Ten Ways to Thrive in the Mortgage 2.0 Era

1) Think outside the LOS box.

How do your mortgage lending systems work with the rest of the bank's architecture? Is the bank undergoing an SOA transformation or is operations looking towards the use of cloud computing technologies to drive efficiency and cost savings? How do the systems across the bank work together now, and is the bank truly serving the customer's best interests via the coordinated cross-functional sharing of consumer data?

2) Look outside banking.

Examine other industries to observe best practices and case studies that may be applicable to your operations. Technology and mortgage analysts and pundits alike see similarities between where the mortgage lending sector is today, and where the travel reservation marketplace (e.g. Sabre's consolidation into a single booking platform) and electronic resource management (ERM) were ten years ago (e.g. emergence of SAP as centralized management tool for manufacturers).

3) Digitize your data -- all of it.

It's the easiest way to ensure accurate tracking of mortgage files from application to close to the secondary markets.

4) Build checks and balances into the system.

Rather than relying on manual spot checks, build controls, checks and balances into the lending management system so that *every* loan files comes out error-free.

5) Centralize lending oversight and control.

Knowledge empowers. And being able to view the real-time status of each loan file in the system is vital to making key decisions regarding product mix, which is of particular importance when products are more "vanilla" and margins thin relative to the boom era.

6) Build a lending system that contracts or scales with your business.

Having an agile and flexible system in place is no longer a "nice to have" competitive advantage. It is now a necessity for survival, and a precursor to thriving in the Mortgage 2.0 era as regulations increase and the financial markets remain vulnerable.

7) Talk to the analysts. Get their advice.

The major research analysts serving the banking industry such as TowerGroup, Forrester Research, and Gartner understand the breadth of technology and the business problems that each of these solutions solve. They also collectively talk to hundreds of financial institutions throughout the world and assess dozens of financial services technology vendors every year. Sometimes their predictions are off, but very often they are right.

8) Build transparency and compliance into the system.

The processing of a mortgage involves a drawn out, highly complex series of transactions involving multiple parties and as such is prone to error. The meeting of regulations surrounding separation of roles, consumer data handling, closing documentation, credit disclosure, and product underwriting requirements adds to this complexity. Implementing a transparent work flow process with built-in compliance handling into the consumer lending process reduces risk exposure and can turn a traditionally onerous audit lasting months into a relatively easy week-long event.

9) Realize that an ounce of prevention today is worth millions in upkeep later.

These days, choosing the right lending automation system is less a comparison of the features and functionality hard-coded into the product, but more of an examination of the underlying architecture supporting the product — how easy (or hard) is it to change a feature, or to upgrade the software, or to add a new rule? And how much will it cost your business if a change takes weeks, or even months to launch?

10) Know that not all "SaaS" and "web services" models work.

Just because a solution utilizes a web interface doesn't mean that it's a true Software as a Service. SaaS is a delivery model and like any software system, there are ones that can be trusted with your mission-critical mortgage operations — and ones that can't. Ask the right questions about security, SAS 70 compliance, and implementation track record/deployment success.