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Discussing True Innovation

The PROGRESS in Lending Innovations Award Winners gathered to talk about the future of mortgage lending. Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Ninth Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of industry innovation right now? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

JERI YOSHIDA:Innovation is filling an unmet need with a solution that people prefer over their previous options. I don’t think that sweeping versus incremental change is a major factor in determining innovation.

STEVE VIARENGO:We define innovation as the transformation of the way a company or a process works. Disruptive, sweeping change is exciting, but unless you’re a start up, it’s rarely practical. Most companies need to protect their core business while driving change, so incremental change is necessary for success. At Capsilon, we provide disruptive technology that fundamentally changes how companies work. Over the years, we’ve learned how to implement innovative new processes in incremental ways that help companies realize an immediate, positive business impact while marching toward broader, more sweeping changes that add up over time.


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SARA NAKAE:You can’t put innovation in a box or on a timeline, innovation happens through thought, focus, and excellence. Innovation can be either sweeping or incremental, it’s not an all or nothing process. In fact, the definition of innovation does not contemplate “how” a new product or service is introduced, innovation is taking a great idea and turning it into a valued product or service that customers will buy. From a business standpoint, incremental innovation is the more popular approach because it comes with less financial risk to the organization. But sweeping, or radical, innovation is something that shouldn’t be ignored either. Both exist and both have their merits. But the key to innovation is to focus on the impact to the customer, did you improve their user experience? Innovation can happen incrementally or sweeping, as long as the product or service creates value from the customer’s perspective.

MATT HANSEN:I like to think of innovation as something that changes the status quo. It can be organizing and making sense of other’s ideas. Innovation can also be something that is more self-created. Either way, I believe innovation requires execution.

SHAIMAA ELK:Innovation comes in all forms and should not be limited to being seen as a sweeping change. Innovation can be defined as simply as the application of ideas to remain relevant.


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BOB BRANDT:To Optimal Blue, innovation is not a tsunami that happens, and everyone then reacts to that moment in time. Innovation is not something you revisit only when you have the time. At Optimal Blue, innovation is a pillar in our corporate DNA. We view innovation as a constant, as something that drives our approach each and every day.

ELIZABETH KARWOWSKI:Save once in a generation discoveries, I don’t think sweeping change is possible without being preceded by smaller, incremental changes. In other words, small changes to procedures or products over a period of months or years often have the effect of completely transforming them into something that’s never been done or seen before. It’s often not until we look back to where we started that we fully grasp the gravity of those seemingly small changes made along the way.

DAVE SIMS:I would define innovation as anything that has the potential to dramatically change a market. In terms of the mortgage industry – an industry where processes have mostly remained unchanged for more than 80 years – the introduction of digital automation and point-of-sale solutions have caused massive disruptions by simplifying the once-complex and non-secure process of originating a mortgage loan, thus setting a new standard in borrower expectations. Floify was one of the first of its kind to market in 2013. Since then, we have seen our user base grow to nearly 700,000 lenders, borrowers, and other loan stakeholders. Every day, more and more lending operations are transitioning to digital solutions, which is helping them remain competitive in this highly-competitive industry and allowing them to effectively fight margin compression. To me, the recent changes in the mortgage industry have been the epitome of innovation.


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BOB DOUGHERTY:Innovation can be incremental or sweeping, depending on your business objectives and strategy. Both sweeping and incremental innovation promise great benefits—improved accuracy, speed and profits. However, incremental innovation lacks many of the challenges that come with radical change, such as significant disruption of day-to-day business or heavy time and resource investments in new technology that may or may not work.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

SHAIMAA ELK:The state of innovation in the mortgage industry is modest at the moment. If innovation is the application of ideas to remain relevant than a key element in the equation is the degree of underlying change in regulations, processes and expectations that drive that relevance equation. The mortgage industry is currently heavily regulated, which impacts its speed of change. In this current environment, industry change is still slow and limited, which has put a reduced demand on the need for innovation.

MATT HANSEN:Organization of ideas is happening in the mortgage space. There’s rarely a new idea, but execution of ideas is getting a lot more attention. Some companies are able to execute, and some are not. We’re also seeing vendors open the doors between each other, which previously didn’t happen on the same scale. This is bringing new products to the market. For this reason, I would say we are in a state of growth and innovation.


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STEVE VIARENGO:It is an exciting time to be in the mortgage industry. There has been a significant influx of capital invested in technologies that enable a better way of doing business, legacy technology companies are recognizing the need to create more open environments and work with other tech providers, and companies in the space are embracing change. We’ve been working closely in partnership with our lender, investor, and servicing partners to build innovative solutions that solve the biggest pain points for companies in the space.

BOB BRANDT:We are in the midst of an innovation renaissance period in the mortgage industry. There are more technology vendors developing more interesting approaches to automation and problem-solving than ever before. Optimal Blue believes that the state of innovation is thriving! However, the challenge that industry innovators face is to think beyond technology silos. For this very reason, Optimal Blue has developed robust and highly unique RESTful API interfaces that +50 leading mortgage vendor partners leverage to break down the integration barriers between mortgage technology systems that have historically held back the industry.

SARA NAKAE:With today’s economy and the advances in technology and data availability, innovation in the mortgage industry is moving from stagnant to thriving. There’s been a lot new capital infusion through various FinTech companies over the past 24 months. Financial institutions are becoming more competitive every day, each one trying to produce a better product and borrowing experience. Reducing costs and turn-time are big factors for lenders who want to compete, and they are putting their focus on innovative ways to improve their product and their process.

BOB DOUGHERTY:Innovation is thriving in the mortgage industry. Technology providers are constantly launching new solutions; enhancing their existing products; and integrating with other technology providers to streamline and accelerate the mortgage origination process for everyone involved. From a broker perspective, all of this technology is empowering because it lets them focus more on their borrowers and less on manual processes or maintaining software or hardware.

DAVE SIMS:I believe the state of innovation in the current mortgage industry is neither thriving nor in a state of decay; rather, it is now in a mode of stabilization. When Floify’s automation technology was introduced to lenders in 2013, there were only a few players in the space, all vying for a piece of the mortgage tech market. Since then, dozens of hopeful competitors have come and gone. Only a few have withstood the test of time. What has set Floify apart from our competition is our ability to continue our pace of innovation and partnering with like-minded leaders in complementary spaces, including VOE/VOA/VOI, credit reporting, eSignature, and productivity vendors. This strategy has allowed us to develop a single solution that integrates with our customers’ favorite solutions, further simplifying their lending operations.

JERI YOSHIDA:I wouldn’t call innovation in our space thriving, but the work I do with NEXT has shown me that there are a lot of new technologies entering the mortgage industry. How many of them are truly innovative? That’s the question. A lot of companies want to be the one that takes the mortgage industry out of its old school, manual, paper-based processes. And a lot of them are working really hard to stake that claim by conceptualizing new technologies and bringing them to market. That in itself refutes the notion that our industry is in a state of decay.

ELIZABETH KARWOWSKI:The mortgage industry is fiercely competitive, and competition almost always breeds innovation. There is no better teacher than past experience and, as mortgage professionals learn from past missteps and accomplishments, we are seeing new ways in which technology is leveraged to increase efficiency and streamline processes. In this industry it is almost impossible to be successful without constantly tweaking and tinkering to get an edge on the competition.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

SARA NAKAE:Focus on their customer, how can lenders create a better experience for their borrower? It’s a combination of cost and time. Lenders need to focus on reducing the cost for customer’s to get a loan and the time it takes to close. Innovation that focuses on those deliverables will be winning over the next 12 months.

SHAIMAA ELK:The industry could use a fresh approach to mortgages, a re-imagining of the entire process. This would require a joint effort with lenders, investors, regulators and vendors. But in the meantime, the more pressing issue is not what type of innovation the industry needs, but how quickly can we adopt the innovation that is readily available today, like digital portals, robotic process automation (RPA), data analytics, and blockchain. Furthermore, beyond adoption, there’s the notion of packaged solutions that deliver integrated solutions from “best-of-breed” providers. This is a different perspective on innovation that could prove to be equally as fruitful.

BOB BRANDT:As an industry, we are beyond the desperate need for “the ONE innovation” that we hope will make the key difference. We believe that the industry is at a point where the most significant difference will be made by a series of incremental innovations by a host of companies. Optimal Blue has already automated the secondary marketing process, and now our focus has turned toward a series of even more granular functionalities and automation that will pave the road for an entirely new way of conducting originations in the industry. A good example of that is our “lights-out” lock desk and trading platform automations.

BOB DOUGHERTY:Since origination volume is expected to remain flat this year, more brokers and lenders are turning to non-agency/non-QM products to reach underserved borrowers. Originating these loans is typically a manual process. In order for the non-agency/non-QM market to scale, the mortgage industry needs technology that allows originators to quickly and confidently qualify these borrowers.

STEVE VIARENGO:The absence of good data is one of the most significant barriers to innovation in the mortgage industry. Having clean, accurate information you can trust is a critical element needed for automation, risk reduction, and cost reduction. Companies can now solve this problem with technology like Capsilon¹s doc and data audit tools that enable them to build a complete, accurate record for every loan. Companies who don¹t adopt these types of technologies over the next twelve months are going to find it hard to take advantage of a wave of innovative technologies coming that require clean data to be effective. The massive impact these technologies will have on the mortgage industry is now undeniable. Companies who lag will be left behind.

MATT HANSEN:Twelve months is a very short period of time. It seems most likely this idea has already been conceived and mostly built if it’s to come to market in the next 12 months. That being said, the cost of human capital has been difficult for lenders in lean times. In order to solve this, it would need to be an innovation that cuts into the biggest expenses lenders incur on a per loan basis.

ELIZABETH KARWOWSKI:I think it’s time to turn our attention to potential borrowers who don’t fall within traditional lending parameters. Specifically, Millennials and younger generations are entering the work force with priorities and values that often differ greatly from Baby Boomers and Generation X. Many of them have never had a credit card, and don’t have any credit history or credit profile at all. It is imperative that the industry begins implementing  educational programs and providing resources in order to ensure that these young people, (who will eventually make up the majority of the population) see the value in home ownership and will actually qualify for a mortgage.

DAVE SIMS:The mortgage industry would greatly benefit from an innovation that improves the accuracy of real estate appraisals. In fact, more than one in three appraisals contain inconsistencies in property ratings and values. Additionally, conflicting property condition and quality ratings can result from numerous factors, including human error, appraiser subjectivity, physical changes in property condition or quality, or even possible fraud, which has been cited by the GSEs as the top origination fraud scheme trend in recent years. Developing an innovation that would create consistencies across the appraiser network would be the perfect way to combat this troubling trend.

JERI YOSHIDA:The mortgage industry desperately needs innovative change in the way it thinks and interacts as an industry. There is no shortage of sharp minds and great ideas, but in order to fully capitalize on them, the industry needs a shift in its thinking. Day in and day out, I work with more brilliant executives through NEXT than I have at any other time during my decades-long career in this industry. If these particular executives were leveraged in C-suite positions, or if they were given a more visible platform, I suspect we’d see the start of a massive push forward—in innovation, creative ideas, opportunity, and so much more. This would in turn produce other measurable results from higher client and employee satisfaction to higher recruitment of top talent. This could set the tone for not one or two innovations, but rather a culture of innovation that yields a decade or more of brilliant, truly innovative advances in the mortgage industry.

Rising Above A Challenging Landscape: Leveraging A Comprehensive Lending Technology Framework

The mortgage lending landscape is always changing, and the solutions created for yesterday’s challenges may not help new roadblocks that arise. At a high level, the themes are like the issues lenders always face: high origination costs, margin compression, constantly fluctuating rates, and changing regulations. Of course, the devil is in the details. For example, when it comes to interest rates, industry experts like the MBA, Fannie Mae and Freddie Mac speculate that rates could rise to nearly 5 percent by Q4 2019. This creates unique opportunities and challenges for lenders.


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As the fed raises rates to slow inflation, home values have already seen a significant increase, surpassing $15 trillion according to MarketWatch.com.  As a result, more and more lenders are promoting home equity loans and home equity lines of credit as an additional source of lending business. As lenders migrate toward home equity loans, lenders also face a high demand for faster closings. Today’s borrowers expect a quick and painless experience from their lenders, but the state of the industry today makes it difficult to always deliver.  The tools for end-to-end, digital, and paperless lending are out there, but too often lenders must put together a piecemeal solution of software that may or may not work with the other pieces of their technology infrastructure.  And, that’s one of the biggest challenge’s lenders face: with more technology solutions than ever before, it is both more important and more difficult to choose the one that is right for them and their specific needs.

Top Priorities: Speed and Efficiency

To solve the problems lenders currently face, the solution must deliver two key benefits: speed and efficiency. Efficiency gains can come from many different areas. A solution that reduces any human error or duplicate data entry certainly improves efficiency and accuracy. A solution that consolidates vendors into one platform can also create efficiency, as lenders do not have to spend time searching for different solutions from different vendors. When all the work from different vendors is available in one instant report, lenders can save precious time while staying confident that they have all of the information needed to do their job. 


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These efficiency gains help lenders save money by also saving time. Lenders are can reduce turn-times and closing times while simplifying and streamlining their workload. This makes lenders more productive, allowing them to do more with their time. Increased efficiency naturally results in increased speed when it comes to fulfilling a loan.


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Time and cost savings clearly benefit the lender’s bottom line but choosing the right technology solution provides additional benefit. These time and cost savings most importantly improve the lender’s relationship with the borrower. Faster turn-times and closing times help keep borrowers happy, as they receive their loans faster. In addition, cost savings for lenders can easily mean cost savings for borrowers. Money saved is another way to ensure borrowers are satisfied with their experience.


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In today’s landscape, there are plenty of challenges for lenders to face, but this abundance of challenges creates an abundance of opportunities for lenders to use technology solutions to their advantage to rise above the competition. When lenders find the right end-to-end solution, it enables them to rise above the challenges of the industry while giving borrowers the experience they are looking for. With the right solution, lenders can streamline their workload, keep borrowers happy, and remain profitable and competitive in the industry. Solutions that do this empower lenders to confidently face the challenges presented by an ever-changing lending landscape.

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The Value Of Data: Leveraging Property And Borrower Data Intelligence

A few years ago, The Economist ran a now famous headline that said, “The world’s most valuable resource is no longer oil, but data.” This might have sounded absurd at the time, but it rings all too true today. Data is incredibly valuable, and there is more access to it than ever before. Technology is providing more and more ways to tap into these reserves and bring crucial data up to the surface.


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With the Internet serving as the primary source for all of today’s information, anyone can find the information they need instantly. With more processes becoming automated due to an increasing reliance on technology, electronic records are becoming the new norm for businesses.

The same is true for businesses in every industry. In mortgage lending, electronic records are becoming more common as more counties are keeping their information online instead of on paper. Lenders have access to so much property data that, in many cases, a valuation for a property can be determined without even having to set foot on it. This is just one of the many ways that an increased access to data is changing the very nature of the mortgage industry.


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Lenders also have an opportunity to access data about a borrower that can help them work quickly from origination to closing while ensuring they are meeting the borrower’s needs in the best way possible.

Making the most of your data

All this information available to lenders has sparked a change in the industry. Lenders must leverage the data available to them in order to streamline their lending process or they risk falling far behind their competition. Using automation and other technologies is no longer an option for lenders that want to be successful. All the data they need is readily available and lenders must be equipped to use it. When lenders can use the property and borrower data intelligence available to them to turn loans around more quickly and efficiently, they will become more competitive and profitable in the industry.


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With digital data comes digital processes that can save lenders time and money. Today’s technologies can compile all of the available property or even borrower information and make intelligent decisions based on that data. Technology can look at available valuation, title, credit, tax and flood information and decide if a property needs full AVM (automated valuation model) or maybe a desktop valuation if there is not as much information available online.

Having access to all the necessary data in one place keeps lenders organized and productive. Especially with loan officers in short supply, it is important that the ones that are still around can accomplish the most. When they are presented with all the information they need, they can do more with their time, keeping them productive and profitable, even when the market gets tough.


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Technology can also access data such as income and credit history in order to help lenders assess their borrowers. Lenders can leverage the data that financial institutions have about their customers and members in order to quickly and efficiently decide how much a borrower should be approved for, what their interest rate would be and so on. In the same way that property data intelligence can help lenders make intelligent decisions about the property, borrower data intelligence can aid in the decisions they make about borrowers.

With closing times steadily lengthening, borrowers and homeowners are growing increasingly impatient to close. Using technology to aid in the lending process saves a tremendous amount of time, speeding up the closing. Instead of lenders having to take days to track down financial information about a borrower and determine risk, borrower data intelligence will compile all the available information and recommend what loan would be best for them. This keeps yet another part of the lending process running smoothly and efficiently for lenders, a benefit that borrowers, and even homeowners trying to sell, can also enjoy. Technology is not only changing a lender’s interactions with a property, but with a borrower, as well.

Removing guesswork through suitability

This property and borrower data intelligence is also the fuel that helps lenders select products and solutions that are most suitable. This concept of suitability logic gathers all the available property data to help lenders choose the best product or solution for their given property and loan. Often, lenders must “stare and compare,” taking a static property report and playing a guessing game about which type of valuation or title work would be best. They go in blind and must choose on their own which solution or provider might be best suited to help fulfill that loan. If they guess wrong, they must go back to square one and all of that work must be redone.

Suitability takes the guesswork out of the equation for lenders. By gathering all the available property data, suitability logic looks at the data and makes a recommendation for what course of action would be best for a lender to take. This means more efficiency and fewer errors, which brings significant time and cost savings that lenders can then pass on to the borrower.

The important element of suitability logic is that it is not simply a computer taking in data and spitting out a recommendation on its own. Suitability logic is designed to mimic a lender’s current underwriting guidelines, which helps business to continue to run smoothly. This also means that lenders do not have to sacrifice their borrower’s experience in the name of productivity. Suitability logic can “think” like the lender, ensuring that borrowers are still receiving excellent service, while lenders are simplifying and streamlining their workload.

Using data to compete in a tough landscape

In today’s competitive landscape, efficiency is crucial. With rising rates and low inventory increasing competition and decreasing origination volumes, lenders are looking for any way to stay ahead of the game in this difficult housing market. With a streamlined workload, lenders can do more with their time, ensuring that they are able to give each borrower the best experience in the most efficient way possible. These time and cost savings lenders can experience by leveraging property and borrower data intelligence can be the factor that keeps a lender not only competitive in the industry, but profitable, even in a tough and competitive landscape. These time and cost savings can also be passed down to the borrower, creating a win-win situation for both borrowers and lenders.

Soon, leveraging this data will not be an option for lenders who want to stay in the game. With more and more electronic records, lenders must embrace the technology that can help them get the most out of their information. Soon, property and borrower data intelligence will be the norm in the industry and lenders must embrace the technology now in order to remain competitive.Between the time and costs saved, this technology is invaluable to lenders. It its true, as The Economist said, that our most valuable resource is not oil anymore, data is. Lenders must be able to tap into these reserves, and technology is the tool that they need.

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Partnership Furthers A More Digital Process

FirstClose, a provider of technology solutions for mortgage lenders nationwide, announced that its reporting suite is now available through Ellie Mae’s Encompass digital mortgage solution. The seamless integration allows lenders to order FirstClose’s solutions directly through Encompass to drive quality and efficiency in the loan origination process.


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Services can be ordered directly from Encompass at the touch of a button, eliminating duplicate key strokes when placing orders. When orders are returned, data points are sent back to Encompass, which automatically populates critical fields such as the full legal description and vesting information from the title work, the appraised value from the valuation product selected, and more. Copies of the completed reports are automatically imaged into Encompass. The integration reduces human error, as well as costs and closing times.


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Ellie Mae is a provider of innovative on-demand software solutions and services for the residential mortgage industry. Ellie Mae’s Encompass digital mortgage solution provides one system of record that enables banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency.


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“Seamless integration between the LOS and valuation and settlement services helps lenders close loans more quickly and efficiently,” said FirstClose CEO Tedd Smith. “Our secure integration with Encompass enables our clients to simplify the process of ordering our solutions, so they can more easily process mortgage loans and grow their business. We look forward to a long, successful relationship with Ellie Mae.” 


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FirstClose is a provider of best-in-class property & borrower data intelligence and settlement services nationwide. The company specializes in delivering a powerful web app and LOS plugin that is a home equity and refi tool that offers everything from application to servicing (credit score, valuation, title, tax, flood, closing and recording) on one easy-to-navigate platform.

In addition, the company delivers simplified vendor management by consolidating vendors and products on one platform.   FirstClose makes it easy to identify and repair the gaps where lender profits can be maximized.

Improve Vendor Management With Data Consolidation And Tracking Software

Lenders are constantly reviewing important pieces of data, typically from multiple vendor sources, in order to make critical lending decisions regarding borrowers or their pieces of property. This often results in miscommunication, lost files and the use of inappropriate vendors for unique scenarios.


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Luckily, there have been major advancements in the world of reporting, including the perfection of software tools that allow third-party companies to collect vendor data and display it in ways that are easy for employees to consume. Those employees are then better able to effectively guide their lender customers to the best course of action regarding the vendors they use.


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For instance, one of the biggest complaints that borrowers often have with their lender is that the appraisal process takes far too long. Especially in today’s world of instant gratification, no one is happy about waiting weeks to hear if their loan has been approved.


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So, if an appraisal from a certain vendor took an unusually long amount of time, a third-party employee can use this reporting software to determine if this is a one-off scenario that occurred due to unexpected factors, or if it is actually part of a larger trend with that particular vendor. If the vendor is performing positively the majority of the time, no changes need to be made. However, if the data indicates a larger trend of poor performance, the employee must then alert the lender and help him make an appropriate decision about using better vendors in the future.

Because of this, it is important for third-party companies to first focus on internal reporting so that they can ensure they are doing the best possible job for their lender customers. When evaluating these reports, employees may note things like a vendor consistently slacking on turn times or a lender that is lending in an increasingly wide footprint. Upon seeing things like this, the company can provide its guidance on what alternative vendor options they may have.

And, just because a vendor is flagged for one customer does not mean it is flagged for all customers. Not all vendors are great performers in all areas; one may be a top performer in California but fail miserably on the East Coast. It is up to the third-party company to ensure that each of its customers’ unique requirements are met at all times.  

Of course, a reporting solution from a third-party provider is of no use if the provider is not adamant about staying up to date on compliance expectations. As lenders know better than anyone, the home equity and refinance industry is no stranger to ever-changing rules and requirements. By partnering with a company that can easily update its software as soon as laws or industry standards change, lenders save a lot of time and greatly reduce the risk of costly mistakes.

Reporting and analyzing data is truly the best method of vendor management. If a third-party provider has a lender customer that wants to change vendors, that provider should be able to effectively and efficiently collect data on the vendor and present it to the lender to either enforce or dispute their concern. It is vital to avoid making a vendor change based on an isolated incident that could actually make the problem worse.

An all-in-one solution to consolidate settlement services and aggregate vendor management, as opposed to the traditional model of ordering title, valuation and flood reports from different vendors, is critical for lenders to be flexible, successful, and to maintain positive relationships with their borrowers.

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Taking LOS Integrations Further

By now, most lenders can agree that there are countless benefits to integrating their Loan Origination System (LOS) with a technology provider’s software. For one, it eliminates the front-end data entry of having to visit multiple vendor websites and rekeying data they have already entered into the LOS. With a true “lights out” integration, the lender doesn’t have to ever leave the LOS; they can order everything they need within one system, saving valuable time.

In addition, LOS integrations eliminate copying and pasting on the back-end of the process once the order is complete. When the report is delivered back to the lender, not only is the PDF imported to the “manage files” section of the LOS, but key data elements populate important data fields. When done correctly, the LOS automatically populates the legal description and vesting information from the title work, the value of the property from the Automated Valuation Model (AVM), desktop valuation or appraisal, and valuable flood zone and HMDA data from the flood certification. Populating these key data fields saves the lender from copying, pasting or rekeying the information into the LOS. It also mitigates the risk of potential human errors associated with manual data entry; for example, the “w” and “e” keys, located right next to each other on the processors keyboard, could be accidentally keyed incorrectly which would present a problem for legal documents and recordation if “E. MAIN ST.” inadvertently becomes “W. MAIN ST.”

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Lenders partnering with a provider that enables a true “lights out” LOS integration surely experience benefits. However, if their provider is not a middleware aggregator, they are still missing out on ways to improve their loan processing. By partnering with an aggregator, lenders can take their LOS integration a step further and distinguish themselves among competition.

In most LOS integrations, a technology provider integrates into a lender’s LOS in order to enable access to their own brand of products and services. An aggregator, on the other hand, provides lenders access to all brands within one platform. Even if a lender wanted to integrate with multiple providers, the process to include all of their vendors could take months to complete. With an aggregator, lenders can go live with hundreds of vendor choices available to them on day one.

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Some aggregators even give lenders the ability to add their own vendors that may not be integrated with the aggregator; such as small, local title companies or appraisers. With User Defined Vendor (UDV) technology, the lender selects which vendor they would like to utilize and the aggregator delivers the order to the preferred vendor. Local vendors looking to access an aggregator’s system on the back-end can easily upload their documents to the system with data elements and the PDF so that the aggregator can convert the forms to XML and deliver them back into the LOS. UDV technology enables lenders to add their preferred companies into their LOS in days as opposed to months.

Another important tool that lenders should look for when choosing an aggregator is escalation intelligence. This type of technology programs the systems to automatically know what the lender wants to do next if orders receive a “no hit” or if the underwriting guidelines dictate that a more robust type of product needs to be ordered. For example, if a lender orders an instant property valuation and there is not enough information on the property for the system to return an AVM, the system will automatically order a desktop valuation, drive-by appraisal or full appraisal, depending on the underwriting guidelines, risk tolerance and cost savings objectives of the lender. The same technology can be applied to instant title searches, full property reports and title insurance products.

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Finally, an aggregator has the ability to mimic the lender’s underwriting guidelines to provide additional efficiency and “automated decisioning” technology. They provide configurations that intelligently know what products to order based on credit scores, loan amounts, LTV and other underwriting criteria, then auto-order the appropriate products and services that are required for that specific loan. This type of technology eliminates the need for the processors to determine what to order and when to order it, thereby reducing the risk of human error.

LOS integrations with middleware aggregators result in reduced processing and closing times for lenders. The aggregator delivers faster integrations with more vendors, manages vendor turnaround time on behalf of the lender and even calculates Loan to Value (LTV) and Combined Loan to Value (CLTV) to automatically populate on the lender’s system. While general LOS integrations are beneficial, it is clear that the most competitive lenders use middleware aggregators to take their integrations to the next level.

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FirstClose Partners With Chicago Title Insurance Company To Provide Wider Range Of Services

FirstClose, a provider of technology solutions for mortgage lenders nationwide, today announced a partnership with Chicago Title Insurance Company.

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Through this integration, the FirstClose Report now provides financial institution clients with Chicago Title’s property search, legal and vesting products and services. The property search report includes items such as the last grantee of record, a legal description of the property, a list of mortgages and liens on record, the permanent index number and the latest transfer deed on file. This report can be used with residential or commercial properties.

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In addition, FirstClose and Chicago Title’s full legal and vesting services include the last grantee of record, a legal description of the property in text format and the latest transfer deed on file.

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“Our comprehensive title products and services enhance FirstClose’s home equity and refi suite of offerings to add efficiencies and further expedite closing times for lenders,” said Thomas Curry, vice president of Chicago Title.

“We are thrilled to be working with Chicago Title and know that this partnership will only improve our product offering and allow us to better serve our clients,” said Tedd Smith, chief executive officer of FirstClose. “Giving our clients options when it comes to products and services has always been a key part of our business. Partnering with a powerhouse like Chicago Title will help us continue to drive our business forward.”

Taking LOS Integrations A Step Further

By now, most lenders can agree that there are countless benefits to integrating their Loan Origination System (LOS) with a technology provider’s software. For one, it eliminates the front-end data entry of having to visit multiple vendor websites and rekeying data they have already entered into the LOS. With a true “lights out” integration, the lender doesn’t have to ever leave the LOS; they can order everything they need within one system, saving valuable time.

In addition, LOS integrations eliminate copying and pasting on the back-end of the process once the order is complete. When the report is delivered back to the lender, not only is the PDF imported to the “manage files” section of the LOS, but key data elements populate important data fields. When done correctly, the LOS automatically populates the legal description and vesting information from the title work, the value of the property from the Automated Valuation Model (AVM), desktop valuation or appraisal, and valuable flood zone and HMDA data from the flood certification. Populating these key data fields saves the lender from copying, pasting or rekeying the information into the LOS. It also mitigates the risk of potential human errors associated with manual data entry; for example, the “w” and “e” keys, located right next to each other on the processors keyboard, could be accidentally keyed incorrectly which would present a problem for legal documents and recordation if “E. MAIN ST.” inadvertently becomes “W. MAIN ST.”

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Lenders partnering with a provider that enables a true “lights out” LOS integration surely experience benefits. However, if their provider is not a middleware aggregator, they are still missing out on ways to improve their loan processing. By partnering with an aggregator, lenders can take their LOS integration a step further and distinguish themselves among competition.

In most LOS integrations, a technology provider integrates into a lender’s LOS in order to enable access to their own brand of products and services. An aggregator, on the other hand, provides lenders access to all brands within one platform. Even if a lender wanted to integrate with multiple providers, the process to include all of their vendors could take months to complete. With an aggregator, lenders can go live with hundreds of vendor choices available to them on day one.

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Some aggregators even give lenders the ability to add their own vendors that may not be integrated with the aggregator; such as small, local title companies or appraisers. With User Defined Vendor (UDV) technology, the lender selects which vendor they would like to utilize and the aggregator delivers the order to the preferred vendor. Local vendors looking to access an aggregator’s system on the back-end can easily upload their documents to the system with data elements and the PDF so that the aggregator can convert the forms to XML and deliver them back into the LOS. UDV technology enables lenders to add their preferred companies into their LOS in days as opposed to months.

Another important tool that lenders should look for when choosing an aggregator is escalation intelligence. This type of technology programs the systems to automatically know what the lender wants to do next if orders receive a “no hit” or if the underwriting guidelines dictate that a more robust type of product needs to be ordered. For example, if a lender orders an instant property valuation and there is not enough information on the property for the system to return an AVM, the system will automatically order a desktop valuation, drive-by appraisal or full appraisal, depending on the underwriting guidelines, risk tolerance and cost savings objectives of the lender. The same technology can be applied to instant title searches, full property reports and title insurance products.

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Finally, an aggregator has the ability to mimic the lender’s underwriting guidelines to provide additional efficiency and “automated decisioning” technology. They provide configurations that intelligently know what products to order based on credit scores, loan amounts, LTV and other underwriting criteria, then auto-order the appropriate products and services that are required for that specific loan. This type of technology eliminates the need for the processors to determine what to order and when to order it, thereby reducing the risk of human error.

LOS integrations with middleware aggregators result in reduced processing and closing times for lenders. The aggregator delivers faster integrations with more vendors, manages vendor turnaround time on behalf of the lender and even calculates Loan to Value (LTV) and Combined Loan to Value (CLTV) to automatically populate on the lender’s system. While general LOS integrations are beneficial, it is clear that the most competitive lenders use middleware aggregators to take their integrations to the next level.

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Eliminate Risk

Improperly handling risk management efforts can make or break your loan origination process. Often, unforeseen issues arise that can be effectively dealt with, or even prevented by, the implementation of a strong risk management infrastructure.

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With potential crises just waiting to be revealed, it is beneficial for lenders to identify these risks up front, before the damage becomes irreparable. Three areas on which lenders should focus in order to protect themselves and their borrowers are title search insurance, AVM audits and the use of innovative technology for property reports.

Title Search Insurance

Performing a title search consists of locating all necessary documents to determine and verify the legal owner of a property, and additional interest(s), claims and encumbrances on the property. Having insurance on these searches protects the lender by insuring that the information presented in the search is accurate and valid. If a title search is performed without proper insurance, the lender is left responsible for any issues down the road. For example, if a lender closes a home equity loan, and two years later the borrower defaults and the lender was not aware that there was a mortgage lien filed prior to the home equity that lender is subject to any losses that could occur as a result of the error on the original property report.

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With title search insurance, any errors or missing data on the property report are covered, and the lender is guaranteed a lien position. This indemnifies the lender of fault and losses for any incorrect data on the initial report, should the borrower default on the loan. Lenders should always partner with providers that not only handle nationwide title searches for them, but also provide sufficient title search insurance.

AVM Audits

Automated Valuation Models (AVMs) allow lenders to receive information regarding a residential property at the touch of a button. They show the lender the market value for the property, the tax assessor’s indication of value, recent sales history and comparable sales analysis of similar properties. And, although some lenders lost confidence in AVMs as a result of the 2008 financial crisis, they are making a strong comeback.

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In order to keep AVMs up to date and functioning properly, lenders must perform timely audits or validation. These audits should include a thorough comparison of a sample pool with AVMs versus a benchmark, such as a standard appraisal. This allows lenders to understand the strength and accuracy of the AVM model being used and the deviations between both, enabling the lender to adjust guidelines if necessary. Auditors want to see AVM validations to ensure the AVMs are delivering accurate values on properties.

By scheduling regular audits, lenders can trust that their AVMs are presenting correct information.

Using Innovative Technology for Property Reports

Many lenders still receive property reports from third parties that manually pull information from the Internet, transpose it to a report and then deliver the package to the lender. This physical transport of data from one document to another, or the “stare and compare” approach, significantly increases the risk of human error.

Lenders should engage with providers that use technology to create property reports directly from information provided by the courthouse or credit repositories. When no data is manually input by humans, the process becomes much faster and ensures accurate information. The lender is then delivered one concise report in a timely and compliant manner.

The best way to enhance your risk management infrastructure and keep up with competitors is to partner with an expert, third-party provider that offers full title search services, including insurance, AVM audit services and technical property reports. This will not only set you apart from others maintaining out-of-date processes, but will also ensure that all parties are protected throughout the entire loan origination process.

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Partnership Enables Efficient Home Equity Lending And LOS Integration

FirstClose, a provider of end-to-end technology solutions for refinance and home equity lenders nationwide, today announced a partnership with Pensacola, Fla.-based Pen Air Federal Credit Union. The partnership integrates FirstClose into Pen Air’s loan origination system (LOS), LoansPQ. A MeridianLink solution, LoansPQ integrates loan origination, core processing and internal banking software in almost any configuration.

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The integration with FirstClose provides the credit union access to an end-to-end refinance and home equity lending solution, as well as a vendor management system that eliminates duplicate data entry. Pen Air is able to easily order instant property reports, AVMs, desktop valuations, property condition reports and flood reports directly from its LOS. In addition, FirstClose will handle all closing and recording responsibilities on behalf of the credit union.

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“FirstClose’s unique, comprehensive solution provides an effortless way to process all home equity loans and home equity lines of credit,” said David Lancaster, VP of Lending, at Pen Air. “We pride ourselves on providing our members with the best possible service, and we’re looking forward to working closely with FirstClose to achieve this.”

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“We already value our partnership with Pen Air and look forward to helping Pen Air reduce closing times, cut costs and increase efficiencies,” said Tim Smith, co-founder and president of FirstClose. “Our goals align with Pen Air’s in that we are focused on providing the most accurate property information in an efficient and easy-to-use way.”

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