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Using A Legacy LOS In The Cloud Is Costly

You get what you pay for, the saying goes. But in our industry this rule doesn’t always apply—especially when it comes to loan production. Today’s lenders have made major investments in producing high quality loans and improving the borrower experience. Yet, too often, they don’t receive the results they expected.  

This is particularly frustrating given the current lending environment. For lenders, producing high quality, compliant loans designed to meet federal and state mandates and investor requirements has meant adding staff to review loan files for accuracy and completeness. In fact, loan production costs are at all-time highs because of the new rules of the road. Higher rates and a cooling housing market have only exacerbated this situation. 


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Meeting the demands of today’s mortgage borrower and providing great customer service have also come at a premium. This is true in spite of rapid adoption of new fintech solutions designed to make the mortgage process simpler for consumers. While these tools make the mortgage process easier in many ways, they are often poorly integrated with a lender’s back end technologies, pushing manufacturing costs even higher.

Every lender wants to provide a better customer experience and lower their costs, but limited options appear to make attaining both goals impossible. Yet, they actually are achievable. A quiet revolution is taking place in mortgage production that is reversing this all-to-familiar predicament—and it’s all happening in the cloud. 


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A Revolution Driven by Millennials

Clearly, Millennials are behind the mortgage industry’s most important advancements in customer service. They’re the ones who literally grew up with computers all around them, even in their back pockets, and they’re the ones driving demand for more convenience and simplicity. They’re also the ones increasingly driving the housing market. 

According to Realtor.com,  Millennials accounted for 45 percent of all new mortgages by the end of 2018, compared to 36 percent for Generation X buyers and 17 percent for Baby Boomers. In order to better serve this growing market, lenders are swarming to do-it-yourself websites and mobile apps designed to give borrowers a simpler, more convenient way to get a mortgage. And they are making it easier in many ways.  


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Another driving factor behind this “new normal” in mortgage customer service is that the lender, not the real estate agent, is now the first point of contact for most homebuyers. Most consumers are well aware that it’s not easy to qualify for a mortgage. They know there is no point in calling a real estate agent or even looking at homes until they are sure they can afford to buy, so they are more likely to look first at financing. This puts lenders behind the wheel in the homebuying transaction. The problem is how to take the borrower to where they want to go. 

Because they are so comfortable with technology, Millennials are more likely to research and shop for mortgages online long before they are willing or even interested in speaking with a lender. In response, lenders have adopted consumer-direct tools such as self-driven borrower websites, automated asset and income verifications, and credit services that let borrowers find out their FICO scores and determine what they can afford to buy. 


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These technologies are available on a wider number of platforms than ever before. Borrowers today can literally research, qualify, apply for a mortgage and sign disclosure documents while sipping a latte at their local Starbucks. Therefore the potential for excellent customer service is evident. So is the potential for saving costs, since borrowers are able to do more of the legwork of getting qualifying and approved for loans. So what’s the problem? 

The problem is that this whiz-bang mortgage experience doesn’t last because it only exists on the front end of the transaction. Behind the scenes, lenders are still struggling with legacy technologies that hamper production efficiency. This is because borrowers and lenders are still using different technologies to create the same loan, when both sides should really be using the same system. That’s where the magic of a platform built in the cloud enters the picture. 

More Cloud, Lower Costs

To be sure, cloud technology is not a new concept for our industry. Instead of hosting their own servers and data centers, the vast majority are leveraging cloud environments for their data storage needs. Unfortunately, however, the cloud isn’t being properly leveraged to create a faster, more efficient mortgage production process. That’s because most lenders continue to place their trust in legacy loan origination systems that were never designed for a cloud environment. They can’t integrate easily with many newer technologies, and weren’t built for consumers for use. 

On the other hand, new mortgage platforms that have recently come into the market are built with modern technology and designed from the start for a cloud environment. They’re capable of leveraging an unlimited number of software integrations, and they’re also able to handle multiple lines of business, including wholesale and  correspondent lines, traditional retail and  consumer-direct business. Most importantly, they can be used by borrowers to apply for loans using a common web browsers or even mobile apps.   

While it is true that several traditional LOS solutions are now being migrated to cloud environments, they are still tethered to their legacy technologies—in other words, they cannot simply scratch everything and start over. Even as they shift to the cloud, they still have to support their legacy systems. That comes at a cost that is inevitably passed onto clients. 

According to a recent MBA study, approximately 80 percent of a lender’s costs to originate a loan is tied to human staff, while roughly 10 percent is spent on technology. With a cloud-based mortgage platform that is capable of automating more pieces of the loan process, however, lenders can start making serious dents in these costs. The beauty of a cloud-based mortgage platform lies in its ability to improve process automation at practically every stage of the loan production process. 

These new platforms do not require lengthy, complicated and ultimately costly integrations that require site visits and repeated testing and retesting. Because they are built in the cloud with modern technology and flexible application programming interfaces (APIs), they are able to make interoperability between third-party technologies completely seamless. These third-party technologies can include credit reporting services, pricing engines and document services and many more. As a result, lenders are able to automate various steps in the loan production process and deliver a totally end-to-end mortgage experience at a lower cost. 

For example, cloud-built platforms are able to integrate software that provides real-time fees from thousands of different service providers, which can be used to populate loan disclosures. This allows lenders to manage an endless supply of accurate closing cost data, so that lenders no longer have to verify fees for accuracy by hand.If there is a change to any loan data, the fees can be instantly recalculated and repopulated throughout the loan file, reducing costs even further. Performed manually, these tasks could easily take an hour or more. When automated, they just take a second. 

No Better Time Than Now

Of course, lenders could build a cloud-based mortgage platform themselves. But very few lenders have the staff resources, the technology expertise or the necessary capital on hand to make this happen. On the other hand, there are new mortgage platforms that have already been built that can be customized to fit a business’ needs at a fraction of what it costs to build such a system in-house.

Today’s new breed of mortgage platforms also cost about the same or less than any legacy mortgage production platforms on the market today. And they pay the cost several times over by reducing manual tasks, such as collecting borrower documents or using staff resources on “stare and compare” methods of reviewing loan documents for accuracy.  

The only obstacle for lenders, it seems, is leaving behind technology that manages to get the job done—even if a better way is possible. And I get it. It’s a pretty big deal to put aside technology that the vast majority of our industry still relies on. After all, many American households – roughly 46 percent – still have landline telephones, according to a National Center for Health Statistics survey. But those numbers are dropping fast, because better technology exists. Better technology exists in our industry, too. And with so much at stake – especially with soaring loan production costs and Millennials poised to drive the future real estate market – there is no better time to use it.  

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Automating Loan Workflows With Perfected Data

Capsilon, a provider of digital mortgage solutions, has partnered with Blue Sage, a browser-based, end-to-end mortgage platform, to automate key steps in the loan origination process. 


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As a result of the partnership, Capsilon’s patented document recognition and data extraction technologies have been integrated into the Blue Sage Digital Lending Platform to help mortgage lenders of all sizes drive down origination costs and improve customer satisfaction. The integration with Capsilon is made possible through Blue Sage’s unique application programming interfaces, or APIs, which make interoperability between third-party technology providers completely seamless.


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Capsilon IQ captures and perfects mortgage data from any source, eliminating manual data entry and comparison, and enabling automation with complete, accurate information. The Capsilon IQ platform helps lenders to speed up loan intake and reduce the manual work typically associated with handling inbound documents and data, so they can redeploy staff on more valuable tasks. 


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“We are very excited to partner with Blue Sage, as it represents the cutting edge of today’s mortgage origination technology,” said Sanjeev Malaney, CEO of Capsilon. “Blue Sage and Capsilon also share a common goal—to help drive down origination costs  while helping our mutual customers take on more volume, scale appropriately and create key competitive advantages that drive their business growth.” 


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The Blue Sage Digital Lending Platform is a browser-based, highly scalable solution capable of supporting any mortgage channel, including retail, wholesale and correspondent lines of business. Built, managed and delivered through a cloud environment, Blue Sage can be accessed on any device and handles pricing, underwriting and loan decision-making from the point-of-sale stage all the way to the closing and funding of a loan.  “Capsilon IQ perfectly and seamlessly complements our robust workflow tools and enhances our ability to deliver a truly unique, digital mortgage experience,” said Joe Langner, CEO of Blue Sage. “Not only will Capsilon’s technologies help save our lending clients time and money, they will improve quality and efficiency at every stage of the mortgage lifecycle. We couldn’t be happier to be working together.”

CUSO Chooses Blue Sage To Go Digital

Member First Mortgage, a credit union service organization (CUSO), has chosen Blue Sage as its mortgage origination platform. Member First Mortgage provides a complete range of conventional and government loans and performs loan processing, fulfillment, servicing and other mortgage-related services for more than 200 credit unions nationwide. Here’s why:


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All mortgages originated on behalf of Member First Mortgage’s credit union members will be created through the Blue Sage Digital Lending Platform, a browser-based, highly scalable solution capable of supporting any mortgage channel, including retail, wholesale and correspondent lines of business. Built, managed and delivered through a cloud environment, Blue Sage can be accessed on any device and handles pricing, underwriting and loan decision-making from the point-of-sale stage all the way to the closing and funding of a loan.  


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The decision to use Blue Sage was made following an extensive search and review of competing loan origination platforms, Member First Mortgage CEO Jerry Reed said.  “Unlike most loan origination software, Blue Sage was not built with technology that was developed more than a decade ago and is continually repackaged to look new,” Reed said. “It was written in current software language and includes a rich system of APIs, making it a more fluid system that offers better connectivity than any other product on the market. And because Blue Sage is a cloud-managed system, we can add new features and capabilities for years without constantly building new bridges to third-party software and services. It’s completely superior to anything else on the market.” 


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 From a borrower perspective, Blue Sage will be instrumental in helping credit unions attract and serve younger members, Reed added. The Blue Sage platform comes equipped with borrower-facing loan application tools that enable credit union members to manage their own mortgage experience. After a borrower applies for a loan online, Blue Sage automatically calculates fees and creates electronic disclosures that are then sent to the borrower for e-signing, saving valuable time and effort. All vendor services-such as appraisals, title and flood insurance-can be automatically ordered online through Blue Sage’s workflow as well.  


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“Blue Sage is an incredibly fast, user-friendly platform that delivers the same type of online experience that Millennials get when using social media, including chat and screen sharing features. Yet it is also intuitive enough for borrowers of any age to use quickly and easily,” Reed said. “From a presentation standpoint to the way it works behind the scenes, we believe Blue Sage represents the next evolutionary step in loan origination technology.”

 “Member First Mortgage shares our view that mortgage technology should be simple and always place the borrower first,” said Joe Langner, CEO of Blue Sage. “We’re excited for the opportunity to help hundreds of credit unions create a unique mortgage experience for their members by simplifying the mortgage process, eliminating paperwork and dramatically reducing the time and expense it takes to close loans.”

Top Lender Selects New LOS

PrimeLending, a PlainsCapital Company and top 10 mortgage lender that originated more than $14.5 billion in mortgage loans last year, has chosen the Blue Sage Digital Lending Platform as its new mortgage origination platform. Here’s why:

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The Blue Sage Digital Lending Platform is a completely cloud-based, highly scalable solution capable of supporting any mortgage channel, including retail, wholesale and correspondent lines of business.

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“We are laser-focused on delivering the best mortgage experience and, in our opinion, Blue Sage gives us a tremendous advantage now and in the future,” said Tim Elkins, CIO, EVP of PrimeLending. “Because of Blue Sage’s unique combination of mortgage industry expertise and open architecture capable of seamless integration and automation capabilities, we will be substantially better positioned to evolve and improve efficiencies over time. Blue Sage was a great fit – there is simply nothing else on the market like it.”

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The Blue Sage Digital Lending Platform is event-driven. The platform handles pricing, underwriting and decision-making from the point-of-sale stage all the way to the closing and funding of the loan. Because Blue Sage can be easily integrated with third party services due to its APIs and integration options, an unlimited number of third party vendor services, such as appraisals, title and flood insurance can also be ordered online through the Blue Sage platform. Blue Sage also includes mobile applications and CRM tools geared to helping loan officers increase sales.

“We are beyond thrilled that a powerhouse lender like PrimeLending has placed its trust in the Blue Sage platform,” said Joe Langner, CEO of Blue Sage. “Based on its large origination volume, a lender the size of PrimeLending can achieve enormous savings by leveraging our digital mortgage technology. We look forward to a long and productive relationship with PrimeLending.”

Blue Sage Launches Multi-Channel Digital Platform

Blue Sage Solutions, whose founders created the mortgage industry’s first browser-based, end-to-end loan origination system, has launched a new Digital Lending Platform that now serves retail and wholesale businesses channels in addition to its existing correspondent lending capabilities. Available immediately, retail and wholesale lenders will be able to sell, manufacture and close loans online while offering borrowers a fast, efficient and user-friendly digital mortgage experience.

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The Blue Sage Digital Lending Platform Retail Portal enables borrowers with any digital device to shop, apply, and participate in the origination process. Retail lenders can now leverage Blue Sage’s consumer applications to enable borrowers to explore eligible products calculated with real-time rates, fees, and cost options that they can take directly into online application process. Meanwhile, the Blue Sage Wholesale Portal enables wholesale lenders to work more efficiently with brokers and banking partners, and deliver faster loan decisions in an automated and collaborative digital environment.

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“Unlike most platforms, Blue Sage was completely built and delivered through the cloud and designed to support any mortgage channel or line of business,” said Blue Sage CEO Joe Langner. “Retail and wholesale lenders no longer need to bolt-on third party add-on solutions through complex integrations, such as borrower websites or pricing engines into their existing LOS. Our platform provides lenders everything in one cohesive solution, so borrowers receive a simpler, more efficient experience from start to finish.”

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Blue Sage’s consumer applications streamline the user experience by offering full chat and remote assistance and automated workflows. After a borrower fills out an application, Blue Sage verifies pricing and compliance and delivers to the borrower a personalized portal to track their loan progress and receive access to the initial disclosure package ready for an electronic signature.

The Blue Sage Digital Lending Platform also includes an Originator Portal and Mobile App that provides key point-of-sale and CRM functionality to set up contact strategies, interact with borrowers, set goals and manage pipelines and performance. With Blue Sage, lenders can increase capture rates, react more quickly to market changes, ensure compliance, and meet borrower demands for a completely digital mortgage experience all on one seamless platform.

Langner added that the Blue Sage Digital Lending Platform can be easily updated with new products at no additional investment to lenders. “Blue Sage offers unparalleled flexibility through an ecosystem of API (application programming interface) services, which allows us to offer new products rapidly, such as our mobile Loan Officer Portal,” Langner said. “There’s tremendous value for lenders in having a complete solution designed from the beginning to bring all the pieces of the mortgage process together while reducing total costs of ownership.”

Joe Langner Moves To Blue Sage

Joe Langner, a mortgage technology veteran and former COO at Ellie Mae, has been named CEO of Blue Sage, developers of the mortgage industry’s first browser-based, end-to-end digital lending platform. Langner will be responsible for implementing the company’s strategic vision and establishing Blue Sage as the industry’s platform of choice for lenders seeking to provide every borrower a fast, efficient and unique mortgage experience.

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Langner has more than 25 years of executive experience in the financial services and software industries. A former COO, executive vice president and chief sales officer at Ellie Mae, Langner played a significant role in Ellie Mae’s initial public offering and helped transform Encompass, the company’s loan origination software (LOS), into an industry leader. Most recently, he served as president of PC Lender, a provider of SAAS mortgage lending solutions. Langner’s previous roles include general manager and executive vice president for Sage Inc., a leading, global ERP & CRM provider, and senior vice president at Dun & Bradstreet, where he oversaw the expansion of the company’s brand into the small business market.

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Blue Sage is a complete end-to-end digital lending platform built with the mortgage consumer experience in mind. A browser-based system with consumer-facing desktop and mobile applications, Blue Sage handles product pricing, underwriting and decision-making from the point-of-sale stage all the way to the closing and funding of the loan. Blue Sage enables direct lenders, retail lenders, wholesale lenders and correspondent lenders to increase capture rates, lower costs, ensure compliance and differentiate themselves by creating a modern, digital consumer experience.

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“Given Blue Sage’s recent growth, we needed a veteran mortgage technology leader who understood the challenges today’s lenders face and the demands of today’s mortgage consumer,” said Carmine Cacciavillani, founder and chairman of Blue Sage. “Joe has superior knowledge of the mortgage lending landscape and has successfully helped countless lenders adopt technology to improve efficiency and compliance. I can think of no one more equipped to take Blue Sage to the next level and revolutionize the way mortgages are produced.”

“Today’s mortgage lenders are at a crossroads, as very few are equipped with the type of all-in-one technology that allows them to truly give consumers the borrowing experience they are seeking,” said Langner. “Blue Sage has literally reinvented mortgage production, allowing borrowers and lenders to seamlessly collaborate and create a fast, intuitive digital mortgage process.  I joined Blue Sage because I know what lenders need from a technology solution, and Blue Sage is it.”

There’s A Disruption In The Force

In today’s business climate, talking about “Business Disruption” is all the rage. Disruption is now synonymous with innovation which is synonymous with winning. Uber and Amazon are “Disrupters”. Uber has redefined on demand car service and Amazon owns online buying, shipping, delivery and now Digital Cloud solutions. It seems simple in concept, but is elusive in practice. Very few businesses seem to actually deliver the innovation required to become “Disruptive” and with the process and compliance complexities of mortgage lending, the goal is doubly challenging. Disruptive business models imply a willingness to think differently, operationalize a vision and leverage new technologies to deliver it. After recently seeing the latest trailer for this year’s Star Wars movie reboot, it occurred to me there are a few interesting parallel storylines with the mortgage industry worth exploring.

First the original concept of “The Force” as an omnipresent energy available to all, but leveraged for advantage by a precious few (Yoda, Obi Wan, Luke), reminds me of how so few lenders take advantage of optimized processes, proven technologies and innovative tools available. Ironic, because lenders seem to understand mastery in these areas is crucial to winning in an increasingly competitive purchase money environment, while unwillingness to challenge outdated thinking inevitably leads to the Dark Side.

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Also, in the original Star Wars, Luke had innate ambition to do something important with his life. He was the very symbol of “Disruption”, capable of challenging the tyrannical grip held by Lord Vader. To achieve his destiny, Luke eagerly absorbed lessons learned from Obi Wan and trained with Yoda to improve skills, so he could harness “The Force” to his advantage and reach his fullest potential. Ultimately, he was successful when he teamed up with Princess Leah, Han Solo and R2D2, who provided vision, tactical skills and technical knowhow to defy all odds and destroy the Death Star.

Likewise, today’s lenders “feel” they have a higher calling to deliver on customer needs, focus on addressing compliance requirements and automating key processes to effectively compete. Most lenders seem to understand what they must do, and they discuss it, but they have yet to crack the code to harness their own “Force” and carve out their own market niche. They have a notion of some key ingredients but may lack the actual recipe to achieve Skywalker-like success. There are some likely culprits for this.

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First, most lenders develop a vision in the context of their existing franchise so it is nearly impossible to re-imagine their business models from scratch. Conversely, Luke left his home planet and his entire way of life to evolve into something brand new and exceptional. Second, lenders are consumed with day to day operations making it difficult to find time to consider new strategies, redesign current policies and rethink outdated processes. With existing operations come existing baggage and resistance to change. Contrarily, Luke’s only allegiance was to learning anew and putting teachings into practice. Lastly, lenders seem to have the greatest challenge with implementing new technologies. Their existing outdated platforms do not play well with advanced technology stacks designed with change in mind, so they dabble with point solutions instead of taking a disruptive transformational view. Luke, on the other hand, embraced quite the opposite approach. He knew technology created an advantage. Over the course of three movies he used R2D2, C3PO, the Millennium Falcon and his Light Saber with great effect to consistently overcome adversity and ultimately harness “The Force” to win the day.

So as a lender, becoming a “Disruptor” and harnessing your personal “Force” for good need not be so far far away. It is after all your destiny.   First, heed your inner calling to deliver service excellence within the constraints defined by the CFPB. Then develop a vision and reinvent your identity, processes and brand. Always partner with seasoned mortgage innovators to deliver flexible digital functionality for competitive advantage. And integrate the latest technology wherever possible to deliver lower cost intelligent loan manufacturing allowing all parties to proactively contribute to the process.  There can be no try; there is only do. And if you do, you will surely rule the mortgage galaxy.

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And The 2015 Winners Are …

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Prominent mortgage executives gathered last night to see who the Executive Team of PROGRESS in Lending named the top industry innovations of the past year. This honor is the Good Housekeeping Seal of Approval, the Gold Seal when it comes to recognizing true industry innovation. All applications were scored on a weighted scale. We looked for the innovation’s overall industry significance, the originality of the innovation, the positive change the innovation made possible, the intangible efficiencies gained as a result of the innovation, and the hard cost and time savings that the innovation enables industry participants to achieve. In alphabetical order, the top innovations are:

Blue Sage Solutions

BlueSagePROGRESS in Lending has named Blue Sage Solutions a top innovation. While interest rates have remained historically low, lenders have still had to contend with inordinate compliance burdens and untenable cost structures exacerbated by the inability of antiquated technology platforms to deliver on the promise of seamless automation and productivity gains. New industry requirements for digital audit trails and much improved customer service are now table stakes for lenders seeking to win in today’s hyper competitive mortgage lending environment. Why has no one been able to deliver the integrated automated system these lenders need and deserve? Well, now someone finally has.

Comergence

ComergencePROGRESS in Lending has named Comergence a top innovation. The regulatory landscape has undoubtedly changed in the past few years, and nowhere is that more evident than in the area of third party relationships. With regulations driven by Dodd–Frank now in effect, lenders aren’t just being held accountable for their own actions, but for the actions of all the third parties with whom they do business. The CFPB and other agencies, including the Federal Reserve System, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency (OCC), are closely watching how lenders manage and monitor their third party relationships. Comergence solves this problem.

CSi

CSIPROGRESS in Lending has named CSi’s TRID Solution a top innovation. This technology represents the future technology platform for analyzing, assembling, disclosing, and transmitting transaction data in the industry. CSi’s TRID Solution was created to address two monumental challenges facing the industry. First, the solution includes highly technical and dynamic compliance specifications and resulting transaction risks created by the CFPB’s TILA-RESPA Integrated Disclosure Rule (the “Rule”). Second, the solution addresses the GSE’s impending mandate that lenders deliver Closing Disclosure data in the new Uniform Closing Dataset (UCD). CSi’s TRID Solution uses revolutionary dynamic document assembly and data analytics to conquer the highly technical disclosure requirements and resulting transaction risks created by the Rule.

LoanCare

LoanCarePROGRESS in Lending has named LoanCare a top innovation. LoanCare, a ServiceLink company, is a leading national provider of full-service residential servicing to the mortgage finance industry and is reported to be ranked second among the top subservicers nationwide. In the past year LoanCare launched two major technology innovations: LoanCare upgraded its borrower-facing website (MyLoanCare.com) and created a customer advocacy portal for borrower complaints (MyLoanCareCustomerAdvocate.com). LoanCare also addressed issues cited by the Consumer Financial Protection Bureau (CFPB) in its 2013 Supervisory Highlights publication as a specific problem area within the mortgage servicing industry: lack of shared information and inadequate access to borrower information.

Mercury Network

Mercury NetworkPROGRESS in Lending has named SureReceipts a top innovation. On January 7th, 2014, Mercury Network launched a new software application called SureReceipts. It was developed in response to the new federal ECOA Valuations Rule mandating that lenders provide a copy of all collateral valuations to the borrower, promptly and no later than three days prior to closing. SureReceipts is available to any lender or AMC (whether they use Mercury Network or not) and it securely packages the appraisal, sends an e-mail to the borrower letting them know the appraisal is available for secure download, and then tracks when the borrower viewed it. A full audit trail is recorded so lenders can prove their ECOA compliance later, if needed.

Motivity Solutions

MotivityPROGRESS in Lending has named Motivity Solution’s Movation Business Intelligence with Targeted Solutions a top innovation. This innovation involves implementing a complete, fully integrated and functioning mortgage business intelligence platform in three days. This is 30 times faster than the next best industry BI vendor claim (unsubstantiated) of 90 days. In less than one week, lenders are leveraging over 1,000 key performance indicators, 11 scorecards, 20 different data dimensions, 150 visualizers that include activity and pipeline metrics, as well as detailed report cards for each primary position within the organization. All of this helps increase organizational efficiencies immediately, as compared with all other mortgage business intelligence solutions, which require that all of the features outlined above be built from scratch.

Path2Buy

Path2BuyPROGRESS in Lending has named Path2Buy a top innovation. The problem with most marketing aimed at first time homebuyers is that it assumes that the consumer has already made the decision to buy a home. That is where the Path2Buy Homeownership Coaching Program comes into play. Path2Buy is a program that assists mortgage originators with growing their purchase business by providing them with a system to effectively acquire, incubate and convert future homebuyers. By focusing specifically on renters, either those who have never owned a home before or those that are currently renting due to foreclosure or short sale, the Path2Buy program provides a system for educating these consumers and getting them on the path to becoming homebuyer ready.

Platinum Data Solutions

Platinum DataPROGRESS in Lending has named Platinum Data Solutions a top innovation. Platinum Data has created four industry-first technologies. First, RealView appraisal QC technology pioneered automated data verification for appraisals. It is the only software of its kind that (1) is designed specifically for lenders and AMCs, (2) uses business intelligence to provide a contextual analysis of data quality, and (3) is completely configurable. Second, FreeAppraialReview.com, is a free appraisal review technology specifically for appraisers. In seconds, it screens each appraisal for the most common causes of returned appraisals, which routinely add days to loan turnaround times. Third, OptiVal automates AVM analysis, which enables the responsible use of AVMs. OptiVal is essentially a customized, turnkey rating system for AVMs. Lastly, Collateral Expert aggregates property data and provides comprehensive findings based on a property address for the current date or a date in the past.

 

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Customer Centric CRM Wins The Day

We all know that precipitous drops in interest rates drive significant increases in loan applications. From September to October of this year mortgage rates dropped 30 basis points and applications correspondingly increased 11.6% from one week to another. For lenders seeking to prosper in 2015 and beyond the question is, are you prepared to capitalize on favorable market fluctuations when they occur? Do you have the proper tools and processes to attract and convert new prospects in real time? As competition heats up to acquire new purchase and refinance customers, winning lenders can benefit from leveraging more advanced, customer centric CRM solutions that connect borrowers with the right product the right people and the right process in real time.

The latest research from JD Power’s 2014 originator rankings confirms the value of consistent communication indicating a 23.7% decrease in customer satisfaction when lenders fail to call back as promised. Delivering on a new customer centric CRM strategy should be high on the agenda of lenders seeking to grow top line revenues by aggressively converting prospects to customers over the next several years.

To create a truly unique customer centric experience, lenders need to first envision mortgage CRM as an end to end process designed to support customers from first contact through loan closing. Using advanced component based vendor solutions specifically designed for mortgage origination; lenders can deploy the desired front office functionality, either as a standalone solution or integrated to their traditional CRM investments.

The best solutions are able to ingest new leads, instantly connect online applicants with seasoned loan officers, deliver real-time compliant loan quotes, share ongoing loan status and provide integrated mobility options. Ironically, as borrowers click through online loan options, communicate through messaging and upload requested documents they not only compress the overall process but also leave a digital footprint. Likewise, using properly designed digital solutions, call center agents, loan officers, processors and underwriters also actively contribute to a positive consumer experience in real time providing the required audit trail to boot.

Implementing customer centric CRM is a win-win value proposition. The use of advanced digital solutions simultaneously empowers borrowers to actively engage, while compressing cycle times, ultimately leading to a more satisfying interaction. With all the current focus on implementing compliant back end electronic disclosures, many may miss the opportunity to modernize the front office customer experience. Lenders seeking a place high on the 2015 JD Power Mortgage Origination Satisfaction Study should consult with vendors versed in delivering a highly automated digital customer experience. Taking action now could prove quite valuable as forward thinking lenders capture inordinate market share, with satisfied borrowers eager to ”tweet” compliments about their highly competent mortgage lender.

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Driving Innovation And ROI

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The term “innovation” isn’t usually applied to the loan origination system (LOS). The LOS is often viewed as the system of record that is a necessary evil when operating in the mortgage industry today. Further, the term “return on investment” is not often used when talking about an LOS. What do I mean exactly? Few lenders are really happy about their LOS, but the prospect of changing to a new LOS can be daunting, so lenders put off the switch until things get critical. However, it doesn’t have to be that way. Things are about to change for the better.

Carmine Cacciavillani recreated the LOS space when he developed Palisades Technology Partners, which served five of the top 10 lenders. He successfully sold that company to IBM. Today, seeing the tumult in the mortgage industry, with the onslaught of new regulation and the drop-off in loan volume, Cacciavillani could not stand idly by. Now is an ideal time to once again recreate the LOS space. As is often said, innovation is born out of necessity and market conditions in the mortgage industry today certainly necessitate innovation. But innovation alone is not enough. The next-generation LOS has to produce results, as well. Lenders looking for increased transparency, efficiency, straight-through processing, ironclad compliance, etc., should be able to get all of that and more from their LOS.

Realizing this need, Cacciavillani has developed a new LOS called Blue Sage Solutions. This new company is focused on leveraging the latest in Web, Cloud and Mobile technologies to help mortgage lenders succeed in a more competitive, more regulated lending market. In 2013, Cacciavillani’s in-depth lending experience allowed Blue Sage Solutions to deliver its new platform in record time for two initial customers and the company is now engaging the mortgage industry in a time of rapid change to provide both a comprehensive and robust LOS.

Right about now you’re probably asking: Does the mortgage industry really need another LOS offering? Why is Blue Sage Solutions so next generation? And how does Cacciavillani see the mortgage market evolving? Well, he sat down with our editors to discuss not only his vision behind starting Blue Sage Solutions, but also where he sees the LOS and the larger mortgage industry going over the next few months and years. His thoughts are very insightful. Here’s what he said:

Q: You have been delivering mortgage solutions for nearly 30 years. How has the industry and technology changed over that time?

CARMINE CACCIAVILLANI: Having been in the mortgage business for 30 years, I have witnessed dramatic change. In the 80’s when I started, interest rates were relatively high. The largest lenders had good market share and borrowers were not nearly as sophisticated as today. Few executives understood the business value of technology-based solutions, but those who did reaped rewards. As an example, while working for a top 5 lender in 1985, we created an application to laser print dynamic commitment letters, replacing clunky error-prone typewriters and pre-printed forms. In a period of one month, this lender was able to reduce its headcount from 40 to 3, redeploying resources elsewhere.

The opportunity to innovate always exists. Lenders need to embrace technology-based solutions as a means of gaining a competitive advantage. Over the following two decades, the emergence of new technologies allowed our teams to design highly automated and interconnected systems that significantly increased productivity across the entire origination supply chain. Today with Cloud delivered solutions, responsive browser-based UI’s, mobile devices and, widespread adoption of MISMO standards, lenders can leapfrog to the next generation. I believe there is an immediate opportunity for lenders to enrich the way they interact with customers as they deliver compliant mortgages, through an intelligent loan manufacturing platform.

Q: How have changing market conditions impacted technology’s role?

CARMINE CACCIAVILLANI: Today lenders struggle to do more business with fewer resources; and quite frankly I believe that is precisely the environment where well-designed and architected technology solutions can shine. Look at how Smartphones and mobile devices have positively affected our personal and professional productivity and the intelligent sensoring of automobiles is delivering superior driving performance, fuel efficiency and safety.

Today’s sluggish economy and rigorous regulatory environment mandate that mortgage lenders innovate or be left behind. The good news is technology innovation can be a strong countermeasure to today’s challenging market conditions. While lenders’ compliance burdens and processing costs have grown steadily, so too have flexible technology solutions available to them.

I believe lenders will require partnership with high-performing providers experienced in both the mortgage business domain and true systems design to transform their business. The technology tools and platforms exist to deliver a lending process capable of attracting new customers, addressing compliance requirements, increasing productivity and providing a full digital audit trail necessary for regulatory and investor inspection. The opportunity to deliver the future is now.

Q: How did the purchase of Palisades Technology by IBM and the eventual creation of Blue Sage Inc., impact your viewpoint of what lenders are looking for from their LOS provider today?

CARMINE CACCIAVILLANI: IBM acquired us for a few key reasons: First, they wanted immediate credibility in the mortgage lending space and they knew we had high performing teams well versed in the business of mortgage lending. Second, 5 of the top 10 lenders used our platform to close tens of thousands of loans per month, proving performance and scalability. The acquisition validated our view of how a lending platform should be architected, designed and used to deliver ROI. One customer of ours with 2,000+ users improved productivity from 11 to 21 loans per FTE, per month. Technology for technology sake is not particularly valuable. What is valuable is how a solution transforms the way lenders do business. For me personally, working at IBM helped shape my view of how to continually add greater value for customers.

Our team is comprised of veteran business leads from large lenders and forward-thinking technologists. Together our people focus on designing intuitive, scalable solutions that drive greater automation through integration and collaboration. We have always done this. To IBM we were proven. Our POS/LOS platform allowed large multi-channel lenders to quickly train new associates, acquire new customers and ultimately establish their brand in a positive light.

Our goal at Blue Sage is to use the next generation technology to deliver this solution on a broader scale and at a lower cost.

Q: Rules changes are happening at an astonishing rate. How does BLUE SAGE’s approach and technology assist lenders in staying ahead of these constantly changing rules and regulations?

CARMINE CACCIAVILLANI: While the regulatory environment is clearly more onerous than ever, we have a long-standing history of delivering the requisite compliance functionality. We deliver system intelligence by injecting the regulatory requirements into our lending platform, accessing the applicable functionality and data to verify and validate throughout the process. Because of our open design we can quickly calculate key values and maintain a complete “digital history” on each loan.

The first step in the process is to align our teams with regulatory bodies, legal entities and partners to clearly understand the legislative requirements and implementation timelines. Then we design and test appropriate rule sets for efficient, rapid execution and maintainability. Where appropriate we integrate to proven third-party compliance providers as well. This approach maximizes compliance capability with business agility into the future.

Q: What are the biggest challenges that mortgage lenders face today and how can technology be used to address those challenges in your opinion?

CARMINE CACCIAVILLANI: Aside from regulatory compliance already mentioned, lenders need to differentiate themselves. As they staff up on the sales side to attract new purchase money customers, they need to simultaneously increase customer satisfaction and close ratios while keeping costs in check. Attracting younger borrowers is the Holy Grail as they represent longer-term relationships with the opportunity for cross selling. Lenders will need to fine-tune their marketing using analytics to attract new prospects and then service the transaction through direct to consumer portals and mobile applications to close the deal and drive the loyalty and referrals desired.

I truly think an intelligent loan manufacturing platform designed for integrated functionality between Consumer Direct Websites, Loan Officer CRM capabilities and a highly automated back office Loan Fulfillment platform can be the right solution to help these lenders win.

For 15 years we have used rules, events and workflow to connect and guide borrowers, loan officers, processors and underwriters through the transaction. For example, at the point-of-sale, the system automatically provides a list of qualified products for borrowers to choose or loan officers to recommend.

Once in process, the system then maintains the list of required data and documents, based on automatically generated conditions, and proactively assigns granular tasks throughout the process to assure productivity. The system expertly guides all parties to actively contribute to the transaction thereby compressing cycle times, increasing customer satisfaction and minimizing the need for costly training. I think system intelligence is key to winning in the future.

Q: You talk about the significant difference between installing and implementing an LOS. Can you explain what you mean by that? In addition, how does that impact a lenders business and their ROI?

CARMINE CACCIAVILLANI: Based on industry observations many lenders seem to be settling for vendors that install outdated software packages delivering an application that requires significant mortgage knowledge to properly execute manual entry. One lender recently indicated his user was forced to refer to a 10-page document, go to 5 external websites to key in data and then wait an extended period for documents to render. These outdated systems are dangerously error prone and very difficult to maintain.

Conversely, our approach has always been to execute an insightful, predictable implementation that configures lender business model preferences for products, pricing, fees, workflow, documents and partner interfaces, allowing the system to be the expert. As the system intelligently automates core functionality, validates data, and distributes tasks, the lender manufactures high quality loans more efficiently with far fewer employees and less training, driving ROI significantly higher.

Q: What should lenders be asking vendors as they do their due diligence when researching a new LOS?

CARMINE CACCIAVILLANI: Lenders should seek to work with partners who have an extensive track record of proven success assuring no failed implementations or legal issues to worry about. If history is a valid predictor of the future, then past experience should count for much in terms of delivering the agreed upon functionality on time and on budget.

Clearly, lenders should investigate how providers deliver compliance today and into the future. Additionally, lenders in growth mode might consider the usability, system performance and scalability of the vendor solution. The industry has seen many vendor platforms falter under the weight of significant loan volumes.

Q: What do you expect the LOS space to look like five years from now?

CARMINE CACCIAVILLANI: Overall, I see some contraction in the space. It feels like the LOS vendors with significant industry experience and willingness to invest will thrive. I think the platforms engineered for the Cloud can deliver the functionality and price performance needed to win. A vendor putting older architecture in the Cloud represents the proverbial lipstick on a pig. Trying to make outdated architecture flexible and scalable is impossible as the foundation was designed for an era gone by.

Further, lenders need more bang for their buck so vendors extending their solutions will inherently extend their value. In addition to Loan Fulfillment functionality, I see leading providers delivering a broader set of capabilities.

Also, as the industry moves to standards across the board, integration capabilities to take advantage of structured data intake will be important. The systems embracing standards to maximize interoperability will lead the way.

Lastly, LOS systems will become a formidable source of digital data for analytics providing a detailed transcript of borrower preferences and the overall transaction. This data will be valuable to lenders seeking an advantage in honing their customer acquisition and processing models as well as investors wanting loan performance assurances.

Q: On a separate, but related note, there have been a lot of mergers and acquisitions. Do you expect that to continue and how do you think it’s impacting the space?

CARMINE CACCIAVILLANI: Acquisitions and mergers are a fact of life. Buyers have different strategies and ways of valuing acquisition targets. Firms seeking LOS functionality need to understand where they fit into their strategy and the true capabilities of the platform they intend to acquire. I am amazed by the number of platforms acquired and then isolated, shelved or divested.

Today, there are vendors attempting to be all things to all lenders, but a look under the covers reveals woefully inadequate and disparate architectures resulting in limited automation and flexibility for their target market. Despite this, I think acquisitions will continue as services firms seek ways to broaden their offerings and deliver greater value for their customers.

Q: What is BLUE SAGE’s biggest differentiator as you see it in the marketplace?

CARMINE CACCIAVILLANI: First and foremost, we have an established team with decades of mortgage process and technology experience and we take pride in delivering intelligently designed platforms that drive true ROI for our clients. Our core group has been working together for over 25 years. Second, our view is the system of record should be an expert in mortgage process execution minimizing manual input. With this in mind, the team purposely took a step back to consider emerging market conditions and technology trends. We met with lender executives, consulting firms, regulatory bodies and current vendors to better understand industry challenges and system shortcomings. Our goal was to develop a vision for how new integrated digital solution sets: Consumer Direct Websites, Smart Mobile Apps, CRM platforms and Loan Fulfillment functionality, designed for the Cloud should support lenders and investors in the future.

As a result, we engineered a new robust consumer centric data model to support all mortgage channels and lines of business. We think this is a game changer as it provides the foundation for our agile, scalable Cloud-Based platform and can support all lending products. On top of the model we layer reusable components across all our solutions, and orchestrate with rules, event triggers and workflow to deliver seamless productivity and transparency. We also invested significant time and effort to optimize usability assuring borrowers, back office users and partners could all actively contribute to the origination process. In the end, our mission is to deliver an intelligent end-to-end loan manufacturing platform to help lenders differentiate and win in this new highly competitive era. We are successfully executing this strategy with customers today.

INDUSTRY PREDICTIONS

Carmine Cacciavillani thinks:

1.) The CFPB is here to stay and future regulations will require reporting greater details about the entire lending transaction.

2.) There is no short-term catalyst to return to the loan volumes of the previous 5 years and therefore lender competition will continue to increase and profit margins will continue to tighten.

3.) Younger millennial borrowers want to use lenders that provide a rich online digital experience.

INSIDER PROFILE

Carmine Cacciavillani is an industry veteran with nearly 30 years experience designing highly automated origination systems. He is currently the CEO of Blue Sage Solutions, focused on corporate strategy and overall operations. Prior to Blue Sage, Carmine founded Palisades Technology Partners, implementing the Impact POS/LOS at 5 of the top 10 lenders. Palisades was sold to IBM in 2006. Carmine’s vision is to deliver a superior integrated digital lending solution to drive value for Borrowers, Lenders, Partners and Investors.