The Elusive E-Mortgage

Will we see e-closings and e-recordings in our lifetime?

You’ve heard me and other industry media pundits write and speak about the e-mortgage and what I like to refer to as “The Final Four Challenges.” For this discussion, let me address where we realistically stand on the two most critical components in attaining the e-mortgage – e-closings and e-recordings.

Let’s define e-closing as the ability to close a loan without printing docs and signatures. I am not referring to electronic delivery of closing docs, but rather achieving the goal of working with our partners to make SMART docs and signatures “standard operating procedure (SOP).” The benefits are more than apparent to all of us—more efficient loan production, an improved customer experience, reduced origination costs and, ultimately, increased profitability. Sounds great, but as we all know, the legislative process has dragged its feet on pushing the e-signature agenda forward.

As for e-recording, I’ll define it as the electronic recording of documents at the county level. And we have to face reality—there are only a handful of counties doing this at some level. In fact, the Wall Street Journal reports that only 20 of the 26,000 counties and other recording jurisdictions do any e-recording.

You might conclude from this that the e-mortgage may not arrive in our lifetime, right? Not so fast. There’s been a tremendous amount of industry and media e-signature hype in the past couple of years. Couple this with an industry-wide push for establishing data standards, led by the Mortgage Industry Standards Maintenance Organization (MISMO), and the future for electronic closing and signatures actually looks pretty bright. In addition to the efforts by MISMO, the Standards and Procedures for Electronic Records and Signatures (SPeRS) is in the process of establishing industry guidelines for electronic signatures. Finally, recently passed legislation has opened the door wider for the e-signature to have the same validity as that of a “wet-ink” signature.

So, if the technology and the laws are all falling into place, then what’s the holdup? Borrower confidence is one problem. Without borrower faith in the process, the electronic signature won’t happen. It is very easy to forget that for many, if not most borrowers, the mortgage process can be confusing and intimidating. Top this experience off with asking for an intangible signature, and it may be too much for some borrowers to handle. Assuring borrowers that their electronic signature is valid and secure is a far greater challenge than finalizing industry data standards and legislation.

Despite the borrower’s comfort level, it’s important to reassure them and take the time to explain the security measures the industry has taken to build and sustain consumer confidence as electronic signatures become more commonplace. And the demographics and psychographics are in our favor. The next generation of borrowers (the Gen Xers), having grown up in an electronic world, will be much more amenable to electronic signatures.

However, the greatest hurdle on the road to e-mortgage acceptance is, and will continue to be, county recording offices. As noted earlier, less than 20 of the nation’s 26,000 county and other recording jurisdictions are configured to receive and record mortgage documents electronically.

What’s more, the handful of counties that use electronic capabilities in their recording offices are using only basic scanned images. Although the technology exists to provide and facilitate e-recordings, it seems there is no overwhelming or driving impetus for counties to improve efficiencies or speed closing processes. Sophisticated technology is needed to provide the industry with true e-recording capabilities—technology that includes building databases from which information can be transmitted electronically and that can populate the appropriate parts of existing forms, reducing the percentage of re-keying errors and the time required for document review. The efficiencies and savings are there, but can we prove it?

So the bottom line is that for all of the time and money savings that e-recordings promise, the reality of a national working electronic recording system is as far away as universal acceptance and implementation of the technology and processes by county governments.

What part can we play in supporting and encouraging companies to research, develop, and refine the technologies that can answer the remaining electronic problems and challenges to e-closings and e-recordings? I believe the answer is within us as an industry. We have the power to organize at the local, state, and national levels. Discuss it with your employees, business partners, and technology vendors. Elevate the discussion at your association level meetings and conferences. Together, we have the influence and power to move the process closer to reality by sharing issues, successes and milestones. How about this—if we could convince one county in every state to become a “beta” to prove the business case for e-recordings, it would literally open the gates overnight. In a time when local governments are striving to cut costs and provide better service to their constituencies, it might be just what the doctor ordered.

Lining up all the pieces to make e-mortgages a mainstream process is elusive but not unattainable. It’s simply a matter of setting our sights clearly, leveraging existing and emerging technology, and strengthening our industry, national and local government relationships to create a “slam dunk” case for the national acceptance of e-signatures and the local acceptance of e-recordings by county recorders. It is only through this proof and partnership that the e-mortgage will become “Standard Operating Procedure.”

By Sig Anderman

Tech Solutions for New Government Regulations

Lately when I talk to mortgage originators, I hear variations of the same questions and concerns: What are the legislators in Washington thinking? Why choose now to introduce potentially restrictive regulations such as RESPA, the Gramm-Leach-Bliley Act, and the “Do Not Fax” rule on the one market segment that has been carrying the sagging U.S. economy for the past 18 months?

Though most of the attention has been focused on RESPA reform, what impacts the future progress and promise of electronic data exchange today is Gramm-Leach-Bliley (GLB). Although it was created with good intentions, the final product is serious, penalty-driven legislation aimed at the financial infrastructure of the mortgage business, as well as other financial institutions. Yes, it protects confidential consumer information, and as technology’s progress develops ever faster and the speed and volume of data exchanged electronically grows exponentially, protecting consumer information is crucial.

It is important to remember, however, that GLB is enforced by the Federal Trade Commission, an agency well known for its willingness to sacrifice the occasional business enterprise to protect consumer interests. If you are not prepared to meet the regulations, you could well be out of tens of thousands of dollars, and possibly, out of business.

Past assumptions of what constitutes a “secure” exchange of information no longer work in an era of massive digital databases, high-speed worldwide networks, and continuous, too often successful hacker attacks. What is important now is preparing for the potential implications of these legislative ramifications and how they will affect the way originators conduct business. Without new technologies, the mortgage industry could have never successfully managed the massive refi boom (that’s sustained our nation’s economy) as it has. But can technology help the mortgage industry negotiate the minefield of emerging regulatory hurdles?

Through technology, the ability to commit fraud with a simple click of the mouse has been introduced, and hackers seem to be one step ahead of many “secure” firewalls and protected databases. In order to address the concerns of borrowers and the requirements of GLB, the mortgage industry must look at current technologies and what changes must be made, specifically in the arena of security.

The GLB Act that Congress produced was not specifically aimed at mortgage brokers when it was originally drafted. It was the FTC that included all mortgage brokers in its definition of “financial institution”—even those who don’t function as correspondent lenders. Because the services included in the FTC’s definition of “financial institution” are lending, brokering or servicing any type of consumer loan, transferring or safeguarding money, preparing individual tax returns, providing financial advice or credit counseling, providing residential real estate settlement services, collecting consumer debts, and an array of other activities, brokers must take immediate steps to change the way they exchange information.

First, mortgage professionals must have a privacy plan that the FTC approves and ensure that their customers specifically give authorization to exchange their information with “non-affiliated third parties.” The new rules mandate a $10,000 fine for every infraction.

When you figure that e-mailing a normal, unencrypted loan file to anyone at all constitutes an infraction, and multiply that by the number of unsecured borrower e-mails a mortgage company typically exchanges with lenders and settlement service providers, you begin to grasp the tremendous risk to your organization’s financial health that GLB represents.

Brokers can forget about flying under the FTC’s radar on this. This particular federal agency is designed primarily to respond to consumer complaints, and anyone—your competitors included—can present themselves as a consumer.

So, what’s the good news? The same technology revolution that gave us the ability to outstrip existing privacy regulations has also given us the tools to comply with the new ones. Here are some steps I would recommend for developing a GLB compliance plan:

Step 1. If you collect and store information electronically, implement electronic documents that bind data in an encrypted, immutable file. Know what private information you are responsible for protecting and apply security in all formats. GLB applies to “nonpublic personal information” that your company gathers and discloses about customers—in practice, most information connected with loans.

Step 2. If your company operates a computer network, place it and any database you use to store information behind an effective commercial firewall. Many commercial firewall programs are commonly available and the investment is worth it. If your processors and loan originators have individual Internet access, choose the best personal computer firewall program you can afford and supply each of them with a license to install it on their computer and ensure that they do so. It seems obvious, but make sure your office computers are “physically” secure. If not, make it so.

Step 3. Immediately stop e-mailing borrower files or borrower information. Your loan origination system should provide you with a means for securely transferring just the specific information that your lenders, service providers, and GSEs need in order to facilitate your request for products and services. In fact, your LOS should also provide you with a secure process for transferring your borrower files within your own branch or corporate network.

Step 4. If your LOS does not provide these levels of security, in order to continue doing business with outside entities—while staying in compliance with GLB—you will have to add Secure Sockets Layer (SSL) functionality to your network or to each of your employee’s computers. If you are reasonably computer literate, you may be able to do this yourself. If you have any doubts, however, invest in the services of an IT professional to do it for you.

In addition to these technological safeguards, consider developing privacy-protection procedures for employees to use in conducting your company’s day-to-day business. Create a “customer privacy” training course for your staff and make it a mandatory requirement of employment at your firm. Be sure they understand the new legal requirements and how to implement them in real life. How your people handle customer data is the most important link in the chain of responsibility.

Also, summarize your capabilities, supporting technologies, and employee procedures in a single document. This will become your legally required “Privacy Notice” under GLB, defined as “a clear, conspicuous, and accurate statement of the company’s privacy practices,” including “what information the company collects about its customers, with whom it shares the information, and how it protects or safeguards the information.”

In my opinion, only when you have the technology in place to effectively protect your business and comply with the Gramm-Leach-Bliley Act will you be appropriately prepared to face the changes and challenges of the future.

Loan Analyzer and Comparator

As a longtime user of a major loan origination system (LOS), one of the most common issues that I face in the pre-qualification phase is the issue of whether or not it makes sense to refinance in this environment. Many have refinanced into what would have been a wonderful rate historically, only to see the rates erode an additional percent. The loan pre-qualification software built into my LOS does not give me any clear way to reasonably compare the old loan scenario with one or more new loan possibilities. Loan Analyzer provides me with some needed tools to make this determination.

Loan Analyzer is a conventional Windows-based program that is available as a download (or CD request) from the company Web site (http://www.agosoft.com/). Anyone may use the software as a demo for two weeks. Paying the licensing fee converts the software into a fully functional version. To protect the buyer’s investment, Agosoft, Inc. also includes updates and upgrades to the software for a period of 18 months. The program operates a conventional display panel with menus at the top. In addition, at the right are located a number of tabs that provide information, such as Current Loan, New Loans A through C, Reports, Summary, and several others.

I was quite impressed with the addition of a wizard, which allowed me to walk through a scenario step by step, first deciding whether my major goals included a lower payment, more rapid payoff of the loan balance, or debt consolidation. I entered my existing loan information, including the interest rate, remaining loan balance, and remaining term. In my case, I entered an existing 15-year loan only eight months old, and compared this with three other scenarios: a new 15-year loan with a one percent lower contract rate, a 30-year loan with a half-percent lower contract rate, and a T-bill adjustable with a start rate 1.5 percent lower than the existing loan.

Loan Analyzer allowed me to look at the short-term advantages to be gained by lower monthly payments, and measure this against the increased loan size resulting from financing $2,000 in new closing costs (as well as the longer time it took to pay off a new loan).

Over a dozen reports were available, which could be used in a preview mode as well as regular print mode. The reports gave me detailed information on the four different loan scenarios, and even provided one report comparing all four loans on one page. Closing cost comparisons were also available as a report. Short- and long-term gains, as well as a specified time period, were also available in the reports.

When I completed my analysis, I was able to export the desired loan as a new loan into my copy of Calyx Point, ready to start additional pre-qualification or processing of the information as a loan file. The results were a bit surprising. As predicted, a new 15-year loan and 30-year loan resulted in a lower payment. I would expect the savings to start to be significant after about five years, once the closing costs were finally paid for by the better interest rate in the new loan. But after 10 years, my principal balance was still several thousand dollars higher on the new loan. Since most customers desire rapid principal reduction through a 15-year loan, this would negate some of the advantages of the new 15-year loan.

In this environment of questionable stock market appreciation, paying off the house earlier makes a lot of sense. Loan Analyzer helped me to decide that my eight-month-old refinance was good enough, all things considered.

This is a great tool for mortgage professionals when they need to advise their clients who refinanced in the last year and are thinking of doing it again. I found the software relatively easy to use. It only took me about 30 minutes to figure out the nuances of the product.

Case History: Originating From a Yacht

Fidelity Mortgage, headquartered in Tucson, Ariz., is on a mission to make paperless mortgages a reality. In order to show the origination community in general—and Fidelity’s employees in particular—that loans can be originated and closed from virtually anywhere with the right technology, the company hosted a unique event: originating $10 million in loans over five days from a 65-foot yacht in the San Francisco Bay.

Nick Haines, co-owner and executive vice president, organized the event, which took place May 18 to 22. “I thought it would be a great way to teach originators how to use technology to enable them to produce no matter where they are or what they’re doing,” he said. “I also thought it would be a great training method, rather than training employees in the office.”

The Goal
Fidelity, a mortgage banker with approximately 50 loan officers and 80 employees total, is licensed in 12 states and has three offices on the West Coast and two in Arizona. “About 75 percent of the technology that we have is being utilized by our employees,” Haines said. “We want to make our office even more efficient.” Haines, who works in Fidelity’s San Francisco office, has found that the concept of a paperless mortgage is surprisingly accepted by consumers. “Right now, about 15 percent of our applications are received online through our company Web site,” he said. “Our goal is to have about 95 percent of our customers apply online from the convenience of their own home. This cuts down on the amount of time we spend on each transaction, and has ultimately provided better customer service.” Haines noted that customers do, of course, sometimes need a live person to communicate with to make them feel more comfortable, but that overall, they are open to the idea of making the mortgage process much easier.

It was the hesitancy on the part of Fidelity’s employees that led to the idea of originating loans on a yacht. “I thought it would be a really fun way to show that you can originate loans from anywhere,” he said. “We want to teach them how to cut back on the use of 90 percent of the paper used during the origination process.”

The company chartered a 65-foot yacht called “The Five Star,” which took Fidelity employees around the San Francisco Bay while they conducted business. The event kicked off at a home game of the San Francisco Giants, with the boat anchored outside of Pacific Bell Park for a Sunday afternoon game. For the rest of the week, the company held regular business hours, answering customer calls that were forwarded from the office lines to their cell phones. “The loan officers were close to their laptops at all times, ready to take incoming customer calls,” Haines said. In between originating loans, the employees were able to enjoy the sights around the bay area, including trips to nearby popular tourist destinations such as Sausalito and Tiburon.

Since the event wouldn’t be affecting the way the loans were handled from the customer’s point of view, the company kept advertising for the event to a minimum—only a small ad in the San Francisco Chronicle, on Sunday and on Tuesday. “With all the technology that we have, it was just ‘business as usual,’ but from a boat. We used cutting-edge technology to originate, process, underwrite, and close our loans,” Haines said.

The Technology
The main technology that is needed for conducting business from remote locations, according to Haines, is the use of one common server. “Having a common server where all data can be shared and accessed by all employees in real time is the one thing that’s really necessary to make paperless mortgage a reality,” he said. “We do share a common server, which makes the sharing of live data possible in all of our markets.”

After setting up a common server, originators simply need to take advantage of readily available technology—tools that many originators are already using on a day-to-day business, such as laptop computers, cell phones, and automated underwriting systems. Fidelity Mortgage had two laptop computers set up on the yacht; originators were able to access the Internet on the laptops via Bluetooth (http://www.bluetooth.com/) wireless technology, which enables a cell phone to be used as a computer modem. They also used their cell phones to pick up customer phone calls, which were forwarded to the phones from their office landlines. Customers were able to quickly qualify over the phone and were then directed to Fidelity’s Web site to fill out the initial 1003 form online. Using e-fax capabilities, which allow faxed documents to be sent as e-mails and displayed on-screen, loan originators were able to gather customers’ documentation information; this eliminated the need for fax machines.

Once the computer received the customer’s information, an electronic file was automatically created for that customer; any employee was able to access and update a customer’s information, which was stored on the server. Data could then be electronically moved from the loan originator to the processor to the underwriter, and all finished files were stored electronically. Since Fidelity funds loans in its own name, the process was much more streamlined because they didn’t have any delays in waiting for outside lender approvals.

The Results
Fidelity Mortgage exceeded its goal for the event, which was to originate $10 million in new business in five days, according to Haines. “We hit almost $12 million, with 43 loans. The great thing about it was that it was invisible to our customers. The phones were forwarded to our cell phones, and the customers were directed to our online Web site for applications. The file was then processed from the Tucson processing center,” he said. “Our employees had a chance to learn in a new environment using features on their cell phones, such as Bluetooth linked with their laptops. And, they were also given the opportunity to visit the San Francisco area.”

As the rest of the world turns more and more toward online and automated processes, many originators may find it becoming increasingly harder to compete using only paper faxes and files. Regardless of how far we are able to take the paperless mortgage, there will never be “peopleless” mortgages.
Originators at Fidelity Mortgage have shown that it is possible to combine good old-fashioned customer service with the latest technology. As Andrew Wieser, an originator in Fidelity’s Tucson office, put it: “There will probably be some resistance to paperless mortgages initially, but there was also probably a lot of resistance to the switch from typewriters to computers—and look where we are just 10 to 15 years later,” he said. “I think the single greatest advantage to the customer will be the additional two to three days (or more) that can be shaved off current times. With just a few phone calls and clicks of the mouse, conditions and requirements can be met instantly (and cheaply) compared to the current time-consuming, resource-wasting, and laborious methods that are employed now. Within three to five years, a paper file will be about as archaic as a slide rule, and everyone—from the customers to the underwriters to state banking auditors—will appreciate the speed and convenience of a 100 percent paperless mortgage.”

By Rachel Richards

The Comdex Report

This year Comdex-Las Vegas ran from November 11 to 16. Nearly 2,000 exhibitors displayed their latest items, ranging from rather unlikely entities—such as the U.S. Post Office and manufacturers of battery-operated muscle stimulators—to the usual technology vendors. The entire show fit within the Las Vegas Convention Center; attendance dropped from last year’s 250,000 to about 70,000. This dramatic year-to-year reduction is due far more to the changed economy than to September 11.

Not much new this year. The big news for mortgage folks is the strong push towards device convergence among the tools most of us use. Handspring  announced its new Treo. The Treo is a cellular telephone, PDA, e-mail, Web browser, and short text message (SMS) device, all in one small unit. With its intelligent and reasonably sized screen, you can actually use the device for e-mail and Web browsing. Handspring offers a browser that uses its Web servers to handle the heavy work, sending to your Treo only that information which it can easily display. This allows quick, usable browsing, even over current wireless connections. With Handspring’s enterprise partners, companies can extend their existing Exchange e-mail systems to these units for better corporate connectivity. Treo uses world phone technology, so it can be used anywhere in the world. It may be used as a speakerphone and allows for easy one-button, three-party conference calls. It also has caller-ID technology that pops the caller’s name and information from your address book onto your screen before you answer. You can maintain a call history log of up to 1,000 entries, including the date, time, call duration, and phone number for each entry. This service is expected to cost $399.

Nokia showed working prototypes of their new 9290 Communicator. Incorporating the ability to send and receive images, sound and video clips, the Nokia 9290 Communicator is the first product to reveal the next steps toward Multimedia Messaging. With over 200 billion short text messages (SMS), Multimedia Messaging will build upon this success by adding rich content to messages, making this form of communication more unique and personal.

The Nokia 9290 Communicator is a fully integrated mobile terminal combining phone, fax, e-mail, calendar, and imaging functionality. Internet access is possible via both a WAP (Wireless Application Protocol) and a HTML-based Web browser, which also supports frames. Word processing and spreadsheet applications are included, plus support for many of the most commonly used PC applications. You can view and edit Microsoft Word and Excel documents, and a PowerPoint viewer is also built in. Included SyncML support allows for seamless synchronization of contact, calendar and to-do information across SyncML-enabled PCs, PDAs, mobile phones and other devices. Expected price is $799.

Bluetooth products are finally beginning to ship and the eponymous pavilion showcased more new items. Bluetooth wireless technology allows short-range (about 30 feet) automatic connections between various devices. Now available are printer modules that eliminate the need for cables or a network box from computer to printer. Two-ounce earpiece sets for wireless access to your cell phone, desk phone, or car phone—all from the same tiny device—are now shipping.
Pen2Net’s CompuPen device automatically captures handwriting strokes on any writing surface, digitizes the data, and uses Bluetooth connectivity and encryption to communicate the data securely to mobile appliances such as handheld and laptop computers, cellular phones, email pagers, and personal information appliances, as well as to the wireless Internet.
Another important product area is WiFi certified wireless devices using the 802.11b standard. These tools enable wireless networking within an office space. This eliminates any need to pull cable through walls or ceilings. Running at standard wired Ethernet speeds up to 11 MB, functionality is excellent for networks of up to 20 or 30 users. Higher speed products are in testing, but will likely require more wired nodes to cover the same distances as the lower speed product. WiFi certification is important for compatibility between different manufacturers’ products.

A major area at this Comdex convention was digital photography, both still and video. As little as two years ago, digital still cameras with 2 Megapixels were expensive top-of-the-line items. This year Olympus introduced its D-40, a pocket-sized, zoom lens camera offering 4 Megapixels that is capable of prints of up to 16 by 20 inches.

Supporting technology has also improved dramatically. Products from Applied Science Fiction can restore old, scratched, or bent photos to like-new images. Another of their products restores original color to faded photos. While not sold to consumers, they are available at photo processing shops or included in other products from Nikon, Minolta, and other major vendors.

Preceding the Bill Gates keynote presentation, Bonacci & Wood, an acoustic guitar duo from Melbourne, Australia, provided an hour of entertainment. Their live session was recorded and then edited during the Gates presentation. DVDs of the concert were available the next day. All this was done using Windows XP, plus specific hardware and software from Pinnacle Systems, Mitsui, and Rimage. What seems remarkable is that the needed software and hardware, including the DVD recorder, cost less than $800, yet the quality is excellent. True, it helps that the recording was done using very high quality cameras and professional level equipment. Still, all the editing required only a single PC for full motion, full color video. Such technology makes it economically feasible for even small companies to produce top quality training and educational materials. You could produce DVD recordings of a new home buyer informational seminar, then offer these to other prospects as business incentives. Your real estate division could produce custom video tours of suitable properties and forward the resulting DVD to transferring executives.

There was one repeating theme, beginning with the Bill Gates keynote and threading through many of the exhibits and subsequent presentations: computers are too hard to use. More attention is about to be paid to increasing the trustworthiness of the hardware and software we must buy and use. One Microsoft demonstration of this topic took place during the introduction of their new X-box game machine. During the keynote demonstration, the presenter repeatedly flipped the machine off and on, even interrupting the boot process a couple of times. Nevertheless, the X-box booted properly and ran just fine. Try that with your standard PC and you’ll be down for several minutes to several days, depending upon what files become corrupt in the process. Microsoft XP claims to be a step in this direction. Self-correcting computers, self-correcting software, and sufficient robustness to withstand power fluctuations are now design targets. Any such valid improvements will certainly be welcome here.

There was much more offered at Comdex, but I have described a few of the most important prospects for our profession. I’ll keep you posted on further developments.

By Bruce Forge

Wireless Mortgages

Today, speed and efficiency are watchwords in our industry. Many loan originators work as outside sales agents. They visit clients, prospects, and other sources of business. They make presentations and attempt to find or develop quality potential borrowers. Many use laptop computers to present their products to prospective borrowers away from the loan production office. When they return to that office, they need to transfer the new loan files into the company’s loan production computer.

Making this transfer normally means:

  • Find an open network station to connect the laptop to the company’s network, or
  • Copy files from the laptop to a floppy diskette, then insert the diskette into a network workstation, or
  • Use some sort of e-mail file transfer.

But there are other ways. One option is Bluetooth, named after the Danish Viking King of that name. Bluetooth may become the product of choice for so called Personal Area Networks, or PANs. Bluetooth operates in the 2.4 GHz band using frequency hopping and provides up to one Mbps data rates over short ranges, usually less than 30 feet. Note that many other devices operate in the same spectrum; wireless phones come to mind. Interference between or among these devices can require some patient tuning.

Bluetooth lets myriad devices automatically synchronize whenever they come within range of eachother. For example, you could be out of your office to take a loan application. When you return to your car, the client database in your car phone could automatically update for the new client contact data. Return to your office and the laptop file information could synchronize automatically with your office computer and your processor’s computer.

There are many more Bluetooth features pending, however pending seems to be the operative word. Currently Bluetooth devices are expensive and very few products have reached the market. Most of these are in Europe and not yet available in the US. For current information about Bluetooth products, and progress, check the official Bluetooth website at www.bluetooth.com

An engineering standard known as 802.11b now allows wireless connections at standard Ethernet speeds. The device in my office handles up to three wired connections at 100 Mbps and ten wireless connections at up to 11 Mbps. It does additional duty as a router to our cable modem, sharing this high-speed connection with all connected computers. It also offers a built in firewall to help deter any snooping parties. It cost less than $300. A refinement, called 802.11a, is in the wings and will increase connection speeds to 56 Mbps.

A truly wireless office should become a reality during the first part of the 21st century. New technology for wireless voice and data systems, together with advances in fuel cell technology and miniaturization of computing and telephony devices, will allow powerful new tools. These emerging wireless technologies promise new tools that will alter the shape of your workplace and the way you’ll work in the next century.

When new freedom to connect gives you the ability to easily work anywhere, will you still need a traditional workplace? That will be a major decision for many companies. You can see this beginning today with the growing number of home workers and distributed offices. By adopting portable mobile devices as primary productivity tools, coupled with high-speed wireless access to the Internet, mobility and nomadic work styles may become the norm, and not just for loan originators. Ricochet now offers 128 Kbps wireless access in major cities and major airports. This service lets you access the Internet, e-mail, and the like at ISDN speeds anywhere within the coverage areas. As an automobile passenger, you can surf the net while driving through cities such as San Francisco, San Diego, Denver, and others.

Technology always leads change. In the 19th century, the typewriter, telegraph, and telephone shaped the offices we know today. Networked personal computers largely replaced the dedicated computer room, bringing power and efficiency to each desktop in the late 1970s and early 1980s. However, such networks require expensive cable connections to connect every desk to every other desk.

Wireless technologies greatly reduce the need for cabling. Software-based, easy to use, visual, telephone functions merge into mobile computers and let you point and click to talk with anyone you wish. This eliminates telephone cable requirements too. Making the whole process wireless means you can continue to work the same way wherever you happen to be, reducing training cost. Computer based telephony has already brought tremendous savings to long distance and conference calling. Now if you make all this wireless and wearable, just imagine the differences

To the user the environment will seem wireless. But behind the scenes, all these devices still connect through local bridges or gateways to a complex cabled infrastructure. Still, reducing these static resources reduces physical constraints, costs, and complexities of cable management in buildings. Freedom and flexibility will redefine where and when you work, both inside and outside of corporate real estate. Hiring and managing in this environment will be the next great leadership challenge.

New Internet protocols (IP) will also change the rules. IP-enabled networks are the norm for many organizations, but understanding the benefits of working with the Internet is just beginning. A web browser can be the primary workspace for many people. Software does need to reside on each user’s personal computer. Users do not need a physical desktop. A wireless browser becomes the gateway to information and communication, perhaps becoming the future office. Outsourced application and data storage offers a world where the individual is king and corporate resources can become virtual instead of physical. New companies offering Application Service Provider (ASP) concepts may forever change the way you do business. Such vendors can eliminate concerns about software management and upgrades, data backup, central data storage, access management, and can allow much easier management of distributed workforces.

Long-term, as we move toward a wireless digital world, one should anticipate more fundamental change. Companies demand increased flexibility as they develop new, more fluid, organizational structures. Physical offices are expensive overhead usually occupied only 30% of the day. New work styles, such as the hot desk or free address, and new office concepts, such as office hotels or clubs, are already underway as companies become leaner and more agile. Increased pressure on companies to improve and innovate, push them towards new styles of work that include teaming, telecommuting, and home working. Employees also want to adopt new work patterns as they reassess work-life balance and quality of life.

Wireless technology and the Internet certainly are no longer new, but the shift toward digital communication, new standards, miniaturization and portability of equipment, together with increased battery power and reliability, allows new systems to be launched and puts a wireless office within reach today, or very soon

Website Review – FairOaksMortgage.com

As an entity in the mortgage business, you do not need to spend a lot for a website that delivers a wealth of consumer-related benefits. The proof of this can be seen at http://www.fairoaksmortgage.com/, from Fair Oaks Mortgage. The layout is typical, functional, and attractive. What makes it a great broker website is the abundance of elements that it offers.

This site’s options are displayed in a tab format that makes your screen look like a tab index card file. Tabs are easy to understand and make navigation easy. The layout is clean and attractive. The graphics are simple, yet effective. It uses economical but effective techniques like drop-shadows behind the company name, creating a 3-D effect. The focal point is a scrolling text box (an “applet” or an embedded file) that is inexpensive to create and is not memory demanding.

Here are examples of techniques that are effective and easy to add to a home page. Next to the scrolling text, options for Apply Online or Bi-weekly Mortgage are encased in powder blue ovals. When you hover your mouse over one of the ovals, it appears to jump in front of the other. Move your mouse to the other oval and it jumps to the front. It looks like animation but it is actually a trick. There are two complete images. Mouse-over coordinates activate a Java Script command, swapping images. Another example that creates an illusion of animation is in the beveled option buttons. Again, the mouse hover triggers an image swap, making the shadow in the bevels appear to move from upper right to lower left. This creates the illusion of a motion.

At least half of the features in the website are purely informational. For instance, under the heading FHA, there are 11 second level options: max loan limits, termite requirements, well and septic information, appraisal red flag items, who can pay for what, reverse mortgages, rehab loans, and MIP refunds, as well as the options of calculating a payment and downloading an FHA loan package. Under the VA tab, there are another dozen screens with information related to that type of home loan.

Other useful features in the website include links to mortgage type agencies. Another of the tabs is Special Programs which lists five programs that have lower rates or ways to buy a home with no money. This section also loads a matrix that displays all the features and requirements of the programs. With Acrobat Reader, you can print all the forms needed to process a mortgage. A feature that I like is “Loan Officer of the Month.” Non-monetary incentives such as this are always welcome.

There is a lot of information in this website, but how does it help Fair Oaks Mortgage get more business? Here is one way. Under the Find A Property tab, there are no less than eight categories of home sources: FHA, VA repos, Fannie and Freddie sales, foreclosure auctions, and MetroList (the local MLS). The good part is that each of these selections is a form of co-marketing with a real estate sales entity. Can you see the potential for relationships with the local real estate companies? The B2B stuff does not stop yet. One of the click options on the home page is a link to MovingSaleClassifieds. This is a website where you can locate a real estate agent, a home, or a lender.

Dan Silverstein, owner of Fair Oaks Mortgage, designed this website with help from Capitol Works, the web professional. He estimates 3000 hits a month and attributes most to the B2B links. Many of his Realtor clients use the site for their home page. The website gets a superlative rating for the following reasons. The graphics are clean, bold, and thematically consistent. Navigation is easy with the tab design and a maximum of three layers throughout. Modest file size and judicious use of elements make it fast loading. The site holds a wealth of industry-related information, brings in loan applications, and creates a rapport with local real estate agents.

by Thor Skonnord

A Technology Score Card

“While (PDAs) are far better than anything that preceded them, they still aren’t up to the tasks that a typical mortgage originator needs.”

Internet Portals – Warm
I really like this concept, but it probably won’t take hold of the industry until 2002. This year, we’ll see portals that offer a wide variety of features and services to meet the needs of every mortgage company. Eventually, they’ll be like a virtual office. For anyone that has used MyYahoo, you know what I’m talking about. We’ll see one simple website that incorporates and integrates everything a mortgage company does or needs. The industry is just now getting turned on to these websites and they are still in their infancy.

Invasion of the Dot-Coms – Cold
The carnage from the overall dot-com world is amazing. We’ll see much of the same thing from dot-com’s that serve our industry. There were dozens of new dot-com’s at the MBA Annual Convention and I’d bet more than half of these won’t be there this year. If you are considering signing up with one of these firms, then start by doing your homework. First, determine if you would be harmed if the company goes under. If so, you need to make sure they have thousands of other customers, and are showing strong promise with their business model. You want to be certain they will be successful. If they have dozens of customers or less, you’ll likely end up with a failed company.

Loan Origination Systems – Hot
Some in the industry have wondered if eventually, the Loan Origination Systems (LOS) might be replaced by online versions (such as the ASP solution mentioned above) or perhaps by other solutions like Automated Underwriting Systems (AUS) that become much more comprehensive. While I can see why some might hypothesize about such, I can assure you that for as far as the eye can see, the LOS’s are here to stay. LOS’s are much more than just printing loan applications and other related documentation. They are the central database for everything a mortgage company does. Their uses include tracking all customer correspondence, providing management reporting, tracking all documentation, performing all compliance work, tracking customers’ escrowed fees, managing the staff, and a wide variety of other services. In the future, a major aspect of the LOS will be to handle all data flow between the mortgage company and all the third parties involved in the loan transaction. E-commerce will continue to become a core function for the LOS.

Personal Data Assistants – Cold
Every few years we get a new wave of ultra-small computing devices, and the latest are the Personal Data Assistants (PDA) from companies like Palm and Handspring. While these devices are far better than anything that preceded them, they still aren’t up to the tasks that a typical mortgage originator needs. For example, a new loan file can require hundreds of data elements to be entered. On a PDA, entering this amount of information is very tedious and time consuming. It would be so unproductive that most consumers sitting with a loan officer would begin to question the professionalism of the mortgage company. Many other issues exist as well. Loan officers need to show charts, loan amortization schedules, and loan- product comparisons side-by-side. These are the tools of the profession, and a PDA could never do justice when compared to today’s laptops. Sure, a PDA might be fine for a loan officer to use to keep track of appointments and phone numbers, but every loan officer should be well-equipped with a laptop that’s capable of handling every request a prospective borrower could come up with.

Rate Distribution Systems – Cold
Since the early 80’s, we’ve had companies attempt to create a wholesaler-to- mortgage broker solution. Such a solution would distribute rate and product information from wholesalers to mortgage brokers. On the surface this appears to be a perfect new business for budding entrepreneurs. However, I’ve seen more than 25 companies in the last 20 years attempt to build this solution, and all have gone out of business. Most invested millions, only to see losses for their efforts. I’m not aware of a single company that ever earned a profit trying to distribute rates and product information, and yet, more are in the works today. The only development in this area is that wholesaler web pages are replacing the need to fax rate sheets. Granted, this isn’t much of a change, and you’d think something better would be coming along. Unfortunately, it just isn’t.

Website Builders – Warm
A lot of Internet Service Providers (ISP) are getting hit hard in the public markets, with their stock prices 80 to 95 percent off their highs. Still, those companies that host websites will always be around, even if consolidation dramatically reduces the number of ISP’s. There are hundreds of ISP’s that build websites for mortgage companies. Their numbers have been reduced dramatically in recent times, and most mortgage companies now realize they need to work with an ISP that exclusively works in the mortgage industry. There are several dozen of these, but this number is also shrinking. By the end of 2001, it should be clear who the remaining winners are in the ISP battle for market share within the mortgage industry. Eventually, it should get down to just a few.

XML – Luke Warm
The industry would sure love a standard and nothing has come closer to it then XML and the MISMO group (they define the data within the XML format). A lot of talented folks have put their hearts into creating these standards, and some of the technology companies in the industry have started to use them. Still, they don’t work for all transactions, and in all circumstances, for a wide variety of reasons. Thus, this standard will be a little hit and miss. We’ll begin to see it’s use in 2001, but it will be some time after that before significant usage is seen. To the mortgage originator, XML really isn’t that important, as it operates behind the scenes. For them, the only issue is if the data moves from company to company without fail. For this reason and others, alternative data formats will continue to see widespread usage.

by Scott Cooley

Website Review – PrideMortgage.com

“Good website designers pay attention to file size, because the bigger the files, the longer it takes to load a screen.”

Our pick for this month is a really nice example of a loan originator website: www.pridemortgage.com. While many of the premier players in the lending industry are prone to fanfare in their splash screens using big screen movies and sound, Brian Farley, president of Pride Mortgage, in Provincetown, Massachusetts, uses a subtler theme for his home screen. If I had to pick one word to describe the theme, it would be “Sincerity.” In the header, an animated gif (graphic image file) displays alternating pictures of happy, satisfied clients. The gif file includes a text box with alternating messages that support the perception of a customer comfort level-“With Pride Mortgage, we assure you comfort, savings, and service,” along with a picture of Brian. The background color subliminally portrays trust: dark “true” blue.

The home page loads extremely fast considering the animation and graphics that it uses. Good website designers pay attention to file size, because the bigger the files, the longer it takes to load a screen. Here, they did a clever thing with the graphic in the header. It has horizontal black lines running through it, which creates an abstract affect. (Imagine you see someone standing behind window blinds.) A benefit (in addition to the effect) is that it cuts the file size down by a third. Black does not require much memory compared to color, and the more colors used, the more memory required. The gif also uses 32 colors, which still gives adequate resolution while keeping the files size down. The result is a modest 30K file. The picture of Brian is a jpeg file, which has more definition, but is still only 7K.

I like the layout, it is one of the reasons that I picked this website out of many good ones. I have to admit that I am getting tired of the stereotyped web design. (Header, option button screen left, and body lower right.) The Pride Mortgage site is fresh. Brian’s picture is on the left. The center of the screen is a column of text saying good things about the company and the options are on the right side of the screen. Instead of the traditional buttons, they are laid out in a column of nice bold, italic hypertext with the addition of really zesty crescents that add texture. A mouse hover turns the target bright red, leaving no doubt that a click will link to something interesting. There are five option links: Apply Online, Online Calculators, Interest Rates, Contact Us, and Our Team. The first three are active components. When you want to add these to your website, you face the same dilemma is a home shopper. Should I build, buy, or rent? Do I contract a web master to create proprietary calculators and application modules? Or, do I buy or lease a pre-canned website? Or should I rent the components? Brian opted for the third option.

The application, calculators, and rates are links to Mortgage 101, which provide highly functional modules. Although the jump to another website appears relatively seamless, you can see the URL change. It changes to Mortgage101/Partner scripts. When loading the new site, and ID is verified to make sure that the link is from an authorized site. If you like trivia, the Mortgage 101 application module starts with https (instead of the more common http). The “s” denotes a secure site where the data is encrypted. This makes sense if you are taking a loan application on the Internet. Something that you lose with this option is a break in theme continuity.

Look at the other two options, Contact Us and Our Team, and you see how the theme and navigation are retained. Our Team is a really nice example of something that should be included in any service-oriented business. The screen is a thumbnail style layout with pictures of (almost) all of the production and management people at Pride Mortgage. Just like Brian’s picture in the home screen, everybody looks happy. Below each picture is the person’s name in hypertext. A click brings up an e-mail to the person. Another idea would bring up links to profile screens of each person.

This website is rated as extremely good because of the presentation and image that it presents. The judicious attention to file size makes it load fast. Although not proprietary to the site, the rented calculators fill the functionality requirements. The general layout and design of the website is extremely well balanced, attractive, and focused.

by Thor Skonnord