance and performance benchmarking that helps lenders constantly increase efficiencies while enhancing the financing experience for borrowers.