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And The 2013 Winners Are …

And The 2013 Innovations Winners Are …
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It was a night to remember. Over 100 mortgage executives gathered to see who the top innovations of the past year were. We recognized innovations that were introduced into the mortgage market between January of 2012 and December of 2012 that truly changed the mortgage market for the better. Understand that this is not a subjective competition. All applications were scored on a weighted scale by every member of the PROGRESS in Lending Executive Team. 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. We encourage everyone to apply online to get recognized next year. But for now, in alphabetical order, the top innovations of the past twelve months are:

a la mode, inc.

alamodePROGRESS in Lending has named a la mode, inc.’s Appraisal Quality Management (AQM) system a top innovation because in a risk-averse market, the AQM service guides underwriters to the issues in each appraisal that require human attention, includes actionable recommendations for improving quality and compliance, an end-to-end audit trail to satisfy examiners and investors, and produces investor-ready loan files, dramatically reducing repurchase risk. AQM is the result of lengthy collaboration between a la mode and MasterServ Financial and AXIS Appraisal Management Solutions. With AQM, risk assessment and investor preparation is transparently integrated with standard collateral valuation workflow. This is important because essential results are returned along with an overall Appraisal Quality Index (AQI) score compiled from analysis of five intelligently weighted risk categories in the appraisal report, consisting of property risk, market issues, completeness of the appraisal report, accuracy of the findings, and the risk associated with the collateral value, making it a true innovation.

Compliance Systems Inc.

CSIPROGRESS in Lending has named CSi’s Configurability tool a top innovation because this product addresses a clear and rising industry problem. With the rapid, extensive and frequent regulatory changes that are hitting mortgage lenders as a result of the 2008 market upheaval, lenders will not be able to maintain libraries of modified standard and custom documents without introducing unacceptable levels of risks. To address this Configurability includes the functionality for lenders to (a) add/append to standard provisions within documents (e.g., a Mortgage/Deed of Trust, Construction Loan Agreement, etc.), (b) replace standard provisions within such a document or (c) suppress/exclude certain standard provisions (“Configurations”); the functionality for lenders to make and manage Configurations internally (i.e., without reliance on a third-party entity for making or maintaining changes); the functionality for lenders to maintain and adapt those Configurations as market, business, policy and regulatory needs change (which is generally frequent, rapid and extensive); the functionality for a lender to create and maintain those Configurations while maintaining the Compliance Warranty of the underlying transaction; and the functionality for lenders to define the business rules/conditions under which the Configurations are to be used in specific transactions.

eLynx

ElynxPROGRESS in Lending has named the eLynx Expedite Inbox a top innovation because this solution provides a central portal for all consumer documentation. Consumers establish a single account that can manage documents across all loan products, providing a consistent and easily identifiable touchpoint for the bank. The solution is truly innovative because it enables borrower access to all manner of loan documents through a single, bank-branded portal. Instead of borrowers having to search through e-mails for the link to a document, they can simply log in to their secure account on Expedite Inbox and see a visual display of all the document sets sent from their lender, with the current completion status (as well as the status of associated signers, if applicable) and due date provided. These visual displays enable consumers to know, at a glance, how close they are to completing actions and what tasks must take priority.

IndiSoft

IndysoftPROGRESS in Lending has named IndiSoft a top innovation because the company has consistently improved business processes in the financial industry, and its RxOffice platform is an innovative technology that is continually enhanced to benefit all stakeholders. From originations, to default management to foreclosure, IndiSoft’s technology has transformed communications and workflow processing. In turn, customers have experienced strong returns on their investments and consumers have been able to work through their financial challenges more quickly, which is greatly helping the financial industry gain stable footing for the future. This year, IndiSoft added a mobile feature and engaged a national law firm to provide users the additional assurance that they will remain up-to-date with all regulatory changes. IndiSoft truly understands the issues surrounding regulatory compliance and the growing need for mortgage companies to implement strong quality control initiatives.

The Lykken on Lending Radio Program

LykkenPROGRESS in Lending has named the Lykken on Lending Radio Program a top innovation because David Lykken saw a need to create a new way for mortgage executives to stay abreast of the latest industry events. With that, the radio show was launched. The radio show is innovative because it takes an old concept (the idea of doing a specialized radio broadcast) and brings that concept into the mortgage space, which has never been done before. Today the radio program averages 30,000 unique downloads of the broadcast every month. In 2012 the industry saw the culmination of and launching of a lot of new rules. Realizing that mortgage lending is quickly becoming a highly-regulated space, the radio program quickly moved to innovate this past year by filling that need.

NCS

NCSPROGRESS in Lending has named National Credit-reporting System, Inc. (NCS) a top innovation because for the past three years, NCS has been a driving force behind the mortgage industry’s IRS electronic signature initiative for the income verification IRS Form 4506-T. These efforts came to fruition on January 7, 2013, the day the IRS began accepting e-signatures for Form 4506-T. The e-signature of Form 4506-T will lead to rising consumer satisfaction and mortgage processing efficiencies, while significantly advancing the protection of consumer information and lessening the opportunities for mortgage fraud. Through its work, leadership and influence, NCS was the undisputed leader behind this innovation. Only the NCS team—led by Cecil Bowman, senior vice president for government and industry relations for NCS and a former top administrator at the IRS for 35 years—had the know-how and experience to successfully navigate the IRS bureaucracy and develop trust with the agency.

The Turning Point

TurningPointPROGRESS in Lending has named the work of The Turning Point a top innovation because the company stepped up in 2012 to champion compliance-centric marketing. The FTC’s “Mortgage Acts and Practices – Advertising Final Rule” (that became effective in late 2011) was instrumental in pushing marketing compliance to the top of every lender’s agenda, although this is only one component in an expanding array of mortgage-specific regulations that now seriously constrain marketing activity. Of particular interest is section 321.3 of MAP, which outlines 19 areas where mortgage advertising misrepresentations have been prevalent – including loan terms, fees and costs, and the consumer’s potential for savings or approval – and which “prohibits any material misrepresentation, whether made expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.” The Turning Point’s SaaS-based MACH3 platform rose to the challenge, introducing “Corporate Control” and confirming MACH3’s status as the mortgage industry’s only compliance-centric corporate CRM and marketing automation solution.

 

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Magazine Cover Story

*Looking Toward The Future*

**Executive Roundtable**

***Over 120 mortgage executives came together to attend PROGRESS in Lending Association’s Innovations Event. We named the top seven innovations of 2011. After that event, we wondered what would happen if we brought together executives from each winning company to talk about mortgage technology innovation. Where do they see the state of innovation? And what innovation is it going to take to get our industry going again?

****To get these and other questions answered, we got the winning group together. In the end, (Back Row Left to Right) Lester Dominick, President of MortgageFlex Systems; Brent Stokes, Senior Vice President of Sperlonga Data & Analytics; Jeff Wirsing, President and Co-Founder of GreenBar America LLC; (Front Row Left to Right) Ravi Ramanathan, President and CEO of Decision Ready; Joe Badalamenti, President and CEO of Five Brothers; Bruce Backer, President of LoanSifter; and Jennifer Miller, President of a la mode’s Mortgage Solutions Division, talked about a lot of pressing industry concerns.

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

****JEFF WIRSING: More often than not innovation involves incremental change in how something was done previously … but the end result is to effect a significant change, or ripple effect, that reaches a critical mass. It’s almost like a chess match. As in chess … a piece gets moved from one square to another. When that happens it opens up a multitude of other opportunities for the other pieces. That being said, it’s only true innovation if the result is an improvement over what you had before. And in business, that means a “monetizable” improvement.

****JENNIFER MILLER: A true innovation creates a solution to a problem that has never been done. It’s a new and creative way to describe, solve, or redefine a problem that impacts the daily lives of a particular market. And taking it a step further to provide context – it’s applying technology to solve a problem in ways that no one has done before.

****LESTER DOMINICK: True innovation is the creation of a product or service that does a better job of solving a real problem than what currently exists. Sometimes a small incremental change can have a great impact and carry a small cost. Sometimes it takes a completely new solution to have great impact. The determination if a product or service is a successful innovation is ultimately determined by the market, which considers costs and benefits. True innovation has to be proven and sustainable. Change for its own sake and without lasting impact is a huge waste of valuable resources.

****JOE BADALAMENTI: Innovation is at the heart of all progress and success. It is the introduction of new methods, ideas or products. Innovation can take the form of sweeping change, while at other times it may take the form of incremental change. Five Brothers defines true innovation as the process of applying knowledge, expertise, and technology to meet the challenges and opportunities in the market. This approach allows us to deliver major productivity gains, while meeting our timeframes and goals, helping our clients achieve success in a dynamic, competitive and highly regulated marketplace.

****BRUCE BACKER: It is possible to have incremental innovation without a sweeping change by applying proven techniques to a new market or product or by enhancing products in ways the market hasn’t seen. By studying technology innovators such as Google, we’ve been able to create performance efficiencies and reliability that this market has not experienced with product eligibility and pricing engines, and I would consider that incremental innovation. But your purest innovation is often sweeping, or at least it has a sweeping impact on the market. By getting a clean start, you are not held back by tunnel vision or the design limitations of the current system. It’s often beneficial to the industry when a company can repeatedly step back and examine the tradeoffs of a complete re-design of any particular solution.

****RAVI RAMANATHAN: I believe true innovation always stems from creative approaches to difficult challenges. Innovation is taking creativity a step further by putting ideas into action. That means coming up with a new solution, product or service that will have an impact. It usually involves taking risks, and thinking outside the box, which of course is at the very heart of innovation.

All innovation is important, whether it be a large and far-reaching change, or come in the form of smaller, incremental changes to build upon an original idea, which seems to be more the norm. But all innovation requires taking action. It’s not enough to simply come up with the creative idea; you must find a way to apply it so that it’s useful.

****BRENT STOKES: I also don’t believe that innovation has to involve sweeping change. Innovations often incrementally improve an important aspect of daily life in surprising ways. We’ve had cell phones for more than a generation now, but innovative technologies have made them far more useful over the last 10 years or so. Those changes have been incremental in nature. True innovation usually means turning a good idea on its ear and creating something that works better, easier, faster, cheaper or a combination of all of these. Sometimes innovations first appear to be solutions in search of problems, but true innovations are generally things that make people ask, “Why didn’t I think of that?”

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

****LESTER DOMINICK: A little bit of both and a whole lot of being stuck in neutral. There is a tremendous amount of focus required on current and future regulatory compliance. Even the most aggressive innovators must devote their most valuable resources to compliance as their highest priority. There are certainly many opportunities to create innovative products and services taking advantage of new technologies and information distribution channels. New consumer technology innovations are happening every day and lenders have realized that today’s consumer expects the same advanced conveniences in their lending experience. I’m only seeing a few companies devoting resources to pursue this opportunity while most are just trying to get by with just focusing only on compliance. There are clearly some products in the marketplace that are entering their sunset phase.

****JEFF WIRSING: From my perspective, I see very little true innovation in the mortgage industry. It’s not thriving and it’s not in decay. It’s just stuck. I compare the “system” that we call the mortgage industry to a car that worked for many years. But times have changed and the old reliable car just doesn’t serve our needs any more. In an effort to fix a variety of problems the participants in the mortgage industry have been dismantling the car, re-building it with the exact same parts, and (surprise, surprise) getting the exact same result.

****BRENT STOKES: Mortgage industry innovation may not be thriving the way it was in previous real estate cycles, but it’s certainly not in decay. On the origination side, we are not seeing as many new loan programs or technologies that make mortgage credit as widely available as before. We are, however, seeing new ideas to make loans more safely. On the servicing side of the mortgage business, we are seeing innovation, especially in the foreclosure segment. Why? Because mortgage servicers are still trying to cope with the aftermath of the largest financial crisis in U.S. history. There is no choice but to find fresh solutions.

****JOE BADALAMENTI: The past few years have been extremely challenging to the mortgage industry. The industry has been forced to respond to the massive influx of new rules and regulations, challenging economic conditions and uncertainty in the market. These changes have spurred a wave of new innovations to meet these challenges. The silver lining is that the innovations created over the last year specifically address new market conditions, which are helping servicers maintain control in this new environment. Some innovations have been sweeping changes, while others have delivered incremental change, but one thing is certain, innovation in the mortgage industry is not in a state of decay.

****RAVI RAMANATHAN: Overall, I would say the state of innovation in the mortgage industry remains vibrant, but in different areas from those we saw prior to the crisis we are presently dealing with. As a sector, we continue to innovate in the segments most in need of help. Because the market demands it, Decision Ready is focused on default servicing technology, but we are already looking at using data obtained on the servicing side for different applications in the origination space.

****BRUCE BACKER: I believe mortgage technology innovation is thriving. Today’s regulatory and consolidative environment is forcing innovation to be centered first and foremost around compliance needs and tight integrations between best-of-breed solutions. This type of “forced” innovation may not be as press-worthy as the big splash of production innovation, but it doesn’t suggest any sort of ongoing concern.

As consolidation slows and the regulatory environment stabilizes, those companies that may appear to be lagging in innovation should be able to re-engage with more exciting initiatives. For example, we’ve seen renewed innovation in jumbo products and warehouse banks looking to mitigate risk while increasing liquidity. For LoanSifter, we’ve had more time and resources this past year to innovate, the results of which will become clear over the next six months.

****JENNIFER MILLER: There’s no doubt that mortgage industry innovation is currently thriving. Regulations have necessitated considerable innovation with regard to appraisal independence and delivery, just to name one industry example. The market has also been an impetus for innovation since mini booms require technological investment to seize market opportunities. In addition, industry professionals are actively looking at how technology can be applied to streamline their operations in the most cost effective manner possible.

****Q: Lastly, if there was one innovation that the mortgage industry needs to get closer to recovery, what would it be?

****BRUCE BACKER: We’ve seen the aftermath of some innovations that have driven the industry’s boom periods, so I’d be skeptical of any magic bullet that will substantially enhance the market in the short term. For the industry to strengthen its reputation, it needs to continue supporting the education and empowerment of borrowers, which is what the LoanSifter Available Mortgage Rate index was designed for. Borrowers are becoming increasingly savvy, and the ability for online shoppers to quickly locate a fair deal and apply for a loan represents an ongoing opportunity for customers of our eOriginations platform, our auto-quoting partnerships, and for the market as a whole.

****RAVI RAMANATHAN: Finding a quicker and more efficient way to resolve delinquencies and foreclosures would help get the industry back on track. As everyone knows, there are markets in the country with a shortage of housing inventory, yet an abundance of foreclosed properties waiting to come onto the market in the form of shadow inventory. Often servicers are stymied by the fear of lawsuits and potential compliance issues. Addressing those concerns and using technology to ensure that foreclosure processes are legal and compliant will ease servicers’ minds. Then the number of properties currently being tied up and hanging over the market can be moved. Already, it’s starting to happen, which is good news.

****JOE BADALAMENTI: Implement innovative, regulatory-compliant mortgage technology solutions that enable residential mortgage servicers to effectively respond to constantly changing market conditions. This type of innovation will provide servicers with the ability to maximize asset preservation, reduce costs, and optimize borrower relationships.

****JEFF WIRSING: It’s all about the quality of the mortgage backed asset and reestablishing the secondary market. Over the last 3+ years we’ve seen changes in the mortgage industry that effected licensing, valuation, compensation, legislation, fraud, analytics and underwriting guidelines. Despite all of those efforts the result (for all intents and purposes) is a complete lack of investors coming back to the secondary market. And the one thing that has been conspicuously absent in all of these “fixes” is the consumer. The innovation the industry needs to get closer to is focusing on the borrower at the point-of-sale. Let’s face it … if the borrower never defaulted there would be no need for any of the aforementioned changes. That may be a very simplistic comment … but that doesn’t make it any less true.

****LESTER DOMINICK: A loan product that would reduce the financial risks for a family being homeowners would be great. The product would offer financial stability and flexibility in all economic conditions for the majority of homeowners. It would balance the benefits of an appreciating market against the downside of a declining market. There are institutions that could take this risk, as their investment-planning horizon is much longer than the average homeowner. New technology could be developed to support this product offering. This would be a way to bring buyers back to the market again and stabilize neighborhoods over a long term.

****JENNIFER MILLER: The biggest area where innovation can be applied is in the arena of analytics – especially when it comes to evaluating appraisals in such a way that the good can be picked from the bad. Appraisers are coming under fire because they are being viewed as the party that is “killing deals.” But in some cases, the deal should to be killed. We need analytics – proof – that will refute these negative perceptions of appraisers and provide the potential buyer, agent, and LO with solid reasons why the loan should or shouldn’t have been approved.

****BRENT STOKES: We also need more efficient ways to bring qualified buyers and motivated sellers of properties together. With interest rates at an all-time low, the real estate market should be more robust. The overhang of foreclosure inventory needs to be absorbed so that the housing market can help revitalize the national economy. This means removing the friction that separates the housing supply, including REO and the distressed borrower inventory, from willing and capable buyers. Short term answers like investors who purchase homes for the rental market are good fixes, and they will help house families that were displaced by the crash. But we need an innovation that will bring home ownership efficiently to those who are able to handle the obligation now. There is a pent up demand out there that is being underserved by a lack of loan programs with realistic parameters.

And The 2012 Winners Are …

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And The Winners Are…

True Innovators Recognized

Over 100 executives gathered to honor the top innovations. It was an event to remember. In the face of adversity the mortgage industry responded. Several new innovations arose to help aide the industry in its efforts to get closer to recovery. And that’s really what the Innovations Program is all about. We are the Good Housekeeping Seal of Approval, the Gold Seal when it comes to recognizing true mortgage industry innovation.

What were we looking for specifically? We are recognizing innovations that were introduced into the mortgage market between January of 2011 and December of 2011 that truly changed the mortgage market for the better. Understand that this is not a subjective competition. 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.

Also understand that this recognition was not decided by mere industry onlookers, all six industry experts that make up the PROGRESS in Lending Association Executive Team acted as judges and all were given an equal say in how applications were evaluated. In short, the winners were judged by industry peers who know the space inside and out, just like you do.

In alphabetical order, the top innovations of 2011 are:

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a la mode, inc.

The rapidly changing regulatory landscape and the new GSE requirements significantly impacted the appraisal management and collateral valuation industries in 2011. Without critical innovation, delivery difficulties of the newly required MISMO 2.6 appraisal data could have choked origination pipelines at a time when this industry can least afford it. Since a la mode’s appraisal formfilling software is the choice of well over half the appraisers in the country, the company already had a presence on the desktop of a majority of the nation’s appraisers. That presence gave Mercury Network the unique opportunity to innovate a solution that streamlines the delivery of compliant appraisal data and ensures the easiest possible transition for all lenders and AMCs to easily comply with the GSEs new Uniform Collateral Data Platform (UCDP). In September of 2011, a la mode’s Mercury Network launched DataCourier, a new service that allows appraisers to easily deliver the MISMO XML to any lender or AMC they work for, without any manual file conversions or non-compliant e-mail attachments.

DecisionReady

In 2011, DecisionReady tackled a tough industry problem—default mortgage servicing—head-on, and came up with a technology solution that has already had far-reaching effects. The challenge of how to manage the business of servicing defaulted and delinquent loans in an efficient, cost-effective, and, most importantly, compliant manner, is one faced by nearly all of today’s mortgage servicers. By combining up-to-the-minute technology with a shrewd business strategy, DecisionReady came out with a solution that delivers major advancements in the business of managing defaulted loans, while ensuring the servicing of those loans is compliant. The solution created by DecisionReady addresses the full range of issues faced by today’s servicers. The DRAW platform helps servicers reduce costs, improve accuracy, and reduce the compliance risk associated with servicing delinquent loans.

Five Brothers

Over the past couple of years we have experienced serve economic challenges. High unemployment rates, an epidemic of foreclosures and defaults, declining home prices and an economy that is struggling to get back on track.  This has been difficult on everyone, including municipalities. To combat this situation municipalities have turned to implementing a wave of new regulations, and municipal codes requiring strict vacant property registration.  Each municipality across the country has added their own requirements and penalties for not adhering to these strict vacant property requirements. Resulting in fines and fees for non-compliance. To provide an effective and powerful tool, Five Brothers Default Management solutions has applied over 40 years of default management expertise, deep knowledge and working experience with municipalities, and advanced technology to deliver the industry an innovative vacant property registration solution. This Web-based system leverages the most advanced vacant property registration database to deliver 24/7 solutions to servicers to ease their burden of handling vacant property registration.

GreenBar America

Mortgage technology is advancing but really nothing innovative has been created to change the consumer experience at the point-of-sale. That’s where GreenBar comes in. The GreenBar solution addresses the intent of the Consumer Financial Protection Bureau as it pertains to the mortgage transaction; it endeavors to eliminate intentional and unintentional product steering by mortgage originators; it provides the mortgage industry with a more effective, comprehensive, realistic and consumer centric definition and solution for adhering to intent of the “safe harbor” provisions; it protects consumers against loan originator bias (intentional and unintentional), as pertains to the selection or recommendation of a specific mortgage product and terms; it establishes a simple, easy to understand and universally accepted framework for evaluating the borrower’s ability-to-pay; it puts consumer needs as the starting point of the mortgage transaction; and it incorporates a standardized educational method into the origination process. To elaborate, the GreenBar Decision Engine enables mortgage borrowers to be “pre” underwritten by loan originators for the purpose of educating consumers as to the optimal product and strategy to maximize the likelihood that they will be able to meet their new long-term financial obligation.

LoanSifter

The LoanSifter Available Mortgage Rate Index (AMRi) is the mortgage industry’s first complete, real-time mortgage rate index that is based on same-day rates and the only index that provides a realistic idea of what borrowers typically pay for a loan. Three main characteristics set LoanSifter AMRi apart. First, it provides the most accurate depiction of current and historical mortgage rates available on the market. It is the only index based on same-day rates. Rather than using past sources of information, the LoanSifter AMRi’s indices are created by leveraging real-time data from 25 wholesale and correspondent lenders. Second, the LoanSifter AMRi was created in partnership with the Federal Reserve Bank of Boston, one of twelve district Reserve Banks in the Federal Reserve System. Third, use of the LoanSifter AMRi is completely free of charge. The LoanSifter AMRi lists all relevant rate information all on a single page.

MortgageFlex

Recognizing that the lending industry would never be the same after the last industry down time and lenders would need smarter and more efficient solutions, MortgageFlex developed an offering that isn’t just new technology but a new solutions approach. One that addresses everything a lender needs to respond quickly and easily to the ever-changing rules and regulations and the demands of tech savvy borrowers while continuing to increase revenue. Traditionally, technology vendors simply upgrade to the latest platform (DOS > Windows > .NET) and tout the advantages. And while the latest advantages are numerous, there still needed to be a support solution paradigm shift to accommodate the lending transformation that has occurred. Just upgrading technology is not enough to be successful anymore; lenders need flexible pricing options, secure hosting choices and experienced resources. In short, they need a strong partner with new answers. To meet these needs, MortgageFlex redesigned not only the LoanQuest product offering but looked internally and evaluated their resources and processes.

Sperlonga Data & Analytics

The past few years have revealed a growing problem faced by mortgage servicers: delinquent homeowners association (HOA) fees causing delays in reselling foreclosed and defaulted residential properties. It has been said that this is “the biggest problem the mortgage industry has never heard of,” and it affects, in one way or another, over 24 million properties. Enter Matt Martin and team with a simple, yet ingenious, solution; find every HOA out there and bridge the gap between them and the mortgage servicer and investor community.Martin’s concept was the genesis of Sperlonga Data and Analytics, an Arlington, VA-based company created in 2011 to provide a technology-enabled centralized interface for HOAs and servicers, as well as an array of services to benefit both sides. Sperlonga’s technology facilitates the identification, delivery, and resolution of outstanding account balances related to association fees. Servicers and investors upload portfolios of properties directly into the Sperlonga workflow engine, and progress and results are viewable through a personalized Client Dashboard. This simplifies the overall process.

 

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