Do U Stink @ Mortgage?

And you may ask yourself
How do I work this?
And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house
And you may tell yourself
This is not my beautiful wife
-“Once in a Lifetime,” Talking Heads

Now that we have endured a refi-boom that has lasted longer than anyone expected, you may ask yourself, “how have we performed?” Many mortgage lenders express frustration with the process of getting a loan through the pipeline to closing. Many mortgage underwriters wish applications were submitted with more complete and accurate data. Many mortgage processors just throw their hands up. On the other hand, there are lenders that have taken the time to retool their shops with next generation mortgage loan origination systems and document imaging systems and have been able to capture market share and new customers.

Take this short self-assessment to learn if you have that beautiful house – or if perhaps you stink at mortgage

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Applications and Secondary Marketing

	Yes		No	Our lead management system efficiently turns prospects into applications.
	Yes		No	Based on application data, eligible loan products are automatically selected.
	Yes		No	LLPAs (loan level price adjustments) are automatically calculated and applied.
	Yes		No	Locked loans automatically fill available commitments.
	Yes		No	Product rates and parameters are automatically updated from investor Web sites.
	Yes		No	The lock desk is automatically notified when terms of a committed loan change.

Underwriting and Processing

	Yes		No	DU or LP findings are automatically resubmitted when loan terms change.
	Yes		No	Correct disclosures are automatically reprinted when loan fees change.
	Yes		No	Stakeholders are automatically notified as the loan status changes.
	Yes		No	None of our third party orders (flood, title, appraisals, etc.) require redundant data entry.
	Yes		No	Third party data results automatically populate MLOS data fields.
	Yes		No	The MLOS keeps up with and reminds us to follow up on conditions or missing information.
	Yes		No	We eliminated moving paper file folders from desk to desk.

Closing, Funding, Post-Closing QC, and Shipping

	Yes		No	Forms generated from the MLOS are automatically sent to the document imaging system.
	Yes		No	Closing packages are seamlessly, securely, and electronically delivered to the closing agent.
	Yes		No	Post-closing tracking is an integrated task.

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If there aren’t a whole bunch of Yes’s marked, then you probably stink at mortgage. But don’t despair, there is hope. I have spent the last year diving deep into mortgage origination shops and sitting through countless vendor demonstrations, and it is encouraging to see the latest generation of products providing real relief. These systems don’t tend to come from core vendors, and they require more commitment than Zsa Zsa Gabor’s nine marriages, but the payoff is well worth it.

I am a firm believer that high volumes of originations will be around for a while. You may ask yourself, “Croal Dude, how the hell can we keep up this pace?” When you look at the rate environment, it becomes quite apparent that rates can do three things: go up, go down, or stay the same.

 

Now you may ask yourself, “What if rates go down?”  I would expect GovCo to step in and force investors and servicers to let everyone refinance. But even if that doesn’t happen, all those millions that refinanced at 4 percent will be back in to refinance at 2%.

Now you may ask yourself, “What if rates go up?” That will certainly get the “waiting for housing or rates to bottom out” crowd to move. Purchase volume will go through the roof.

Now you may ask yourself, “What if rates stay the same?” Eventually, enough payments equals principal reductions; the underwater crowd will no longer be underwater and they will be able to refinance.

So if you believe any of these outcomes from the three rate scenarios are possible, then why the heck would you continue to endure the pain and suffering of your current mortgage operation?

I’ll tell you what it is about these “new systems” that makes life a dream compared to the nightmare you are living.  

• For starters, that cadillac Internet software that your lenders don’t use 10% of can go away and save you a bundle.  The new systems have effective application portals that cost less, integrate better with the MLOS, and provide two-way communication with your borrower.
• These systems also eliminate the quagmire you call lock desk management. They have their own pricing and eligibility engines that are tightly coupled with the MLOS and the government sponsored entities Fannie and Freddie. You will never manually create a rate sheet again. Say bye-bye to standalone pricing and secondary marketing software packages that don’t talk to the MLOS and are unaware that the underwriter just changed your committed deal.
• These systems take extreme advantage of third party vendors that are Mortgage Industry Standards Maintenance Organization compliant. That means you never have to go to another vendor Web site and rekey the same data that is in the MLOS just to pull a flood or credit or order an appraisal. In fact, if you have a vendor that is not MISMO compliant, just shoot them now.
• The systems use data and document imaging correctly. With that I mean the system knows when to follow-up, who to notify, when something is late, when it arrives, etc.  And you don’t need to run a freaking crystal report to tell you. It’s just part of the deal. Borrowers can submit documents through the same online portal where they started the application to satisfy conditions.
• The systems also get you out of the forms creation and “pick-the-right-one” business, a place you don’t want to be when the Consumer Financial Protection Bureau rolls out their new Loan Estimate Form and Closing Disclosure Form. Sure, these forms are just three and five pages long, respectively. But the rules to implement the forms are 1,099 pages. Good luck wit dat. The new systems will send your data to a document provider who will not only produce the required form set but also give you a portal to get the documents to your closing agent. Adios ##Secure## in the subject line and Father-Son-Holy Spirit hope it gets there.

My mentor, Terence Roche, shared some data with us last week that showed how big banks, even with all the bad press, kicked our asses in core deposit and loan growth since the crisis. But the one bright spot was mortgage originations. While they were busy in court defending robo-sign, community banks and credit unions were out getting the loans. But man, was it painful. Mortgage can be a big profit booster if it is done right.

Don’t miss this opportunity. It may be a decade before you have another chance.
-Croal Dude

Letting the days go by
Let the water hold me down 
Letting the days go by
Water flowing underground 
Into the blue again
After the money’s gone 
Once in a lifetime
Water flowing underground

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Are You Running a Next-Gen Mortgage Shop?

Or are you missing out on a huge opportunity while you live with the nightmare of outdated systems?

At Cornerstone Advisors, we have seen mortgage loan origination systems and document imaging systems in financial institutions of all sizes. We’ve seen the great and the not so great.  Visit our Web site or contact us today and we’ll talk about steps you may need to take to put your mortgage operations to work capturing market share.