2018 Ends On A High Note With A 14% Rise In Commercial/Multifamily Borrowing

A strong final three months of the year helped commercial and multifamily mortgage originations increase by three percent in 2018, according to preliminary estimates from the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released here today at the 2019 Commercial Real Estate Finance/Multifamily Housing Convention & Expo.

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“2018 ended on a strong note for commercial mortgage borrowing and lending, with fourth quarter originations 14 percent higher than a year earlier, despite the broader market volatility,” said Jamie Woodwell, MBA’s Vice President for Commercial Real Estate Research. “Investor and lender interest in multifamily and industrial properties continues to drive transaction volumes while questions about retail and office property markets have slowed activity for those property types. The market as a whole ended the year roughly flat compared to 2017, continuing a plateau we’ve seen in mortgage borrowing and lending since 2015.”


An increase in fourth quarter originations for healthcare, multifamily and industrial properties led the overall increase in commercial/multifamily lending volumes in the fourth quarter compared to the same quarter in 2017. The fourth quarter saw a 61 percent year-over-year increase in the dollar volume of loans for healthcare properties, a 32 percent increase for multifamily properties, a 28 percent increase for industrial properties, and a slight increase (one percent) for retail properties. Originations decreased for hotel property loans (4 percent) and office property loans (3 percent).  

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Among investor types, the dollar volume of loans originated for the Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased year-over-year by 32 percent. There was a 22 percent increase for life insurance company loans and a five percent increase in commercial bank portfolio loans. The dollar volume of loans for Commercial Mortgage Backed Securities (CMBS) declined 35 percent.


Compared to 2018’s third quarter, fourth quarter originations for health care properties jumped 155 percent. There was a 56 percent increase in originations for hotel properties, a 34 percent increase for industrial properties, a 30 percent increase for multifamily properties, a 29 percent increase for office properties, and an 11 percent increase for retail properties compared to the third quarter of 2018.

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Among investor types, between the third and fourth quarter of 2018, the dollar volume of loans for commercial bank portfolios increased 46 percent, loans for the GSEs increased 32 percent, originations for CMBS increased 31 percent, and loans for life insurance companies increased by 30 percent.


A preliminary measure of commercial and multifamily mortgage origination volumes shows that 2018 originations were three percent higher than 2017. By property type, originations for multifamily properties increased 22 percent, originations for industrial properties rose 12 percent, and originations climbed 5 percent for hotel properties. Office property originations were down 7 percent, retail properties declined 13 percent and healthcare properties decreased a 16 percent.

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Among investor types, loans for the GSEs increased 16 percent between 2017 and 2018 and originations for life insurance companies increased 10 percent. Loans for commercial bank portfolios decreased 10 percent and loans for CMBS decreased 26 percent.

In late March, MBA will release its Annual Origination Summation report for 2018, with final origination figures for the year.

Originators Weigh In On Industry Risks And Challenges

Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”), a provider of real estate, mortgage and technology services, released its 2018 report, “The State of the Originations Industry.” The report showcases results from the annual Origination Solutions Survey, a survey of over 200 decision makers in the mortgage origination business.  

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Mortgage origination professionals (29 percent) cited increased purchase business competition as the biggest challenge in today’s mortgage market; 25 percent said margin compression due to regulatory mandates and 24 percent pointed to elevated interest rates. With the increased purchase business competition, there are fewer loan transactions for which to compete. This is primarily driven by a tightened inventory of existing and new construction, which helped drive home price appreciation. The combination of higher interest rates and higher home prices has impacted affordability, which has made it harder for consumers to upgrade to more expensive housing and limited the inventory of starter homes. As the available purchase business declines, capturing this business relies on the originator’s ability to quickly respond to requests and originate loans faster, with great customer experience.

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When looking at the most promising market opportunity, the mortgage origination professionals surveyed ranked construction loans as the most promising (25 percent) and non-QM loans (not including jumbo loans) (20 percent) as the second most promising. Construction activity should increase over the next year due to the robust demand in the overall housing market and the historical shortage of existing housing supply. The non-QM market is predicted to grow by 400 percent over the next year1 and while this growth only represents an increase of $5 billion-$8 billion in annual production, the appetite for this asset class is still growing and the non-QM opportunity should be watched.

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“The survey uncovered many industry insights, including risks and challenges present in the market,” said Justin Vedder, Chief Operating Officer, Origination Solutions, Altisource. “The biggest challenge identified, with respect to the mortgage market, is the economic environment today and into the near future. With that said, originators can take certain steps to stay competitive. For example, consider outsourcing some or all fulfillment, closing and processing operations, join a peer network, continue to look for new talent while also focusing on the retention of top performers, add new loan programs but offload the risk and operational cost to a third-party and be bold with piloting programs that will generate higher margin revenue.”

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Click here to download the full report, “The State of the Originations Industry.”

The Percentage Of Purchase Loans Continues To Rise

The percentage of closed purchase loans increased to 62 percent of total closed loans, up 6 percent from the month prior according to the March Origination Insight Report from Ellie Mae. The percentage of closed refinances decreased to 38 percent, down from 43 percent the month prior.

This comes as 30-year interest rates continued to rise to 4.69 percent, up from 4.48 percent in February and 4.33 percent in January. This is the highest rate since January of 2014. Additionally, the percentage of Adjustable Rate Mortgages (ARMs) increased from 5.5 percent in February to 6.3 percent in March.

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Closing rates on purchase loans rose to 76.3 percent, up from 75.7 percent the month prior, while closing rates on refinances decreased slightly from 65.0 percent in February to 64.9 percent in March.

“With interest rates rising to the highest levels since January 2014, we’re seeing the purchase market continue to gain momentum,” said Jonathan Corr, president and CEO of Ellie Mae. “As we’ve seen in the past several months, the shift to a purchase market coupled with the adoption of digital mortgage solutions by our customers aids in driving down the time to close.”

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Other statistics of note in March included:

>>The percentage of refinances decreased across the board with FHA refinances dropping from 28 percent in February to 23 percent in March. Conventional refinances dropped from 48 percent in February to 43 percent in March, and VA refinances decreased from 33 percent in February to 28 percent in March.

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>>The time to close all loans decreased slightly from 42 days in February to 41 days in March. Time to close purchases dropped to 43 days in March, down from 45 days in February and 47 days in January.

>>Overall FICO scores increased slightly to 722. LTV increased slightly to 79 and DTI decreased to 26/39.

The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

Digital Advances

There is always talk about the digital mortgage. It’s in high demand. Industry data shows that 67 percent of all closed loans by Millennial borrowers were conventional, the highest percentage in two years. Conventional loans continued to be the most popular loan product, although women were slightly more likely to take advantage of FHA loans. So, what does that mean? It means that more lenders need to embrace the digital mortgage to reach this new group of borrowers. How do lenders do that? Adam Batayeh, President of Lodasoft, talked to our editor about how he sees the digital mortgage technology landscape.

Q: How would you describe the state of mortgage origination today?

ADAM BATAYEH: I think we’re in an amazing place in terms of the evolution of the mortgage industry. The mortgage industry had been hit with a significant amount of negative press following the mortgage meltdown. What many people haven’t fully realized is all of the positive changes that have been made in the mortgage space since.

The crash may have pushed the industry into a sort of regulatory confinement period putting everyone behind the proverbial 8-ball, but great progress has been made over the last 10 years. While it may have even stagnated tech innovation, as lenders were busy with TRID, I believe that these 10 years have washed away the pretenders and the best of the best are now advancing the industry, which only leads to what’s best for the consumer.

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You look at the top originators list for example and it is no longer comprised of solely big-box banks with a 50-state brick and mortar footprint. According to Bloomberg, non-banks accounted for more than 70 percent of FHA loans just last year.

You’ve got true innovation that is taking place that has allowed for mortgage companies to come out of obscurity to a predominant role driving the industry forward. The retail space is truly diversified and you have a wholesale market in the midst of a major comeback.

Q: Interesting, can you expand on how technology is actually making its impact?

ADAM BATAYEH: For me, the best part of the innovation that is taking place is that lenders and brokers of all sizes can take advantage of the best technologies available. The strength and ubiquity of APIs is game-changing in and of itself.

Look at Fannie and Freddie for example. They’ve recently come out with products that incorporate features allowing for the automation of income and asset verification. However, those aren’t proprietary solutions. Really what they’re doing is integrating to the same technologies available to all of us.

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These pieces of technology have sort of become commodities that everyone can implement and benefit from. The best originators are using them to enhance speed, efficiency, transparency, etc. Everything that we’ve been trying to do for so long is finally coming to fruition and we really can attribute it to the rapid growth of new and innovative technology.

These new innovations are allowing for a level playing field. We feel this is contributing to the healthiest level of competition we’ve seen. Not to mention, cloud-computing and SaaS-based products are allowing all of us to be everywhere at all times without the need for as much costly brick and mortar and IT expense.

Also, I just want to say that you hear a lot about the “Digital Mortgage” and at first-glance it sounds like the easy button, but it’s not. If you look at DU and LP for example, they both assist in underwriting efforts. They are tools to help us make decisions, but they did not eliminate the Underwriter by any stretch.

Q: Speaking of “Digital Mortgage”, what’s your take on its status?

ADAM BATAYEH: It’s here and it’s here for everyone. Many vendors have been helping lenders deliver electronically signed eMortgages for what, 10 years now? The Digital Mortgage is really an extension of that effort.

The focus thus far has been on borrower experience and rightfully so. However, to truly deliver on the digital mortgage experience, lenders must not only provide a slick and engaging online point-of-sale tool, but they also must automate the backend mortgage process and communication touch points that impede a truly seamless mortgage experience.

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The good news is again, it’s here. There are solutions at every price point and if you do your due diligence and stay current, you can compete with the largest lenders with the biggest bankrolls. Whether you’re retail or wholesale, broker or banker, Community Bank or Credit Union — you can find a solution that will fit (especially if you keep a pulse at tradeshows and with industry sites and publications like this one).

Q: How would you say retailers and wholesalers differ in their need for digital solutions?

ADAM BATAYEH: That’s a great question because it would seem that an originator is an originator right?

One of the big differences is in adoption. If you look at some of the larger consumer-direct players, they have a bit of an advantage as they have more of a captive team. They are more centralized and can distribute and train fairly quickly.

Retail Community Banks and Credit Unions are similar as they are a little more centralized even though they may be branch focused. They are typically cross-selling other internal products and so flexibility and configurability is very key to them. Integration is also high on the list for many reasons especially for servicers.

Wholesale and Distributed Retail shops have some things in common and they’ve got a different set of considerations. For one, a branch model might be providing tools, maybe an LOS, but those branches may be on their own in terms of say lead, contact management, or even borrower experience.

Same goes with Wholesale Brokers as the lender may provide portals that offer pipeline management but may fall short in more front-end activity. Some high-producing teams like to do things their way, and that’s not necessarily a bad thing. Flexibility is needed at a different level here.

The best advice I can give is, try to partner with tech vendors at different levels. For example, consider a solution that comes 75 percent configured and offer your branch or broker some control in taking part of their own configuration. We’re all typically willing to integrate at various levels and have resources to help get your staff trained quickly.

Q: What are you currently solving for that Lenders haven’t addressed yet?

ADAM BATAYEH: For us, it’s really the difference in what we have chosen to focus on. We’re based right outside of Detroit and we all know stories of how Ford implemented the assembly line to drastically reduce costs and increase production. Well, there’s a lot to be said for how far manufacturing has come and it really lies within automating processes.

A great borrower experience is one thing, but if that experience transitions to a back-end process that is not transparent or communicative, that borrower experience may fall short in the end.

We’re incorporating workflow in a way that allows for centralized, automated processes, so that mortgage companies of all sizes can truly compete and enjoy similar reduction in costs and increased production to that of the largest lenders.

Q: What has had the biggest impact on how you develop solutions?

ADAM BATAYEH: Definitely the unique diversity of our team and our client feedback loop.

On the operations side, our team has closed thousands of loans over the span of 20 years. When we talk to mortgage people, they know we’re one of them. They feel it in the questions we ask and the thought around the downstream impact of implementing a certain capability.

On the tech side, our guys have been developing solutions specifically in mortgage either for lenders or vendors for most of their careers. They have also been cloud-computing since, well, before the word cloud-computing was a thing.

We don’t allow ourselves to just go out and create but at the same time our clients understand that they can’t just dictate their needs to us as everyone is different. So, when we add a feature, we look at it from all sides and then look to provide flexibility so that it may be configured for the various types of lending institutions we cater to.

Q: What is the most critical challenge mortgage business are addressing?

ADAM BATAYEH: I don’t want to just give you the “everyone is different” answer so I’ll try my best not to give you a non-answer. If I must choose one challenge, I’ll say, “putting out fires”.

It boggles my mind that we are an industry that still says “it’s the end of the month, don’t talk to me”. If you go to the doctor on the 30th, do they tell you to come back next week? No, you have an appointment and they are just as busy on the 12th as they are the 30th.

The tendency in our industry seems to be to stop the bleeding. If a borrower needs something, we surely don’t want them going anywhere else so we stop the presses and give it to them.

I don’t care how big or small you are, you have fires that tend to creep up and you can identify them. If you can identify them, you can plan for them. If you can plan for them, you can get ahead of them.

It’s what I was referring to around the assembly line. You can use automation for the sake of automation. Or, you can use it create as repeatable a process as possible.


Adam Batayeh thinks:

4.) Origination numbers will continue to spread as the playing field levels. Wholesale, Retail, Consumer-direct, etc. will all experience slight shifts in portfolio focus.

2.) The “Amazon Effect” will have more of a positive impact on housing supply as millennial and first-time homebuyer awareness shines even brighter.

3.) A greater focus in 2018 from a Digital Mortgage perspective will be on further automating backend processes. This will trend well into funding and servicing.


Adam Batayeh is President of Lodasoft, the mortgage industry’s leading solution to help lenders eliminate complexity and automate the manual workflow involved in the everyday loan process. With more than a decade of experience in the mortgage industry, Batayeh has held executive sales, marketing, product and strategic partnership positions with key mortgage technology providers. He is responsible for overseeing the daily operations, growth of organization, strategic partnerships and long-term strategic vision of Lodasoft. You can contact Adam at or to find out more about Lodasoft visit website

Robotics In Origination

Over the past decade, mortgage originators have seen the average cost to originate a loan nearly double. As we all remember, the rush of post-crisis regulations required originators to quickly ramp up staffing, change processes and implement new technology to meet these regulatory demands. At least for now, the dust has settled on the regulatory front, and originators are now able to look more closely at other operational concerns and opportunities.

Today, originators are increasingly focused on identifying efficiencies that will enable them to decrease turn-times from application to close and to decrease the average cost to originate a loan without compromising service or compliance. When considering possible ways to accomplish these goals, originators are finding that advancements in technology show great promise – in particular, Robotic Process Automation, often referred to as Robotics.

Robotics technology leverages powerful decisioning, workflow and imaging functionality to enable more complex automation than previously available in the mortgage industry. Originators interested in taking advantage of Robotics technology will not have to look too far since some loan origination systems are already using this advanced automation. While many technology providers are offering a variety of pre-configured options to automate specific processes, originators can also tailor Robotics technology to address their specific preferences for managing back-office processes.

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The nearly unlimited number of automation possibilities using Robotics technology may make it hard to select a starting point – but early adopters have already started by automating highly manual processes where significant efficiency gains are most needed. These early adopters have paved the way for the rest of the market to more easily implement and begin taking advantage of this new technology. Some key use cases are as follows:

Automating Disclosures

While technology development played an important part in helping originators ramp up for the enactment of the TRID Disclosure rule, Robotics now makes it possible to take automation to the next level in the disclosure process. Robotics technology can automatically assess data that has been received to determine whether or not the originator has everything needed to systematically generate the disclosure package. If not, automatic notifications can be sent to the processor for intervention.

Automating Flood Zone Determination Evaluation

As soon as the originator understands the conditions for a loan and receives borrower payment, Robotics can enable the automatic ordering of a flood zone determination from a third-party vendor. When the determination is returned, the system reviews the information and based on predetermined rules, completes the evaluation task. For example, if the determination states that the subject property is not in a flood plain, then the evaluation task can be automatically checked off as completed and requiring no further action. If the determination states that the subject property is in a flood plain, the system rules can be programmed to alert the processor, and can further assists by automatically preparing the flood notification letter for the borrower.

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Automating the Appraisal Process

Similar to flood zone determinations, Robotics can also automate the ordering of an appraisal as soon as the loan conditions have been set and the borrower payment is entered into the LOS. Once the appraisal results are returned to the LOS, Robotics can enable the automatic gathering of all third-party service data needed for the appraisal review process, such as automated appraisal reports and the Submission Summary Report (SSR) from Fannie Mae or Freddie Mac. Once all information needed for the review is gathered, a member of the review team can be automatically alerted to begin the review process.

Benefits of Robotics in Origination

When originators employ Robotics technology to automate as many aspects of the origination process as possible, significant benefits can be expected. One of those benefits is risk reduction, especially when leveraging Robotics technology from within the LOS. Originators often operate in multiple systems, which is ineffective and inefficient.

By automating origination processes with Robotics, originators enable existing staff members to focus more on higher-level tasks and less on repetitive tasks. This has the potential to create a more engaging and rewarding work experience for employees. Originators can also scale their LOS to enable existing staff members to handle more loans. If existing staff members can manage more loans, the originator can lower its average cost to originate.

Further, Robotics technology eliminates human error in the processes it automates, improving overall accuracy within the origination process. The technology also eliminates bottlenecks and speeds up processes. Faster, more accurate origination processes can improve the customer experience, lead to more referrals, and ultimately increase revenue.

In the past, technology used to automate origination processes was not as robust as it is today, and required long implementation times. However, with Robotics technology, originators are finding a different experience. Since Robotics technology is already built into some LOS systems, there is no new system implementation required. Robotics functionality for common processes such as those previously mentioned is now easily accessed through the LOS. The same functionality is also easily redeployed to automate other processes.

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Not so long ago, originators had a stronger reliance on vendors for any adjustments to process automation. Now, Robotics enables originators to have more direct control over process automation with an entirely configurable client workflow. Although advanced decisioning functionality may still require vendor consultation, originators are more empowered to manage their automation than ever before.

Transforming the Origination Process

To thrive in today’s mortgage market, originators must find ways to decrease their turn-times as well as lower the average cost to originate a loan without negatively impacting their ability to ensure compliance and deliver a high-quality customer experience. Robotics technology built into loan origination systems is equipping originators with the tools they need to tackle this challenge. Originators leveraging LOS systems that use Robotics technology are quickly transforming their origination processes, experiencing multiple benefits, and helping to ensure that they are better prepared to scale for any growth opportunities that lie ahead.

About The Author

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.

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.

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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.

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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.”

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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.