Magazine Feature: The New Wholesale

*The New Wholesale Channel*
**By Andrew Weiss-Malik**

***The wholesale mortgage channel has always leveraged its primary advantage of providing maximum choice to consumers – choice of lenders, products and price. However, in the aftermath of the housing crash, the bailout of the major banks and the decimation of the wholesale channel, the market penetration of mortgage brokers went from 7 out of every 10 loans down to nearly 1 of every 20 loans. But from these depths a new industry is being rebuilt. Broker market share has doubled since reaching its low water mark. The new wholesale industry has the same foundation of maximized consumer choice, yet is framed with a new structure of technology, innovation, flexibility and competition.

****The mortgage industry as a whole lost about 50 percent of its workforce since the highs reached in 2006. While some jobs have been regained, the total industry employment is still more than 200,000 below its record high level. The wholesale channel of the mortgage industry was even harder hit, losing closer to 80 percent of its employees since 2006. Current estimates put wholesale mortgage employment (lenders, brokers and originators) between 40,000 and 60,000, a long way from the 200,000—250,000 it once saw. Accurate figures are hard to come by given the hybrid nature of many firms.

****The US Federal Reserve’s support of a low interest rate environment, the availability of severely discounted foreclosure and short-sale housing inventory and several federal programs designed to facilitate refinancing by consumers, have combined to keep origination volumes high. But as you might imagine, high volumes and a reduced workforce have led to processing delays. These delays have been seen across the origination channels but are more acute in the large retail bank mortgage operations due to the number of employees dedicated to underwriting and loss mitigation efforts. How has the wholesale channel managed to maintain better production metrics despite an even more severe staffing squeeze? While there are likely many reasons, two of the most significant are technology and innovation.

****Our firm, 360 Mortgage Group, is a good example of how the wholesale channel continues to push the envelope relative to technology and innovation. In January 2011, a change occurred in the way in which brokers interact with the Federal Housing Administration (FHA). As part of the FHA’s efforts to reform its process and work with higher capitalized counterparties, they eliminated the ability of brokers to directly obtain case numbers for their files. While this was an understandable change, it created a real hardship for brokers and a real delay in the loan origination process. What 360 Mortgage Group did in response, since we are able to directly interface with FHA Connection, was to create a technology solution that enabled our broker partners to instantaneously obtain FHA case numbers all the while remaining inside of our web platform. This solution has been a huge hit and empowers brokers to better serve their clients.  Additionally, our platform maintains a real-time synchronization with FHA Connection which eliminates the data integrity issues most mortgage banks experience.

****On the innovation front, we have used existing technology in a new way that is paying dividends for us, as well as our clients and their customers. We are using real-time traditional chat tools to enable our broker partners to actively engage our underwriting staff during business hours.  Instead of voicemails or emails that must be queued and responded to, or forwarded to others for response, we have actual underwriters available at a moment’s notice for a quick Q&A. This system greatly facilitates the process and creates high levels of satisfaction for all involved.

****The pressure that the wholesale channel faces to implement or create new technological solutions, or to innovate within, stems from industry competition. Retail mortgage banks servicing exclusive branch offices do not face the competitive and innovative pressures facing the wholesale sector. The flexibility to implement these innovations quickly is the result of not having to resell loans to federal insured depository banks which have a desire to conduct business in the same way it has been done for 30 years. The mid-sized wholesale mortgage bankers that now dominate the space since the retreat of the large banks, are by-and-large unburdened by the legacy technology systems that made the banks unable to adapt to changing market conditions and the needs of brokers and consumers. Cloud computing and flexible technology platforms that can be modified on the fly give the remaining wholesale bankers a real competitive advantage over the banks retail operations.

****Due to this ongoing reality of effective use of technology, process innovation, flexibility and competition, the wholesale channel will continue its resurgence and take market-share from the other origination channels. Wholesale origination may never reach 70 percent market-share again, yet 30 percent plus is a realistic expectation.

Magazine Feature: Chasing The Sun To Build Better Mortgages

*Chasing the Sun to Build Better Mortgages*
**By Rob Pommier**

***The sun rises on the U.S. East Coast, and work begins. As the day progresses, lenders, loan originators and underwriters all work in conjunction to move borrowers from application to closing. Automated systems cut slack out of the pipeline, as software runs underwriting checks, imports data from one program into another and generates documents and compliance reports.

****As the day ends, though, the work does not. A stack of disclosures stands ready to be processed, printed and delivered. The lender’s software instantly sends all the files to a fulfillment center in California, which spends the next three or four hours sending the disclosures out. As their day ends, the software once again sends the files across the Pacific to a settlement services shop, which begins the work of finalizing appraisals, title and insurance needs.

****By the time the sun rises on the East Coast once again, the staff of our intrepid office comes in to find their loan files a full day ahead of their competitor in the workflow.

****Science Fiction? Only available to the largest banks in the country? With the availability of hosted software and business services, not anymore.

****Follow-the-Sun workflow has been utilized by global companies for decades. Now, the decreasing cost of international communications and the efficiency of hosted, cloud-based software, is opening the door for lenders of all sizes to benefit. For the optimal mix of efficiency lenders can combine geographically diverse Business Processes as a Service (BPaaS) with cloud-based, data-driven software to maximize internal efficiencies and reduce the time spent preparing loans for closing.

****Step One: Maximize Automation with Data-Driven Technology.

****To get the most out of any loan process, the first step is to ensure that internal systems are as efficient, fast and accurate as possible. The challenge in today’s technology environment is that most legacy systems are built around the document, which was necessary in the pre-digital days, but creates bottlenecks as different departments wait on a document to be completed before they begin their portion.

****The beauty of digital data is its readability and usability by any system. Once an application is entered into the loan origination system (LOS), all data should be instantaneously available at every step of the loan process. By relying on data over documents, lenders have the freedom to work on pieces of the loan they want without having to wait on their partners to finish, thus reducing cycle time.

****By building the workflow around a central datacenter, the lender enables multiple departments to work on the loan at the same time. Data-focused origination also provides clearer transparency and more accurate risk analysis.

****As soon as an application is filed, underwriters should be able to evaluate the Automated Underwriting results and apply approval decisions. Investors should be able to automatically scan for adherence to their guidelines and evaluate risk and pricing. All of this happens, while the closing department is pulling the loan documents and submitting disclosures.

****The key is to use automated business rules to streamline the data entry, manual evaluations and quality checking at each step of the mortgage’s journey to closing. Mortgage technology should be able to automatically evaluate data within the context of business rules, thresholds and other data to render a decision. This saves manual work on the loan and for those loans that do not meet standard criteria or have other issues that need a more nuanced decision.

****Once an automated decision is made, the system should be able to take one or more of several actions: clear the check or condition, create a new task, request or obtains more data (i.e. additional property valuation or income verification), or notify someone of the decision. Implementing a data-centric loan platform, and then combining it with BPaaS, can trim as much as 30 percent off the time and cost needed to close the loan.

****Another challenge of most mortgage technology platforms is one of configuration. In an effort to reduce development costs, most platforms come packaged in pre-configured settings that must then be customized to meet the lender’s specific needs. This can be costly, as a change to the LOS can also mean a change to auxiliary software to ensure a strong integration.

****A more productive model is one that has become the dominant platform in personal computing technology. Since the introduction of Apple’s iPhone in 2007, phones, tablets and laptops have become centers of apps, all built on a base operating system.

****This philosophy works just as well in mortgage industry, since no lender has the exact same technology requirements as another. Instead of an older or legacy LOS, which dictates which third-party software it works with, lenders can now implement a “mortgage operating system” or MOS to meet their specific needs. Lenders can add and remove loan apps without affecting the functionality of the MOS and its remaining apps.

****Of course, some of these apps will be developed by the MOS vendor, but a true platform-based system will enable lenders to add third-party apps at will.

****Step 2: Rely on BPaaS to Maximize Efficiency.

****While cloud-based SaaS services are one of the fastest growing areas of technology growth, lenders can also benefit by moving business process services to the cloud. Traditionally, lenders who wanted to utilize a third-party service for processes, such as settlement services would have to sign extensive monthly contracts and pay for a certain amount of bandwidth, regardless of whether it was used or not. BPaaS builds on the benefits of cloud-based software by providing processes and expertise through a pay-per-use model.

****Much like SaaS removes the barrier of expensive installations, BPaaS does not require a heavy upfront investment in new infrastructure, which enables fast entry into new markets and smooth setup of operations in new geographies.

****For example, a lender can work with a BPaaS service to provide support for mortgage origination, enabling interaction between the many players and parties involved in the transaction. They could enhance that support with document management to streamline communications – and all of it is available on demand, in real-time.

****Ultimately, BPaaS enables lenders to have greater end-to-end flexibility and effectiveness in their operations and provides options that can dramatically improve processes without requiring a massive influx of capital.

****BPaaS can be as extensive or as minimal as necessary to meet the lender’s needs. Point BPaaS solutions can enhance individual parts of the process or retool the entire workflow into an effective end-to-end workflow. BPaaS is also a real consideration for lenders facing major changes, such as acquisitions or entering new states. The ability to apply the same technology standards easily across the entire enterprise makes a combination of SaaS and BPaaS a lower cost, lower risk option.

****The key to any successful BPaaS solution is in selecting the right provider. BPaaS companies run the gamut from niche, specialized services to global, multi-industry services.

****Lenders interested in BPaaS solutions should be able to answer the following questions before committing to a vendor:


  • Does the provider have deep operations-level functional expertise in mortgage lending? Can the provider meet both the operational and compliance demands of the industry?
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  • Is the provider committed to continual improvement as practices evolve? The shift from document-centered lending to data-centered lending is a perfect example. Keeping up with the constantly changing regulatory environment will be critical to any lender using BPaaS.
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  • Is the solution stable and scalable? By entrusting processes to the cloud, the vendor must be able to prove security, redundancies and the ability to handle a lender’s growth.

****Lenders should also evaluate what technological support is available in addition to business process services. Most process innovations require technology solutions, such as the MOS. For instance, a lender may begin using BPaaS to underwrite loans for major investors, but by adding automated risk analysis tools, the lender can multiply the benefits of manually completing the analysis in house and relying on SaaS and BPaaS services to decrease the capital investments needed to build those capabilities.

****With loan volume still struggling to reach the pre-recession levels, lenders are of course sensitive to price. The increase in high-broadband internet connections and a decrease in the cost of sending data digitally have seen an emergence of innovative pricing models that can make BPaaS and SaaS attractive to lenders of all sizes. While high transition costs used to make the utilization of external service providers prohibitive for everyone but the largest lenders, pay-as-you-go pricing models with minimal upfront infrastructure costs are opening doors for small and large lenders alike.

****The drive to achieve maximum efficiency with cloud-based software and business processes is amplified by chasing the sun and utilizing geographic work shifting to ensure a true 24-hour workflow. Rather than settle for just simple replication of existing processes at a lower cost, lenders can transform their workflow with a global workload that scales volume up and down as needed.

****For some lenders looking to gain a true 24-hour work cycle, utilizing international business process centers provides the largest gains in efficiency. The 12-hour difference between Asia and North America provides a perfect overlap of handing off items at the end of one business day, having BPaaS services rendered overnight, and coming back in to a loan a full work day ahead of schedule.

****But chasing the sun does not have to be global. For some lenders, utilizing the three-hour difference between the East and West Coasts provides enough of a competitive edge, whether it is extending call center hours or relying on an extra half-day for processing documents, collecting payments or running compliance checks.

****Just as advances in network capabilities have lowered the price of cloud-based software and services that same infrastructure makes it more affordable than ever to rely on geographic shifting of work. Even for a regional lender working in one time zone, having an on-demand center to respond to customers submitting income verification documents or answer questions about their application around the clock, provides enhanced customer service and reduces the time spent by core staff handing those tasks the following day.

****And the on-demand aspect of BPaaS means that lenders are only paying for the services used, which can help keep costs affordable enough to benefit from the advantage of an extra workforce.

****So, don’t let the sun setting signal a stop in your loans’ march to the closing table. Combine the cost and time-saving benefits of stronger automation, business process services and time-shifting to gain the edge on your competitors and accelerate the climb back to the top.

Magazine Feature: A National And Industry Crisis

*A National And Industry Crisis*
**By David Lykken**

***At times of great conflict, we look for great leaders. The word “conflict” and the Consumer Financial Protection Bureau (CFPB) are becoming synonymous, especially with the Tsunami of new regulations flooding our industry. In some cases, the “conflict” with CFPB is more closely akin to “warfare,” especially when you endure your first CFPB audit. It is not just mortgage companies reacting to the flood of new regulations from the CFPB. Technology companies are being forced to invest millions of dollars to insure that their systems are compliant with all these new regulations. Questions abound. What does this mean for the future of technology innovation? What does this do to the competitive landscape? Do only the bigger companies survive? Who is going to merge and emerge as the industry leader(s)? Who will survive? Who will die? Sobering questions for a somber time.

****The late Jack Tramiel said, “Business is war!” Mr. Tramiel knew something about war. He was born in Poland to a Jewish family in 1928. After the Nazi’s invaded Poland during World War II, he and his family were shipped off to Auschwitz. Mr. Tramiel was rescued in April 1945 and immigrated to the United States in 1947. Once here in the U.S., he started a typewriter repair business and then got into calculators, which eventually led him into computers. He founded Commodore International and quickly became a crucial figure in the early history of personal computing. For those of you old enough to remember the Commodore 64, it went on to become one of the best selling computers of all time. Even after this success, Mr. Tramiel was forced to leave the company he founded in 1984. After being ousted from Commodore, he bought Atari Inc.’s Consumer Division and launched the Atari computer line. His revolutionary approach to computing was “Affordable computers for the masses and not for the classes.” He was more than a survivor and truly understood that “business is war.”

****The concept that “business is war” has never been more evident than it is today in the mortgage industry. We are at “war” NOT with our competitors but with the regulators. In reality, it seems as if the regulators are at war with us. That saying from WWII: “We didn’t go to war, war came to us” may be applicable here.

****We have been hearing reports that the CFPB has been training a team of auditors for months. It’s not surprising then that we are now hearing reports that the CFPB auditors along with a cadre of state regulators are descending upon banks and mortgage companies to do compliance “reviews.” One company said they had over 35 state and CFPB auditors in their office at one time. Another executive said, “We received a 35-page document request a few days before they showed up at our door.” He said, “It was like a mass invasion.” What was most troubling was their attitude. He said, “I thought the premise of our country’s legal system was ‘innocent until proven guilty.” “Not with this bunch” he said. It was just the opposite, “Guilty until he could prove otherwise.” He jokingly said that his recent IRS audit by comparison was “a walk in the park.”

****It seems like we have a great “ideological divide” in our country, more so than ever before. This is so evident when you consider the stark contrast between our two political parties. On one side, we have the Democratic Party led by President Obama, who seems convinced that “more or bigger government” is needed to both “control” the markets (hence CFPB) and to “stimulate” our economy (more government spending). On the other side, we have the Republican Party led by Governor Romney and Representative Paul Ryan who have the belief that we need “less or smaller government” with less controls on business (keeping the “free markets” free) and then get focused on getting our fiscal house in order. It really comes down to this simple question: Do you want “more government” or “less government” in your mortgage business? I have been saying on my radio program (, “Politicians are getting involved in YOUR business, don’t you think it is time you get involved in THEIR business?” Be a leader … get involved …  make a difference!

****Never has an election been more critical for our country and to our industry. I firmly believe that we are at the precipice of economic disaster from which there will be no recovery if we don’t change our course. If we continue down the same path of bigger government and more spending, it will not only threaten our fragile housing recovery that is just now trying to get underway, but it will destroy us economically as a world power.

****No matter which way the election goes this coming November, the mortgage industry has some very difficult days ahead. We still have serious systemic problems as an industry. Here’s what I mean:


  • When over 95+% of all mortgage loans being originated today are FHA, VA, Fannie Mae, Freddie Mac or USDA home loans, we do not have a healthy industry! We have to work toward getting common sense non-conforming loan products back in the market again.
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  • When investors hear reports that the Obama Administration is putting pressure via the U.S. Treasury on Ed DeMarco, Director of the FHFA, to authorize Fannie Mae and Freddie Mac to do principle write-downs, it effectively drives private investors away from investing in mortgage back securities. If they do, they will price it accordingly. It is critical that we have elected officials that have a thorough understanding of the secondary markets. It is equally critical that we have strong industry leaders speaking with one unified voice helping politicians understand the importance of having strong and viable privately funded secondary markets.
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  • When misguided municipalities irrationally threaten to use the right of eminent domain to keep delinquent homeowners from being foreclosed upon, what investor is going to invest in a mortgage-backed security secured by loans within that municipality’s boarder? We need leaders to rise up in every community to educate local governments on how to positively impact their real estate markets and not torpedo them.
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  • We have already lost some great mortgage insurance companies, so we need to keep the remaining companies strong. This is going to require intelligent and responsible leadership making the tough calls to help restore a solid foundation to this critical segment of our industry.
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  • One of our greatest weaknesses, is the fact that current leaders are not willing to set aside their many divergent interests and focus on solutions that strengthen the whole industry. We have to come together for the sake of our industry to find solutions that are good and that will benefit everyone. This will only happen when we promote leaders with a vision for what strengthens the entire industry and that does not just benefit the privileged few.

****There are many areas that I could go on and on about regarding the numerous systemic problems that we as an industry need to address. Good leadership starts by accurately identifying the weaknesses. Again, there are two solutions before us this election year. Do you want government to identify the problems and put in their “big government” solutions … OR … are you for “we the people” of the mortgage industry doing something about it?

****I firmly believe that when we fail to regulate ourselves from “within,” we will be regulated by forces from “without” … in this case outside regulations. For this reason, I am of the opinion that Dodd-Frank and the CFPB is NOT going away anytime soon.

****Some may feel like the Dodd-Frank “Wall Street Reform and Consumer Protection Act” was a declaration of war on our industry. And if that is the case, it may seem as though the CFPB is the enemy with which we have to fight. It can seem that way especially when you read an article in the Washington Times titled, “Consumer bureau seek sleuths for bad bankers.” The article started out with this, “The newly created CFPB is recruiting investigators in ads that suggest the agency plans to go undercover to pursue cases against banks, credit card companies and other financial companies.” After reading this, I can better appreciate the perspective that “Business is WAR.”

****This is the climate we find ourselves in today. We are an industry with a serious PR problem, with few strong leaders willing to step up and truly lead. In a recent television interview with Neil Cavuto on the FOX Business Network, he jokingly said to me, “You know Dave, mortgage lenders aren’t much more popular than TV news anchors.” It got a good laugh but sadly it is true.

****I applaud David Stevens for his leadership at the MBA. But he is just one guy and no doubt and understandably has to struggle with representing the divergent interests of the few big institutions that cover a significant portion of the MBA’s budget. Many small to mid-sized companies have become disillusioned with the MBA, which has opened the door to a new emerging trade association, the Community Mortgage Lenders Association (CMLA). I believe we ALL desperately need to come together for the sake of the greater objective of rebuilding from within our industry. We MUST NOT allow big government to do it. In fact, I believe when bureaucrats fail to understand a problem they default to regulating everything around the problem. In their mind, that means that they did something. The reality is that most politicians and bureaucrats are ill-equipped and therefore incapable of identify solutions to the complex problems we face. That is why we in the private sector must collectively come together to present a solution that will work.

****I firmly believe that technology is going to be more crucial and critical to loan quality and the future success or failure of mortgage companies than ever before. As a result, the liability facing technology companies today and in the future is going up exponentially. And given the complexity of our industry these days, it precludes most thinly capitalized tech companies from making it. For these reasons, I believe we will continue to see continued consolidation. While it may seem that innovation may have to take a back seat to getting systems compliant, the smarter vendors are going to find innovative ways to help their customer mortgage companies be compliant. Innovation never goes away. The question is where will it appear.

****As it relates to loan production channels, I believe that while we may never again see brokers have the market share they once did, they are far from dead. As Mark Twain said, “The rumors of my death have been greatly exaggerated.” When we finally hit bottom and truly begin to see consistent growth, we will need brokers and the wholesale channel more than ever. But the biggest surprise will be who is and is not active in the wholesale channel. Even more interesting is who will be doing what duties. This is where regulations will have a lasting impact.

****No question … these are times of great conflict, but also of great opportunity. This is especially true for the leaders who emerge. I ask you, “Are YOU one of those strong leaders?” If so, I encourage you to “ANSWER THE CALL.” If you do, write me at or send me a message via LindedIn and/or facebook. I will send you information about the “The 7-C’s of Leadership” … Character, Courage, Confidence, Charisma, Conviction, Communication & Compassion.

Magazine Feature: Attaining Compliance Despite Limited Resources

*Attaining Compliance Despite Limited Resources*
**By Sharon Matthews**

***Over the last several months, refinancing activity has once again surged to the highest levels and even originations are now finally showing some signs of growth. In the midst of this active market, loan officers also have to keep up with a growing number of new regulations that are forcing process change.  Unfortunately, pull-through rates aren’t keeping pace. The average time to close has lengthened from 30 to 45 days, and in many cases much longer. Some of this is simply because of the heavy workload. Loan teams today are fighting to keep up with record volumes.

****Another reason, though, is new regulations are increasing the number and type of disclosures required, forcing lenders to modify processes and systems while trying not to skip a beat. First, there was RESPA that regulated the time to disclose and the allowable variances in loan fees. Now, the CFPB’s integration of HUD and TIL will likely place further burdens on a lender to ensure borrowers are informed and fees are controlled. Looking ahead, the CFPB is discussing the possibility of adding automated valuation models used in appraisals to the list of required consumer disclosures. Banks are doing everything they can to keep up with these changes because the repercussions of regulatory non-compliance are costly and damaging to a lender’s reputation.

****Is Technology Really The Answer

****Many banks have reasonably looked at technology as a way to stay on top of these new compliance requirements, manage costs, and create a better user experience. For example, creating loan documents electronically, and then being able to distribute them to all parties in an electronic fashion addresses the compliance need, while also being faster and less expensive to execute. Even with compliance as a driving force however, we’re still not seeing significant changes industry-wide.

****Last year, we wrote about some of the best practices lenders could use to improve the success rate with electronic document delivery, both within their internal teams and with consumers. A year later, we see incremental improvement but the journey is far from over. In fact, if you look at the state of eMortgage – researched by us as well as others – that evolving destination point is still a ways off.

****Nonetheless, the value of using technology to manage loan documents and data continues to be compelling and quantifiable. Certainly, eliminating paper costs and compliance penalties result in direct savings. Our analysis also indicates that if a consumer accepts the initial disclosures electronically, there is a 70 percent to 80 percent probability she will continue to interact with the lender in an electronic fashion all the way through closing. This improves pull-through, speeds time to close, and creates a competitive advantage in the market. We estimate, based on client experience, that every day shaved from the loan pipeline can save from $25 to $110 per loan, depending on the average loan value. With today’s loan volumes, this equates to substantial savings very quickly. Figures like these have to make you wonder – why aren’t more banks rushing to deploy eDelivery services for their mortgage documents in a comprehensive fashion?

****Not surprisingly, it comes down to resources and prioritization. Because external market and regulatory forces are putting such a strain on banking resources, lenders usually implement technology or deploy eDelivery services one document or process at a time, usually where the need or risk is the greatest. Maybe it’s initial disclosures. Or appraisals. Or an adverse action letter. Further down the process it might be the closing documents or the HUD statement. Regardless, lenders frequently attack what they feel to be the most relevant problem at the moment, document by document, because they feel these measures can quickly address the area causing the greatest bottleneck or triggering the highest non-compliance risk. In addition, this piecemeal approach presumably makes it easier for internal IT resources to provide the necessary integration support. IT scarcity is a significant hurdle as they usually have multiple projects demanding their time and attention.

****A More Manageable Issue

****What lenders may not fully realize: It’s possible to implement eDelivery services in a simple and pragmatic fashion without internal IT integration support. In so doing, lenders can realize the cost savings, work load, quality, and compliance benefits enabled by technology, without investing a significant amount of time or resources. As an example, eLynx eDelivery services can be installed and appear as a network printer. Loan officers, processors, underwriters, or closers prepare the documents they normally do, and simply print them to the eDelivery printer. The workflow doesn’t change so there’s no retraining required or disruptions caused by new technology. And delivering documents to consumers electronically saves days in the loan cycle, and ensures that compliance deadlines are met.

****Because eDelivery services appear as a printer, there’s little to no work for the internal IT team. In this scenario documents will go out electronically. Of course, it’s usually better to fully integrate into your LOS with bi-directional data, so that returned documents and status messages are automatically updated within the LOS. But if you can’t secure sufficient internal IT support immediately, and yet you have compliance holding fast to a strict deadline, implementing eDelivery services in this simple fashion may be a very pragmatic solution.

****Another way to achieve near-term needs with minimal outlay is to select a flexible technology solution that can start with a single document, but can also expand quickly and easily as you enable eDelivery across more of the lending processing lifecycle. Today’s regulatory climate might change if we have a new administration in 2013, but the need for business flexibility will most certainly not. Being able to start small and expand later is a valuable option. As proof, we need only look at the LOS market or the document preparation market where interest is shifting to SaaS-based vendors. When it comes to eDelivery, look for that same flexibility and expandability. Don’t just solve today’s compliance needs. Put yourself in a position to handle the next business or compliance risk as well.

****A final point worth considering is whether the lengthy, multi-step nature of the mortgage lending process itself may also lead to the “one-document-at-a-time” approach. Banking processes and systems are still rather siloed. As a result, it’s easy to compartmentalize needs and look for point solutions to handle each area. What banks may not realize – and, frankly, what we vendors may need to better communicate – is that comprehensive solutions exist that can support the entire mortgage lending process flow.

****The Real First Step: A Scalable, Long-Term Solution

****Covering the entire mortgage process flow is the key to unlocking the full business value of eDelivery services. Our data shows that today’s consumers prefer the speed and convenience offered by electronic delivery and receipt of mortgage documents. Beginning with an application and following through to disclosures and closing packages, consumers will stay electronic all the way through if you start that way out of the gate. Having to switch from electronic to paper and back is where the value starts to erode.

****From a practical standpoint, we understand that most banks will convert to electronic in phases. Whether you use compliance mandates as the catalyst, or you have the foresight to get ahead of that curve, using a SaaS-based solution for eDelivery gives you the flexibility to set a pace appropriate to your organization. Also, you can minimize the amount of IT support needed by using a common delivery platform that can handle all stages of the mortgage process from application to post-closing and reselling. For complete risk mitigation, that platform should also incorporate a fallback capability for those instances when an eDelivery is not achievable, recognizing and handling the printing and mailing of necessary documents within compliance timeframes.

****Finally, don’t assume that your internal IT’s schedule is a showstopper. There are ways to deploy some technology solutions immediately without IT assistance. This allows you to meet pressing needs today and begin realizing the benefits of eDelivery services. As you have time and resources, you can then go back later to more fully integrate your solutions. Ultimately, it’s critical for banks to understand that simple, incremental changes like those discussed can drastically reduce risk, empower teams to do more with less, and improve the data quality and consistency of loans. These are essential steps that enable today’s financial industry to move forward and stay on track in an environment with ever-changing rules and priorities.

Magazine Column: How Are You Organized?

*How Are You Organized?*
**By Michael Hammond**

***I read a lot. Recently I was struck by an article called “Roadmap for Designing High-Performing Organizations” by Leader’s Beacon. In that article it said that companies are frequently facing the need to restructure their organizations. Changes in leadership, a shift in strategy, or changing factors within an organization often create the need for reorganizing. Organization design is one of the most powerful tools available to senior managers for shaping the direction of their organizations.

****“Organization design” is often used incorrectly to refer only to an organization’s structure. However, organization design is much broader than rearranging the boxes on the organization chart. Simply stated, the organizational design process aims to maximize the organization’s chances of delivering its strategy. It is the deliberate process of configuring structures, processes, reward systems, and people practices and policies to create an effective organization capable of achieving its business strategy.

****This reminds me a lot of our industry. I wonder if all of the companies serving our space are truly set up to succeed.

****For example, organizational leaders often lack the tools necessary to help them in making decisions about how to design their organizations. Further, efforts at restructuring are often uneven and lacking a systematic approach. Decisions to reorganize are often made with insufficient information and without a clear process to guide the effort. The result is that reorganization efforts often fail to produce the desired outcomes, leading instead to further confusion or problems within the organization down the road.

****A popular organizational design framework is the Star Model, developed in the 1960’s. The framework is designed to be used as the basis for an organization’s design choices. The framework is made up of five components, which can be manipulated by management and leadership to shape an organization and the behavior of the people within it. Let’s look at each of them briefly.

****Strategy is the first component to be addressed in the Star Model. Strategy defines the direction of the organization. It is important to tackle strategy first because any organizational form we end up with will involve compromise, so by setting the strategy first, it enables us to make the right compromises.

****Now let’s move on to structure. Structure determines the location of decision-making power. Structural decision can be divided into four areas:


  • Specialization: refers to the type and numbers of job specialties used in performing the work.
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  • Shape: refers to the number of people constituting the departments (that is, the span of control) at each level of the structure. Large numbers of people in each department create flat organization structures with few levels.
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  • Distribution of Power: refers to centralization vs. decentralization along with whether we push power down through the organization to the lowest levels where the issues and information are, or whether we want all decisions to go through decision-making bodies.
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  • Departmentalization: refers to the basis for forming departments at each level of the structure. The standard dimensions on which departments are formed are functions, products, workflow processes, markets, customers and geography. Matrix structures are ones where two or more dimensions report to the same leader at the same level.

****Now let’s talk process. Processes information and decision processes cut across the organization’s structure; if structure is thought of as the anatomy of the organization, processes are its physiology or functioning. Management processes are both vertical and horizontal. Processes determine the flow of information and decisions in the organization. Vertical processes allocate the scarce resources of funds and talent. Vertical processes are usually business planning and budgeting processes.

****Rewards come next. The purpose of the reward system is to align the goals of the employee with the goals of the organization. It provides motivation and incentive for the completion of the strategic direction. The organization’s reward system defines policies regulating salaries, promotions, bonuses, profit sharing, stock options, and so forth.

****Lastly, it’s about people. This area governs the human resource policies of recruiting, selection, rotation, training, and development. Human resource policies – in the appropriate combinations – produce the talent required by the strategy and structure of the organization, generating the skills and mind-sets necessary to implement the chosen direction.

****Beyond these five principles, its how the organization design gets created is almost as important as the design itself. The complete process can take a few weeks to several months, depending on the size and complexity of the organization. Determining the organization’s strategy is often done by the company’s leadership and executive team.

Designing the organization’s structure, processes, rewards systems, and people is typically the responsibility of the leadership team. Once the high-level designs are established, the detailed designs are often crafted by a steering committee or working group. Implementation of the new design should be accompanied by a robust transition and a change management plan.

****Components of the Star Model may be more or less important depending on the unique needs of your organization (e.g., standing up a brand new organization versus tweaking an existing organization). What is most crucial is to ensure that the five categories align with each other, and for you to stay focused on strategy each step of the process.

****Phil Harkins, CEO and chairman of the board of directors of Linkage, Inc., put it this way:

****“Well-integrated, high-performing teams – those that ‘click’ – never lose sight of their goals and are largely self-sustaining. In fact, they seem to take on a life of their own. And it’s all down to leadership.”

****In every case that has been studied at the Europe-based Centre for Organizational Research, teams that ‘click’ always have a leader who creates the environment and establishes the operating principles and values that are conducive to high performance. The evidence for this is clearly seen in organizations where a manager who creates high performance moves to another part of the organization, or a different organization, and within 18 months they once again establish a high performing team.

****He believes that these leaders operate in an organized, systematic way to build successful teams, and that the formula not only involves what leaders should say and do, but also what they should not say and do. It also involves working backwards – leaders should envision the future before dealing with the present.

****The four most significant behaviors consistently demonstrated by high-impact leaders are:


  • defining clear goals or a vision of the future in accordance with overall organizational aims (the ‘big picture’)
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  • creating blueprints for action to achieve those goals
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  • using language to build trust, encourage forward thinking and create energy within the team (‘powerful conversations’)
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  • getting the right people involved (‘passionate champions’). Imparting a clear vision of where the team should be headed, and inspiring its members to make it a reality, is fundamental to team success.

****In the end these are things that we should all consider as we navigate a very tough mortgage market.

Magazine Feature: The Mobile Impact

*The Mobile Impact*
**By Randy Schmidt**

***The mobile revolution is expanding at an unprecedented pace.  In a research report called “The Mobile Revolution & B2B” by Christina Kerley, she says,  “with over 5 billion mobile subscriptions worldwide, that eclipses the combined penetration of PC’s, landlines and TV’s”.

****But it doesn’t stop there, as nearly 6 out of 10 U.S. consumers use smartphones, while tablets are used by more than one-third, according to a new survey from Frank N. Magid Associates. Smartphones are now used by 58% of American consumers and by 76% among those under the age 44. Meanwhile, tablet usage has risen to 34% from zero just two years ago.

****Here are some additional mobile statistics that reflect the growth and importance of the mobile channel for reaching your potential borrowers:


  • Global internet usage will more than double by 2015, and most of these users will be mobile. (Boston Consulting Group, Mary Meeker, Kleiner Perkins, Morgan Stanley Research, Berg Insight via Business Insider)
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  • Adults spend more media time on mobile than newspapers and magazines combined. (eMarketer December 2011)
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  • In 2012, the U.S. saw a 55% increase in smartphone subscriptions to make for 98 million smartphone subscribers, representing nearly 42% of all U.S. mobile users. (comScore 2012)

  • In the U.S. alone, there were more than 400 smartphone devices on the market at the end of 2011. (comScore 2012)
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  • In 2011, smartphone adoption increased 99% among 6-person households, 98% among those making less than $25,000, and 92% among retirees. (comScore 2012)
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  • Apple and Android represent more than 75% of the smartphone market. (comScore 2012)
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  • QR code scans increased 300% in 2011 over 2010. (ScanLife)
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  • QR code usage jumped 617% from January to December 2011 in top 100 magazines. (Nellymoser)
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  • In 2012, the audience of internet users in the U.S. will expand by 3.1% to 239 million, representing 75.6% of the total population. In other words … more than 3/4 of the total population will be online in 2012.
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  • Mobile Internet users will reach 113.9 million in 2012, up 17.1% from 97.3 million in 2011.
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  • Smartphone users will reach 106.7 million in 2012, up 18.4% from 2011.
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  • In 2012, 94% of smartphones users will be mobile Internet users.
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  • All mobile phone users will reach 242.6 million in 2012, up 2.3% from 2011.
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  • Tablet users will reach 54.8 million in 2012, up 62.8% from 33.7 million in 2011.
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  • iPad users will reach 41.9 million in 2012.
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  • In 2012, 76.4% of tablet users will be iPad users.
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  • Adult-aged eReader users will reach 45.6 million in 2012, up from 33.3 million in 2011.

****Are you overwhelmed yet? Well, you should be. The facts are resoundingly clear, mobile is huge. What does all of this mean for the mortgage market you might ask? Despite signs of continued housing market distress, most homeowners and perspective buyers are optimistic about the housing market, according to a survey by real estate website Trulia.

****In the biannual American Dream Survey, 78 percent of homeowners said their property was the best investment they had ever made. But 20 percent said they felt trapped in a home that was worth more than their mortgage, and 14 percent told surveyors that they would walk away from their homes if they could.

****The people least likely to be affected by the housing crisis, 18 to 34-year-olds referred to as ‘millennials,’ were most optimistic about a recovery. According to Trulia, 26 percent had become more positive about owning a home over the past six months compared to 18 percent of 35 to 44 year-olds and 45 to 54 year-olds, and 22 percent of baby boomers.

****Millennials—also commonly referred to as Generation Y and echo boomers—are the first generation to come of age in the new millennium. Unsurprisingly, the internet’s role is paramount among the age group’s media habits and usage. From shopping to socializing to watching TV, they do it all online.

****“Millennials represent a critical target for marketers, and the best place to reach them is where they are—online,” said Jared Jenks, eMarketer analyst and author of the new report, “Demographic Profile—Millennials.”

****According to Wells Fargo, there are 51.5 million potential first time homebuyers born between 1979 and 1991, people born in between these years are also known as the Millenials. Approximately 6 million more of these Millennials are making of these years the prime home buying age.

****Millennials comprise nearly a quarter of the total US population, and are evenly split between males and females. Less than six in 10 are white, and aside from children under 18, millennials are the most ethnically and racially diverse generation in the country’s history.

****Virtually all members of this age group are online, and nearly as many are social network users. Millennials are ahead of the curve by almost any digital metric: online video viewing, mobile internet usage, mobile commerce, and location-based services.

****Their presence on such a wide variety of digital media offers marketers a plethora of opportunities to target them, but millennials are typically unenthusiastic about advertising and prefer to avoid marketing messages that seem insincere.

****“What appeals to them is authenticity,” said Jenks. “They are not opposed to connecting with brands, but do so only when there is an exchange of value and, of course, when it is on their terms.”

****Millennials were also more likely to aspire to own homes, with 88 percent of the 18 to 34-year-olds surveyed saying they planned to buy property. Many argue that this demographic will be key to reviving the real estate market.

****Kerley points out, “In the mobile revolution, what is most important—yet not widely understood—isn’t that we’re changing our technology, but that this technology is changing us. Mobile is driving sweeping changes across the needs, expectations and thresholds of today’s consumer and business audiences.  Mobile is pervasive in every aspect of our lives”.

****After all, what is more personal to you and your borrower than their mobile devices?  Mobile devices are:


  • Always on
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  • Always with them
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  • Tailored to their preferences

****Going mobile today means that you can conduct business; with anyone, from anywhere, and at any time. Can your business do this? If not, now is the time to start thinking of ways to accomplish these very goals. The days of needing to be tied to a single location to conduct business are over. It’s time to cut the cord and move into the mobile arena where information can be easily accessed from anywhere.

****All of the tools to make this happen are readily available today. Almost every part of the lending process is available via the web. Online point-of-sale and consumer portals are available to allow you to reach out and communicate with your prospects and customers. Cloud-based document storage allows you to collaborate with customers and business partners. Online LOS systems let you process loans from anywhere by using only a web browser. If you are considering purchasing or upgrading any part of your lending process, now is the time to think mobile.

****So, what should you be doing as lender active in the space today? Align your products and services with this profound, permanent shift that mobile is driving across your core audiences… or risk your company’s relevance in a business world forever changed by anytime, anywhere, always on access to critical lending information.

Magazine Column: Relieve The Stress Of REO Disposition

*Relieve the Stress of REO Disposition*
**By Joseph Badalamenti**

***Elevated numbers of foreclosed properties are placing lenders under significant pressure to reduce ballooning REO inventories, while minimizing portfolio losses. In these extreme market conditions, it has become increasingly difficult to sustain property-specific marketing strategies. Time constraints and sheer numbers tend to reduce the focus on individual properties in favor of volume-driven approaches. Ironically, the resulting one-size-fits-all solutions have often had the opposite of their desired effect, leading to longer disposition cycles and lower selling prices.

****To improve results, stronger field execution is paramount. Servicers need to look for an REO asset manager with a nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties. This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

****A nationwide network that includes both brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient, effective approach for each asset in the lender’s REO inventory.

****In addition, field service companies must demonstrate the ability to handle both quantitative (volume) and qualitative (depth of service) market demands. Meeting this dual-track challenge requires a large, nationwide field service team. The key to rapid deployment of field resources on a neighborhood-by-neighborhood, property-by-property basis. Providers who can perform at this level are re-defining responsive REO service.

****Servicers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

****Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

****Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process – is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

****Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

****Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turnkey auction management or assigning a broker, as appropriate.

****Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most important, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

****Closing Services – Well-qualified REO asset management organizations can provide the people and expertise to coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information, all in strict accordance with client, legal and regulatory requirements. Title procurement, HUD-1 review and approval, escrow/closing coordination. These capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

****Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

****However, it’s important to remember that With today’s inflated REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies, particularly for low-value, high-risk properties must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether large-scale bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

****Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

****And yes, this is possible. With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turnkey auction management or assigning and managing a broker, as appropriate

****The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including ongoing detailed progress reports. Most important, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means, first, knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

****The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles: It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through evaluate and monitor property marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

****Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help lenders/servicers address these and other needs critical to REO asset marketing success.

****As we all know, Improving and streamlining default and REO processes will remain a primary focus of servicers and their field services partners as elevated foreclosure rates continue and regulatory compliance becomes more urgent and complex. The field service provider’s first step in navigating these realities will be to become an even more capable and efficient resource – a true problem-solving partner who understands both broad market forces and the servicer’s particular needs and business circumstances.

Magazine Feature: Conquering The Paper Monster

*Conquering the Paper Monster*
**By Eric Kujala**

***It’s been more 12 years since Congress passed the Electronic Signatures in Global and National Commerce Act. Many thought that this would change forever the loan origination industry.

****While much has changed, the industry is still playing the waiting game — waiting for the majority of loan origination companies to realize the benefits of going paperless. And with the introduction of new developments like e-disclosure support and web-based loan origination systems (LOS), many expected the industry would have been completely transformed by now. But that is far from happening. Change is happening, but it’s been evolutionary rather than revolutionary.

****The following article looks at the reasons and trends occurring in the loan origination industry. So, why is the industry is hesitating? Let’s face it, paper is a great technology, but in reality it’s not going anywhere. For those who are not using an imaging platform, paper will remain business as usual for the most part. There might be more questions around clean desk policies, security, etc., but paper will remain a feasible way to do business.

****It’s really the fear of the unknown. Our industry tends to be traditional. They know paper; they can see it, touch it. The thought of moving to paperless mortgages may seem overwhelming. But I can tell you from our company’s own experience, once the fear subsides, it’s a necessary and easy switch.

****In order for the switch to happen we need more education and increased awareness. In the origination world, it’s all about being compliant. This is especially true because the technology reduces human errors and manual data entry. Also, paperless processing allows all documents associated with a loan to be monitored throughout the life of the loan.

****Also, for most originators, it’s really about time management and saving money. By reducing the time spent on each loan document package, originators can then focus their time on improving customer service, increasing loan volume and lowering their costs. And as Eric said, we continually look for ways to stay compliant. There are many new government regulations coming out and paperless technology tends to keep up with the ever growing changes coming from Congress.

****So going back on how to have the industry embrace paperless, I’d like to add that the fear of security needs to be addressed. Originators need to realize that paperless mortgages are more secure than paper-based loans. Because electronic files can be encrypted for secure transmission and storage, this prevents any unauthorized access to the data. Also, with paperless, you can see what changes were made to the file, when they were made and by whom.

****In the end, as more regulations are introduced, it will become increasingly difficult to manage the loan process in a paper environment. If you look at those companies that use paper in their workflow today and analyze their process, you’ll notice they are doing a lot of work electronically already. For example, they get emails from borrowers, use efax, pull documents from a website, upload to investors, etc. Once they realize the work already being done electronically it will be an easy gap to fill in where paper exists.

****The younger generation is obviously more comfortable with and fully understands technology. When they move into management, they will be the innovators and risk takers. And I think innovators definitely tend to push the envelope. Remember when loan origination systems really hit the market? People used to hand-write loan applications 10–15 years ago. Now there is a very small population of loan officers that still do it that way. Eventually it will be the same thing for paperless workflows.
As we go forward, for the paperless documents industry, I believe new more advanced technology will be introduced. Also, look for the customer to be the focus. For example, during all of the regulatory changes over the past several years, many organizations’ initial reaction was to add more steps to the “assembly line.” This included the mortgage process to handle disclosure, re-disclosure, etc. Over time these trends have changed somewhat and companies are looking to minimize the customer touch points. In doing so they can improve customer service and hopefully expand responsibilities of the existing staff without having to hire in reaction to these changes.

****For the mortgage origination industry, look for domino effect to take place. As people realize that paperless saves more than trees and time — it saves a great deal of headaches and money. For example, this will have a huge effect on disaster recovery regulations.  Think about it, neither tornados, hurricanes or even fires will destroy paperless. We don’t have to worry about keeping the real estate to house the documents safe from weather or fire.
If we’re talking industry changes as a whole, I see more consolidation not only with technology companies, but with lenders, brokers, banks, etc. Even though there are fewer mortgage companies in the industry, the existing ones appear to be getting bigger and expanding their reach geographically. This means the reliance on technology becomes even more important. There was a report not too long ago that 17 percent of the mortgage companies are in the process of changing their LOS platforms. They are asking more and more of their technology providers to keep them in compliance and provide accurate business intelligence to manage their rapidly growing businesses effectively.

****I think we’ll also see a great deal of “work from home” employees — something our company is piloting. Without the worry of printing the documents, this opens up a whole new industry of employees — those who have a secure connection and a computer are able to work from home and collaborate and connect electronically.

****The loan origination industry is definitely changing. It will be a much greener industry, with more home-based employees not driving their vehicles to work each day, less printing and copying of the documents and the elimination of mammoth warehouses. And with that, keep an eye on new technology designed not only for the industry, but also expanding into new territories.

Magazine Feature Article: Calling Out Single Point Of Contact

*Calling Out Single Point Of Contact*
**By Barbara Perino and Rebecca Walzak**

***Do you know SPOC? No, it’s not a character in an outer space science fiction movie, nor is it the name of your new neighbor’s dog. “SPOC” stands for Single Point of Contact, the requirement that every borrower have one individual who is their link between themselves and the servicer when working through a default management issue, be it forbearance, loan modification or short sale. It first became a requirement when established by the Treasury Department as they struggled with the massive delinquency and loan modification programs which began in 2008 and continue to this day. This concept, the idea that a borrower can call one representative of the servicer at any time and receive information as to the findings, issues and status of their problem or requested option, has not been an easy one or even a welcomed one by servicing organizations. Yet it seems, at least on the surface, to be a win-win for everyone. The borrower can get up-to-the-minute information with just one phone call and servicing personnel are freed from the handling of numerous interruptions and frequent phone calls made by frustrated borrowers. Yet servicers, from largest to smallest, seem to be slowly working through this “evolving process” rather than stepping forward to embrace the idea as they implement a single point of contact program. Is this concept so new that we are struggling to understand exactly what is required? Is it so labor intensive that the volume of work completed comes to a near standstill in order to take a customer call? What exactly is the problem?

The idea of a single point of contact was not a new concept developed by regulators in response to mortgage consumer complaints, but has been adapted from other industries faced with an overwhelming volume of calls that they attempted to manage through dysfunctional, outdated methods for providing customer support. Technology companies were among the first adaptors of implementing a structured unit within an organization whose objective was to be the communication link between the company and those that it served. The focus of the “customer service” unit was a means to provide information, accept orders, resolve issues and satisfy customer needs in an organized, efficient environment that is easily scalable to meet the ebb and flow of customer volume. Once initial implementation was achieved, the satisfactory rating of consumers skyrocketed. Companies continued to enhance the use of these units and expanded them to include assigning specific “order” numbers to calls so that any responder could identify the issues in the customer service program and answer questions and/or give updates. The next step of course was to assign each individual caller with their own service provider. This individual would take responsibility for a specific caller, their needs and concerns, until such time as the caller was satisfied with the result.

Despite concerns about the potential costs associated with creating this special unit the use of “call centers” proved very successful. Management found that through this process they were able to remove the ambiguity of issues and quickly identify what the “real” issues were. This allowed the customer service representative to more easily address the core problem and resolve the callers’ issues. Ultimately this produced results showing higher productivity numbers for companies as other employees were not haphazardly interrupted with phone calls that took them away from their assigned work load. It also eliminated the customers receiving redundant responses or conflicting information which ate up even more of employees’ time as they attempted to untangle the issues and resolve the problem.

One of the most beneficial results of this single point of contact concept was the move from constantly being in a reactive state to one of proactivity. Customer service representatives began to more effectively manage the process of correction and improvements as requested and took the initiative to begin placing calls to customers on a regular basis to advise them of the status of their issue. The responses to this type of proactive calling were overwhelmingly positive.

This practice also had more easily quantifiable economic benefits as well. As the data on issues and problems was collected in a single source database, it was much easier for management to identify the common issues and sources of problems. Once these were isolated, improvements to processes and new technological innovations could be developed. Funding for opportunities established through this information source was routinely successful in creating more effective and/or efficient products and services.

Today there are world-wide call centers for just about every major industry and global company. While the number of companies that assign specific representatives to specific callers is smaller, the overall nature of the calls has moved from one of calling when a problem arises to one of seeking resources and information in implementing some new aspects of the servicers provided or attempting to answer a question that may arise.

Unfortunately the status of the mortgage servicer “SPOC” programs does not appear to be quite as successful. The implementation of the single point of contact program by servicers programs have received only mediocre reviews and lawmakers have been focusing on national foreclosure reform legislation. Although this legislation seems to be stalled, many states have or are beginning to consider this issue.

Servicers in the meantime have been working on and experimenting with ideas for the best method for implementing the program. Not all of the plans have materialized into effective programs while some have been more successful than others.

The most common implementation approach appears to be the expansion of the more traditional call center. In this scenario, the standard 800 number is still used as the primary point of contact for the borrower. Once the borrower has reached a representative of the company, they identify the reason for the call and determine which employee would be best able to address the issue. In the case of modifications in progress, the individual assigned to handle the application then becomes the single source of contact. This process may attempt to minimize the modification specialists’ phone time, by arranging for a call back time, but the process still requires a great deal of consumer interaction time.  There are several other iterations of this approach as well. One of these is to advise the consumer that the individual who is handling the case will call them back. Unfortunately, many times this results in a game of “telephone tag.” Complications further occur when the individual to whom they are assigned calls them and leaves a message to return the call. Then when the borrower returns the call, they are sent to the main number and the individual answering the phone has no idea about the issue and cannot transfer the caller to the modification specialist.

Another approach is to create a program that will update information about the status of the application or request. Then when the consumer calls into the assigned number, any individual answering the call can refer to the system to identify the status and provide updated information. Unfortunately these calls often leave the consumer with unanswered questions because the individual on the phone has no knowledge of the required steps in the process or cannot provide specific information on how to address a problem. Ultimately these approaches are not successful because they do not meet the standard established by the requirement; a single point for the consumer to call and get questions answered and issued resolved.

How do we move beyond the stumbling blocks of today’s approach to SPOC? One way is to look at those who have been successful in implementing such a program. In reviewing information about other programs similar to what is required of servicers, there is one common thing that stands out. These companies see the person answering the phone, as the most important in the company since they are “customer facing.” In order to be assigned to these positions, individuals at these companies are assessed for their level of professionalism and overall attitude. In addition, they are required to have a comprehensive knowledge about the products and services that the companies provide so that questions can be answered correctly the first time. However the most stringent requirement mentioned consistently within these companies was the ability to communicate. These employees must be skilled empathetic communicators; not just talking, but excelled at listening to the customers to isolate and identify the issues so that they can be resolved. Training for these positions is in many cases extensive and rigorous. As a result, these employees are highly-valued and highly compensated.

In today’s servicing world many managers see these positions as entry level and low paying positions. They are hesitant to invest in these individuals who openly admit they are looking to advance to other positions in the organization. While some may have training in call center work, rarely do they have anything but a limited knowledge of the mortgage industry and/or the servicing process. While there are attempts to overcome this with prescribed scripts, the end result is less than effective.

In addition to the lack of appropriately trained and skilled professionals to work in a SPOC center, our industry has not yet grasped the opportunities that this type of function can provide. As mentioned earlier, many companies utilize the data obtained from documenting and tracking these calls through to final resolution to identify where there are productivity and cost-reducing gains to be made. While today’s servicing managers worry about absorbing the costs associated with hiring and training these individuals they have failed to balance these costs against the savings that can be achieved.

While today’s focus is on providing a single point of contact for the servicing organization, it is impossible to overlook the potential of this approach for the origination end of the business. One of the biggest failings of the mortgage boom was the borrower’s total comprehension around how these loans would work; what future payments would be and how they would affect the borrower’s equity in their homes. It is not a large leap to envision a resource for borrowers beginning the process of originating a loan to want and/or demand this type of resource from their chosen lenders. This idea has great appeal to consumer advocate groups. An originator whose approach provided this level of support and knowledge to their customers would undoubtedly be able to draw consumers to them.

Whether you think of SPOC as an alien here to take over your organization or as an opportunity to differentiate yourself from the competition, it is safe to say that the idea is not going away any time soon. And with the repercussions from regulators and state legislative interest in this idea growing, management, ready or not, is going to have to implement these programs.

So bottom line is; there is tremendous opportunity to embrace the value of putting a highly effective SPOC program in place in your company and create benchmarks that can be tracked for success, allowing room for any needed adjustments. It starts at the top. Leadership has to embrace the importance and value of this new requirement. If you don’t have leadership buy-in on the significance of this program you are going to be in the spotlight, under scrutiny and setting your company up for failure. Some things to think about:

  • Leadership creates a strategic meeting of the leadership team to talk about how they can implement a highly effective customer centric program. What needs to be done to get this in place? Who are ideal candidates for our SPOC program?
  • Leadership has to get very clear on the ROI of doing this process and exemplify it throughout the company. (walk the talk)
  • Possibly create a survey to be given to every employee in the organization to flush out possible candidates for these positions, including managers. Craft questions about what SPOC means, how it works; and some questions (or personality assessments) to find out which employees are perfect candidates to be the SPOC because of their knowledge of the loan programs, policies and procedures and just as important, their customer service, relationship building, organized skills, great with follow up, etc.
  • Create benchmarks and matrixes on the goals and results that will be needed and designate timeframes when to review how well the program is working going forward.
  • Create chain of command for problem solving if something gets escalated and a manager needs to get involved
  • Create ongoing training, motivational exercises, coaching of the SPOCs.
  • Compensate these people as they aren’t just answering phones and passing on calls; this position is a very important position that will impact the success of the SPOC program so promote and hire the best.

The government is here to stay for a long time and these types of programs are not going to go away so find how you can embrace this change and decide you are going to do it well. Take the bull by the horns and go for it. It will serve you in the long run.

Magazine Cover: Blooming Appraisal Innovation

*Blooming Appraisal Innovation*

**Executive Interview**

***There is no denying that the mortgage space has seen an onslaught of new rules and regulations since the meltdown. And guess what? More are on the way. One area in particular that has been hit hard with these new rules and regs is the appraisal space. First, new rules were put in place to prohibit lenders from influencing appraisers. Following that the GSEs have sought to reshape how appraisals are done by mandating that they be delivered as data in compliance with the MISMO standard. Through it all a la mode has stepped up and used these changes as a way to innovate. In fact, we at PROGRESS in Lending named their DataCourier tool a top innovation for its huge industry contribution. To this end, Jennifer Miller, president of a la mode’s Mortgage Solution Division talked to us about her company and the future of the entire appraisal space.


****Q: Let’s start by talking a little bit about you. What’s your primary role at a la mode?


****JENNIFER MILLER: My focus is Mercury Network, our vendor management platform. Mercury Network is used by lenders and AMCs to manage their appraisal operations, cut overhead expenses, improve appraisal quality, and remain in compliance with state and federal regulations. Our team is responsible for maintaining Mercury Network to support tremendous traffic (over 20,000 appraisal deliveries a day and growing), and also responsible for supporting our client base, and continuing to add features that improve appraisal management workflow for our clients.


****Q: But what makes Mercury Network different from other appraisal management platforms out there?


****JENNIFER MILLER: That’s an interesting question because most of the other platforms are also integrated with Mercury Network to offer their clients expanded options and more control over their operations. We work with many of those platforms in what we call a “co-opetitive” manner, so lenders and AMCs get the tools they really need regardless of the platform they choose. In many cases, even if you use another platform, you’re still relying upon the Mercury Network backbone. Over half the nation’s residential real estate transactions pass through the a la mode Operations Center, so many of the different software platforms out there are relying upon the Mercury Network core.


****Q: Let’s move on. Your DataCourier service has received a lot of press lately, including the PROGRESS in Lending designating the solution a top innovation. Can you tell us a little about what DataCourier does?


****JENNIFER MILLER: First, we definitely want to thank the board at PROGRESS in Lending. The award and your recognition really mean a lot to the dozens of developers and analysts that worked tirelessly to release DataCourier before the GSE’s requirements went into effect.

****We released DataCourier in the Fall of 2011 so appraisers (regardless of the formfilling software they use) could easily deliver the newly required MISMO XML appraisal files to their lender and AMC clients. Recall that the GSEs mandated the new file format, effective in September of 2011, but appraisers didn’t have an easy way to bundle those files and get them delivered to their lenders and AMCs in a compliant and secure manner. Without DataCourier, this new GSE requirement would have caused significant and serious delays in lender pipelines, when the industry and this economy could least afford delays. Appraisers jumped on the free service and are using it every day.  Since we released it, DataCourier has been used to send over 2.6 million appraisal reports.


****Q: Let’s take it one step further: What kind of impact has DataCourier had on the industry?


****JENNIFER MILLER: We had high expectations before we released it, but the stats have really been shocking. There are a few points in the appraisal transaction that DataCourier affects, so I’ll briefly describe a few.

****First, DataCourier also offers lenders a free, direct integration to UCDP. It’s of huge significance to the nation’s smaller lenders and AMCs. Their percentage of the nation’s overall origination volume continues to climb, yet they do not have the same technology and financial resources found at larger institutions. Instead of these UCDP and appraisal compliance requirements significantly impacting their operations expenses, they can sail through UCDP without paying a dime or slowing down to adopt complex new processes. And having the connection to UCDP available inside DataCourier eliminates the need to save out the XML file and then manually upload it to the portal.

****Second, since DataCourier packages the appraisal data and delivers it in compliance with the Gramm Leach Bliley Act, it shields lenders and AMCs from potentially catastrophic violations of GLB. If appraisal reports (which contain federally protected non public information or “NPI”) are just e-mailed rather than sent through DataCourier, lenders and AMCs are exposed to tremendous GLB compliance risks. With the rise of compliance exams, it’s critical that every institution mitigate their risks so DataCourier has been instrumental in helping small and large lenders get their operations in compliance.

****Third, DataCourier has other very helpful tools to help the lender. It includes the ability to send a copy of the appraisal to the borrower in a GLB compliant manner and record that the borrower has actually viewed the appraisal. This gives the lender a free solution to the Dodd-Frank requirement that the borrower must receive a copy of the appraisal prior to closing.  Another tool available is the ability to request a revision from the appraiser via the DataCourier platform with those change requests stored in the audit trail of the DataCourier file.


****Q: Looking ahead, what’s next for Mercury Network and the appraisal space?


****JENNIFER MILLER: We think lenders and AMCs really need additional analytics to more effectively monitor both what the appraisal is telling them and isn’t telling them about the property. Based on extensive market research and direct communications with the largest lenders and AMCs in the country, it’s clear additional tools are needed to gauge appraisal quality and more effectively manage compliance.

****Over the next few months, we’ll be working on new services in Mercury Network that give lenders and AMCs even more control over their appraisal quality. We’ll be focusing on evaluating risk related to the market, neighborhood, accuracy, completeness, and value. We’ll also include tools to help our customers more effectively track their vendor’s performance over time. The most important aspect of the new system, is it will augment and expand on what our customers are already doing when they are reviewing appraisals. We aren’t removing the human element, but we will be making it more efficient and we will be memorializing the results of the review so it can travel with the loan file to prove that the originator did their due diligence when evaluating the merits of the appraised value provided.



****Jennifer Miller thinks:

****1.) Lenders and investors will start to demand additional analytics for determining collateral risk.

****2.) Community banks and credit unions will continue to grow in terms of mortgage lending market share.

****3.) Appraisal fees will continue to rise due to expanding scope of work and compliance considerations.



****Jennifer Miller is president of a la mode’s Mortgage Solutions Division. Her focus is Mercury Network, the nation’s premier vendor management platform responsible for 20,000 appraisal deliveries a day. She manages the daily operations of the division, the continuous additions of new features to Mercury Network, and the support of the growing client base. Jennifer can be reached at