It’s The End Of The World As We Know It


“It’s the end of the world as we know it.” — R.E.M., 1987

How many times has that thought run across the minds of those of us in the mortgage industry since 2008? That line seems to capture how a lot of people feel about the recent presidential election. Whether you’re keeping an open mind or you fear we’re headed for disaster, one thing is for sure: change is upon us. We don’t know what the coming changes will look like, but whether or not they’ll be regarded as positive depends largely on how we handle them. It would be foolish to speculate broadly or too specifically about what the new President will do once in office – just ask the pollsters and pundits who woke up with their heads spinning on November 9th. But both candidates spoke loudly of policies that need to be updated, redesigned or completely dismantled.

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The widespread election of Republicans at the national and state levels signals that the Dodd-Frank Wall Street Reform and Consumer Protection Act will be a target; it’s been on the (now) ruling party’s radar practically since the drafting phase. The mortgage industry may be in for changes TO the changes we’re still mastering and adjusting for. Lawmakers aren’t the only ones the mortgage industry must obey, for the consuming public is our ultimate boss. The industry must brace itself not only for what regulators may do, but what the public is demanding. Change is inevitable in business, but profitability and survival really depend on how those changes evolve.

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It took years to enact aspects of Dodd-Frank, like the TILA-RESPA Integrated Disclosure Rule (TRID), and whatever changes may come are likely far in the distance, meaning that widespread lender relaxation of compliance policy and procedure is not advised for obvious reasons. Companies and originators have been experimenting with all sorts of technology for marketing and compliance with varying degrees of success. The fear of Consumer Finance Protection Bureau wrath has mellowed of late and doesn’t dominate the industry dialogue as it once did. But canvass the nation and you’ll find a veritable mélange of systems and tools in use at different companies and branches to manage compliance and marketing. Companies must take a realistic approach to compliance and the diverse needs, attitudes and willingness of MLOs to adopt mandated technologies. Communication and leadership is as important as the technology choice itself, and implementation won’t be successful without buy-in from those affected.

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The need for new technology to manage business is well understood, however the entrepreneurial nature of the humans who originate loans must be understood as well. Management can’t assume that change – even if necessary – will be embraced. One size doesn’t fit all for top, mid and lower-range producers, and neither does one announcement or approach to getting the rank and file in line with what needs to be done. Dodd-Frank is still on the books for now and regulators have been nipping at our heels for years, but another key to our success and survival is also hard for lawmakers to keep up with: the digital age.

“The digital mortgage” has displaced “compliance” as the top of mind concern in virtually every area of the mortgage industry – and the public is clearly ready for it:

>> 89% used some form of online technology to help them with the homebuying process

>> 76% feel technology made them a smarter homebuyer

>> 69% said technology made them feel more confident

These figures were compiled by Versta Research in a survey of homebuyers commissioned by Discover Home Loans, and the Federal Reserve Bank recently released its 2016 Consumer and Mobile Financial Services report showing that 87% of adults are using mobile technology and 43% are using their devices for banking services.  The public is comfortable managing day-to-day household finances on mobile devices, and those transactions and records tie directly to the larger, more occasional act of getting a home loan. Since big and small lenders alike can execute digital mortgages, the fears that jobs will disappear and that the need for loan officer expertise will diminish are real. But there’s consolation in the Discover survey for the humans working in mortgage:

>> 67% of homebuyers said after using apps and the internet to explore real estate and financing, they still preferred to work with a professional

>> 33% of respondents found the financing process difficult

>> 31% of respondents found the financing process confusing

Feelings of panic over the rise of the digital mortgage are really the result of thinking that it’s “all about us” in the industry versus the borrowers we serve. As bosses go, consumers are tough:

>> Have you ever applied for a job where you were abundantly qualified, aced all the interviews, jumped through every hoop and still didn’t get it – like when you incubate a prospect through credit repair, mortgage planning and pre-approval, but they close with another lender?

>> Have you ever worked for someone who’s tough to please – like a borrower who took personal offense at what’s required to get a mortgage and was convinced their experience would have been different with another lender?

>> Have you ever completed a difficult task only to have the way you approached it dissected and criticized – like getting a loan closed against all odds and getting attitude instead of gratitude from the client?

Consumers don’t always know what they want, but they easily and eagerly opine about what they don’t. And unfortunately, we usually find out what those things are after a transaction is closed. Being the best has always been a challenge, but how do companies and MLOs win in a supercharged regulatory and increasingly digital environment? The Federal Reserve Bank and Discover reports reveal an attachment to the human element in addition to a growing appetite and demand for digital services and 24/7 access. Success in the next era of lending will require an understanding of how to deliver what consumers want – and deploying technology to deliver it when and how they want it. As professionals, companies and MLOs need to self-examine:

Automate. What’s your process from contact to close?  What tasks can be handled by automation – or “digitized” – keeping in mind that quality still counts? For example, a lot of marketing can be set on autopilot, but the messages must be current, relevant and motivate prospects to action.

After taking a thorough, honest inventory, update your process – and your thinking. Next, figure out how much time and manpower you will save by deploying technology when it makes sense. There’s a bright side beyond surviving in this increasingly digital world: we can generate analytics and derive crucial insight on the things consumers need and find important that we previously never dreamed of. Around the clock access to their transaction and the metrics on usage will reveal how often borrowers feel the need to check in on their loan’s progress…they’ll log in a lot more than they would otherwise call. Digital access also means answers will be delivered without MLOs having to take calls or answer emails. Decide how you’ll use your freed-up time to elevate your service.

Elevate. Decide what’s important and be there for it “live.” Whether it’s a call or face-to-face meeting, MLOs can spend the time to do what online mortgage calculators and websites can’t. Things like offering specific, expert advice on what a borrower can afford – not just qualify for, calming nerves over credit dings, reassurance about the benefits of homeownership, and counseling on reserves, household finances and how to manage the massive, multi-year commitment of a mortgage.

Change brings opportunity. We don’t know if a new presidential administration will declaw or dismantle Dodd-Frank, but we do know that innovation and technology are juggernauts that don’t care who the President of the United States is – or what political party is in control. The mortgage industry must never lose touch with the borrowing public, even if it feels like the digital trend is depersonalizing the service we provide or diminishing our importance. Companies and MLOs who embrace this progress will evolve and thrive in the next era of lending. When we acknowledge the things we can’t control, and carefully consider and respond to the signals and needs of the consumers we serve, the concept of “making it up as we go along” manifests as real, positive evolution.

There’s a lot going on in the mortgage industry and our country. With open minds and a connection to why we got into and stay in this business, we just might reach the conclusion that R.E.M. did in the last line of their ’87 hit: “I feel fine.”

About The Author

Leading LOS And CRM Partner

PCLender has completed an enhanced integration with Vantage Production. The new integration enables lenders to manage leads, sales processes and the ability to generate powerful automated marketing messages.

“We are committed to providing our customers with the industry’s premier vendor solutions and our partnership with Vantage Production strategically aligns with that goal,” says Lionel Urban, CEO of PCLender. “This new integration is just one of the many ways we allow our customers to tailor fit our solution to best meet their specific lending needs.”

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Vantage Production is a provider of mortgage-specific customer relationship management (CRM), automated marketing and marketing content, sales enablement and MBS market advisory services. Their solutions have been developed to help nearly 300 lenders and tens of thousands of individual mortgage loan originators succeed every day in our challenging, dynamic market.

PCLender has been streamlining mortgage operations since 1997 as a prominent provider of LOS, websites and portal technology that supports consumer direct, retail, wholesale and correspondent lending channels. The integration will link Vantage Production’s database of leads, contacts, borrowers, referral partners and loan information in real-time to PCLender’s web-based total mortgage solution.

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“As the battle to acquire new borrowers continues to intensify, PCLender users now have real-time lead data accessible through their LOS,” said Sue Woodard, president and CEO of Vantage Production. “This dynamic partnership allows lenders to manage the lifecycle of a loan and track loan profitability seamlessly.”

A Bold Statement


Sue-WoodardHere is a bold statement: customer relationship management (CRM) technology is the most impactful development for the mortgage industry since the advent of broad-market loan origination software (LOS) about two decades ago. Those systems, despite being PC-based and just receiving their first graphical user interfaces, were transformative for their day. Printers replaced typewriters, and data that repeated throughout the loan file needed to be entered only once, for the most part. They seem quaint by today’s standards, but they were marvelous labor-saving devices at the time. In the new age of extreme regulatory oversight, however, when exactitude is required at every step of the origination process, no technology can bring as much impact as a great CRM.

That statement is certain to run contrary to the feelings of many who are involved with mortgage technology. But as someone who spent 20 highly productive years originating loans, as well as managing and training mortgage loan originators to succeed, I know without a doubt that an advanced CRM can make all the difference between success and mediocrity in our business. Here’s why.

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Innovation is more critical now than ever before for lenders, particularly in view of the industry’s multi-agency oversight and the precision that the new regulatory era requires of originators. In addition, lenders’ competitive pressures have shifted due to two principle factors. First, the decreasing influence of big box banks is giving rise to rapid expansion by predominantly non-bank lenders who are unfettered (at least so far) by the additional regulations to which depository institutions are subjected. Second, the homogeneity of products available due to the dominance of the GSEs in the investor community has made differentiation among lenders less dependent on products and more on marketing and sales efficiency. If every flavor is essentially vanilla, you had better possess superior surroundings, toppings and service if you want to engage customers.

Technology ties all these changes together. It represents the only truly acceptable response to the challenges of the new environment – and advanced CRM technology stands out among all others in this regard.

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Five-Tool Players: Baseball fans are familiar with the notion of the “Five-Tool Player,” the exceptional athlete who can run, field, throw, hit for average and hit for power at an elite level. They are as rare as unicorns and immensely valuable to a winning organization. Back when Branch Rickey, the legendary major league baseball executive, coined the term in the 1960s, he could name only two players who filled the bill, Willie Mays and Mickey Mantle.

In our business today, there are also probably only two five-tool players: the top-line LOS and advanced CRM technology. You need a superior LOS to get in the game and stay there; to win consistently, you need great CRM.

Historically, several of the core functions of CRM technology have been left to chance by lenders over the years, but in the new reality, that’s no longer a recipe for success. The days of leaving MLOs to their own devices in the creation of marketing collateral and non-standard presentations are over, thanks to the CFPB. Further, marketing campaigns and enterprise data must go hand in hand today, not only to achieve outreach excellence, but also to stay compliant with fair lending considerations, including Disparate Impact.

For the purposes of this discussion, I differentiate an “advanced” CRM from the garden variety tools to indicate that we are not talking about contact management software that produces basic email marketing messages, which the industry has used for decades. I am referring to the sophisticated variety of highly responsive technologies that are used by most other industries, yet have been strangely absent from the mortgage business until recent years. These are technologies that work with enterprise systems to maximize data usage, develop tailored marketing outreach campaigns, produce presentations that dazzle customers with personalized scenarios, and provide complete reporting to please data nerds and regulators alike. These technologies access content libraries representing hundreds of years of collective industry experience to produce articles, newsletters and informative materials that drive action, and create lasting bonds with borrowers and referral partners. They are an entirely new breed and rival the best CRM systems found in every other large industry.

So how does advanced CRM fit into the picture for lenders? Simply stated, that five-tool metaphor translates into functions every lender needs in order to excel today. The most advanced CRM technologies are cloud based, SOC 2 audited, secure platforms that:

>> Provide a competitive advantage with marketing sophistication to accelerate sales cycles and enhance recruiting efforts;

>> Keep MLOs and your brand protected and safely compliant with standardized messaging;

>> Regulate and keep track of outgoing borrower communications and offer detailed reporting for audit purposes;

>> Reduce costs associated with production through higher closing ratios;

>> Leverage enterprise data and exponentially increase the organization’s reach to potential customers, including to underserved markets that are affected by the Disparate Impact ruling and other fair lending mandates.

Excellence Trumps Freelancing: When discussing our CRM solutions, I am frequently asked first about how MLOs respond to having their freelance marketing efforts suddenly ended. The answer often surprises: they love it. Sure, it’s counterintuitive, because field loan people are quite often fiercely independent. But when they see the difference between the results of their amateur efforts versus the consistently polished, professional and always-impressive output of the advanced CRM system, their objections go away. The fact that the materials are produced so effortlessly wins them over because time is money for them. The fact that all are pre-designed for compliance is, in the minds of most MLOs, secondary. It has never been a good idea to let MLOs run amok with the company’s messaging in the field, but that course has been the path of least resistance for lenders over the years. Today, it’s an unthinkably dangerous practice due to compliance considerations, and thanks to great CRM, it can now be obsolete.

Another early question I am asked is, predictably, what about the cost issue? Until a few years ago, big technology improvements generally required writing a big check. These days, pay as you go and success pricing arrangements are the rule rather than the exception. You can expect some integration time and expense, of course, but those are recovered very quickly as the benefits of advanced CRM are realized. When those systems are already integrated with the leading vendors, much of the implementation time and expense evaporates, too.

Evaluating Prospects: Just as big league scouts vet prospects to find five-tool players, it’s important to do your homework before you commit to a CRM technology. And don’t just include the tech people in the organization, either. CRM is a business-side decision, as it can have enormous current and future impact on a company in terms of data productivity, retention marketing success, referral partner relationships, pull-through rates, and recruiting goal achievement. Schedule demos for senior production executives and be sure to include the operations and compliance leaders. Gauge their input and reactions and make certain nuts and bolts observations are carefully recorded, as top CRM systems are highly customizable. You don’t have to settle for “one size fits all” when it comes to features and capabilities.

Security is on everyone’s mind, as well it should be. The best CRM vendors have undergone rigorous audits to demonstrate their operational and data security measures and can share that information readily. The Service Organization Controls (SOC) 2 report, for example, focuses on a business’s controls over security, availability, processing integrity, confidentiality and privacy of a system. These are prepared by independent third party auditors and should be considered absolutely necessary for a CRM candidate when company data is on the line.

The upside of putting advanced CRM to work for an organization is greater than ever, thanks in no small part to Dodd-Frank and the CFPB. While many might disagree, it is a blessing in regulatory disguise; lenders would have benefited mightily from having these capabilities over the years. Now that everything lenders say to the outside world is under the microscope, they have the opportunity to do something truly transformative for their companies that is well beyond today’s regulatory demands. As the competitive landscape changes to spotlight fewer teams chasing greater shares of the market, they would do well to have some truly great five-tool players at their disposal.

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The Broader Impact Of TRID


TME-TGarritanoAs the TRID deadline approaches we are all wondering what the industry impact will be. Will it be Armageddon? Or will it be a blip? One thing is for sure, the industry is grateful that the CFPB delayed the deadline from August to October.

“The level of complexity makes readiness hard,” said eLynx President and CEO Sharon Matthews. “We are ready, but the lender has to be ready, and other parties have to be ready, as well. The CFPB should have a parallel deployment that starts before October so lenders can test and use the new disclosures early to truly know if they are ready, that would increase the quality of the outcome once it’s mandatory.”

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eLynx recently launched an updated version of Expedite, its cloud-based platform for managing and delivering all loan documents. This release will enable lenders to comply with the CFPB’s upcoming TILA-RESPA Integrated Disclosures (TRID) rule. Expedite is used by thousands of lenders and settlement services providers across the industry.

New functionality includes:

>> Full document generation of Loan Estimate and Closing Disclosure documents;

>> Direct bi-directional integration with third party fee providers and title production systems that automates the collection of fee information from different sources;

>> Data extraction service that eliminates the need for manual data entry even when direct integration between lenders and settlement agents is not possible;

>> Fee determination features that allow lenders to compare the fees side-by-side, select the appropriate fees to include in the Closing Disclosure and document the different fees and actions in a fee reconciliation report;

>> Real-time alerts when there are potential compliance issues;

>> A fully integrated audit trail that documents TRID compliance; and

>> Two-step authentication and other security enhancements.

The good news is that many players within the space are trying to educate lenders and vendors alike about how to be ready for TRID. For example, Vantage Productions, a leading innovator in customer relationship management (CRM), marketing, sales and content solutions, hosted a free one-hour webinar earlier this year aimed at preparing senior managers and lending executives for the TILA/RESPA Integrated Disclosures (TRID) industry-wide implementation. Attendees received a detailed implementation worksheet and other useful tools to help them prepare.

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“The vendors are ready but I think the full readiness of lenders is up for grabs,” noted Sue Woodard, President and CEO at Vantage Productions. “Lenders will find themselves in a lot of trouble if they feel like this onslaught of new regulation is a passing fad and don’t dedicate the resources necessary.

“Second, leadership can be deficient, especially when interacting with sales staff. It reminds me of a parent that hates to hear their kid cry so they won’t take them to the doctor to get needed vaccinations. There are too few lenders focusing on boldly leading all their people, instead they are working around the concerns of their people.”

Certainly it seems like most lenders are looking for a band-aide approach to TRID compliance instead of taking a deeper dive and actually looking to improve their overall process. Those lenders that think holistically will be the winners after the dust has settled on TRID. For example, Security National Mortgage Company (SNMC) of Salt Lake City, Utah turned to Vantage Productions to centralize marketing, compliance and sales process management for its national network of retail origination branches.

Like many mortgage lenders, SNMC was concerned about standardizing and controlling messaging for Realtors and consumers to ensure compliance with CFPB requirements, as well as making sure that loan officers were utilizing the best possible materials across the country. SNMC was founded in 1993 as a subsidiary of the Security National Financial Corporation, which began in 1965 as Security National Life Insurance Company and has invested in mortgage loans for almost 50 years.

“As a company that started from humble beginnings, we have grown and succeeded over the decades by providing very personal service to our customers,” says SNMC Chief Marketing Officer Michael Shehan. “It was absolutely essential that we continued to offer the best possible borrower experiences while making certain that SNMC was fully compliant with the new regulations surrounding customer communications. With 80 branches across the country, we turned to Vantage Production to centralize this effort with VIP’s content and workflow, vastly improving control and messaging across our network,” he says. “Additionally, we offer a broad range of home loans due to our very well established relationships with mortgage investors, so not all of our loan programs are the standard products offered everywhere. We needed flexibility with differentiated program specifics for our sales force, and VIP creates outstanding presentations on every possible loan product,” he notes.

While a lot of focus is put on the lender and their technology partners, the real point of TRID was to improve the consumer experience. “The other thing to consider is the consumer,” reminds Stan Baldwin, Chief Operating Officer, Informative RESEARCH. Founded in 1946 and based in Garden Grove, California, Informative RESEARCH has grown from a local credit reporting agency to a national data and technology company providing a broad range of risk management products to the financial industry. Informative RESEARCH is a privately held company, known for its innovative approach to industry solutions via analytic data applications. The company is a Tier One credit reporting agency, providing proprietary tri-merge credit reports along with a broad variety of other risk management solutions for lenders and servicers, including pre-qualification, fraud detection, and credit score management tools. Informative RESEARCH is a preferred provider to the Lenders One Mortgage Cooperative.

In advising smaller lenders on the best way to prepare, Baldwin says, “they might want to pull together their resources with other lenders and join a consortium like Lenders One. In general, lenders need to rethink their process. We need more innovation to help lenders improve and gain efficiencies.”

In the end, compliance can actually be a plus for a lender. “Compliance should be a competitive advantage,” pointed out John Lawson, Chief Compliance Officer at Commerce Home Mortgage. He has more than 30 years of experience in the areas of consumer compliance, audit, accounting, finance, operations, and information technology in the specialized financial services and banking industry. Lawson’s previous work experience includes the Federal Reserve Bank of San Francisco, Bank of America, E-Loan and Union Bank.

“Getting back to fundamentals is key. If you are not documenting your controls, you are in trouble,” added Lawson. “Compliance is so abstract. Each regulation compliments another one, but if you don’t see that you will run into problems. You need training and legal support. You can’t interpret everything every time you come across something. Lenders may hire a guy that’s good at one thing, but not so good at other things. You need a suite of people that are good at a lot of things. If you under fund your compliance folks and your training, you are going to be in big trouble.”

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