Looking Back A Bit

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We can all agree that 2013 will go down in the record books as an interesting year. With so many memorable moments on social networks in 2013, you may have a hard time remembering them all.

Fortunately, the following infographic by Infographic Promotion captured many of them for you. Here’s a look at the major events in social media in 2013.

The year started with big news:

>> Vine, a social network dedicated solely to looping six-second videos, was launched.

>> Facebook announced its Graph Search, so users could search Facebook for specific questions, people, places, photos, and interests.

>> Google+ became the No. 2 social network site (in active users).

In February, 38% of Super Bowl ads had hashtags, up from the previous year’s 31%. Also, the original Harlem Shake resulted in more than 1.7 million other Harlem Shake videos being posted on YouTube.

Why is all of this important to you? Because it should show that this technology has gone mainstream. Everyone is social online these days. So, why not get that trend to pay off for your business? In the B2B world Facebook may not be the best outlet but Twitter and LinkedIn are very widely accepted and used in the B2B sector.

And if you still doubt the coming of age of social media, just look back at some of the high points last. Why is it important to do this? Because if you see what happened last year you’ll realize that you yourself know about a few of these events, and if you know about them that means that social media’s influence is growing and your peers probably are catching on, too.

Here are some highlights from last year’s posts on social networks. I bet a few will be very familiar. Check out the following infographic:


Unlocking The Value Of Documents And Data

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TME-Alec-CheungEver since the ESIGN Commerce Act of 2000, the mortgage industry has gradually adopted electronic signatures as a way to improve the efficiency of the mortgage transaction and to speed up the pace of commerce. No more waiting for mortgage documents to be sent via courier for paper signature. No more faxing of signed documents while originals followed in the mail. With the growing acceptance of electronic delivery and signature of documents, workflow has become more efficient, more secure and easier to monitor for status.

The mortgage industry has not yet completed its journey though. We still have not transitioned to a completely electronic workflow and the vision of a totally electronic mortgage has not been realized. There have been many real external barriers to progress. Not until last year did the IRS officially accept electronically signed documents for the request of tax transcripts; and as of this writing, the FHA has STILL not issued their formal guidance on the acceptance of electronically signed documents, though that is expected very soon.

Other impediments that are more industry-related remain as well. There is the matter of needing paper printouts for many county recordings and for investors. Because state laws vary so widely, legal experts will still often advise that it is safer to have the actual mortgage note in hard copy rather than in an electronically signed format. These obstacles will eventually fall as technology continues to improve, as early adopter banks prove that electronic formats are viable, and perhaps most importantly, as the Consumer Financial Protection Bureau takes up the mantle in 2014 of championing the eMortgage and forcing the necessary changes to make that a reality.

But there is also an additional hindrance, a more subtle one that if not recognized may in the end prove to be the most persistent because it is not caused by a lack of technology or an external constraint, but by the very way the mortgage industry has incrementally adopted electronic fulfillment. This hindrance has to do with the way banks deploy electronic delivery and signature as a series of add-on projects rather than as a holistic system that ties together the entire mortgage process.

Why does this matter? Because the mortgage workflow is a complex, multi-step process that involves many participants, is very document centric, and heavily reliant on the data within those documents to ensure quality, compliance and a positive customer experience.

When the delivery of documents and the exchange of crucial data within those documents is implemented merely as a feature to be added to process support systems, it results in a fragmented approach that is constrained by the very activities it was meant to support. There is in fact a sizable missed opportunity to leverage documents and data across the mortgage lifecycle from one participant to the next in order to better monitor compliance, to mitigate fraud, to enhance quality and to deliver a truly superior customer experience.

Siloed Approach to Delivery

To understand why this has happened, you have to look at how we arrived at our current state.  The adoption of electronic delivery and signature in mortgage has frequently been driven by a series of loosely related but nonetheless individual triggers.

The first of these is compliance. Banks often end up adopting electronic delivery and signature only when triggered by new regulations. Appraisal deliveries are a good example of this. When the CFPB stated that lenders would have to provide borrowers with copies of appraisals for all mortgages and not just higher-priced ones, it forced banks to prioritize the electronic delivery of appraisals as a high priority initiative in order to be able to meet the 3-day delivery time period mandated by regulation.

Overcoming legacy processes and a “the way it’s always been done” mentality is a second factor. Just because something is legal doesn’t always mean that businesses will change their processes right away. When they do change, it often comes one step at a time. It took the IRS till just last year to finally begin accepting electronically signed tax transcript request forms. This was just ONE form and though glad for the progress, it’s yet another example of how the migration to electronic delivery and signature has unfolded in a piecemeal fashion.

A third contributing factor is that there are multiple actors involved in transacting a mortgage, and each has its own systems. Lenders rely on loan origination systems. Title agents have their settlement software. Underwriters utilize title systems. Appraisers have appraisal systems and appraisal valuation models. Even income verification vendors for the IRS have their own proprietary systems. These are separate parties, with their own systems, their own buying behaviors and, therefore, they look at the adoption of electronic delivery and signature in their own way.

The last contributing factor is industry standards. This has more to do with data that documents, but it is equally important. It has taken many years for MISMO to achieve a broad level of acceptance as the de facto standard for exchanging mortgage data. Prior to MISMO, two parties that needed to pass data back and forth had to agree on a data exchange format themselves. It was much simpler to do so for very specifically defined data sets in relation to certain documents. With MISMO’s latest v3.1 standard, we now have a commonly accepted standard that will simplify and normalize data exchange for the benefit of all.

Put together, these various factors have resulted in electronic delivery and signature as a technology added onto to (or perhaps integrated into) existing systems. This assessment is not meant as a criticism. If anything, our industry deserves credit for recognizing problems and them methodically tackling them. We have been pragmatic about our approach if nothing else. It just so happens that as we look back, we can see that the end result is a mortgage process that is rather stitched together in terms of workflow and data exchange between multiple participants.

Single Delivery Platform

This uneven approach where electronic delivery is tied to individual systems means we have no opportunity to leverage delivery as an underlying process that can bring the entire mortgage lifecycle together in a more efficient and effective way. After all, the delivery of documents and the exchange of data within those documents is the one process that touches every participant in the mortgage lifecycle. That simple but fundamental insight bears repeating. From application to processing to underwriting to closing to post-close, documents and data are central to every step along the way. They are used to demonstrate compliance. They are analyzed to uncover risk. They are carefully designed to ensure an effective customer experience.

As a mortgage progresses through each phase, the value of the data that accompanies documents grows. During the application and processing phase, the lender sends the initial disclosure so the borrower can review and understand the loan she has applied for – how much she will pay in interest, her rights as a borrower, etc.

At closing, the lender sends the final approved loan package to the settlement agent. A common delivery platform is in the optimal position to compare the data from initial disclosures to final approved loan to corroborate that the loan the customer is getting matches the loan initially applied for and quoted to the borrower. This is an example of how documents and data from one loan phase can be valuable in the next loan phase.

Likewise, after close, the settlement agent can send a copy of the signed loan for delivery back to the lender. Again, with a common delivery platform for document and data exchange, the signed loan can be immediately compared to the approved loan to ensure discrepancies are within quality and regulatory tolerance. The automation and simplification of these checks – QM, RESPA, anti-predatory lending, etc. – can considerably speed up the time it takes for a lender to complete its processing. Faster processing means faster time to loan sale to investors, which directly and positively impacts bank revenue.

* * * * *

It is easy to think of the electronic delivery and signature of documents as an efficiency driver. E-signature vendors are partly to blame for this. It is much simpler to tout the advantages of e-signature independent of the kind of document or workflow you are supporting. Faster transactions. Better audit trails. Simple to use. These are all benefits that vendors typically advertise.

But the actual workflow process being supported is fundamentally important to the value proposition of electronic document delivery and signature. For complex, multi-step processes like mortgage lending that involve many participants, document delivery is the common component that ties many of the activities together.

Furthermore, the data that is accessed via document delivery can help a lender demonstrate compliance, better manage risk and deliver a superior customer experience. Full access to documents and document-related data puts lenders in a position to be able to substantiate that the loan the borrower applied for is consistent with the loan that was approved, with the loan that was actually signed at the closing table, and with the loan that was ultimately sold to investors.

You can achieve this by building numerous custom connections and integrations with the various systems that support the mortgage process, or you can choose a single delivery platform that already has the connectivity in place. One way or another, this will be needed, and it is something that lenders should begin to think about.

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Let’s Get Perspective

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Last year one of the big stories was that rates are going up. Why was this a big story? Because with rising rates, refinance activity will slow. With refinances slowing, that means that lenders will have to work harder to get more purchase money in the door. How much harder will lenders have to work? That depends.

“Mortgage rates have settled over the last few days in January, as we’re in-between market-moving events,” said HSH.com vice president Keith Gumbinger. “The soft December employment report is behind us; the next Fed meeting, where we may or may not get another cut in Treasury and MBS purchases is coming up. Investors are watching the incoming data closely for signals that the Fed will or won’t make a move, so interest rates are holding fairly steady at the moment.”

The Federal Reserve trimmed QE purchases by $10 billion at its December meeting, and outgoing Fed Chairman Ben Bernanke left a strong impression that the Fed would like to reduce purchases of MBS and Treasuries at a like amount over the next seven Fed meetings. However, the Fed has noted that the decision to do so is dependent upon whether the economy is performing satisfactorily, that the risks to inflation aren’t rising, and perhaps most important, that the program is still having the desired impact. With interest rates already well off their bottoms, it just may be that the program is no longer generating the economic heat that it once was, and there may not be much additional upward impact on mortgage rates if the taper continues at a measured pace.

“The Fed’s QE program certainly provided key and needed support for the housing markets, fostering sales, firming prices and reducing the number of underwater homeowners,” adds Gumbinger. “However, the economy may no longer need as much of this unusual support. Aside from refinancing, the housing market has done fairly well in the last half of 2013, even with mortgage rates a full percentage point or more above last May’s lows.”

So, let’s take a deep breadth and put things into perspective. Rates are going to rise. Refinance activity is going to lessen. Purchase business lenders will be successful. All of this is just our current and future reality. What confuses me is why this intimidates some lenders. Is it that they forgot how to do purchase loans? Of course not, even lenders that were heavy in refinances did some purchase lending. Doing purchase loans may not be as quick and easy as doing a refinance, but quick and easy isn’t going to work anymore. As the old saying goes, slow and steady wins the race.

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‘Dig’ These New Apps

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TME-LSichelmanThere are apps – as in mortgage applications – and then there are apps – as in application software designed to help perform specific tasks. And the real estate space abounds in new apps, the latter kind anyway.

The latest newsmaker is Zillow’s Digs, the site’s new remodeling estimator. The tool allows users to click through thousands of images of remodeled spaces and then provides a ballpark estimate of what it would cost to reproduce the project in their own homes. The photos are taken from the 110-million homes in Zillow’s vast database, while the estimates are generated by contractors and designers.

Outfits like the seven-year-old Zillow, which has three other popular online tools, including one that focuses on the mortgage market, get all the buzz because of their sheer size. But there are many others that, though just as useful, never get any “ink”

Here’s a few that haven’t received much publicity but may prove to be handy. Many were previewed at the recent Real Estate Connect conference in New York:

>> Hubzu – This online residential marketplace makes it easy for consumers, investors and brokers to buy and sell houses. From start to finish – that is, from searching and bidding to financing and closing – the app provides a totally online experience. Hubzu, from Altisource Portfolio Solutions in Atlanta, isn’t entirely new, having replaced the firm’s GoHoming platform more than a year ago.

>> Clipix – The brainchild of New Jersey’s own Oded Berkowitz, a former Wall Street exec, this free online tool allows shoppers to bookmark any link they find on the web to create a single destination for the short list of properties to their liking. The list can be viewed, edited and shared at any time, plus you can ask for price drop alerts to monitor price reductions. Beyond saving web links, Clipix can upload any document, creating a complete paperless real estate organizer.

>> HomeZada – This tool is a Daytimer for the home, tying together everything needed to manage the property. The flexible system runs from basic to complete, including an inventory of all your possessions, plans for home improvement projects, various home-centric spending categories, checklists for home maintenance and news and alerts. If you have more than one property, HomeZada can manage them all.

>> REESIO – With this app, there should be no more piles of paperwork. REESIO takes the pain out of the real estate transaction by simplifying the experience every step of the way. You can upload and save all documents, e-sign those which require a signature, and remind participants of what needs to be done next. The tool also allows agents to schedule showings and transmit offers for the seller’s approval or rejection.

>> Contactuality – This tool automatically and tactically manage the users’ contacts by promoting actions that help you remain relevant and top-of-mind. It will tell you who’s most important on your list of previous contacts and those you haven’t contacted in a specific amount of time. The system will prompt you when to reconnect and, using such clues as social updates and recent conversations, when it matters most to reach out.

>> BlockAvenue – Moving? Search neighborhoods, block by block, to find out what it’s really like to live there. Data will include amenities, wining and dining, schools, transit and crime. Using this neighborhood platform, you also can communicate directly with folks who already live in the area for their assessments, good or bad.

>> Sensopia – No longer the purview of just crime scene investigators and archeologists, this app measures and draws floor plans. Simply snap a shot of the corners of each room and MagicPlan measures walls and doors, identifies the shape of the room and draws a plan for each one. Then you can assembles rooms with your fingers and even add in some furniture for placement purposes.

>> Revestor – Billed as the “new way” to hunt for real estate, this patent-pending, “next generation” search engine allows investors and others to seek properties based on their highest return rates. Enter the location, price range and how you want to search, by either capitalization rate or cash flow.

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Change The Way You Think

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TME-RGudobbaOrganizations are facing a multitude of challenges forcing them into making more decisions, and faster, every day. The ability to recognize complex situations and resolve them is a critical skill. The best decision makers accept the challenge and face it head on rather than avoid it. Most of us believe we are capable and impartial decision makers. Unfortunately, the research indicates otherwise.

In ‘The Design of Business’, Roger Martin offers a compelling and provocative answer: we rely far too exclusively on analytical thinking, which merely refines current knowledge, producing small improvements to the status quo. To innovate and win, companies need design thinking. Roger Martin unveils a new way of thinking that balances the exploration of current knowledge (innovation) with the exploitation of current knowledge (efficiency) to regularly generate breakthroughs and create value for companies.

The Four Stages of Design Thinking: In ‘Designing for Growth’, Jeanne Liedtka and Tim Oglivielaid out a simple process for using Design Thinking. Whether your focus is growth, redesigning internal processes, launching new products or expanding into new markets, the basic methodology remains the same. The design thinking process examines four basic questions, which correspond to the four stages of Design Thinking. What is? Explores the current reality. What if? Envisions multiple options for a new and better future. What wows? Makes some choices about where to focus first and What works? Moves into the real world to interact with actual users through experiences.

Five Contributions Design Thinking has made to business. In the Fall, 2013 issue of Rotman Magazine, Jeanne Liedtka listed the following.

1. The Power of Re-framing: Design Thinking helps us ask better, deeper questions that expand the boundaries of the search itself. One of the most serious challenges we fac in our quest for innovation is our own impatience, which makes us rush to solve instead of taking the time to understand. Spending time at the front end of the process to explore the question and it’s context can pay big dividends in producing more effective solutions.

2. Collaboration. How many of us have been trapped in seemingly endless debates between ‘quant jocks’ and ‘intuitives’ or between those advocating the ‘customer case’ versus those insisting on the ‘business case’? Design thinking refuses to get caught up in debates and either/or thinking. Instead, it insists that we develop shared insights and ambitions before generating ideas, and that we use data from experiments (rather than theoritcal debates) to determine the most effective course of action.

3. Curation. Design thinking helps us to drill down to the essence of an issue and see what really matters. This is an increasingly important role in today’s environment. Wired magazine has announced that we have entered the “age of curation,” where we are “surrounded by too much music, too much software, too many websites, too many feeds,too many people, too many of their opinions and so on…” The problem: research demonstrates that too much information actually degrades the quality if our decisions. But it is unlikely that this information bombardment is going to let up. We predict that the future will place even more value on the ability of the design process to cut through complexity to find nuggets of wisdom.

4. Comfort with Emphasis. Design is comfortable with ’emptiness’ – with leaving space in the emergence of a solution so that many can contribute to it. Managers are often taught the importance of finishing something, making it complete; but artists and philosophers know better. “To finish a work?” Picasso said; “What nonsense! To finish it means to be through with it, to kill it, to rid it of its soul.” In organizations, employees want to be pa of works in progress, too, to feel the sense of discovery as it unfolds. Design thinking builds these possibilities into every step of the process.

5. Speed. The final contribution is an outcome of the previous three: when you combine the engagement and alinement that design’s affinity for collaboration and emptiness makes possible with skilled curation, you get another invaluable asset for any organization trying to move innovative ideas through bureaucracies: speed. Design’s ability to deliver engagement, alignment nd curation greatly enhances speed by removing the friction and subsequent drag created by trying to unite people with different views of the world around a new idea.

Design Thinking: Whatever label it goes by, this approach to problem solving is distinguished by a few key attributes:

>> It emphasizes the importance of discovery in advance of solution generalization using market research methodologies that are empathic and user-driven.

>> It works to expand the boundaries of both our problem definitions and our solutions.

>> It is enthusiastic about engaging partners in co-creation.

>>It is committed to conducting real-world experiments rather then running analyses using historical data.

Let’s explore this further by looking at a recent RFI (https://federalregister.gov/a/2013-31436). Specifically, the Consumer Financial Protection Bureau (CFPB) seeks information on key consumer “pain points” associated with mortgage closing and how those pain points might be addressed by market innovations and technology.

Consumers and Closing

1.)What are common problems or issues consumers face at closing? What parts of the closing process do consumers find confusing or overwhelming?

2.)Are there specific parts of the closing process that borrowers find particularly helpful?

3.)What do consumers remember about closing as related to the overall mortgage/home-buying process? What do consumers remember about closing?

4.)How long does the closing process usually take? Do borrowers feel that the time at the closing table was an appropriate amount of time? Is it too long? Too short? Just right?

5.)How empowered do consumers seem to feel at closing? Did they come to closing with questions? Did they review the forms beforehand? Did they know that they can request their documents in advance? Did they negotiate?

6.)What, if anything, have you found helps consumers understand the terms of the loan?

Errors and Changes at Closing

7.)What are some common errors you have seen at closing? How are these errors detected, if at all? Tell us about errors that were detected after closing.

8.)What changes, diverging from what was originally presented at closing, often surprise consumers at closing? How do consumers react to changes at closing?

Other Parties at Closing

9.)How, if at all, do consumers typically seek advice during closing? In person? By phone? Online?

10.)Where and to whom do consumers turn for advice during closing? Whom do they typically trust?

Closing Documents

11.)What documents do borrowers usually remember seeing? What documents they remember signing?

12.)What documents do consumers find particularly confusing?

13.)What resources do borrowers use to define unfamiliar terms of the loan?

Improving Closing

14.)What, if anything, would you change about the closing process to make it a better experience for consumers?

15.)What questions should consumers ask at closing? What are the most important pieces of information/documents for them to review?

16.)What is the single most important question a consumer should ask at closing?

17.)What is the single most important thing a consumer should do before coming to the closing table?

The CFPB has been very open and shows a strong willingness to collaborate with the mortgage industry in addressing consumer’s concerns. I encourage and challenge everyone to consider the Design Thinking concepts when formulating your response to the RFI. This is the time for some progressive ‘thinking outside the box’.

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AVMs: What You Don’t Know Can Cost You

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TME-PHuffIgnorance is not bliss —especially when it comes to business and the bottom line. Yet day in and day out, lenders are operating in the dark and losing dollars in the process. Last month, I wrote about the most common misconceptions about AVMs, also known as automated valuation models, the most commonly used collateral evaluation tools. AVM are being used over one billion times each month, and I estimate that hundreds of millions of those billions of AVMs are being used by lenders and servicers in the mortgage industry. But even considering these gargantuan proportions, most mortgage folks are surprisingly unaware of how big an impact AVMs can have on their bottom lines.

This month I’m going to cover three of the most common ways AVMs are being used today. And for those of you concerned with your bottom lines, I’ll get into the concrete details about how lenders and servicers are saving — or wasting — thousands of dollars or more each month, simply by the way they approach AVM suitability.

Accuracy Matters

One of the biggest misconceptions about AVMs is that they are inaccurate. Last month, we revealed the fact that standard error rates of AVMs are actually lower than those of traditional appraisals. While my aim is not to rank one form of evaluation above another, it is to point out that AVMs can be quite reliable and highly appropriate for lower risk activities and transactions. I’d also like to remind you that there is no benefit to using an unreliable tool, not where data and decisions are concerned. Accuracy matters.

This is a key point. When financial decisions are being made based on a reported dollar value, businesses need to ensure that the evaluation tools being used are producing the most accurate value possible. While this may seem like common sense, this is not the general practice being exercised in the mortgage industry when it comes to AVMs. Hundreds of millions of times each year, lenders and servicers are running AVMs without much thought as to the accuracy of the reported figures, and this haphazard approach is likely costing them more than they imagine.

The following are three of the most common ways that AVMs are being used by lenders and servicers today:

1) Mortgage Pre-qualifications

A lot of smart lenders are using AVMs in the pre-qualification process. As they’re taking a quick, cursory look at borrowers, they’re also taking a quick review of a property, to see if a deal is worth pursuing. AVMs are well-suited for this review. It takes just minutes to run an AVM, and if the right one is used, the results can be surprisingly accurate. However, if the AVM is not accurate, lenders are likely wasting money and missing valuable opportunities.

If an AVM comes in significantly below the property’s actual current value, lenders are missing opportunities in loans that can’t be made. Let’s say your average gross profit per loan is $4,000; even one lost customer a month can amount to nearly $50,000 in missed opportunities per year. If, however, the value comes in too high, lenders can invest valuable man-hours taking a loan through the process until an appraisal reveals that the transaction won’t go. Even at a pay rate of $25 per hour, a processor spending a mere four hours on a loan that will never fund is costing the company $100 on lost labor.

This situation might be understandable if an AVM returns a value of $200,000 and an appraisal comes in at $194,000, and it’s just enough to kill the deal. In cases like these, hopefully the loan officer informs the borrower that the value is tight and may not come in as needed. If, on the other hand, the appraised value comes in at $186,000, and there was clearly no reason to even run a full appraisal, chances are, you’re going to have a very upset borrower on your hands. Incidentally, in case you’re wondering, yes, there is a way to make sure that you have significantly fewer of those $200,000/$186,000 scenarios. That is absolutely within a lender’s control.  I’ll get to the details of how in a moment.

The Cost of Losing Trust

Back to the $200,000/$186,00 situation. There’s a more significant, long-term financial issue at hand here. Borrowers traditionally cover the cost of the appraisal, which is roughly $350 for the average non-FHA loan. From what I hear, borrowers don’t take very kindly to paying fees for a loan that has no possibility of being funded. While this is important for any lender to remember, credit unions, being the member-driven organizations that they are, might want to be particularly attuned to this.

There have been numerous studies of the costs of losing trust, and consequently losing a customer who feels he or she has been wronged.  Anecdotal evidence shows that a disgruntled customer will tell between eight and 16 people, with 10 percent telling more than 20. When you factor in the ease of communication and the viral nature of social media, the number increases exponentially. Even if they tell no one, 9 out of 10 unhappy customers will never purchase goods and services from you again. Not a good consequence when, according to Gartner Research, the cost of acquiring a customer is five times the rate of retaining existing ones.

2) Home Equity Lending

There are two ways that lenders use AVMs with home equity lending. The first is to value the property for a home equity loan or line of credit. The second is to evaluate the line after it has been issued to determine whether or not the property has enough value to support it. In other words, lenders often determine whether or not to increase, decrease or shut down a line of credit based on the borrower’s home equity.

Home equity lending requires that an evaluation must include a physical inspection of the subject property, but it does not require a full appraisal, so a lot of lenders opt to use AVMs in conjunction with a property inspection report. As with mortgage pre-qualifications, lenders can lose home equity business when they use AVMs that erroneously under-report the true value of a property. That can add up to losing literally thousands of dollars each year over the course of several years, since home equity lending brings a steady income stream for lenders. With variable rates that range from three or four percent to 11 or more percent, and a loan amount of $100,000, the lender stands to lose $2,000 to $10,000 or more each year, over the course of years, for every lost customer. Lose one customer a month and that number can jump up to $100,000 or more each year.

If the lender is using AVMs to evaluate its home equity portfolio, and that AVM erroneously over-values properties, that lender is at risk of losing the additional income generated by higher interest rates charged to borrowers for higher loan to value ratios. However, if an AVM erroneously under-values properties and the lender reduces or revokes a credit line, it could be losing out on the additional income from the increased line. What’s more, if a lender was negligent in selecting the AVM, and revoked a line without just cause — meaning it can’t prove how and why an AVM was deemed suitable — it puts itself at risk of not only noncompliance, but also litigation.

A Public Relations Nightmare

According to numerous news sources, including CBS, Bloomberg, ABC, and the Los Angeles Times, at least two of the country’s top lenders have been named in class action lawsuits for illegally freezing borrowers’ home equity lines, which according to some sources essentially violates part of the banks’ agreement for the bailout. Plaintiffs’ attorneys cite numerous experts who have stated that erroneous AVMs are at the root of the allegedly illegal actions.

While I am not here to deem an organization guilty or not guilty, I would like to point out the repercussions of this type of debacle. In addition to the hundreds of thousands of dollars in legal costs of defending a class action lawsuit, and the tens—if not hundreds—of millions of dollars a settlement could cost, there is the issue of the public relations nightmare that follows a disaster like this. While the big banks have legal teams and large PR firms to handle these types of issues, small shops, midsize lenders, community banks and credit unions do not. A class action lawsuit may or may not drag a lender into failure. At the very least, it can play a major role in the shortened lifespan and immediate profitability of an organization.

3) Portfolio Analysis 

Lenders and servicers are required by law to analyze their portfolios at least once per year. Most servicers conduct this analysis every six months, and most use AVMs for this type of analysis because they’re so cost- and time-efficient. However, there’s more to the story. Any business entity with a servicing portfolio is required by law to hold back anywhere from 20 to 50 – or in the case of home equity loans, 100 – percent of the value of their portfolios in liquid reserves. That figure is traditionally based on values derived from AVMs.

If a company values its portfolio too high, it is unnecessarily tying up valuable liquidity. To put a dollar figure on this, let’s say that the AVM you’re using returns values that are, on average, 15 percent higher than the properties’ actual value. For a portfolio valued at $50 million, you could be tying up an additional $7.5 million of funds that you are perfectly entitled to keep liquid. On the flip side of that coin, if the AVMs you’ve selected undervalue the properties in your portfolio, you are exposing yourself to the fees and fines associated with violating Basel III requirements. Portfolio analysis is a fine line with potentially severe financial consequences on either side. Your AVMs’ accuracy can tip the scale one way or the other, to the tune of anywhere from thousands to millions of dollars.

Accuracy Testing Pitfalls

As these dollar figures indicate, it’s critical to use the most suitable AVM if you want to reduce loss, maximize revenue and maintain existing customers. Most lenders and servicers do some type of accuracy testing, but chances are, they’re not using the most cost efficient means.

Some companies put AVM selection in the hands of the individual ordering the AVM. That’s not a good idea, because it’s virtually impossible for a human to be able to analyze AVMs well enough to rank each AVM sufficiently to build the most suitable cascade for a property. Others rely on their AVM providers to advise them in building their cascades, which is probably a slightly better solution, unless your AVM provider has an interest in one or more of the solutions it provides. Still others opt to use analysis companies that conduct in-depth research and accuracy testing for each of the AVMs that the lender or servicer uses. While this is certainly a better option than a staff member or AVM provider, it can be expensive and time consuming. These reports cost $50,000 to $60,000 a piece and are generally done quarterly, which brings the annual cost to $200,000 to $240,000 or more per year. And because they’re generally produced by actual humans, you can expect a wait time of roughly six weeks.

Your best choice is to use a technology designed specifically to be flexible in determining AVM suitability, like Platinum’s OptiVal, which can determine the most suitable AVM cascade in minutes. Whichever technology you choose, make sure to use a flexible technology, one that can factor in risk factors like loan to value, type of transaction, and borrower’s credit score. Each AVM is going to function differently for different properties.  There’s no such thing as a one size fits all AVM. The difference between using the most suitable AVM and the least could be vast, as can the difference between using the most and least suitable appraiser. An appraiser that specializes in Des Moines properties couldn’t produce an accurate value for a property in Brooklyn the way one who specializes in the area could.

Stop the Loss

It’s easy to underestimate the role that AVMs can play in a company’s profits and loss. With their low cost and speed, a lot of folks jump to the conclusion that AVMs couldn’t possibly have much impact on the bottom line. But they can and they do. It’s time to get out of the dark. AVMs are the mortgage industry’s most commonly used collateral valuation tools, bar none. But, used improperly, AVMs can do more harm than good. In fact, I believe AVMs are slowly, methodically draining profits for virtually every lender and servicer in our industry, to the tune of thousands of dollars each year. And that’s simply because lenders and servicers have a haphazard approach to AVM suitability and selection.

Accuracy certainly matters when using AVMs. In the mortgage industry, virtually every lending decision is hinged on collateral value. We can’t fool ourselves into thinking there are any cases where accuracy is not an issue, when in fact, inaccurate AVMs can lead to losses as subtle as missed opportunities or as dramatic as compliance violations, lawsuits and tied up liquidity.  Public relations disasters and reputational risk are harder to measure, but can end up being extremely expensive for lenders and servicers.

It’s time to stop the loss and start taking AVMs seriously. Unless of course, your organization has tens of thousands of dollars to waste each year.

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Borrowers And The CFPB Requirements

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Photography by: ©Michael B. LloydTME-Barbara-PerinoThe Consumer Federal Protection Agency has as its primary purpose protecting the consumer from high risk and unfair practices in consumer lending. In other words they are issuing rules and regulations to lenders that protect the consumer from economic loss or other injury as a result of a violation of Federal consumer financial law. As a result mortgage lenders have been inundated with new consumer disclosures, requirements and calculations. As of January 10th, lenders and all related entities involved in the loan origination process must meet certain parameters in order to ensure that the loan underwriting and fees meet the CFPB requirements. While the concern in protecting the consumers is an admirable one, there is no one that was in the business from the late 1990s to 2008 who does not understand that the consumers were also part of the problem. So if lenders and related entities are dealing with the ramifications, isn’t it fair that we ask what is being addressed with the consumers?

In looking back there were three major problems that were the primary consumer involvement issues. The first of these was the general run-up in housing prices. Consumers were frenzied at this time with the opportunities associated with selling their properties. Since home values had escalated so much homeowners saw this as time to sell and then use the proceeds to buy the next, bigger and better house. Most never worried about paying the mortgage since with housing prices rising so fast, they could always refinance or sell. Many consumers also became enamored of the idea of becoming a rich real estate investor and were seeking out properties which they could buy, fix-up or not, wait 6 months and sell for a nice profit.

Then there were those consumers who just didn’t really understand the process and didn’t take the time to read the documents or ask questions. These individuals, whether it their first foray into the world of mortgages or their tenth, just wanted to get a house where the mortgage payments were affordable. They really didn’t understand negative amortization or other financial language, nor did they read any of the disclosures that were provided over and over to them. All they wanted was to get into the homeownership arena. The rest would work itself out.

Finally, there were those consumers who took advantage of the products that were being offered and basically used the stated income application process to secure loans on false information. While there is controversy over who all was involved in the deception, there is no doubt that many of these borrowers were aware of and had agreed to submit the false information.

Addressing these issues is not necessarily the role or the responsibility of the CFPB, but they have included in the new regulations requirements that address the need for borrower awareness and education. The new requirements are primarily for first time homebuyers who are using high cost financing to obtain a mortgage. For these loans a High Cost Mortgage Certification of Homeownership counseling is required. The counseling cannot begin until after the applicants have received their RESPA disclosures and the counseling cannot be performed by an affiliate of the creditor.

If the loan is subject to RESPA then the lender must supply a list of homeownership counseling organizations to the borrower within three days of application. In other words, this new document must be considered one of the initial disclosures provided at time of application.

Other than these requirements, the consumer issues are left to loan originators to handle. In order to gather information on how to make sure the consumer understands the loan program they are entering into as well as ensuring the consequences of supplying fraudulent information, we asked several loan officers to give us some of the tips and techniques they use in their day to day meetings with potential borrowers.

Bob Clinton, a Senior Mortgage Banker at Group One Mortgage in South Florida willingly shared how he builds trusting, strong relationships with his borrowers. “It’s all about transparency and open, clear communication”, he offered. He also advised that the loan officer should “ask questions, questions and more questions.” Bob believes that the relationship between the borrower and the lender should be one of trust, building a strong relationship, being honest and clear on communication. He sees the role as an advisor/guide to the borrower. “It’s the responsibility of the loan officer to compile a list of questions to ask of the borrower as the loan process moves along. The expectations of the borrower and the expectations of the loan officer need to match.  People want to be informed and like to do business with people they like and they trust. The best customers are referrals who are expecting the same level of professionalism and trust they have with who referred them,” summarizes his overall thoughts on the subject.

Other loan officers shared that making the consumer aware that complete information for the pre-approval process has to be provided by the borrower and is best done as soon as possible. Knowing that they will need to provide complete tax documents and/or income documents for all their employment precludes surprises later on in the process.  Stressing the importance of providing accurate and complete information when discussing this with applicants was reiterated by several loan officers we talked to.   If a borrower is self-employed they need to explain exactly what it is that their company does; in other words what are their products and services. They have to disclose any side businesses they are involved in as well, even if it is not their primary business.  Letting self-employed borrowers know how they are evaluated and how their income will be calculated will go a long way in helping them understand why so much information is needed.

Borrowers also need to understand what they are obligating themselves to by thoroughly reviewing the loan documents. It is especially important that they read the initial disclosures including the revised TIL/GFE document. They should make notes of items they do not understand or language they are not familiar with and either get the loan officer to explain it or hire an attorney familiar with mortgage lending.

Realtors have a responsibility in the transaction as well. They must focus on giving the borrower feedback on their qualifications and helping them with a plan that can get them approved for a loan. Steering buyers to homes in which they are not qualified just for a bigger commission is not appropriate or helpful to the borrower or lender. The Realtor can’t just be a listing agent or buyer’s representative. They too have responsibility in helping the borrower get into the residence they want and can afford to buy seeing themselves as a partner with the mortgage company and ensuring the borrower is educated and aware of the obligation they are undertaking.

The loan officers we talked to strongly emphasized that surprises later on in the loan process have to be avoided. Loan files having to be re-submitted, delays in the closing process, lost deposits and additional scrutiny on the loan file are consequences of not doing the job right in the first place. The homebuyer needs to understand their contract. To understand the contract, they need to read it through thoroughly and hire a quality, trusted attorney who will represent them. Signing the documents before hiring an attorney is too late. They need to have a relationship with an attorney to get good advice before the closing.

Loan officer Bob Clinton also shared that loan officers need to probe the borrower with questions and help them through the process by consulting and educating them. “It is critical that the loan officer sees him or herself as an advisor and not just someone selling them a loan,” he offered.

One of the more recent issues faced by many loan officers is dealing with buyers who are part of the millennial generation. These Gen Y borrowers tend to rely on communication through text messaging which can also be a problem if the loan officer isn’t use to texting. To address this Bob asks his borrowers what method of communication they prefer. This way he knows upfront how best to reach out to them. One issue that may make the communication and education process more complex is that the millennial generation are very confident buyers, very busy in their day-to-day lives and want the information sent the fastest method possible. In response they want to provide information as quickly as possible even if it isn’t what was needed. A good example is bank statements. When asked for these, they typically send bank transaction pages. It is only after the requirement and need for full bank statements is explained to them that they finally send the statements.

The loan officers we talked to also go beyond just the specifics of the loan application. Most of the time they explain other aspects of the process as well. For example, they may explain the need for a loan preapproval and how it impacts the buyers’ ability to get the home they want. Another area that has always been left out of these conversations is the reason behind title work and how it can protect them as well as the lender if they choose. Understanding how  and why the survey is done, the need for homeowners insurance and the impact of escrows on their overall payment is important information, especially for first time borrowers. Good loan officers also go over the appraisal report answering questions and helping the borrowers understand what that number really means. Of course, the need for explaining what cash is needed for the closing and the fees charged is of vital importance and can be wrapped into the explanation of the TILA/GFE disclosure. Helping applicants understand the responsibilities of the lender and the realtor and what part each plays in the process is often confusing and a good loan officer fills in that information as well.

Overall, the loan officer provides a tremendous amount of information and is the applicants’ best source of knowledge for the borrowers. To sum it up, Bob stated, “if borrowers want a happy experience, they need to find a loan officer who is going to build a long-term relationship and offer them good advice.”

At the end of the day, being the lender means that we have voluntarily taken on the responsibility of ensuring that our customers, the consumers understand their loans and their responsibilities as well as monitoring their information to ensure its accuracy. While some may see this as a burden, there is a huge opportunity for the lenders. They can become partners with borrowers and realtors while educating them on all aspects of good quality lending practices as well as ensure that the regulation requirements take hold in all facets of the industry. There are huge business opportunities for the lending community to be involved in the education process for the borrowers and realtors; a value-added service that will increase business and relationships for the lenders who embrace this opportunity.

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Is Social Media Marketing A Waste Of Time?

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TME-PHhallOver the past several years, a small army of self-proclaimed marketing experts flooded the Internet with an infinite amount of tips on how companies can secure golden results via social media marketing. But looking back on this endless stream of social media marketing suggestions, it is hard not to notice a surplus of advice but a deficit of results.

If you don’t believe me, let me ask you: how many sales can you directly attribute to Facebook, Twitter and the other social media sites? If you try to count the number on your hands and still wind up with 10 fingers, don’t feel bad – you’re not alone, and it is not really your fault.

Part of the problem is that social media was never intended as a B2B marketing vehicle. Systems and set-ups designed to entertain a select number of college dorm denizens somehow morphed into digital monsters that took over the communications world, with nary a consideration on how a corporate chief marketing officer could monetize the experience. And another part of the problem is that social media is game where the rules seem to change every few days. Websites that once reigned supreme are now entombed in oblivion under layers of digital dust, while new sites with peculiar protocol – most notably, Vine with its six-second video presentation – emerge with the speed and irritation of a skin rash.

Anyone in charge of marketing could easily spend their entire workday and most of their free time posting, following, tweeting, liking and monitoring the multitude of social media sites. And those with a propensity for soul-crushing self-doubt could easily spend hours pondering whether it is a mistake to ignore Flickr in lieu of Tumblr or to bypass Google+ in favor of Reddit. Indeed, many marketers find themselves running faster and faster out of fear of permanently falling behind their competitors.

While tools exist to measure hits and clicks and web traffic on social media sites, the ability to justify a meaty ROI via social media marketing still remains elusive. One problem might be that hype has overtaken reality in regard to this sector. For example, many marketing experts can bloviate endlessly on the importance of Twitter as a B2B tool. Yet a 2012 study by the Pew Internet and American Life Project found only 15% of Americans ever use Twitter, while only 8% use it on a daily basis. Thus, one needs to question whether the excessive amount of focus on Twitter is justified when the overwhelming majority of Americans never bother to look at the site, let alone use it.

For the real estate finance world, this issue becomes thorny due to ominous projections of a lethal drop in home loan originations for this year. The obvious response to this dilemma, according to the marketing gurus, would be a more aggressive approach to the potential demographics lurking on social media sites. But, at the end of the day, how many Facebook postings will it take to drive up sales volume to the point where a company can stay profitable in this challenging environment?

My two-cent deposit: I believe that social media marketing serves some purpose for the real estate finance world – and, in many cases, for other segments of the B2B sphere. But it should not be a major aspect of the sales and marketing strategy, and it would be wrong to place too much emphasis on the power of Facebook, Twitter, LinkedIn, Pinterest, Stumbleupon and the rest of those sites.

Instead, I firmly believe that the real power in today’s marketing is not online, but in the people who are tasked to reinforce the bottom line. In today’s economy, the primary focus should be on assembling a team of professionals that take their work seriously and are able to deliver results that are above and beyond their requirements.

Companies do not stumble and fail because of wobbly and inadequate marketing. They meet their fate because of wobbly and inadequate people that do not handle their tasks with competence. And those individuals can only stay in a job if they work for managers and employers that make lame excuses for their bumbling and delude themselves into believing that subpar work is acceptable.

I am not suggesting that social media marketing should be ignored. My main concern is that no amount of intensive promotional messaging can possibly compensate for the damage that will be done by employing dum-dums. The companies that will emerge at the end of this year with healthy returns will be those that appreciate the value of high-quality people.

Remember, folks, the secret to winning is not what you have online, but who you have on your staff.

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Safeguard Your Loans

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TME-Gregg-LehmanMortgage lenders are now operating in an altered lending environment, thanks to an onslaught of new regulatory requirements that mandate audit trails for virtually all lending decisions, complaint resolutions and life-of-loan interactions. These increasingly complex requirements are not adequately supported by traditional lending processes and business models. Financial institutions must now determine how to both streamline and safeguard compliance, and those that place loan quality and risk management at the center of their operations using an automated loan completion approach will be the ones to achieve a winning outcome.

Loan completion, the final process step to confidently creating a saleable loan unit, can be viewed as a new discipline in lending that leverages automation to track and control quality through continuous life-of-loan management. This approach includes the data transparency and audit trails necessary to support loan quality, loan servicing and loss mitigation. Many financial institutions are using technology to bring disparate systems manually tied together ever-larger excel spreadsheets and complicated process flows to manage data quality and secure access loan data and documents through origination, servicing and sale on the secondary market. What is required is a strategic focus on loan completion to reduce processing steps, costs and ensure quality throughout a loan’s lifecycle.

Traditional Lending Practices ended in 2010. Why won’t traditional lending practices work now? Lending has traditionally followed a linear model, which means there is a different team managing each operational step and little back-office integration. As a result, lending operations must cobble together information from a variety of systems and technology silos to prove that loan information is accurate, loan decisions have been fair, lender actions have been compliant and that all documentation is in place to sell the loan asset on the secondary market. Evidence that a lender is attempting to follow outmoded processes are the hiring of more FTE’s, temporary workers, more meetings and more spreadsheets and checklists. This approach increases lending costs to the point where many wonder why they are still in the business.

The biggest impact on lending practices has been new consumer protection and non-performing loan regulations, which were enacted in the last two years to track loans in foreclosure or near-default. Dodd Frank reform has tasked lenders with performing additional institutional examinations and the Consumer Financial Protection Bureau (CFPB) now requires lenders to document every complaint and resolution.

To keep pace, lenders have had to increase staff and functionality, adding to the complexity of systems and processes that lenders need to be compliant. Compliance is exponentially more difficult when different technology platforms or third-party systems are factored in. This complex concept of technology, process and compliance is codified by the CFPB in its discussion of the “Compliance Management System” mandate for January 2014.

When it comes to acquiring and selling assets on the secondary market, transparency is the most critical piece of the puzzle. The Private Mortgage Investment Act protects investors by requiring standardization and uniformity of mortgage securitization, transparency into all aspects of the securitization, and adherence to the rule of law.

The act encourages robust private investment in the U.S. mortgage market and as a result, has exerted added pressure on lenders’ Post-Closing area. These time-consuming processes are typically not automated, which forces lenders to use reams of paper and piece together workflows.

Asset quality begins with the loan origination process. To ensure loans are compliant from the start, lenders should focus on efficient data processing, automated task routing and process tracking. This stage is all about cost, time-to-close, collaboration, transparency, error discovery and correction, and overall data accuracy ? drivers that affect the lender’s ability to originate “clean” sales to the secondary mortgage markets.

Secondary market demand is forcing lenders to seek out quality assurance processes that speed time to market. However, in today’s multi-platform and manual processing environments – where quality control is challenged by data discrepancies and compounded by human error – speeding up the process may only exacerbate the situation.

Some lenders continue to struggle with the reality of loan buybacks in the secondary market, often a result of poor loan quality due to lax underwriting and document management. To improve the quality of mortgage portfolios, many lenders establish strong quality review workflows that identify problems sooner, and reduce risk and exposure. Multiple technology platforms, disjointed processes and multiple lending systems make this process much more difficult.

Loan servicers may struggle with integration and support, especially those that rely on systems beyond their servicing system of record or use add-on systems. Today, it’s critical to have transparency into reviews for acquisition/sale, early default, pre-foreclosure and payoff, as well as loan modification document routing. Tracking workflows and loan-level events across multiple systems is more challenging, but each step – loan origination, processing, post-close, delivery and servicing – must be scrutinized.

The right technology approach can mitigate risk, offset expenses, and improve quality control and customer satisfaction. A loan completion system automates loan quality processes into origination, servicing, loss mitigation and secondary marketing workflows.

Lenders need an effective loan completion system that goes beyond enterprise content management to capture point-in-time origination, related loan documents, and servicing and loan disposition events. A quality, auditable system also facilitates information sharing by making it possible to view and compare multiple loan documents and records from a single view.

PrintAutomating loan quality ensures that individual steps within the life-of-loan process are definable and traceable, and that loan data meets all quality standards and regulatory requirements. The loan completion system should be flexible and configurable so that lenders can design their loan completion processes to meet ever-changing regulatory demands and specific institutional needs.

There are five vital components of automated loan completion:

1.)Contextual Capture: Keyword data is extracted from scanned documents utilizing zonal OCR, intelligent templates, automated indexing and full document recognition

2.)Track: Automation tracks and reacts to maximize the consumer experience and minimize timelines

3.)Review: Processes support compliance and provide loan level data, remotely viewable documents, standardized packaging, pool reviews and electronic delivery

4.)Confirm: Quality controls are integrated into the pre-close audit, post-close audit, data validation and overall document readiness

5.)Deliver: Final validation and documentation are provided, including delivery of the completed loan document(s) to the correct destinations

Thriving in today’s lending space requires a centralized approach for managing loan quality and risk. Financial institutions that implement loan completion solutions will fortify overall lending and be positioned as industry leaders. Strategically using technology for loan quality assurance tool will help organizations overcome systems limitations, leverage secondary market opportunity, avoid compliance issues and enhance the life-of-loan experience for borrowers.

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You Just Have To Do It

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TME-TGarritanoLet me tell you a story. I’m a married man with two sons. If you read this column regularly, you might feel like you know my family because I talk about them often. Guess what, I have another family story to share with you.

Right now we have a little Yorkshire Terrier. He’s little in stature and big in personality. He rules over the house demanding everything from food, to teats, to regular belly rubs. My wife and my youngest son have decided that having one dog isn’t enough. Being that I’m the one that is saddled with doing most of the work associated with the dog we have, I wasn’t easily swayed. I had to be convinced.

However, in the end, I caved to popular demand. As of this writing, the dog is on the way. He’s an 11-week old Maltese. I have to confess, he’s pretty cute. Now I’m prepping the house and getting as much sleep as possible in preparation for the new edition. Why am I telling you this story? Getting a new dog, especially a puppy, is a big transition. At first I wasn’t open to the idea, but after seeing how much my family wanted this puppy, I’m now very excited to welcome him to the family.

Looking back, I wasn’t too happy to get our current dog. I thought to myself, this is going to be an added burden. Now, I can’t imagine the house without him. I know this new dog will bring just as much joy. I think lenders often feel the same way about leaving behind paper processes in favor of automation. They see the paper processes as comfortable and the new technology needed to eliminate them as a burden. In the end, though, once you get that new technology you find that it brings huge benefits.

“Automation in general is going to create the opportunity to do more,” said Brian D. Lynch, the founder and president of Irvine, Calif. -based Advantage Systems. “In our world, which is the accounting world, if people are bogged down doing transactions just to get month-end work done, they really don’t have the time to analyze those transactions. With the automation capability in our system we’re importing transactions and we relieve the burden from people. People shouldn’t have to go through each file. In the end, automation gives them a chance to do more in terms of analyzing the data, looking at profitability by loan, by loan type, by loan officer. It just opens the door to do a lot more.”

Advantage Systems is a provider of accounting and contract management tools for the mortgage banking and real estate development industries. In this position Lynch is responsible for managing the company’s day-to-day operations, and guiding the company’s strategic direction. Lynch has more than 30 years of experience in the accounting industry.

Prior to founding Advantage Systems, he worked as an auditor for Arthur Young & Co., an international public accounting firm, and as a senior internal auditor with SmithKline Beckman, a multi-national pharmaceutical firm. After joining a consulting firm that provides computer software and hardware solutions, Lynch became involved with the CONTRACK software package to handle project management and accounting needs of real estate developers. Lynch formed Advantage Systems in 1986 to market CONTRACK. The solution was tailored in 1991 to meet the loan-level accounting needs of the mortgage banking industry, thus creating Accounting for Mortgage Bankers (AMB).

“If you have a systematic and automated approach then you have a degree of consistency that you can rely on,” Lynch argues. “I think as a business manager, having the competence that those areas are taken care of is a huge relief, then you have a lot more confidence in the system. On the cost side, again for the accounting world that I live in, without automation you’d be looking at much increased audit costs. The cost it takes to audit with the labor-intensive approach where you’re using a spreadsheet is much greater than if you had a systematic approach.”

“When I think about automation, I think about the obvious pick up and efficiency and compliance benefits,” added Sanjeev Malaney, co-founder and chief executive officer for Capsilon. “Technology standardizes your processes and makes more predictable output and a more predictable result for your business. We speak often to the operational efficiencies that we can create. But I think in today’s market, with more lenders chasing fewer deals, I think the opportunity cost is really where they need to focus on. If somebody can fund a loan in an hour versus two days, you are never going to be able to garner any market share.”

Capsilon is a provider of cloud-based document sharing, imaging and collaboration solutions for businesses. Capsilon’s technology facilitates both internal and external collaboration by connecting virtual workspaces and enabling transaction participants to work together in real-time, reducing the time and cost associated with paper and electronic alternatives.

In January 2013, Capsilon acquired DocVelocity, a document imaging distributor of Capsilon’s technology, from Flagstar Bancorp. Following the acquisition, the company adopted the DocVelocity name for its imaging system. Capsilon has continued to update DocVelocity to provide increased productivity and flexible access for customers. The updates offered throughout last year included batch delivery of loan packages to investors and service providers, improved performance and automatic updates for the Desktop App and camera capture for the DocVelocity Mobile App. In addition, Capsilon now offers users of DocVelocity access to a variety of educational classes designed to train them how to more successfully manage and process their mortgage documents.

Capsilon introduced new Network Delivery capabilities that enable DocVelocity users to deliver secure and compliant loan packages to leading GSEs and financial institutions in December 2013. Lenders can deliver a single loan package or a group for batch delivery to Chase, Citibank, Flagstar Bank, Wells Fargo Bank, Fannie Mae, Freddie Mac and the Federal Housing Authority according to their prescribed formats and protocols. The company also opened new offices in Troy, Mich. and Irvine, Calif. to better manage growth.

The reason why good vendors are growing is because they are introducing new forms of automation that lenders are adopting with huge success. For example, lenders are finding huge ROI associated with mobile computing, says Brad Durrer, mortgage operations manager at Wipro Gallagher Solutions, which provides end-to-end lending solutions to financial institutions.

“We find more and more mobility access is paying off for lenders. We’re working that into secure connections within the loan origination process,” reported Durrer. “Providing our customers the ability to have mobility solutions that they can funnel out either through their loan officers, or through to their customers in general is one area where we’re finding automation is an advantage for our customers today.

“Lenders need consistency across the entire value chain, whether that’s with buys backs and secondary marketing or whether it’s just in your operations. You just have to automate.”

And if lenders don’t automate, they’re losing out during a time in the history of the mortgage business where you just can’t afford to lose out.

“If lenders choose not to automate, they’re losing out on the efficiency,” noted Walt Thomasson, the managing director of College Station, Texas-based Rentsys Recovery Services. “Lenders are limited in resources, so the more efficient that you can become using technology and software to automate these processes, the company just becomes better.”

Rentsys Recovery Services is a provider of a provider of disaster recovery services for banks, credit unions, mortgage lenders and other organizations. In his position, Thomasson is responsible for providing the strategic direction of the company. Thomasson has more than 21 years of experience in the information technology industry, and founded the company in 1995 to offer organizations with a complete range of disaster recovery solutions.

“You need to take a step back and really think about your process,” concluded Thomasson. “Leadership really has to step up and let the experts that are there run through their processes and training to look for improvement. If you don’t have that culture in place, you probably don’t’ have the tools in place to handle the problems that will undoubtedly arise.”

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