Archived Columns

Clean Whiteboards vs. Stained Coffee Cups

By Scott Kersnar, Editor, Mortgage Technology Magazine

The conflict between best-of-breed and end-to-end technology solutions never goes away. For every vendor proudly claiming to have started with a clean whiteboard to create a technology tool that straightens out all the twists and turns in mortgage processes, there are four established vendors taking comfort in the fact that their stained old coffee cups hang in lenders' employee lunchrooms as evidence of solid bonds with customers. Domain expertise counts heavily in mortgage technology. Lenders may be curious about a new whizbang, but few really want to go out to the marketplace to cherry-pick solutions that strike them as (probably, but not certainly) best of breed.

On the other hand, established mortgage processes are inefficient and costly enough to keep bright minds continually looking for better ways. Therefore new tools keep coming to market while established vendors try to do the cherry-picking themselves, going out to create relationships and interfaces that will funnel best-of-breed solutions to their lenders.

As compliance needs intensify, for example, we see announcements that Ellie Mae is creating an interface with ComplianceEase and Fiserv CredStar is partnering with PCi. Vendors create win-wins when these relationships streamline processes and lower costs rather than grafting on clunky and expensive new steps.

Some vendors are so certain that lenders and brokers don't want to be bothered with deciding how to pick their technology weapons that a new breed of services has come on the scene -- Software-as-a-Service. SaaS offers to provide loan origination systems and other technology on a hosted basis. Predicting that mortgage lenders' IT staffs will not be able to keep up with the pace of Web-based technology development, SaaS providers expect that mortgage lenders in droves will decide to outsource their key technology systems, and do that sooner than many think today. Companies like TrueClose and Insight Lending Solutions join ASP veterans like ARC Systems in betting that many lenders will make the big switch once they are convinced that they can entrust the security of their data to a hosted solution provider.

ILS offers Lender's Office to let lenders work collaboratively on loan application and manage the loan process in a Web-based environment. The company's PriceMyLoan.com offers wholesalers a low-priced way to compete with the largest lenders. Designed for wholesale, retail and correspondent transactions, PriceMyLoan.com is embedded into existing websites as a private-label system that lets loan officers submit loan files and get detailed and accurate pricing within 20 seconds. The system is also fully integrated with Lender's Office.

PriceMyLoan.com recently added credit integration that now can both reissue and order new credit reports from more than 200 credit vendors. The benefit is that lenders save time and money and deals are not put at risk when a report is reissued. PriceMyLoan.com also features an ROI calculator to help lenders take a closer look at the value they can expect from implementing the system.

Our recent update of the National Mortgage News LOS Research Report (an MT affiliate) looks at the case for lenders embracing the SaaS option. However, brokers have been more resistant than lenders to swapping out LOS systems. Many a loan officer or processor has no intention of ever abandoning the trusty old Byte, Calyx or Contour LOS.

Loan officers tend to view technology as what is in their hand (PDA, BlackBerry, cell phone, HP12C calculator) or on their desk -- including the fax machine. Nevertheless, it is possible to find products that turbo-charge the tools they use now. Take a look at FaxCore, a .NET and XML-compliant system that makes fax machines work with Internet technology. Brokers like faxes. And let's face it, paper is not disappearing. Paper title reports and appraisals are still with us, and employers are not going to be providing pay stubs in digital form just for the convenience of the mortgage industry.

Also, Calyx Point enjoys the largest market share among brokers, a San Jose, Calif.-based company called PushMX LLC has come to the market with a workflow and CRM product that lets Calyx users keep on using Point.

Aclarian Mortgage CEO Bob DeCecco, a trained technologist in his own right with expertise in business process management, told me that PushMX "has been a phenomenal product for us." He said the PushMX workflow and CRM tools are almost identical to ones he himself envisioned. "I had already started to outline a product that would work with Calyx," he said. "When I saw I didn't have to create it myself from scratch, that's when I went to meet with these guys."

What distinguished the PushMX workflow is that it uses a single screen for pipeline and relationship management, with pop-down boxes to give managers and loan officers all the critical information they need. "You have to keep it very simple because of the very low barriers to entry into our industry," he said. "The simplicity of having the one screen is very important in training people who can barely take a 1003."

Since today's transactional wholesale websites typically offer the kind of high-performance broker-serving tools and services that ILS's PriceMyLoan.com strives to match, Mr. DeCecco said Sarasota, Fla.-based Aclarian is able to count on wholesalers like Ohio Lending, Countrywide, Credit Suisse and ABN Amro's Interfirst to give his loan officers the streamlined service they need to be successful. "Loan officers do 70% to 80% of their business with two or three wholesalers," he noted. "The ones they pick are the lenders that make it easy to do business with them."

As you will see if you click on the "Check Loan Status" button on the Aclarian website (www.aclarian.com), the company uses the PushMX WebCRM module to manage relationships with borrowers, real estate agents and other participants in the transaction. When a loan application is entered into PushMX, Mr. DeCecco pointed out, it automatically generates an e-mail to all parties in the transaction. He said a top-producing Realtor recently allied with Aclarian Mortgage just because of the PushMX implementation. "We are revolutionizing the industry by taking responsibility out of the loan officer's hands," he boasted, "And we do that without increasing our costs."

Aclarian does not yet have its own warehouse line. With aspirations to enter the ring as a lender on a nationwide basis, the company is bound to run into some bumps in the road that PushMX can't smooth out. Some of these -- like keeping Aclarian abreast of any compliance needs that it faces on the lender side of the business -- Mr. DeCecco expects Calyx to handle for him, not PushMX.

But PushMX and PriceMyLoan can indeed turbo-charge the systems brokers and midtier lenders use today. While SaaS providers cannot magically wave present practices out of existence, when you come to the table with 200 credit interfaces and an ROI calculator to prove your value proposition, you are going to have takers.