Are you considering switching Loan Origination Systems? (Special Edition)
SCA's systems expert Paul Bates guest-authors the weekly newsletter and addresses the decision to switch LOS providers.
My name is Paul Bates and I am "guest-hosting" this week's newsletter. I work with Ben and the Spillane team as a lending systems consultant. While Ben and the other compliance gurus help lenders with what the rules are, my group helps lenders keep their systems in compliance with what the regulators dish out!
Compliance Tip
While Ben's trading in his suit and laptop for some Florida fun this week, he did leave me with one TRID tip to share:
If you deliver a revised Closing Disclosure to be signed at closing, make sure that the "Date Issued" on p.1 is updated to match the date the revised disclosure is actually provided. I guess the compliance team is seeing this as a common error.
Choosing an LOS
Now on to the good stuff!
Loan Origination System vendors have handled all of the compliance-related hurdles that have been thrown our way recently with varying degrees of success. Some vendors gave lenders many months of time to prepare, some gave a lot of promises and few days. Some vendors had fantastic support, others not so much. On one call for a client, I am sure I had Peggy from the Discover Card commercials on the line. This has left many institutions thinking it might be time to go shopping for a new Loan Origination System.
Since helping people with these systems (including doing due diligence on switching) is what we do, day in and day out, I wanted to share some tips if you're considering a move:
Timeframe
Plan on spending a year from the decision to look at changing, to taking the first live application on a new system. This is a "critical" system in the regulators' eyes, and institutions must document that the change process was made prudently and methodically. Like your old math teacher used to say - you have to show your work to make the answer correct!
Lending Style and Vision
All lenders have to essentially play by the same rules, but each has a unique approach to their mortgage business. From the small portfolio lender where it's an accommodation to their commercial base, to mortgage bankers who lend in all 50 states. It is key to know "who you are" AND "where you want to be" when looking for a new system. Finding the "right" system depends on what type you are. Just like the old adage, one size doesn't fit all.
Efficiency, Workflow, and the Customer Experience
Everyone wants to become more efficient - "If I get a shiny new LOS, I will be more efficient - Right?" Not necessarily. To make the new system work for you, it is key though to look at your current process.
A successful conversion is most always accompanied by:
Documenting current workflows
Changing workflows to exploit new feature/functionalities
Monitoring
Continual adjustments
Regulators and investors are constantly adding changes to the mortgage process. Don't limit workflow changes to regulatory items. It pays to be nimble.
How will a new system affect the consumer's experience? Is your online presence improved? Can your customers e-Sign documents? Can they securely upload their documentation? Can they get status updates? If you can find a system that also enhances the consumer's experience, that's the golden ticket.
In Other News:
What will the CFPB be looking for in 2016 (and thus what will the FDIC and all other regulators be looking for)? Here's a good summary of the CFPB's public comments
Looking for TRID tips? Even if you're not an Ellie Mae customer, you can check their collection available here
Don't forget to check the Seller's Closing Disclosure for formatting errors - follow along with the CFPB's sample.
"A well-developed sense of humor is the pole that adds balance to your steps as you walk the tightrope of life."
- William A. Ward
Thanks so much for reading our weekly newsletters. We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy. Your calls and e-mails are very helpful - please keep contributing.