nyc | orlando - web-based originations spur questions on how … · 2019-11-27 · march 2012...

Mar

ch 2

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mortgage–technology.com

Web-based originations spur questions on how lenders and vendors will adapt

Exploring Return on Automation

INSIDE

Future of SaaS

Software Pricing Trends

Paperless Adoption

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Contents16 Apply Here

By Ted Cornwell The origination process is evolving. Consumers areclamoring for more convenience from banks, andtechnology vendors are developing systems for themto submit loan applications electronically.

COVER STORY

22 Managing the Flavors of Cloud

By Austin Kilgore While PaaS and IaaS represent the latest

innovations in hosted software, SaaS stillholds a valuable place in the cloud.

28 Cashing In By Scott Kersnar With technology advancing, vendors’

pricing structures are evolving.

34 The Power of Paperless By Austin Kilgore eLynx President and CEO Sharon Matthews

explains how managing data and documentsimproves how lenders do business.

Features Columns

6 Fair and Square By Ronald Jasgur Technology deters REO listing

fraud and gets sellers the best price.

10 Tech Tool Belt By Rob Colbeck Field services improves efficiency

and processes with new technology.

14 Marketing Results By Jim Blatt Successful marketing is automated,

relevant and continuous.

Inside

4 Editor’s Note The trilogy of origination technology.

39 Tech Stats By Austin Kilgore Benchmark study reveals consumer trends

in Internet mortgage application activity.

10

28

22

� Mortgage Technology » March 2012

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http://www.harlandfinancialsolutions.com/mortgage2

Google’s recent decision to shutter its Advi-sor Mortgage rate search platform after just two years was an unforeseen plot twist in the chronicles of origination technology.

As Google exits stage left, the show goes on. While lenders are no longer advertising rates to the search engine’s massive audience, an en-semble of Internet stars continues to offer tech-nology to connect lenders and consumers.

But what’s next after a lender’s online lead generation strategy takes hold? The next chapter in this legend is the deployment of consumer-facing point-of-sale applications. And it’s a worthy sequel—think “Back to the Future Part II,” not “The Lost World: Jurassic Park.”

As this month’s cover story details, lenders are increasingly provid-ing borrowers with online tools to complete loan applications. As this innovation takes off, lenders are adapting their businesses to evolve the role of the loan officer, while POS and loan origination system vendors are engaged in a showdown for the online channel. Also, be sure to check out Tech Stats, which provides some interesting data on a number of trends in the online channel.

This month, we conclude our three-part series, “Visions in the Cloud,” by examining the future of software as a service. As cloud computing evolves to include platform as a service and infrastructure as a service, the tradi-tional SaaS model is still alive and well, providing new opportunities for small and large lenders and servicers alike. If you missed Parts I and II of the series, the e-editions are available online at mortgage-technology.com.

Internet lending and the cloud are both moving lenders forward. The cli-max of the origination technology saga—the mortgage industry’s “Return of the King,” if you will—is e-mortgage. Like the “Lord of the Rings” series, the e-mortgage story is a long and winding one—but more on that next month.

editor’snote

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MORTGAGE TECHNOLOGY (ISSN 1098-4038). Volume 19, Number 1. Printed six times per year with issues in February, April, June, July, September, and October by SOURCEMEDIA, INC., One State Street Plaza, 27th Floor New York, NY 10004. Subscription price: $89 per year in the U.S.; $99 in Canada; $119 for all other countries. Periodicals postage paid at New York, NY and additional mailingoffices. POSTMASTER: Send address changes to MORTGAGE TECHNOLOGY/ SOURCEMEDIA, INC., P.O. Box 530 Congers, NY 10920. For all subscriptions, renewals, address changes or delivery service issues contact our Customer Service department; email [email protected]; or (800) 221-1809 or (212) 803-8333; fax (212) 803-1592; or send correspondence to Customer Service, MORTGAGE TECHNOLOGY/SOURCEMEDIA, INC., One State Street Plaza, 27th Floor, New York NY 10004. Send editorial inquires to MORTGAGE TECHNOLOGY, One State Street Plaza, 26th Floor, New York, NY 10004. MORTGAGE TECHNOLOGY is available online via Information Access (415-378-5000), Mead Data Central (513-865-6800), and UMI (313-761-4700). For permission to Reprint Published Materials, call (800) 367-3989 or (212) 803-8367. Those registered with the Copyright Clearance Center (222 Rosewood Drive, Danvers, MA 01923) have permission to photocopy articles. The fee is $10 per copy. Copying for other than personal use or internal use is prohibited without express written permission of the publisher. © 2012 Mortgage Technology and SourceMedia, Inc. All rights reserved.

Tim AndersonLender Processing Services

Christos BettiosFirst American Financial

Vladimir Bien-AimeGlobal DMS

Brian BoikeShore Mortgage

Ann FulmerInterthinx

Harry GardnerSigniaDocs

Robin HannahWells FargoHome Mortgage

Gagan SharmaBSI Financial Services

John WalshDataQuick

Kim WeaverFiserv

David ZugheriEnvoy Mortgage

ADViSORYBOARD

AUstin [email protected]

Act II


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http://www.docmagic.com

Real-life scenaRio: a listing agent gets assigned a bRand-new bank-owned listing in a great neighborhood. Of course, before marketing the prop-erty, the agent needs to properly register it with the city, conduct a trash-out, change locks, make minor repairs, transfer utilities, winterize and/or facilitate lawn care ser-vice, and finish a few other checklist items like placing a sign in the front yard.

A week or two passes while the bank’s asset manager approves initial expenses and determines a list price based on the agent’s broker price opinion and an independent appraisal. Meanwhile, the listing agent fields telephone calls from prospective purchas-ers and other agents, inquiring about the property and when it will be available.

The answer isn’t quite straightforward: the property isn’t listed yet and the price hasn’t been determined, so everything is up in the air. Buyers are lining up, waiting to see it, eager to pay, but the property isn’t officially for sale. Still, these prospective

buyers are encouraged and invited to take a look before the property hits the market, if they agree to purchase via the listing agent. There’s the kicker. It’s not quite an ethical way to handle this, now, is it? And actually, it’s not even legal.

The listing contract eventually arrives, with instructions and the seller’s list price. The agent submits the buyer’s of-fer on day one. It may even be for the full asking price. Big surprise? No, it’s clear where this was going.

A couple days later, the property finally hits the MLS, and other agents submit offers for their own buyers. They’ve been watching and waiting, and want a chance at the action—which they are entitled to have if all is handled in a fair and above-board manner. These agents rush out with their clients to see the property. They know how active it is and tend to write very strong offers. Some even come in above list price.

What do you think happens to higher offers when the list-ing agent has her own buyer? In a fair scenario, a bidding war ensues and the best offer is the one accepted by the seller. But this isn’t a fair scenario. Far from it.

Agents won’t give up the chance to earn double commission on a sale to their own cli-ents. They won’t present offers that net the seller more money, but puts less in their own pockets. Can you blame them? After all, the bank determined the list price and the agent brought an offer for exactly what the seller expected. Does anyone at the bank know they can get more? Does anyone really lose? And besides, how will they ever find out?

This happens every day. Buyers know it. Agents know it. Asset managers know it. Banks, servicers and the government-sponsored enterprises regularly get letters and phone calls from irate buyers and agents, demanding to know why a property sold for tens of thousands of dollars less than the offer they submitted.

TechOUTLOOK by Ronald Jasgur

Technology deters REO listing fraud and gets sellers the best price.

pers

pec

Tive

s

Fair and Square


006_MTMar12 1 3/6/2012 1:27:37 PM

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Origination ServicingDefaultTechnology

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It doesn’t make sense and they de-serve an answer better than times are tough, things fall through the cracks, agents are only human.

The sad thing is, there isn’t much that anyone is going to do about it after the fact. The property is already sold, is off the books and price expecta-tions were met. There’s too much of a morass in our in-dustry to waste time on look-ing backward. The industry is still reeling from the robo-signing debacle. Who is going to devote what slim resources are available to investigate accusations when the cost to prosecute far outweighs any possible recovery? Nobody.

Human nature trumps ev-erything an agent is supposed to do according to laws and the Realtor Code of Ethics. Real estate laws in every state require a listing bro-ker to deliver all offers to the seller.

Article 1 of the Realtor Code of Eth-ics states, as a primary duty to clients and customers that Realtors “protect and promote the interests of their cli-ent,” and “treat all parties honestly.”

It’s important to note that the list-ing agent’s fiduciary duty is to the bank when selling a real estate owned property. And agents helping a hom-eowner with a short sale have an obli-gation to both treat the bank honestly and minimize any possible deficiency balance that may be left after the sale.

But forget for a moment the seller is a mortgage company. Insert your-self in that scenario.

What would you do if a listing agent you hired to sell your home found a buyer, negotiated a deal for what you were told it was worth and received full commission—then you learn the next day there was another agent with a different buyer whose offer was delivered to your agent but never shared with you? An offer for, let’s say, $20,000 more? Don’t answer.

Although we’d all like to believe that people want to do what’s right and honest, the reality is that human

nature—an attempt to look out for oneself, that Darwinian urge to survive better than the next creature—overrides legal language and any-one’s moral code.

It’s easy to think that this problem is exag-gerated and can’t possi-bly be that widespread. But skeptics need to only Google the ques-tion, “How do I know if my offer was submit-ted to the bank?”

A recent search re-turned about 330 mil-lion hits, representing an overwhelming num-

ber of aggravated agents and buyers who are screaming, begging, hoping that something will be done to right the many wrongs here.

And since that frustrated buyer is also the taxpayer whose money went to bail out the big servicers, there is no doubt in his-yours-my mind that the bank doesn’t care…that the process is “fixed”…that it’s just another example of poor government oversight. The headline risk alone is huge and should be enough cause for concern.

But that’s not all. It gets worse.Most mortgage servicers and as-

set managers today have a system or scorecard that ranks the effectiveness of the agents they employ. They’re tracked on metrics like how quickly they complete tasks. And how quick-ly their listings sell. And how much deviation there is between an asset’s sale price and the agent’s valuation.

It’s easy to see that the way agents are scored actually rewards the worst of-fenders; the agents with the best score-cards tend to get the most listings. And the most opportunity to take advantage of the process. And the cycle repeats.

There is a housing recovery waiting to happen. But until the market closes the gaps that allow scammers and fraud-sters to depress values for personal gain, it won’t come soon enough.

Proven, cost-effective technologies to identify and prevent these types of fraud before they happen are available today for users of all sizes. It doesn’t matter how many distressed assets you have; the size of a business isn’t a deter-mining factor in best-practice business processes. If you have even one REO or short sale, you’re betting against human nature. And eventually you’ll lose.

It’s time to make the industry honest. Any seller—even one deemed the “big bad bank” by whatever stories people tell themselves to rationalize bad be-havior—deserves to see every single of-fer before making a costly decision.

When buyer’s agents are able to submit offers directly to the seller or servicer, listing agent fraud and flop-ping disappear. Asset owners recover more money, servicers increase suc-cess rates with less risk, and agents and buyers finally see transaction time lines closer to that of a tradi-tional sale—knowing, reassured, com-forted by the fact that every offer is received, reviewed and considered.

You can’t make an educated deci-sion without all the facts. Technology brings fraudulent activity right to the asset manager or loss mitigator’s desktop; with empowering solutions, there is no way to miss it.

We are sick of seeing immoral, unethical behavior in this industry. Deliberately defrauding a bank, a GSE, or other institutional investor is illegal and could send an agent or borrower to prison. Plus, it’s just not a nice thing to do—even if you tell yourself the “big bad bank” is a nameless, faceless entity from some other part of the country—not a liv-ing breathing person.

Ronald Jasgur is president of Southfield, Mich.-based Woodward Asset Capital.

techOUtLOOK

Whenbuyer’s agents are able to submit offers directly to the seller or servicer, listing agentfraud and floppingdisappear.


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http://www.guaranteedrate.com

The morTgage field services indusTry has noT hisTorically been known for being on the cusp of new technologies. It was only five years ago that property preservation results, repair bids and photos were transmitted via fax from con-tractors in the field. Many of us still remember the days before digital cameras, when photos were taken using Polaroid cameras and mailed to servicers. Efforts have and are still being made, however, to continually advance the efficiency and effectiveness with how national field service providers operate. Technology is an essential factor, especially when addressing the uniqueness of today’s housing market scenarios.

In recent years, new technologies and updates to electronic processes have made their way to the servicing back-end and in particular, technology in field services has grown. In recent years, servicing professionals have been faced with unprecedented volumes, com-bined with associated risk and scrutiny. From a technology perspective, more efficient

processes and greater process integrity are required.Some of the challenges include the multitude of parties

involved and the necessity to safely exchange timely and sensitive information, the large volume of REO inventory sitting on servicers’ and investors’ books, as well as new challenges, including hundreds of new local property codes and federal mandates that must be managed.

In response to the technology needs of a constantly chang-ing industry, two primary aspects drive field servicers’ search and implementation of technology: flexibility and efficiency.

Mortgage servicing is cyclical, so participants must be ready for changes in capacity to quickly redirect or modify existing resources without interrupting business. Technol-ogy helps to aptly scale processes and the workforce.

Also, field service companies manage an inordinate amount of information. In the time-sensitive nature of de-

fault mortgage servicing, any information exchange must be accurate and rapid since property inspections, preservation work and REO property maintenance, re-hab and repair all require actions contingent on one another.

Field Services Tech EvolvesIt was not too many years ago that servicers, vendors and contractors would sit by a

printer or fax machine and wait for page after page to arrive. There was limited system integration, so documents were manually entered into each platform. Field service pro-viders had to bridge the gap between their environment and that of the master servicing system. It was not so long ago that information would arrive from a vendor, have quality control checks performed, and then have to be re-entered into the client’s system.

SERVICINGSIDE by Rob Colbeck

Field services industry improves efficiencyand processes with new technology.

pERS

pEC

TIVE

S

Tech Tool Belt

10 Mortgage Technology » March 2012

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With all the manual input, the risks of errors and duplicated efforts were great. Unnecessary resources were being ex-hausted by this process—or other resources were not being used to their greatest potential.

Instead, built-in logic can perform checks and enable a seamless information flow be-tween systems. This approach cuts down on turn times and reduces errors. Information is entered only once, electroni-cally validated and then auto-matically transferred.

The more quickly that a field service provider can re-ceive information, deliver it to the field, and then have the results returned back to the client, the greater the benefit to the neighborhood and sur-rounding communities.

The right technology lets a company receive work orders from a client’s serv-er, load the data into its own system and give vendors the utility of having that very order assigned in their sys-tem almost simultaneously. The speed-ier passage of information between all parties, along with system integration, allows the vendor an ability to access an order as soon as it is placed.

At the same time, once results are submitted, they are returned real-time back to the client (assuming they pass all quality control checks). Stream-lined communication means greater productivity, and with inspections and determination of occupancy or first-time vacancy, for example, timeli-ness for an initial secure is invaluable to protecting that asset. The average time for work order completions to-day has been drastically reduced.

Additionally, most vendors have their own group of subcontractors and need a way to manage these individu-als and assign work more efficiently. They can upload information once work is complete to reduce the turn time by at least one, maybe two days.

Such a platform has business rules built in to ensure work is not missed in the necessary workflow. Vendors

can receive the work and report back to the client appropriately, and can communicate additional necessary work and/or property changes more clearly.

Scalability is KeyIt is imperative that

a technology used in the default servicing industry is highly scal-able. Regardless if the technology is focused on field services, REO, short sales, loss mitiga-tion or any other spe-cific business process, the ability to scale both

upwards and downwards and react to fluctuating volumes is a necessity.

A large, national field service pro-vider can easily see results of hun-dreds of thousands of inspections per month pass through its system. Each order requires its own subset of data, including photographs. The vol-ume of photographs received alone reaches into the tens of millions each month, and each photo must be up-loaded and stored, generally for at least seven years. In addition to the storage, this information must also be secured and protected.

IT Security a Must-HaveTechnology, and in particular, IT secu-

rity, defines the leading property pres-ervation companies. Any professional in the servicing industry constantly handles both company-sensitive and customer-sensitive information, in-cluding loan numbers, borrower infor-mation and other data. Just like with online or mobile banking, field service providers must maintain similar sets of controls to prevent unauthorized access to personal information.

Multilayer authentication is imper-ative, as well as having an extreme amount of logic built into systems to set user privileges. There are certain controls for keeping data in place, secure and available for the right people, with each user equipped with specific permission to data. It is criti-cal to prevent information sharing between financial institutions, such as data regarding their portfolios, and data between field service companies, so they see only the work assigned to them. At the field level, vendors of-ten prefer to establish tiered access among employees as well.

Value-Add of Data RedundancyDual data centers are necessary to

mitigate the threat of down time and en-sure business continuity should disaster strike. Remember, disaster recovery is not limited to an actual natural disaster. Most people only associate the term “di-saster recovery” with major events such as hurricanes or earthquakes, but busi-ness continuity is also prepared and re-hearsed for specific geographic events such as ice storms, rolling brown-outs and local severe weather events.

Firms should have the flexibility to shift work between sites, with its prima-ry data center housing high availability technologies, which allow data to be moved immediately to the secondary site with minimal downtime.

Regulatory ComplianceRequirements of servicers and their

vendors are more numerous and more sophisticated today, especially with the technology that is needed to support the new regulations and requirements. Mortgage servicers are held to higher standards, which results in higher stan-dards for all parties involved in the process. Much of that change is due in large part to increased and evolving industry regulations. Servicers have re-ceived new requirements from regula-tors, which are handed down the line.

SERVICINGSIDE

Mortgage servicers are held to higher standards,which resultsin higher standardsfor all partiesinvolved in the process.

Continued on page 40


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The Outlook For 2010Our MT Award Winners Take A Look At Next Year

Vol.

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Exploring Return on Automation

M&A Strategy | Tech Spending | Servicing Roundtable

mortgage–technology.com

013_MTMar12 6 3/2/2012 4:28:02 PM

http://www.nationalmortgagenews.com/mortgagetechnology-subscribe

The key To long-Term healTh in The morTgage markeT is a strong purchase pipeline. Revenue from refinances business is great, but these booms come and go. Banking on refinances may seem beneficial for the moment, but too many outside factors make this a risky stand-alone strategy for the long term. With borrowers being held at bay by recent economic challenges, originators would do well to capitalize on pent-up demand and the coming purchase market.

There are two underutilized strategies loan officers can use to drive their purchase business. First, originators need to fully capitalize on the relationships they have with re-ferral partners. Second, originators need to create affinity programs with local employers. When consistently executed, these programs can increase purchase loans revenue.

To fully capitalize on referral relationships, originators need to focus on marketing that makes them a resource for real estate agents and other partners. Loan officers must

produce marketing that adds value to the relationship. Database management is also important. Loan officers must

demonstrate to partners they are managing relationships with prospects. Regular reporting lets loan officers show partners how they are leveraging referrals. And in order to allocate time and energy in the most productive way, originators must maintain effective management reporting to track results.

In 2012, total originations in the market are forecasted to fall for the fourth consecutive year, but loan originators can avoid losing revenue by implementing more effective marketing. To be successful, marketing must not only build relationships, but also build the loan officer’s reputation as a market expert.

Top originators use this strategy to produce positive results because consumers are more likely to respond to targeted and consistent marketing than they are generic marketing that’s not relevant to their situation. Continuous communication and

memorable marketing that makes sense and is relevant to each individual will naturally strengthen relationships because it speaks to the consumer, not at the consumer.

MarketingThe best marketing come from automated messages that are targeted specifically

to the recipient. Giving real estate agents tips on how to grow business and supplying them with information on the local housing market will position the originator as a value-added service provider. Quality content is often a real issue—if the audience is not reading it, it’s not going to help originators leverage the relationship. Smart origi-nators have to ask themselves “am I delivering content that helps my partner succeed in their business?” If the originator isn’t excited to read it, it shouldn’t be sent.

TechOUTLOOK by Jim Blatt

Successful marketing is automated,relevant and continuous.

pers

pec

Tive

s

Marketing ResultsOriginators can leverage customer data

in loan origination systems to provide updates for partners that have recently referred them business. This type of consistent and relevant communication is valued by real estate agents and helps to build the loan officer’s credibility.

It’s important to use each referral partner interaction as an opportunity to offer valuable information, like rates or economic commentary. That is an easy way to be seen as a financial professional who can guide consumers through a transaction and as someone who can get loans processed on time.

When choosing an email delivery system, lenders should make sure to review delivery reporting, open rates, and opt out/unsubscribe policies. Choosing the right provider, not just the least expensive, will pay dividends in the long run.

Database ManagementElevating a referral relationship from

good to great requires more than good content in marketing materials. Truly managing the new relationships from referral partners is critical.

Meeting expectations for closing is one component, but many originators overlook the importance of regular conversations about the status of referrals. This communication, whether they are in the loan process or not, will demonstrate a level of commitment to communication that will improve the relationship. It will also show that originators not only close loans, but assist in the process as well.

A systematic approach to managing relationships and an easy-to-execute communications plan will help originators become viewed as a trustworthy partner. For example, a regular reminder to review the status of all people referred and where they are in the loan process can elevate the originator’s relationship.


014_MTMar12 3 3/6/2012 1:28:08 PM

gage markeT is a strong purchase pipeline. Revenue from refinances business is great, but these booms come and go. Banking on refinances may seem beneficial for the moment, but too many outside factors make this a risky stand-alone strategy for the long term. With borrowers being held at bay by recent economic challenges, originators would do well to capitalize on pent-up demand and the coming purchase market.

There are two underutilized strategies loan officers can use to drive their purchase business. First, originators need to fully capitalize on the relationships they have with re-ferral partners. Second, originators need to create affinity programs with local employers. When consistently executed, these programs can increase purchase loans revenue.

To fully capitalize on referral relationships, originators need to focus on marketing that makes them a resource for real estate agents and other partners. Loan officers must

produce marketing that adds value to the relationship. Database management is also important. Loan officers must

demonstrate to partners they are managing relationships with prospects. Regular reporting lets loan officers show partners how they are leveraging referrals. And in order to allocate time and energy in the most productive way, originators must maintain effective management reporting to track results.

In 2012, total originations in the market are forecasted to fall for the fourth consecutive year, but loan originators can avoid losing revenue by implementing more effective marketing. To be successful, marketing must not only build relationships, but also build the loan officer’s reputation as a market expert.

Top originators use this strategy to produce positive results because consumers are more likely to respond to targeted and consistent marketing than they are generic marketing that’s not relevant to their situation. Continuous communication and

memorable marketing that makes sense and is relevant to each individual will naturally strengthen relationships because it speaks to the consumer, not at the consumer.

The best marketing come from automated messages that are targeted specifically to the recipient. Giving real estate agents tips on how to grow business and supplying them with information on the local housing market will position the originator as a value-added service provider. Quality content is often a real issue—if the audience is not reading it, it’s not going to help originators leverage the relationship. Smart origi-nators have to ask themselves “am I delivering content that helps my partner succeed in their business?” If the originator isn’t excited to read it, it shouldn’t be sent.

TechOUTLOOK

Originators can leverage customer data in loan origination systems to provide updates for partners that have recently referred them business. This type of con-sistent and relevant communication is valued by real estate agents and helps to build the loan officer’s credibility.

It’s important to use each re-ferral partner interaction as an opportunity to offer valuable information, like rates or eco-nomic commentary. That is an easy way to be seen as a finan-cial professional who can guide consumers through a transac-tion and as someone who can get loans processed on time.

When choosing an email delivery system, lenders should make sure to review delivery reporting, open rates, and opt out/unsub-scribe policies. Choosing the right provider, not just the least expensive, will pay divi-dends in the long run.

Database ManagementElevating a referral relationship from

good to great requires more than good content in marketing materials. Truly managing the new relationships from referral partners is critical.

Meeting expectations for closing is one component, but many originators overlook the importance of regular conversations about the status of re-ferrals. This communication, whether they are in the loan process or not, will demonstrate a level of commitment to communication that will improve the relationship. It will also show that orig-inators not only close loans, but assist in the process as well.

A systematic approach to managing relationships and an easy-to-execute communications plan will help origi-nators become viewed as a trustwor-thy partner. For example, a regular reminder to review the status of all people referred and where they are in the loan process can elevate the origi-nator’s relationship.

Too often, communication is focused on problems such as a borrower who is go-ing to miss a closing. Regularly scheduled status calls, along with market informa-tion, will add some positive one-on-one communication with referral partners and help solidify the relationship.

An effective database management system will automatically generate these communications. The key factor is detailed database management. Without ongoing invest-ment in managing the database, the value of the company’s communica-tions will be diminished.

Strong database manage-ment will also help origina-tors keep referral partners associated with custom-ers and prospects. When a customer or prospect is ready to act, the originator can easily get their refer-ral partner back involved

in the transaction. Even if a client comes back years later to pre-qualify for another home purchase, good database manage-ment allows the originator to get the orig-inal referral partner back in the loop.

Loan officers should not keep this database management a secret. Giving agents and referral partners a tour of this approach will ensure they under-stand the priority placed on managing the business effectively. This should be done automatically, without a lot of additional effort. If loan officers need to manage this for every record closed, it simply won’t get done.

Tracking ResultsEveryone knows their best referral

partner—and probably their second best, as well. But what originators do not know is how much business came from each referral partner.

How has this relationship evolved over the years? Are there “up and com-ing” agents who are starting to send more business to the originator?

To ensure originators are investing their time and energy properly, they need efficient reporting, and they need to share it with their referral partners. Originators should have conversations that show referral partners growth op-portunities, such as “We did five deals to-gether worth $700,000, but I see that you are a million-dollar producer—what can I do to earn more of your business?”

An automated communications system should also provide readership and deliv-ery statistics that allow lenders to adapt content so it resonates with partners. Having good information will allow orig-inators to better focus limited resources where they are most productive.

A healthy purchase business is a sign of strength and stability. Production is not a function of outside sources, but rather diligent efforts to manage relationships both with partners and prospects. This business strategy is the best way to thrive regardless of the rate environment. With the right marketing approach, originators can not only strengthen relationships with their real estate agents and referral partners, but they can prepare to reap the harvest of a strong purchase market.

The last key is finding new referral partners. The easiest place to look is in ex-isting transactions. There are two real es-tate agents involved in most transactions, and both benefit when loan officers are able to get buyers through an efficient closing. Originators should follow up the closing with a letter or phone call to both agents. This information is captured in the LOS and should transfer seamlessly to a database management system.

The second strategy originators can leverage to grow purchase business comes from building affinity relation-ships, becoming the recognized mort-gage professional for local employers. Most originators already have great rela-tionships with local businesses through their existing clients, but may not know it. Since employer information is part of standard loan documents, compiling the top employers within an originator’s database of customers is the key.

Production is not a function of outside sources,but rather, diligentefforts to managerelationshipsboth with partners and prospects.

Continued on page 40

www.mortgage-technology.com 15

015_MTMar12 4 3/6/2012 1:28:46 PM

Web-based mortgage lending may be inevitable, but the industry is still

searching for adoption answers.

COVERSTORY


By Ted Cornwell

The origination process is evolving. Consumers are clamoring for more speed and convenience from banks,

and mortgage technology vendors are developing sophisticated systems for consumers to submit mortgage applications electronically. Those forces are converging on the

Internet, where mortgage lending—like virtually all other consumer goods and services—is rapidly moving toward serving more customers online.In an industry fraught with uncertainty,

the migration to Web-based originations is one of the few inevitabilities for lenders. But that dynamic comes with its own uncertainties, and industry participants differ about what this self-service approach means for lenders.

COVERSTORY


016_MTMar12 1 3/6/2012 2:02:24 PM

Among the questions being debated by lenders, vendors and other industry participants are whether loan officers and mortgage brokers will become obsolete, as well as how point-of-sale applications and loan origination sys-tems will adapt to the growing de-mand for online originations.

It’s unlikely that online origination technology will replace loan officers any time soon, but the shift will change how business is conducted. Meanwhile, the demand for online capabilities cre-ates many questions about the future of POS applications, where expecta-tions diverge substantially.

Some see POS technology as a relic of the industry’s past, while others be-lieve the Internet itself creates demand for more robust, Web-enabled POS of-ferings. As end-to-end LOS technology becomes more prevalent, a debate continues over the best deployment methods, in particular, the value of browser-based offerings.

Web Is a NecessitySteve Donahue, vice president of

mortgage originations at Technology Credit Union in San Jose, Calif., said that his institution’s location in Sili-con Valley and its tech-savvy clientele make online lending a necessity.

“Anyone who is not doing online originations probably isn’t going to last around here,” he said.

The credit union began using Avista Solutions’ LOS in September 2010, in part because Avista offered a more seamless platform than the software it previously used, Donahue said. Once the application data is entered online, it flows through the Avista system all the way through to servicing.

By early 2011, 67% of Technology Credit Union’s originations were coming in through its online channel. By Janu-ary 2012, that share had risen to 86%.

Even though the credit union’s mort-gage borrowing members increasingly rely on Technology Credit Union’s web-site to obtain pre-approval and apply for home financing, Donahue said loan officers continue to focus on building relationships with real estate agents to generate new customer leads and be a presence in the community.

He added online origination capacity increases the efficiency of the “mortgage consultants” at Technology Credit Union, who can now focus on advising appli-cants and following up with consumers who start the process but leave an incom-plete application. “But it’s never going to replace the loan officer, because we still have to have that human contact.”

While many technologies rely on a client-server database architecture for LOS and online application systems, Avista’s LOS and website database is one and the same, so lenders don’t have to import or export data.

Michael Picker, senior vice president for sales at Avista Solutions, said the vendor has offered cloud-based, Web-enabled technology for more than ten years. The Charleston, S.C.-based ven-dor’s consumer-direct website is often a separate product integrated into the LOS and relying on different software for online loan applications, loan un-derwriting, imaging of documents, pricing and product selection requires a lot of integration, he said.

Picker is not optimistic about the future of stand-alone POS technology. He said the POS applications may sur-vive for some time, because custom-ers are used to having them and some providers do a good job, but cloud computing and the Internet increase the appeal of end-to-end systems.

End-to-end solutions also improve compliance, Picker said, because lend-ers rely upon one database in the cloud, rather than having to cull data from multiple sources. “The newer generation of homeowners, they like using the Internet. They find it conve-nient. They trust it more,” he said.

David Boone, first vice president at Provident Bank of New Jersey, said his company has a 12-year working re-lationship with Data-Vision, a Misha-waka, Ind.-based provider of online origination POS applications. He also believes that the rise of online lending is here to stay. “More and more people are finding us on the Internet and ap-plying for a loan without talking to anyone,” Boone said.

In shopping for online lending technology, he said some technol-ogy providers wanted to participate in the profitability of loans obtained online. Data-Vision provided a “one price, what you see is what you get” approach, Boone said. That appealed to the bank more than paying a share of profits to the vendor.

“When we looked at the different online providers, we wanted a provider who let us be as successful as we wanted to be,” Boone said.

A key to successfully driving up online loan volume, Boone said, is using keyword search engine optimization and advertising to help consumers find the lender’s website. Provident hired a consulting firm to help ensure its website appears higher in its potential customers’ Internet search results.

“You could have a wonderful website, but if nobody finds it you are wasting your time,” he said.

He also believes loan officers will continue to be needed, but the Internet is likely to reduce the number of loan officer positions in the industry. Boone added that the rise of online lending reflects the preferences of younger borrowers, who don’t want to call the bank and are more inclined to communicate with loan officers via text message and rely on self-service options. “They press the go button and they expect results,” he said.

POS EvolutionRandy Schmidt, president of Data-

Vision, said the first Internet-based mortgage lending technology focused primarily on data capture and mortgage calculators, but they have grown more sophisticated in recent years. Today, Data-Vision’s POS serves as a consumer portal that provides a touch point between the consumer and the lender, guiding borrowers through rate quotes and helping determine what loan is the best fit for them. The POS allows secure messaging back and forth between the loan officer and the consumer who’s submitting the loan application online.

“It’s become much more interactive and more of a two-way communication vehicle,” Schmidt said.

COVERSTORY

“Anyone who is not doing onlineoriginations probably isn’t goingto last around here.”

Steve Donahue

VP, Mortgage Originations

Technology Credit Union


018_MTMar12 3 3/6/2012 1:31:37 PM

Michael Picker, senior vice president for sales at Avista Solutions, said the vendor has offered cloud-based, Web-enabled technology for more than ten years. The Charleston, S.C.-based ven-dor’s consumer-direct website is often a separate product integrated into the LOS and relying on different software for online loan applications, loan un-derwriting, imaging of documents, pricing and product selection requires a lot of integration, he said.

Picker is not optimistic about the future of stand-alone POS technology. He said the POS applications may sur-vive for some time, because custom-ers are used to having them and some providers do a good job, but cloud computing and the Internet increase the appeal of end-to-end systems.

End-to-end solutions also improve compliance, Picker said, because lend-ers rely upon one database in the cloud, rather than having to cull data from multiple sources. “The newer generation of homeowners, they like using the Internet. They find it conve-nient. They trust it more,” he said.

David Boone, first vice president at Provident Bank of New Jersey, said his company has a 12-year working re-lationship with Data-Vision, a Misha-waka, Ind.-based provider of online origination POS applications. He also believes that the rise of online lending is here to stay. “More and more people are finding us on the Internet and ap-plying for a loan without talking to

In shopping for online lending technology, he said some technol-ogy providers wanted to participate in the profitability of loans obtained online. Data-Vision provided a “one price, what you see is what you get” approach, Boone said. That appealed to the bank more than paying a share

“When we looked at the different online providers, we wanted a pro-vider who let us be as successful as we wanted to be,” Boone said.

A key to successfully driving up on-line loan volume, Boone said, is using keyword search engine optimization and advertising to help consumers find the lender’s website. Provident hired a consulting firm to help ensure its website appears higher in its poten-tial customers’ Internet search results.

“You could have a wonderful web-site, but if nobody finds it you are wasting your time,” he said.

He also believes loan officers will continue to be needed, but the Inter-net is likely to reduce the number of loan officer positions in the industry. Boone added that the rise of online lending reflects the preferences of younger borrowers, who don’t want to call the bank and are more inclined to communicate with loan officers via text message and rely on self-service options. “They press the go button and they expect results,” he said.

POS EvolutionRandy Schmidt, president of Data-

Vision, said the first Internet-based mortgage lending technology focused primarily on data capture and mort-gage calculators, but they have grown more sophisticated in recent years. Today, Data-Vision’s POS serves as a consumer portal that provides a touch point between the consumer and the lender, guiding borrowers through rate quotes and helping determine what loan is the best fit for them. The POS allows secure messaging back and forth between the loan officer and the consumer who’s submitting the loan application online.

“It’s become much more interactive and more of a two-way communica-tion vehicle,” Schmidt said.

The Internet allows lenders to push initial automated underwriting deci-sions to the POS level. Moving that step earlier in the application process creates more crossover between the roles of POS and LOS applications, he said.

But Schmidt believes there is still a role for Internet-enabled POS technol-ogy, because banks don’t want to pur-chase seat licenses for an LOS for all of their loan officers. Lenders that use Data-Vision can take advantage of two-way interfaces between the online POS and various third-party LOS products.

He also agrees that younger custom-ers demand Internet service, noting that one-quarter of the U.S. population was born between 1979 and 1991—people who came of age using the Internet.

“People now have Internet access wherever they go. Not having it, not be-ing Internet accessible, really limits your touch point to the customers,” he said.

While banks will still need loan of-ficers, they may need fewer than in the past. In addition, Web lending may be contributing to a trend away from re-lying on mortgage brokers.

“What we have seen is, with the demise of a lot of the price-conscious broker-based system, people are turn-ing more to their local credit unions or their regional banks,” Schmidt said.

Also, the POS technology allows depositories to enable nonmortgage experts to take mortgage applications from borrowers at bank, credit union or other lender branches.

COVERSTORY


019_MTMar12 4 3/6/2012 1:32:40 PM

http://www.mortgagebuilder.com

Because the common platform of an online POS essentially extends a “help desk and lending expertise” to anyone using the system, “you’re getting much better quality of data coming in from people who aren’t trained to do all of that,” Schmidt said.

Erik Stanton, executive vice presi-dent and chief financial officer at Cornerstone Community Bank in metropolitan Milwaukee, said that taking advantage of all the opportu-nities afforded by the Internet is part of the lender’s strategic focus over the next several years. He said that is the main reason the bank started using Mortgagebot’s PowerSite technology for facilitating online point-of-sale ca-pabilities. Because of the regulatory and economic environment of the mortgage industry the past few years, Cornerstone has had to scale back on asset growth to manage capital ratios.

“That really got us thinking again about the good fit of growing our mortgage business,” Stanton said. “We can originate those loans and sell them and not jeopardize our capital ratio by growing our assets.”

Cornerstone has traditionally fo-cused on its home base in the metro-politan area north of Milwaukee, but the Web-based POS has drawn interest from borrowers in other parts of Wis-consin, encouraging the bank to con-sider expanding its focus statewide.

“These are people from outside of our existing portfolio and clientele,” Stanton said. “Our mortgage lenders have defi-nitely seen an increase in applications with Mortgagebot. The tough part comes in sorting through those. There are a lot of people out there just fishing.”

The Mortgagebot POS, called Pow-erSite, has three modules; an exter-nal, consumer-facing Web portal and a pair of internal applications, one for experienced mortgage profession-als and a second for bank and credit union employees who lack mortgage expertise, like branch tellers, explained Matt Cotter, senior vice president of marketing and sales at Mequon, Wis.-based Mortgagebot.

That way, if a potential borrower walks into a branch location wanting to complete a mortgage application, a branch employee who is not a loan of-ficer can help them by directing them to a computer at the location.

“Usually what happens is the branch person gives you a business card for a loan officer. If you’re really lucky, they’ll take your number and have someone call you,” Cotter said.

Mortgagebot’s technology allows lenders to make a decision on a mort-gage application in about 20 minutes, Cotter said. The company has just over 1,100 lender customers and 700,000 home loan applications were processed using Mortgagebot technology in 2011.

Cotter believes that there is still plenty of growth potential for a pro-vider of Web-enabled POS technology like Mortgagebot, noting that there are 17,000 regulated financial institu-tions in the nation. Year-over-year, he said the company’s customer count is up about 30%, and he doesn’t expect the growth to slow down. “There is a lot of runway out there,” he said.

Cotter acknowledges that there are LOS technologies that include a POS component to create a complete, end-to-end platform, but he doesn’t think that Internet-enabled lending heralds the demise of dedicated POS technol-ogy. To the contrary, he said the POS technology from most LOS vendors “is just not up to snuff.”

In addition, when an end-to-end LOS vendor commits resources to re-search and development, more areas of the developer’s organization are competing for those dollars, time and other commitments, Cotter said. “For me, if I have a dollar for R&D, that is going all to the point of sale.”

Web-based POS applications can take care of a lot of the mechanical as-pects of taking a mortgage application. Instead of spending 90 minutes with a borrower helping fill out paperwork, loan officers can direct a borrower to the website to complete the form.

“It’s a huge productivity tool. It’s 90 minutes of their day that they have just bought back,” Cotter said. “You take the really highly productive loan officers and you let them go back into the field and sell.”

Cotter added that consumer expec-tations for online functionality have risen dramatically over the last several years, driven by their experience with online transactions with large online megaretailers like Amazon, Google and eBay. Having a website isn’t enough anymore.

“Consumer expectations aren’t going back,” Cotter said. “Consumer expectation will absolutely drive a level of sophistication in POS that we haven’t seen up to today.”

He added that one-third of Web applications are done during off hours.

“That’s a pretty big chunk of business that if you don’t have a website that’s been marketed effectively or that isn’t optimized, you’re missing out on,” Cotter said.

High Functionality vs. Browser-Based

Joe Herb, general manager of Kirkland, Wash.-based Byte Software, provider of the SQL server-based BytePro LOS, said the company has enhanced its architecture over the last several years to make Byte more Web-enabled, allowing faster and more active communication between remote branches or other locations and a lender’s central office over the Internet.

Byte Software also partners with other mortgage technology vendors, including Mortgagebot and Oklahoma City-based mortgage and appraisal technology developer a la mode, to create consumer-facing websites for mortgage lender clients and individual loan officers. “Lenders really want an Internet-enabled application, but they want it Internet enabled in the right way,” Herb said.

COVERSTORY

“We can originate those loans and sell them and not jeopardize our capital ratio by growingour assets.”

Erik Stanton

Chief Financial Officer

Cornerstone Community Bank


020_MTMar12 5 3/6/2012 1:32:09 PM

Cotter believes that there is still plenty of growth potential for a pro-vider of Web-enabled POS technology like Mortgagebot, noting that there are 17,000 regulated financial institu-tions in the nation. Year-over-year, he said the company’s customer count is up about 30%, and he doesn’t expect the growth to slow down. “There is a lot of runway out there,” he said.

Cotter acknowledges that there are LOS technologies that include a POS component to create a complete, end-to-end platform, but he doesn’t think that Internet-enabled lending heralds the demise of dedicated POS technol-ogy. To the contrary, he said the POS technology from most LOS vendors “is

In addition, when an end-to-end LOS vendor commits resources to re-search and development, more areas of the developer’s organization are competing for those dollars, time and other commitments, Cotter said. “For me, if I have a dollar for R&D, that is going all to the point of sale.”

Web-based POS applications can take care of a lot of the mechanical as-pects of taking a mortgage application. Instead of spending 90 minutes with a borrower helping fill out paperwork, loan officers can direct a borrower to the website to complete the form.

“It’s a huge productivity tool. It’s 90 minutes of their day that they have just bought back,” Cotter said. “You take the really highly productive loan officers and you let them go back into

Cotter added that consumer expec-tations for online functionality have risen dramatically over the last several years, driven by their experience with online transactions with large online megaretailers like Amazon, Google and eBay. Having a website isn’t

“Consumer expectations aren’t going back,” Cotter said. “Consumer expecta-tion will absolutely drive a level of sophistication in POS that we haven’t seen up to today.”

He added that one-third of Web appli-cations are done during off hours.

“That’s a pretty big chunk of busi-ness that if you don’t have a website that’s been marketed effectively or that isn’t optimized, you’re missing out on,” Cotter said.

High Functionality vs. Browser-Based

Joe Herb, general manager of Kirk-land, Wash.-based Byte Software, pro-vider of the SQL server-based BytePro LOS, said the company has enhanced its architecture over the last several years to make Byte more Web-enabled, allowing faster and more active com-munication between remote branches or other locations and a lender’s cen-tral office over the Internet.

Byte Software also partners with other mortgage technology vendors, including Mortgagebot and Oklaho-ma City-based mortgage and appraisal technology developer a la mode, to create consumer-facing websites for mortgage lender clients and individu-al loan officers. “Lenders really want an Internet-enabled application, but they want it Internet enabled in the right way,” Herb said.

To do that, Byte relies on Web inter-faces that allows information to flow seamlessly into and out of the LOS, he said. It also helps satisfy lender de-mand for a central database that can house all of their information about loan application activity.

“They don’t want a loan officer to get a lead from the company and broker that out behind their back,” Herb said. “They want to know how many loans have been started in the application process.”

Having a centralized database for all loan origination activity also helps ensure compliance with ever-chang-ing regulations, including the Home Mortgage Disclosure Act, Nationwide Mortgage Licensing System and call reports, among others, he said.

But Herb does not believe the in-creasing use of online loan origination technology means that the LOS itself needs to be Web browser-based.

Loan officers and underwriters are often logged on to their LOS all day long and need a high level of function-ality, including multitasking and the ability to keep multiple loan files open at the same time, he said. A browser-based LOS runs the risk of being slow or unresponsive at times.

“Our attitude is that it’s a mistake to try to move that feature-rich environ-ment to a browser,” Herb said. “That last thing you want to do is have users frustrated with your system.”

Raymond Eshaghian, head of Green-Box Loans in Los Angeles, said his company does not take full loan appli-cations over the Internet today but in-stead has a “mini application” that lets consumers begin the process before they start working with a loan officer.

Eshaghian, who ran a mortgage technology firm before moving over to the lending side of the business, said that although there is a trend toward enabling consumers to do the whole loan application online, most are not ready for that yet, especially when it comes to first-time home buyers and FHA borrowers. “It’s a fairly compli-cated process and they are a little bit intimidated,” he said.

GreenBox uses Byte technology, be-cause Eshaghian said he found it to be significantly more robust and customiz-able than other out-of-the-box solutions. He said the Byte software has more than 500 customizable data fields.

“You can take it out and turn it into whatever you want,” he said.

He added that in the current mort-gage technology market, more and more end-to-end offerings are popping up, in part because of consolidation among technology providers. Histori-cally, LOS applications and automated underwriting engines were poorly in-tegrated on the back end, with an in-formation flow that was “choppy and pathetic” at times. A lot of information can be lost when using multiple sys-tems, Eshaghian said.

But that doesn’t mean Internet-based lending will become the norm overnight, he said. As people become more comfortable sharing information online, the Internet will play a larger and larger role in the process.

“The industry is headed in the right direction. The Internet and the mort-gage industry have taken a long time to come together.”

COVERSTORY

“Consumer expectation will absolutely drive a level of sophistication in POS that we haven’t seen up to today.”

Matt Cotter

Senior Vice President

Mortgagebot


021_MTMar12 6 3/6/2012 1:32:38 PM

Illus

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SSoftware aS a Service iS the original flavor of cloud computing and dates back to even before terms like cloud and SaaS were first used in information technology. in the mortgage industry, many lenders and servicers are just now warming up to the concept, educating themselves about the benefits, features and capacity of SaaS. But technology waits for no one.

as the first two parts of the “visions in the cloud” series explain, platform as a service and infrastructure as a service are quickly building off the foundation established by SaaS to further advance cloud computing.

while PaaS and iaaS represent the latest innovations in hosted software technology, SaaS still holds a valuable place in the cloud. But like all mortgage technology, the role cloud computing plays in the industry is largely dependent on the size and type of lender or servicer using it.

Managing the Flavors

of Cloud

By Austin Kilgore

Visions in the CloudPART 3: SOFTWARE AS A SERvicE


022_MTMar12 1 3/6/2012 2:01:34 PM

Cloud BuzzThere’s little doubt that the cloud

conversation has made it to the mortgage industry, in part as the result of continued innovations and the introduction of new products that utilize cloud computing. The discussion is also fueled by a more sophisticated audience.

The nebulous idea of the cloud was once seen as too intimidating for it to be marketed to mortgage lenders and servicers. As a result, vendors often relied on calling sys-tems “Web-based” rather than SaaS, to avoid confusing clients. The In-ternet was sophisticated enough to entice companies to buy vendors’ software and services.

But there is some philosophical debate on whether there is a distinc-tion between “true” SaaS and Web-based, or Web-hosted, applications.

Some technologists argue that in order for a hosted service to truly qualify as SaaS, the system must store all customer data in a multitenet fashion on a single database. Other factors that define SaaS include the ability to quickly roll out updates and new innovations across a user base and the depth and breadth of the technology’s capability.

“Anytime you can do that, it quali-fies. And as long as they’re offering enough breadth that it’s not just a Web service, then that would strict-ly qualify,” said Rob Carpenter, co-founder and chief technology officer of loan origination system provider Dorado, which was acquired by CoreLogic in March 2011.

“Just because I’m hosting it doesn’t make it software as a service,” Car-penter continued. “If I have people on 15 different versions and they’re all on their own infrastructure, that’s just Web-hosted.”

Carpenter points to early versions of San Mateo, Calif.-based Dorado’s ChannelMaster LOS and the main-frame-powered Mortgage Servicing Package system of record provided by Jacksonville, Fla.-based technol-ogy vendor Lender Processing Ser-vices as examples of Web-hosted, but not SaaS, technology.

Regardless, with the advent of cloud computing-based business of-ferings like Salesforce.com, as well as consumer-facing cloud storage like Dropbox and Evernote, the cloud is more approachable.

As mortgage lending executives begin to incorporate SaaS and the cloud into their personal lives, the natural progression is for them to look at possible business applica-tions with the same technology.

“It’s no longer this cutting-edge thing that could put my business at risk,” Carpenter said. “Few people want to be the first ones to try something new, but once it’s more commonplace, then a lot of the fear evaporates.”

Traditionally, when a lender ex-ecutive is looking to update or add new technology, like an LOS, for example, the process begins by looking for a system that’s going to have the least disruptive impact on the production team, which usually means going with a technology that staff members are familiar with.

The delivery method of the soft-ware has typically been an after-thought for executives. But that’s changing, as recent cloud adoptions at Freddie Mac, ING Bank, Starkey Mortgage and others have shown.

And for larger institutions that were the early adopters of cloud computing, the expectations have increased. Users of cloud-based sys-tems are now demanding more flex-ibility, customization, performance and other features out of their ven-dor partners and applications.

“When we started, the things we put in our contracts on the avail-ability of the application would no-way fly today. There’s no chance,” Carpenter said. “People are more sophisticated and have bought enough stuff from other cloud-based providers and they now have an ex-pectation for it not to be almost as good as what they ran in-house, but should be significantly better than what they were running in-house.”

PaaS or SaaS?The new demands and expecta-

tions for cloud technology have driven innovation like PaaS and IaaS, as users seek to use cloud con-cepts to solve other challenges.

The first SaaS applications were turnkey software products deliv-ered over the cloud instead of with desktop installations or client-server hosting. Early cloud development wasn’t complex enough to provide users with customization functions.

But as knowledge about the under-lying tools involved and the architec-tures that supports deeper custom-izations became available and better understood, vendors have trans-formed their technology to provide users with a SaaS product as a start-ing point and PaaS functionality to customize it, explained Ben Frenkel, head of cloud technology at Boston-based business process management technology vendor Pegasystems.

“The customization engines available now are pretty robust and that creates the flavor of platform as a service that blurs the line between the classifications,” Frenkel said.

So when is an application PaaS and when is it SaaS? With SaaS, Frenkel said, users get an out-of-the-box, uncustomized version of a software, requiring users to change their business processes to adapt to the technology. With PaaS, users start with a template of the software that can be configured to create a customized final product—though Frenkel said many users don’t realize they’re getting a PaaS application.

“There’s largely a perception issue that software as a service would be easier to start off with than with something they think of as a platform as a service,” Frenkel said. “They may still have felt that they bought a SaaS solution, even though they effectively bought a set of stem cell components that they subsequently differentiated and modified to compose and create the very specific application that they wanted.”

For large lenders and servicers, the ability to customize cloud-based applications is critical, not only to facilitate data exchanges between divisions of a mortgage business, but also when critical systems need to integrate with core banking systems.

The financial services sector has been slow to find consensus on security standards and requirements for nonpublic information, which creates challenges for cloud technology vendors, Carpenter said.

“It’s no longer this cutting-edge thing that could put my business at risk. Few people want to be the first ones to try something new, but once it’s more commonplace, then a lot of the fear evaporates.”

— Rob Carpenter, DoRaDo

“The customization engines available now are pretty robust and that creates the flavor of platform as a service that blurs the line between the classifications.”

024_MTMar12 3 3/6/2012 1:33:49 PM

The delivery method of the soft-ware has typically been an after-thought for executives. But that’s changing, as recent cloud adoptions at Freddie Mac, ING Bank, Starkey Mortgage and others have shown.

And for larger institutions that were the early adopters of cloud computing, the expectations have increased. Users of cloud-based sys-tems are now demanding more flex-ibility, customization, performance and other features out of their ven-dor partners and applications.

“When we started, the things we put in our contracts on the avail-ability of the application would no-way fly today. There’s no chance,” Carpenter said. “People are more sophisticated and have bought enough stuff from other cloud-based providers and they now have an ex-pectation for it not to be almost as good as what they ran in-house, but should be significantly better than what they were running in-house.”

The new demands and expecta-tions for cloud technology have driven innovation like PaaS and IaaS, as users seek to use cloud con-cepts to solve other challenges.

The first SaaS applications were turnkey software products deliv-ered over the cloud instead of with desktop installations or client-server hosting. Early cloud development wasn’t complex enough to provide users with customization functions.

But as knowledge about the under-lying tools involved and the architec-tures that supports deeper custom-izations became available and better understood, vendors have trans-formed their technology to provide users with a SaaS product as a start-ing point and PaaS functionality to customize it, explained Ben Frenkel, head of cloud technology at Boston-based business process management technology vendor Pegasystems.

“The customization engines avail-able now are pretty robust and that creates the flavor of platform as a service that blurs the line between the classifications,” Frenkel said.

So when is an application PaaS and when is it SaaS? With SaaS, Fren-kel said, users get an out-of-the-box, uncustomized version of a software, requiring users to change their busi-ness processes to adapt to the tech-nology. With PaaS, users start with a template of the software that can be configured to create a customized final product—though Frenkel said many users don’t realize they’re get-ting a PaaS application.

“There’s largely a perception is-sue that software as a service would be easier to start off with than with something they think of as a plat-form as a service,” Frenkel said. “They may still have felt that they bought a SaaS solution, even though they effectively bought a set of stem cell components that they subsequently differentiated and modified to com-pose and create the very specific ap-plication that they wanted.”

For large lenders and servicers, the ability to customize cloud-based ap-plications is critical, not only to fa-cilitate data exchanges between di-visions of a mortgage business, but also when critical systems need to integrate with core banking systems.

The financial services sector has been slow to find consensus on se-curity standards and requirements for nonpublic information, which creates challenges for cloud technol-ogy vendors, Carpenter said.

Various applications, including a bank’s LOS, servicing system of re-cord and other specialty mortgage technology has to communicate with general bank ledger platforms.

“How many flavors of integrations of general ledgers are there that you need to be able to handle?” Carpen-ter said. “You have to contemplate how to do that in a way that doesn’t fundamentally destroy the value proposition of SaaS.”

Vendors can overcome those chal-lenges and will become more ef-fective at it as more core systems across an enterprise go to the cloud, because those core systems will face the same integration challenges. And Carpenter believes those systems will find their way on the cloud, “it’s just a matter of time.”

“If I’m a general ledger vendor, then I have to figure out how to in-bound data and I’m going to archi-tect and solve that problem on my side or I’m not going to get the busi-ness,” he said. “The cloud-to-cloud situation is likely going to be easier to adopt than a cloud to a legacy system because they really didn’t have the same kinds of pressures to make integrations low-cost and eas-ily attainable in the past.”

Carpenter and Frenkel have vary-ing philosophies on the most ap-pealing applications of the various flavors of cloud computing. While Carpenter’s approach differentiates between Web-hosted and SaaS ap-plications, Frenkel sees the two as the same layer of cloud computing and puts more emphasis on PaaS.

Frenkel believes the customizable features of a cloud system are what differentiate PaaS from SaaS, while Carpenter describes those same fea-tures as the difference between Web applications and lighter Web servic-es that serve as point applications.

Another issue debated among technologists is which opportunities of cloud-based customization will be most intriguing to business users.

Frenkel looks at PaaS as an oppor-tunity to inject more efficiency and cost savings into the type of large-scale technology projects that many large institutions have historically performed in-house.

“The very large companies in a particular segment are going to con-tinue to be very interested in being able to highly customize whatever they get,” he said. “They’re going to want to customize it and see advan-tages of time savings by going to a PaaS. That is a consistent theme across all the major verticals that we come in contact with.”

Michael Smaney, a mortgage in-dustry veteran and an industry principal for global credit solutions at Pegasystems, said the trend is rel-evant in the mortgage industry be-cause of the ever-changing compli-ance and regulatory requirements lenders and servicers face.

Cloud application development can happen more quickly and get new or updated systems delivered to users faster. “There’s a dynamic that’s changing in the mortgage in-dustry. Because of the credit crisis, the larger lenders are saying, ‘I re-ally need a different way to solve this problem,’” Smaney said.

But Carpenter believes industry participants who are gravitating to the cloud like the appeal of unload-ing the burden of technology devel-opment on vendors, allowing lend-ers and servicers to focus on the core competencies that differentiate their business lines.

“The customization engines available now are pretty robust and that creates the flavor of platform as a service that blurs the line between the classifications.”

—Ben Frenkel, PEgasystEms


025_MTMar12 4 3/6/2012 1:34:31 PM

“The way I order appraisals, does that really need to be unique?” Car-penter said. “Or do we all really pret-ty much do it the same way and I’m better off investing my management, attention and energy in the things that I differentiate in, that my busi-ness model is based on?”

The industry is evolving, he add-ed, and it’s realizing those differ-entiators don’t include a lot of the things that participants thought they included five years ago.

Moving DownstreamPaaS and IaaS allow technology

providers to develop more robust ap-plications on a faster timeline. And while the lines between SaaS and PaaS are blurred, that doesn’t mean SaaS is going away anytime soon.

Frenkel believes that as cloud technology allows for more cus-tomization, large institutions will eventually exclusively rely on PaaS systems and providers like Pegasys-tems will be able to push turnkey SaaS versions of those applications downstream to smaller lenders.

“It’s the goal when moving down market to take what we’ve learned in development and create a reasonable set of components that can be lever-aged without lots of customization by lower tiers of a segment’s food chain,” Frenkel said. “You start on a very big level with a lot of customization and you see a lot of strong themes in the implementations and those are then distilled into what we call the frame-work of a particular area.”

That will provide smaller lend-ers with more robust technology, Smaney said. “Even if you’re a two-person shop, I can give you the ef-ficiency, operational control, com-pliance guidance that we would give any one of the top 20,” he said. “That’s really a big play for us.”

Carpenter said cloud computing allows lenders and servicers to take a safety-in-numbers approach to compliance, by transferring the risk and the effort to be compliant and up-to-date with market changes to vendors. Vendors, working with a group of clients, can better allocate combined resources to compliance and rapidly deploy updates.

“Nobody wants to be the guy who’s made an example of by a reg-ulator,” he said. “If we’re all doing this, then we all can’t be wrong and they’re not going to come and club all of us, especially if I’m working with a vendor with customers who are bigger than me.”

In the same way that the use of SaaS has evolved to using PaaS with large institutions, it’s possible that smaller firms will eventually de-mand customized PaaS applications. But there will always be a mix of us-ers who prefer turnkey and custom-ized products, Smaney said.

“When I deploy it down, it’s up to that particular customer. The very small guys are going to say, ‘I love this as-is,’ others are going to say, ‘I’d like to have this piece tweaked,’” he said. “In the middle market, there will be some customizations.”

Another challenge for vendors looking to move downstream is the need to provide more complete sys-tems. Functions that LOS vendors can take for granted at the top—like the lender having its own imaging system, for example—don’t exist very far down the chain. It creates a unique demand for vendors.

“They’re incapable of carrying all the other ancillary systems that or-bit a primary system and you have to deliver all of that if you focus on the middle market,” Carpenter said.

Vendors must also take into ac-count that large lenders and ser-vicers tend to establish their own protocols and requirements for data security and standards.

“There’s a host of issues, maybe five or six that are similar, where adoption can get blocked because of interpretation on something that really should be uniform within an industry,” Carpenter said.

However, the midtier market tends to aggregate around a common standard. “As long as you’re indus-try-best or make a de facto industry standard claim, then you’re going to be OK,” he continued. “But the closer you get to the top, the more of the regional or super regional banks, that’s where we typically first start to see these issues.”

Nonetheless, the vendor appeal to moving downstream is customer ac-quisition. After all, there are only 10 LOS sales to be made among the top 10 lenders. By using cloud comput-ing, vendors can make their prod-ucts available to the middle market in a cost-effective manner.

Carpenter said that moving to the middle market is a goal of Dorado’s, but not immediately because of the volume of activity in the market.

“We’ve sort of got our hands full at the top of the market now. There are only 10 or 15 actual targets, but it turns out enough are in play right now to keep us busy,” he said.

Pegasystems is taking a more aggressive approach with the middle market. “I think we’re already seeing that seepage from the upper end into the lower end,” Frenkel said.

Cloud ValueWhether it’s SaaS, PaaS or IaaS, the

value proposition of cloud computing will keep users engaged. With IaaS, the value proposition is twofold, cost savings and the ability to produce a higher level of service.

PaaS provides efficiency gains in innovation cycles. “If I want to deliver applications, my time to market and cost to produce the innovation and deliver it in the market can be enhanced if there’s a platform, particularly a platform that may be tailored to a vertical market, available,” Carpenter said.

“The SaaS value proposition is that I’m letting go of noncore competencies and I’m going to focus on the parts of the business that are really used to differentiate and that I need to excel in,” he added.

The advances in cloud computing may also reopen the build vs. buy debate for large institutions that may elect to develop their own PaaS and SaaS capacity. “Platform as a service will give them access to lower risk system development, which was really the big issue here,” Carpenter said. “When you go to platform as a service, does that reverse the dynamic? I think it probably does.”

Vendors must be careful not to overburden users with jargon. In any new market, consumers may not be sophisticated enough, leading many vendors to rely on confusing terminology to try to create differences.

“As it becomes more mainstream, the expectations from the buyers and consumers increases and they’re not going to tolerate anymore the things you could get away with when the market was immature and new,” Carpenter said.

“There’s a dynamic that’s changing in the mortgage industry. Because of the credit crisis, the larger lenders are saying, ‘I really need a different way to solve this problem.’”

Michael Smaney, PegaSySteMS


026_MTMar12 5 3/6/2012 1:34:17 PM

Worldwide IT Cloud Services Spending by Product and ServiceAccording to International Data Corporation estimates, cloud services accounted for 4% of the $383 billion in enterprise IT spending on business applications, system infrastructure software, application development and deployment software and storage. IDC projected that by 2012, that rate would more than double to 9%.

While still a small share of spending, IDC notes that the compound annual growth rate of cloud services spending is at a rate five times greater than traditional on-premise IT. Cloud spending is also a driving force behind the overall growth in the IT market. IDC estimated that the 9% share of user spending in 2012 will account for 25% of the IT sector’s annual growth.

According to IDC, if the same growth trajectories continue in 2013, IT cloud services growth will generate about one-third of the industry’s net new growth in these segments.

Source: IDC

52%57%

13%

8%

9%

18%

5%9%

11%

18%

Business ApplicationsInfrastructure Software

App Dev & DeplotmentServer

Storage

2008$16.2 Billion

2012$42.3 Billion

Another challenge for vendors looking to move downstream is the need to provide more complete sys-tems. Functions that LOS vendors can take for granted at the top—like the lender having its own imaging system, for example—don’t exist very far down the chain. It creates a unique demand for vendors.

“They’re incapable of carrying all the other ancillary systems that or-bit a primary system and you have to deliver all of that if you focus on the middle market,” Carpenter said.

Vendors must also take into ac-count that large lenders and ser-vicers tend to establish their own protocols and requirements for data

“There’s a host of issues, maybe five or six that are similar, where adoption can get blocked because of interpretation on something that really should be uniform within an industry,” Carpenter said.

However, the midtier market tends to aggregate around a common standard. “As long as you’re indus-try-best or make a de facto industry standard claim, then you’re going to be OK,” he continued. “But the closer you get to the top, the more of the regional or super regional banks, that’s where we typically first start to see these issues.”

Nonetheless, the vendor appeal to moving downstream is customer ac-quisition. After all, there are only 10 LOS sales to be made among the top 10 lenders. By using cloud comput-ing, vendors can make their prod-ucts available to the middle market in a cost-effective manner.

Carpenter said that moving to the middle market is a goal of Dorado’s, but not immediately because of the volume of activity in the market.

“We’ve sort of got our hands full at the top of the market now. There are only 10 or 15 actual targets, but it turns out enough are in play right now to keep us busy,” he said.

Pegasystems is taking a more ag-gressive approach with the middle market. “I think we’re already see-ing that seepage from the upper end into the lower end,” Frenkel said.

Cloud ValueWhether it’s SaaS, PaaS or IaaS, the

value proposition of cloud comput-ing will keep users engaged. With IaaS, the value proposition is two-fold, cost savings and the ability to produce a higher level of service.

PaaS provides efficiency gains in innovation cycles. “If I want to de-liver applications, my time to mar-ket and cost to produce the innova-tion and deliver it in the market can be enhanced if there’s a platform, particularly a platform that may be tailored to a vertical market, avail-able,” Carpenter said.

“The SaaS value proposition is that I’m letting go of noncore competen-cies and I’m going to focus on the parts of the business that are really used to differentiate and that I need to excel in,” he added.

The advances in cloud computing may also reopen the build vs. buy debate for large institutions that may elect to develop their own PaaS and SaaS capacity. “Platform as a ser-vice will give them access to lower risk system development, which was really the big issue here,” Carpenter said. “When you go to platform as a service, does that reverse the dy-namic? I think it probably does.”

Vendors must be careful not to overburden users with jargon. In any new market, consumers may not be sophisticated enough, leading many vendors to rely on confusing termi-nology to try to create differences.

“As it becomes more mainstream, the expectations from the buyers and consumers increases and they’re not going to tolerate anymore the things you could get away with when the market was immature and new,” Carpenter said.

He added that the diversity of vendors participating in the mort-gage technology industry is part of what keeps the jargon flowing.

“The phase we’re entering in is that there needs to be consolida-tion in terms of what are the right answers and right approaches and people start placing bets on that and a couple winners emerge,” he said. “Then, the jargon’s still there, but it’s sort of on the edge.”

As cloud computing takes hold in other industries, Smaney believes lenders and servicers will also be able to apply the lessons learned from those sectors. “From the mort-gage perspective, the industry’s typ-ically seen as technology laggards, but now we can give them examples of other markets where this is being done, with the same security and regulatory constraints that are be-ing met,” he said.


027_MTMar12 6 3/6/2012 1:34:52 PM

Software advances drive changes to

vendor pricing models.

C A S H GI N

ith mortgage technology rapidly advancing, the pricing structures that software vendors employ are also evolving. Vendors must be wary of pricing themselves

out of business as they strive for a win-win relationship that keeps costs low for users.

Spurred by a soft economy, the industry has seen expensive custom technology projects give way to easily implemented, hosted solutions, primarily via software as a service. The days of 20% annual maintenance fees on million-dollar systems are disappearing as lenders have come to realize they can get routine software updates from the cloud at much lower costs.

W

B Y S C O T T K E R S N A R


028_MTMar12 1 3/6/2012 2:02:20 PM

In the near term, “increasing tension between vendors’ insatiable demands for revenue and buyers’ pressing need to cut non-value-adding maintenance expense, coupled with technology changes such as cloud and mobility” are forcing vendors to change long-standing policies, according to a For-rester Research white paper, “Software Pricing and Licensing Trends,” by prin-cipal analyst Duncan Jones.

The April 2011 report documents a widespread overhaul of traditional software licensing and pricing models across all industries in light of the rap-id evolution of software as a service and other cloud-based technologies.

The research adds that a weak econ-omy makes corporate users push back, as chief information officers find ways to make do with less.

Today, corporations have plenty of “real alternatives to their incumbent vendors,” Jones wrote, stating flatly that “cloud and mobility kill deploy-ment-based licensing.”

It’s a concept that’s been growing for some time. A 2007 PricewaterhouseC-oopers report on software pricing trends, written by senior research fel-low Alan Morrison, director Terril Ret-ter and InfoWorld executive editor Galen Gruman, predicted that by 2016, few large software vendors would remain, with lots of niche-oriented small devel-opers—such as best-of-breed mortgage technology specialists—filling the void.

Service-oriented architectures will be the norm for both vendors and users, the report said. PWC envisions large enterprises using SOAs “to give them full control over the value they leverage from their software.”

Meanwhile, said PWC, software vendors will use SOA “to deliver their software as a utility computing ser-vice—hosting multiple applications and integrating them in real time for customers and other vendors.”

“We’re moving almost completely to SaaS,” said Kevin Marconi, chief oper-ating officer of United Fidelity Fund-ing. “We even got rid of Outlook on the desktop. SaaS is the way to go.”

As a major part of that shift Kansas City, Mo.-based wholesale mortgage lender UFF is in the process of imple-menting the SaaS version of the Mort-gageFlex loan origination system.

There is no doubt that commoditi-zation via SaaS has drastically lowered software costs for small and midsize mortgage lenders. However, it’s diffi-cult to get hard numbers on pricing models and trends because most of the industry’s software vendors and service providers are privately held entrepreneurial players.

Jeff Lebowitz, president of Bend, Ore.-based Mortech LLC, said his firm’s research continues to show that lend-er preferences on pricing models are “highly segmented.” Larger lenders continue to prefer fixed costs, he said, while the demand for variable, trans-action-based costs is largely confined to the industry’s smaller players.

“Where you have smaller vendors saying they are winning volume from large lenders,” said Lebowitz, “they’re probably talking about overflow.” He added that the top-tier lenders—the ones doing the lion’s share of produc-tion—remain wedded to their legacy mortgage systems and lean toward us-ing private cloud technology.

Nevertheless, top-tier lenders do part-ner frequently with best-of-breed provid-ers—in default technology, for example.

What vendors have to demonstrate to prospective users of all sizes, said the PWC study, is tangible value in terms of efficiency and flexibility. PWC said software vendors “must begin thinking of their applications as flex-ible platforms that allow customers to choose among software components and pricing models.”

To make the thinner SaaS revenue stream work, the PWC report recom-mended vendors focus on service and support “as key differentiators.” Mar-coni and other mortgage professionals agreed with that view, citing exempla-ry service as a crucial element for any SaaS-based providers seeking staying power in the industry.

But the flexibility of transaction-based pricing is still what’s driving many technology decisions in the mortgage industry. “I don’t know many people doing subscription; almost all prefer transaction-based,” said Scott Stoddard, CEO of Foothill Ranch, Ca-lif.-based default-technology provider Quandis. “I think the only place where licensing will exist pretty soon is in core systems, which are relatively static. And eventually we will go away from that. Everyone is going to the cloud.”

“Using a transaction-based pricing model such as Quandis, we only have to pay for the files that we run through their platform,” said Virgil Watson, chief operating officer of Sherborn, Mass.–based real estate data and ana-lytics firm Collateral Intelligence. “As a result, we are able to take advantage of variable pricing versus a fixed cost, which enables us to better manage large variances in volume.”

“Transaction-based pricing is the new way to go,” said Julie Vazquez, director of automation at Paramount Residential Mortgage Group. She cited the Corona, Calif.-based retail and wholesale lender’s document provider DocMagic and LOS provider Avista as particular examples.

“We’re moving almost completely to SaaS. We even got rid of Outlook on the desktop. SaaS is the way to go.”

—Kevin Marconi, United Fidelity Funding


030_MTMar12 3 3/6/2012 1:35:53 PM

031_MTMar12 7 3/2/2012 4:28:01 PM

http://mortgagestats.com/freetrial

In fact, she said, all the lenders that have survived the recent bad years did that by partnering with vendors “who have allowed us to pay per transaction.”

“We have used the closed-loan mod-el since we started,” said Mark Phlieger, CEO of Charleston, S.C.-based Avista Solutions. “We think it creates a win-win for the customer and the vendor because it aligns our interests. We both get paid when the loan closes. And as we add more people to our cloud-based platform, we get economies of scale that save our lenders money.”

“Everyone has been pressured to re-duce pricing to help lenders increase profitability,” said Dominic Iannitti, president and CEO of Carson, Calif.-based Document Systems Inc., which offers the DocMagic platform. “Lend-ers are looking for certainty in actual pricing, a single price for the whole menu, a single fee per closed loan.”

Vazquez said DocMagic offers that. “And I love the flexibility DocMagic has given us. Not only do they charge only per closed loan,” she said, “they offer a variety of supporting services. The dollars we save with them on the back end are considerable.”

“Their legal department is outstand-ing. When we go into a new market our legal department doesn’t have to spend days or weeks researching regu-lations because we know DocMagic is a compliant doc provider for every locality,” she added. “I can shave off X number of dollars per every closing.”

Global DMS is another vendor that has prospered with per-transaction pricing, charging users a flat dollar per order.

“The per-transaction model has been extremely profitable for us,” said Vladi-mir Bien-Aime, president of Lansdale, Pa.-based Global DMS. “We have expe-rienced 275% growth in the last three years. We make money when our cus-tomers make money. That’s why people are gravitating to a model like ours.”

But this revolution didn’t happen overnight—Global DMS launched in 1999 as a SaaS-only provider.

“How we monetized our solutions at first was a monthly subscription mod-el with discounts for annual subscrip-tion, where you pay for all the features whether you use them or not,” Bien-Aime said. “We found that many were paying more than they should. We moved to a 100% transaction model.”

Like Quandis, Global DMS did not succeed by giving away the farm. “We as a company are always price sensi-tive,” said Bien-Aime. “At the end of the day, how much does it cost us, how do we pay our expenses? We are never going to be the low-ball player that competes on price only.”

What the company does instead, he said, is make sure its product delivers provable operational value and return on investment. “Our moving away from the [appraisal management com-pany] model would not have been possible without Global DMS,” said UFF’s Marconi. “They are one of the best vendors we partner with.”

Some older vendors that originally launched with the client-server model have since adopted the SaaS model, but still offer per-seat as well as per-transaction pricing. For example, Jacksonville, Fla.-based MortgageFlex Systems offers four pricing models: hosted, licensed on premises, by num-ber of users and by closed loans.

“When their volumes are low, or go-ing up and down, people love you for the per-transaction payment basis,” said CEO Lester Dominick. “There’s a cross-over point where the per-seat license makes more sense. If you’re not growing or don’t have confidence in where your market is trending, paying per-transac-tion makes more sense. As people know their business is growing, there is more interest in user licensing.”

Iannitti said large lenders are good at estimating their annual loan vol-umes in advance and negotiating up-front pricing for services. “Here’s what we did last year, and here’s what we’re going to have this year. We will prepay a year’s worth of production.”

Often, Iannitti said, “big lenders pay upfront, let’s say, for a hundred thou-sand closed loans, with an additional fee for volumes over that.”

When all is said and done for mort-gage lenders of all sizes, there is no questions that cloud computing is hav-ing a huge impact on software pricing.

“Mortgage technology pricing has become permanently commoditized,” said Iannitti. “When you’re literally sell-ing ones and zeroes it’s difficult to nick-el and dime clients into paying more.”

Craig Doriot, marketing director for Appleton, Wis.-based LoanSifter, agreed. “Larger players want an all-in price that they don’t want to think about every month. Most are looking for something consistent.”

Sales CompensationWhen large, upfront licensing fees dis

appear, sales strategies have to change radically. Selling SaaS-based systems takes more than persuasive talent.

“We’ve been offering a hosted version for almost 10 years,” said MortgageFlex’s Dominick. “We found we had to pay to attract the sales talent we needed. The sales force has to be proactive and skilled in terms of service. You train the new users during the sales process. You do team-based sales because you can’t expect salespeople to be expert in all areas. In the old days a sales cycle took a few weeks. That doesn’t happen anymore.”

Compensation is more drawn out as well, he said. “Compensation is based on the value of the contract over the period of the term. Salesmen get paid when we get paid.”

Doriot said sales compensation at Loansifter “has gotten very sophisticated” as the company has acquired larger mortgage industry clients.

“There are many demos involving multiple team members communicating internally, doing needs analysis on the workflow, how pieces are going to work with one another, helping them work through their challenges,” Doriot said. “As the implementation moves toward completion and inking of contracts, the salespeople make a smooth transition to the account managers. The compensation moves from a set salary during the ramp-up period of their careers, with commissions supplanting salary as they do more sales.”

“With enterprise sales the price is substantially lower per seat,” he continued. “You reach a cutoff point that gets somewhat commoditized but we become more predictable internally.”

A PricewaterhouseCoopers report on software pricing trends outlines a number of key factors for technology vendors’ success leading to 2016:

Focus on service and support as key differentiators

Offer flexible licensing and delivery mechanisms

Adopt software as a service for commoditized functionality

Resolve issues surrounding revenue recognition

Re-evaluate sales approaches and compensation policies

Concentrate R&D on new functionality where pricing pressures are least in play

Adopt a continuous-improvement R&D model

Cultivate efficient software provisioning and service delivery

Develop a platform strategy

B L U E P R I N TF O RS O F T W A R E

S U C C E S S


032_MTMar12 4 3/6/2012 1:47:52 PM

Often, Iannitti said, “big lenders pay upfront, let’s say, for a hundred thou-sand closed loans, with an additional fee for volumes over that.”

When all is said and done for mort-gage lenders of all sizes, there is no questions that cloud computing is hav-ing a huge impact on software pricing.

“Mortgage technology pricing has become permanently commoditized,” said Iannitti. “When you’re literally sell-ing ones and zeroes it’s difficult to nick-el and dime clients into paying more.”

Craig Doriot, marketing director for Appleton, Wis.-based LoanSifter, agreed. “Larger players want an all-in price that they don’t want to think about every month. Most are looking for something consistent.”

Sales CompensationWhen large, upfront licensing fees dis-

appear, sales strategies have to change radically. Selling SaaS-based systems takes more than persuasive talent.

“We’ve been offering a hosted ver-sion for almost 10 years,” said Mort-gageFlex’s Dominick. “We found we had to pay to attract the sales talent we needed. The sales force has to be proactive and skilled in terms of ser-vice. You train the new users during the sales process. You do team-based sales because you can’t expect sales-people to be expert in all areas. In the old days a sales cycle took a few weeks. That doesn’t happen anymore.”

Compensation is more drawn out as well, he said. “Compensation is based on the value of the contract over the period of the term. Salesmen get paid when we get paid.”

Doriot said sales compensation at Loansifter “has gotten very sophisti-cated” as the company has acquired larger mortgage industry clients.

“There are many demos involving multiple team members communicat-ing internally, doing needs analysis on the workflow, how pieces are going to work with one another, helping them work through their challenges,” Doriot said. “As the implementation moves toward completion and inking of con-tracts, the salespeople make a smooth transition to the account managers. The compensation moves from a set salary during the ramp-up period of their ca-reers, with commissions supplanting salary as they do more sales.”

“With enterprise sales the price is substantially lower per seat,” he con-tinued. “You reach a cutoff point that gets somewhat commoditized but we become more predictable internally.”

Developing SaaSJust as housing prices could not rise

forever, software pricing cannot re-main in perpetual decline.

Given the low prevailing upfront implementation fees and low-cost monthly maintenance fees with SaaS, funding for research and development is a real issue. Development has to take place on a continual basis with multi-tenant systems—and to a lesser extent with single-instance hosted models—but is supported by drastically lower pass-through revenues.

Stoddard believes that the multiten-ant SaaS market will continue to grow because “software is never done and the rules are always changing,” at a time when small to midsized players “don’t have the money to spend on developing applications.”

But vendors like Quandis must continually upgrade their systems, he said—and must price accordingly. He said Quandis is able to keep its transac-tions priced on a cost-plus basis “where we don’t have a single app we’re not working on, profitably. If you can’t make money in default technology to-day, you never will,” he said.

Having recently completed a total .NET rewrite of its system puts Mort-gageFlex in a good position to deal with the challenges of the current market, said Dominick.

“Charging per-transaction works best from a competitive standpoint because we’ve already made that in-vestment. If our competitors still have to make a rewrite, how do you pay for that when you charge on an up-front licensing basis and have to find money for a rewrite of your system?” Dominick said. “What you want to do is build up a reserve to pay for your next big R&D expenditure.”

One way that vendors reduce their own R&D costs is to have customers pay. The PWC report discusses custom-er-supported R&D, which typically le-verages the commercial open source model in a SaaS environment.

For the mortgage industry, this means lender customers pay time and materials for the vendor to develop new features that are automatically delivered to the vendor’s other custom-ers as well. That kind of cooperative brainstorming between vendors and their customers, converting R&D wish lists into working software applica-tions, has long been a high priority at user conferences. Mark Phlieger said a “bread-and-butter capability” at Avista has long been showing users that its programming teams are able to code, test and release new apps faster than lenders can accomplish in-house.

Integration Reduces CostsIn today’s uncertain market, lenders

cannot predict which vendor integra-tions they will need next. A hidden factor in determining whether lend-ers are getting what they’re paying for is having the right integrations—and making sure their vendors do, too.

“When they’re doing their due dili-gence,” said Marconi, “lenders should ask vendors, ‘How many vendors do you integrate with now?’ If they say three, then basically that means they only have three friends. You want a technology partner that collaborates with lots of partners.”

Marconi singled out Global DMS as a vendor that integrates with a num-ber of other solutions. “They do it right, and they’re willing to make friends with anyone. For us small- to medium-sized lenders, that is incalculable, to do it for a dollar per transaction,” he said. “In the technology business no one can be everything to everyone. If you can’t integrate easily with other vendors, you’re going to become obsolete.”

Integration may not be a direct com-ponent of pricing, but it must enter into any assessment of the total cost of doing business. The most useful tech partners are not always the cheapest; at some critical junctures, lenders re-ally do get what they pay for, whether they realize it or not.

A PricewaterhouseCoopers report on software pricing trends outlines a number of key factors for technology vendors’ success

Focus on service and support

Offer flexible licensing and

Adopt software as a service for commoditized functionality

Resolve issues surrounding

Re-evaluate sales approaches and compensation policies

Concentrate R&D on new functionality where pricing pressures are least in play

improvement R&D model

Cultivate efficient software provisioning and service

Develop a platform strategy

S S


033_MTMar12 5 3/6/2012 1:52:32 PM

Sharon Matthews is president and CEO of eLynx, a provider of paperless workflow, document management and e-signature technologies for the mortgage industry.

The company’s suite of products puts an emphasis on helping originators make the shift to all-electronic originations, while still providing flexibility to accommodate paper documents when necessary.

The company got its start in 1998 and by 2008, had surpassed over 2 billion electronically processed mortgage document pages on its cloud-based business process services platform.

Mortgage Technology recently spoke with Matthews on a wide range of topics, including paperless origination trends, mortgage quality control and the best strategies that lenders can use to take their businesses paperless.

ThePower of Paperless

By Austin Kilgore

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The CEO of eLynx explains how managing both data and documents improves how lenders do business in today’s market.


034_MTMar12 1 3/7/2012 10:09:09 AM

MT: There are a lot of e-sign and e-doc vendors in the industry. What makes eLynx unique?

MaTThews: The difference for us is that we have a platform approach. We’ve evolved from being document-centric to being data-centric because we think that gives you transparency in the information around loans. We think that’s good for quality origina-tions, we think it’s good to minimize fraud and we think it’s good to have all that data around the loans through the life of the loans for the investors, who are far more likely to accept them as quality investments and bring that investment market back.

MT: The concept of moving from docu-ments to data is a growing trend in the in-dustry. What’s encouraged that shift?

MaTThews: I would say it’s documents and data; not documents to data. I’m not trying to be picky, but it’s a different point I’m trying to make. This is, today, still a paper-dominated industry. It’s a very large industry and it’s difficult to make changes happen and make them stick in an industry of this size.

As much as it would be glorious to go all data, all the time, being able to still continue to fully accommodate and in-tegrate their documents is critical as we continue to improve the entire attach-ment of the data around the loan.

The more paper you save, the more solid the industry is. The more expen-sive it is to produce a loan, the more risk there is that the borrower you thought was a particular borrower isn’t, the property you thought you’re mak-ing on a loan on isn’t, that the person closing the loan isn’t and the invest-ment you thought you bought, wasn’t.

Q By going after the fraud that you can go after if you have the right data, you mini-mize costs, you make the closings faster and you make the investments faster. The cycle of money is faster on better quality loans. It’s loan quality, it’s reliability, fraud minimization and it brings people back to the market with confidence.

MT: What do you mean by data and docu-ments, as opposed to documents to data?

MaTThews: I don’t think you can vi-ably do one or the other, I think you need both. For example, we have a lot of customers who work with us with e-signatures. They want to start up with us easily and make it as quick as they can and then increasingly adopt greater electronic solutions with us.

Some of them just start with what we call electronic paper. They start by bringing their paper disclosures to us and then they start adopting an elec-tronic version of those paper docu-ments as quickly as they can, as fast as we can help them, which is as fast as they can take it.

They can start with just paper and then they start collecting signatures from their customers. Our experience is, somewhere around 80% of custom-ers, if you ask them and you’re a reli-able person like their bank, people will give you an email address. Once they give you an email address and you start sending disclosures to them elec-tronically, about 75% of those people will accept them electronically. That’s the beginning of the adoption from paper to electronic and the story goes on from there. But it’s a documents and data together story.

It’s a great way for lenders to make the migration and win the right type of customers who are going to stay electronic all their lives and be the least expensive to service and the ones they can identify and make clean loans with. It’s good all around, but it’s both things in this industry.

MT: So electronic paper is the first step and e-signatures is the second step?

MaTThews: Yes, but not everybody starts that way, some go straight to electronic signatures pronto with elec-tronic disclosures and electronic signa-tures at the same time. We have one lender that’s been a closing doc cus-tomer of ours for some time and as soon as they went to the disclosures, they went to signatures straight away.

In the first three months, they got to about 60% adoption and God bless them, they were not happy about it. Now, best in class is about 85%. They were unhap-py and they were beating on us. And we were like, this is fantastic, but funny. But you can see their adoption rates going up every week because they’re doing all the right things to do it.

It doesn’t have to start with paper, but it is an easy path if you have a customer who has a very mature pro-cess and maybe doesn’t have the level of leadership at the top that you might need to get the adoption you want ear-ly on, as a way for them to start gently. But they can start with paper and go to disclosures and signatures as fast as they can do it, we’ll do it with them.

MT: Ultimately, the goal for the industry is to have everything electronic, but many won-der how long that will take. So is the current strategy a stopgap measure until the industry gets to full electronic across the board?

MaTThews: I think it’s a matter of the time frame. Eventually, will it be all data all the time? That sounds wonder-ful to me, but it sounds a little nirvana. It will take a long time to completely eliminate all the paper because maybe some lenders will be able to do it for a majority of their loans, but you will al-ways have some lenders who will lag.

You’re going to have some consumers who will lag for a while, too. It’s going to take a while. We’re ready as fast as the industry is ready, but there are always a few folks who are slow to change.

MT: How do you differentiate between electronic paper versus document imaging?

MaTThews:almost exclusively as a long-term way of keeping hard copies in a sensible electronic form. They are locked and sealed in the sense of being recorded in data format for long-term retention.

But when we take about e-paper, that’s really the ability to be able to integrate electronic documents and paper.

Say you have a borrower who gives you an electronic mail address, and you go to present your disclosures to them electronically. And they receive it with a secure connection and they go to login and they then decide, “No, I’m really not comfortable signing these documents electronically or even receiving them electronically.” Or maybe they’re on vacation and can’t get to a network.

Our system is set up so you remain RESPA compliant and ensure that you sent your disclosures to your customers within the required time frame and paper will be printed, mailed and traced to the recipient and they get physical paper. But it’s fully integrated with the electronic solution. We can track on a loan-by-loan basis, even if there are multiple people on the loan.

When we say electronic paper, we think of an integration between electronic delivery and paper delivery so it’s a turnkey, set-and-forget solution for our lender clients.

MT: What is it about e-docs that makes it a fraud detection tool? What can you do with data that you can’t do with documents?

MaTThews: about the individual, the loan and the property, you can interrogate the data and take action on it. One kind of fraud is multilien fraud. It’s been a big problem in this country for some time, where some individual decides to take out multiple loans on a property with different lenders within a relatively short time frame.


036_MTMar12 3 3/7/2012 10:08:55 AM

So electronic paper is the first step and

Yes, but not everybody starts that way, some go straight to electronic signatures pronto with elec-tronic disclosures and electronic signa-tures at the same time. We have one lender that’s been a closing doc cus-tomer of ours for some time and as soon as they went to the disclosures, they went to signatures straight away.

In the first three months, they got to about 60% adoption and God bless them, they were not happy about it. Now, best in class is about 85%. They were unhap-py and they were beating on us. And we were like, this is fantastic, but funny. But you can see their adoption rates going up every week because they’re doing all

It doesn’t have to start with paper, but it is an easy path if you have a customer who has a very mature pro-cess and maybe doesn’t have the level of leadership at the top that you might need to get the adoption you want ear-ly on, as a way for them to start gently. But they can start with paper and go to disclosures and signatures as fast as they can do it, we’ll do it with them.

Ultimately, the goal for the industry is to have everything electronic, but many won-der how long that will take. So is the current strategy a stopgap measure until the industry gets to full electronic across the board?

I think it’s a matter of the time frame. Eventually, will it be all data all the time? That sounds wonder-ful to me, but it sounds a little nirvana. It will take a long time to completely eliminate all the paper because maybe some lenders will be able to do it for a majority of their loans, but you will al-ways have some lenders who will lag.

You’re going to have some consumers who will lag for a while, too. It’s going to take a while. We’re ready as fast as the industry is ready, but there are always a few folks who are slow to change.

MT: How do you differentiate between elec-tronic paper versus document imaging?

MaTThews: I see imaging being used almost exclusively as a long-term way of keeping hard copies in a sensible electronic form. They are locked and sealed in the sense of being recorded in data format for long-term retention.

But when we take about e-paper, that’s really the ability to be able to integrate electronic documents and paper.

Say you have a borrower who gives you an electronic mail address, and you go to present your disclosures to them electronically. And they receive it with a secure connection and they go to login and they then decide, “No, I’m really not comfortable sign-ing these documents electronically or even receiving them electronically.” Or maybe they’re on vacation and can’t get to a network.

Our system is set up so you remain RESPA compliant and ensure that you sent your disclosures to your custom-ers within the required time frame and paper will be printed, mailed and traced to the recipient and they get physical paper. But it’s fully integrated with the electronic solution. We can track on a loan-by-loan basis, even if there are multiple people on the loan.

When we say electronic paper, we think of an integration between elec-tronic delivery and paper delivery so it’s a turnkey, set-and-forget solution for our lender clients.

MT: What is it about e-docs that makes it a fraud detection tool? What can you do with data that you can’t do with documents?

MaTThews: Once you’ve got the data about the individual, the loan and the property, you can interrogate the data and take action on it. One kind of fraud is multilien fraud. It’s been a big problem in this country for some time, where some individual decides to take out multiple loans on a property with different lend-ers within a relatively short time frame.

Before they run away with the extra money, their credit looks rea-sonably good—though they may have done some identify theft in the first place to make their credit look good.

But their credit looks good, so it looks like they qualify for the loan. Then they go get mul-tiple loans on the same property, one with Wells Fargo, one with SunTrust, one with GMAC and one with some small Georgia bank. They basically take out multiple liens on the same property.

Since we have some-thing like 50% mar-ket penetration, good chances are we’re going to have several of those loans going through our network. Instead of it just being RESPA data, but it is in fact the data and docs together, we can pull the data together and say, “Look at this, within a 30-day period, this same prop-erty has had three out of those four lenders with closing doc-uments being delivered to title under-writers or settlement agents.”

That would create a very suspicious condition and we know it before those loans are closed. That’s the kind of thing you can do.

MT: And you’re doing that today?MaTThews: We absolutely can, yes.

Here’s another kind of value around the data. We can data about people on our network, such as what we’re doing in our closing environment through the settle-ment agent management product.

Today, we have some 100,000 or so settlement agents registered on our network who are regu-larly being reconfirmed so we know that the people who are closing for our lender custom-ers are in fact the people who the lenders think are closing the loans.

Another kind of fraud you probably haven’t heard quite as much about is settlement agent fraud. You won’t hear much about it, although every now and then, you’ll hear little bits and pieces in the press. It’s little, tiny things, so you have to connect the dots.

The lenders try really hard not to talk about this because some of them only discovered it very recently. They didn’t know it was hap-pening. But mostly it’s because the last thing they want to do is make it public that they are victims of it and encour-age someone else to try doing it to them.

The issue is that even if a settlement agent is registered with a respectable ti-tle company, the agent may or may not be the actual person we think they are.

Having data about those people and being able to check that they are who they say they are and whom we think they are, means that the lenders can safely send them the closing docu-ments and disperse the funds that they need to close their various loans. That’s another way to use data asso-ciated with the documents to prevent fraud, clean up the industry and make sure the loans are clean and usable.

Spotlight onSharonMatthewS

Sharon Matthews was named

president and CEO of eLynx in 2007 and came to the company with more than 20 years of executive experience, running large technology and software companies.Matthews is an active coach and a member of the advisory board of Canyon Snow Consulting. The Australian native is now a U.S. citizen and resides in northern California.


037_MTMar12 4 3/7/2012 10:09:15 AM

MT: So a person working for a title com-pany will impersonate someone else?

MaTThews: They can be, or they could no longer be legitimately licensed. They might be in a remote place and they used to close loans and be perfectly legitimate, but it might not be the same people any-more or they might have had their iden-tify hijacked. There are all kinds of things that could have happened.

MT: So the fraudster poses as the title agent and takes the money?

MaTThews: Yes, that’s what’s happen-ing. Sometimes, it’s an entire group of people. We actually saw some compa-nies fold and disappear into the dark.

MT: How do you identify potential instanc-es of this fraud before it happens?

MaTThews: We’re working with lend-ers and the major title companies to en-sure that we can verify and prove that when a lender has picked a particular title company and settlement agent to close a loan, that the settlement agent is in fact verified by the title company and that the person is reverified on a regular basis, to ensure Harry is in fact Harry and knows the right things he needs to know about Harry to prove that he is.

MT: You just gave examples of the value proposition of data. Are lenders compelled by that, or are they more driven by the prospects of cost savings from reduced paper expenses?

MaTThews: There are three things that drive the change. Certainly, the cost savings are one. Although, they don’t like to say that to us because they think we’re going to price on that basis. But there categorically are cost motivations. Being electronic is cheap-er than being paper, without a doubt.

Q The whole fraud issue is also driving it because there is a huge cost associ-ated with it, as well as all the issues with what do you do with loans that won’t be bought by investors?

Those things all matter, but what I’ve seen, particularly in the last five years, is all the compliance demands that are being made of lenders are absolutely driving the move to electronic.

When I talked about e-paper being integrated between electronic distri-bution and delivery to the consumers and the fall back to paper systems if they decide to not go electronic, the fact that we can track exactly where those documents are, who’s got them, when they were distributed, if they ac-cepted the first time and then rejected, whatever they did with it, we know what they did, when they did it, how often they did it and what happened.

That’s our lender customers’ com-pliance. They can prove they met the three-day period and it makes sense that they’ve got traceable, auditable data. That whole concept flows right across the entire eLynx product offer-ing, whether it’s closing documents, proving that the GFE provided to the borrower was in fact within tolerance of the final HUD-1 and they didn’t need to reissue the GFE three days be-fore and delay the loan.

It’s about being able to be compli-ant and being able to prove that you were. So cost matters, fraud matters and compliance really matters.

MT: What does a lender have to do to get their employees on board with e-paper?

MaTThews: I love that question be-cause that’s human nature, none of us really truly like to change. That’s par-ticularly true of an industry as mature as this one. There are loan officers who are hell-bent, who don’t have email ad-dresses themselves. But the answer is that it’s no different than trying to make any other organizational change.

The very best things you can do are lead it from the top of the organization and make it visible that you’re going to do it. As you continue to work through the process of improving adoption, you train people and you keep going back and train them some more.

You build it into loan officers’ re-wards. You give them rewards and make it visible. You make a loan of-ficer the hero of the universe because he’s doing this 85% of the time and he gets a $10,000 because he’s the top, most electronic loan officer.

We’ve got customers doing this. You go visible, you go public, you go on and on about it and you incent, reward and put the crowns on the people who are the best at it. And when you imple-ment it that way, it works.

We have a customer who we’ve been working with since 2004 and they are world-class at doing this. You walk into their operation and you can see basically a measurement of the loan officers’ electronic presentation up there on the wall. We’ve got some white papers and we do a lot of work with customers in this area.

You want to make it easy for them to do, but you want to make it worth-while for them to do. The customer that I mentioned who got to 60% in three months, we were just blown away. But they came to us at the beginning of the relationship and said, “This is what we want to be able to do. How are you going to help us?”

That’s music to my ears. It’s great for the customer. It’s great for us. We told them what to do, we told them how to do and we helped them do it and it’s just living proof that it works.

This is about making it easy to do, giv-ing them a reason to do it and making it so you’re not having something to you, it’s being done so it helps you do your job better. It’s how you close more loans and make more money. That’s what you need to do for them.


038_MTMar12 5 3/7/2012 10:09:29 AM

techstats

t his month’s cover story ex-plores the shifting role of the Internet and Web-based point-of-sale technology in mortgage

originations. While many trends of this phenomenon are anecdotal, a biennial benchmark study commissioned by on-line POS technology developer Mortgage-bot provides more concrete evidence of the industry’s migration online.

The study, released at the end of 2011, combines mortgage application activity across Mortgagebot’s more than 1,000 lender customers with an annual customer survey and indepen-dent market research.

According to the survey, 42% of Mortgagebot’s lender clients generate at least one-quarter of their origina-tion volume by providing prospective borrowers with a consumer-facing website to complete loan applications.

Online Originations

Included in that group is a pool of 11% of lenders whose consumer-direct channels made up 75% or more of their total origination volumes.

In addition to providing tools for consumers to complete loan appli-cations, Mortgagebot’s websites also include rate search, payment calcula-tor and FAQ sections. The rate search module accounted for 54% of total Web traffic, while the application sec-tion generated 25% of activity.

According to Mortgagebot client data, one in every 2.7 visits to a lender’s website generated a rate search inquiry, while one in 24 visits resulted in a con-sumer starting a mortgage application.

While 89% of completed applications were submitted within two weeks of starting the process, Mortgagebot esti-mates that it takes 38 website visits to create a single submitted application.

Benchmark study reveals consumer trends in Internet mortgage application activity.

Rate of Consumer Channel Applications

Lender WebsiteContent Accessed

Loan Application Pull-Through Rates

58%21%

10%

11%

Overall, 64% of consumer applica-tions started on a Mortgagebot-pow-ered website are submitted to lenders. Of the pool of applications not sub-mitted, 11% were abandoned because the applicant was ineligible—meaning once a consumer begins an applica-tion, 72% of eligible borrowers com-plete the process.

The most common place that con-sumers quit the application process is at the very beginning—typically “win-dow shoppers” who stop before they have to enter in personal information.

At the opposite end of the process, 8% of consumers who quit the ap-plication stop at the final submission step—which Mortgagebot said suggests that at least some borrowers elect not to provide credit card or other account information to pay required applica-tion deposits or other fees.

54%

11%

25%

5%5%

64%

25%

11%

Source: 2011 Mortgagebot Benchmark Study

0% - 25% 26% - 50%

51% - 75%76% - 100%

check Ratescalculators Application

FAQs Other

AbandonedIneligible

Submitted

Percentages of total Loan Volume


039_MTMar12 1 3/6/2012 1:48:59 PM

Ultimately, the role of a national property preservation provider is to help protect and preserve the commu-nities and neighborhoods in which it provides its services and the increase in federal and local regulation does create additional requirements for mortgage servicers and their vendor partners. The desired result by all is a reduction in neighborhood blight and code violations, not to mention in-creased communication between local code officials and the mortgage servic-ing industry; much of which is being driven by technology.

To accommodate the increased reg-ulations, processes must be flexible and nimble, be able to change direc-tion as needed, be able to respond to processing differently (even per client) and scalable to manage fluctuating volumes and client portfolios.

Next StepsThe evolution of technology among

consumers always finds a way to in-filtrate the corporate world and find a business-to-business application. The proliferation of mobile devices—and what can be done with these devices—and even of GPS technology will trans-form the field service community.

Take for instance the ability to take pictures on the same device that can be used to upload those very images. Cam-era phones seem almost archaic now, but mobile phone manufacturers initial-ly added this feature as a gimmick. What has followed are browser interfaces and system compatibility with software and social media platforms.

Now, someone in the field applying that all-in-one technology can both take the required photo documenta-tion required for proof of property condition and upload the images, all from a single device. Before, the same task required a camera, connection cables, SD cards and a laptop or PC.

As consumers in general become more technologically robust, the field services industry can take advantage of the same technologies to serve our industry. It is important that we take whatever tech-nology is available and look for ways it can be applied to our business, using that very functionality and integration to add value to what we do.

The late Steve Jobs once said, “Tech-nology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do won-derful things with them.”

And that is exactly what is happen-ing in the realm of field services—Find-ing the balance of innovation, cost ef-fectiveness and readiness for change to effectively meet the needs of the largest servicers, our vendor partners in the field and the nation’s communities and neighborhoods that we serve.

Rob Colbeck is senior vice president of IT at Tam-pa, Fla.-based Mortgage Contracting Services.

Field ServicesContinued from page 12

Since it is part of the loan record, a database management solution should seamlessly pull this information and make it available. From there, searching the database and generating the appro-priate correspondence will take seconds. Again, managing the details is the key.

Once the top firms are identified, a loan officer can ask clients to approach the human resources department to get a warm introduction. Originators should show the employer the value a professional loan officer can deliver to the company associates. Human Re-source departments are often search-ing for benefits they can provide to employees at no cost. Having a rec-ommended loan officer can be a great value-add to an employer, as well as a great source of referrals.

In short, there are several ways that top loan officers build strong purchase pipelines, but it takes dedication, rel-evant marketing, and solid database management and reporting technology.

Originators can’t wait–a long-term, disciplined approach is the key.

Jim Blatt is the CEO of St. Louis-based market-ing technology provider Mortgage Returns.

MarketingContinued from page 15

Index of AdvertIsers

Advertiser Pg #

Document Systems Inc.docmagic.com 5Guaranteed Rateguaranteedrate.com 9Harland Financial Solutionsharlandfinancialsolutions.com/mortgage2 3

Interthinxinterthinx.com 11Mortgage Builder Softwaremortgagebuilder.com 19ServiceLinkservicelinkfnf.com 7


040_MTMar12 5 3/6/2012 1:49:50 PM

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