“Technology is changing so rapidly it is difficult to keep up.”
Until about 100 years ago, the primary method of interpersonal communication was talking face to face. Printing is just 400 years old. Just over 30 years ago, man last walked on the moon, using state of the art computers, not as powerful as your current Palm Pilot.
Technology is changing so rapidly it is difficult to keep up. A little over nine years ago 25 Mhz Intel 286 computer chips were acceptable. Today’s Gigahertz chips are nearly 4000 times faster.
In 1946, the ENIAC computer was built. It was the first “electronic brain.” To match the computing power of the human brain, you would have had to cover the entire United States landmass with ENIAC’s. Now, 54 years later, you’d only need 800 square feet of the current best available computers to match the human brain processing capacity. According to a recent Milken Institute report, sometime in September 2021 someone will announce a computer that matches the computing power of the human brain.
Fortunately, you don’t need to be on the leading edge to be successful in what you do. Select those tools that help make you more efficient, speed your process, and conform to your work style. Experiment a little if you have the time, but don’t become too enamored with the bells and whistles.
Every day you see or hear about yet another technology marvel. It’s another gadget, tool, or gizmo you just have to get. More are coming, too. Things such as totally wireless Internet connections with speeds matching or exceeding T-1 and Cable, available all the time, nearly anywhere. More feature integration is on the way too, with small portable tools that extend your abilities and enhance your workflow.
But how do you evaluate these products, ideas, and concepts to determine which, if any, are right for you and your business? It’s a good question. Here are my latest guidelines to help you make some practical sense of the technology maze.
Focus on Your Goal
Don’t necessarily think about what you should buy. Consider, instead, what it is you want to accomplish. Only select tools that will do the work you need done. Leave the bleeding edge screaming machines to the gamers and moviemakers. You’re in the mortgage business, not a technology beta tester.
The good news in all this is that mid-scale equipment is also much less expensive. You’ll likely replace hardware every two or three years, anyway. That’s about the time it takes for the relative speed of your equipment to get slow enough that you can feel the need to upgrade. The outlet shops of makers such as Gateway, Dell, Micron, Compaq, and IBM have excellent buys on slightly used and refurbished equipment with like-new warranties. Check at their respectively named websites.
Enhance Your LOS
Make sure you get a loan origination software (LOS) program you can use to manage your production. If you also need funding and servicing options, then explore that level of software. After many years of development, all the major vendors can handle the job. It is now more a question of ease of use and training. The recent spate of mergers and acquisitions in this area bears watching. It’s too soon to tell what will result from all this, but expect significant changes in the way this kind of software is marketed and maintained. More and more, your business is moving to the Internet. Not just applications from potential borrowers, but access and delivery of loan components among your preferred providers.
Several credit-reporting companies now offer access and delivery on the web. You can order, generate, and deliver loan documents on the web in minutes from any of several vendors.
Brokers can (and do) order, receive, and print flood certificates and mortgage insurance documents in seconds on the web instead of waiting days for the same result through the wholesale lender. Smart brokers do this and include both items in the loan package when offered for initial underwriting.
LP and DO/DU on the Internet make far shorter work of using these automated systems at point of sale, which is where they should be used. Twenty dollars spent during the origination process for a credit report and automated underwriting could potentially save hundreds of dollars of wasted time and effort on loans not likely to close. It also saves client time and frustration by sharply reducing the seemingly endless list of documents needed to secure the loan.
A good LOS system has built-in connections to all such providers, reducing the work to a few mouse clicks and eliminating nearly all duplicate data entry.
Select Proper Office Software
Do you really need to upgrade to Microsoft Office 2000? We do not live in an exclusive Microsoft world. For example, there are very adequate products from Corel and Sun that compete with Microsoft, offering excellent features at dramatically lower costs. They all read and write to each other’s formats anyway. Not that you shouldn’t use MS Office if you wish, just know that it isn’t the only option.
Once you make a selection, train your staff how to effectively use your choice. You won’t outgrow this program for years. Learn how to get data from your LOS into your office suite for better letters, reports, forms, and data management. Otherwise there is very little other than ego driving this software category for at least 85 percent of office suite users. Most of us only use our word processor to write short memos, brief letters, and complete some simple forms. You could accomplish nearly all of that with the free WordPad program included with the Windows operating system.
Obtain Online Banking Services
Pick an online banking service that integrates with your accounting software. Online banking offers convenience and accessibility. Get the electronic bill-paying feature. Once you get started with this service, you’ll wonder why it took you so long to reach this level of simplicity. There will be no more checks to buy, and no folding, stamping, inserting, or mailing. You can even set up automatic payments for stable items such as rent, equipment leases, insurance premiums, and more. Unless your company is big enough to have an in-house accounting department to take care of such chores, lose the paper, and save the resulting time and money.
Get the Fastest Internet Connection
You want the speediest connection you can afford for your office, based on your number of concurrent users. If your staff works from home offices, then DSL or cable is minimum. Over the next few months, not having an always-on Internet connection will cost you money. In a year, you’ll be hard pressed to stay in business without it. The minimum practical connection is DSL. Next step up is fractional T-1, then full T-1, and on up from there. Cable is not really an alternative in business locations, although it may work fine from home offices. If none of these options are available where you are, you may have to fall back to a satellite link using the Hughes duo-system offering satellite TV and Internet connections in one dish. It’s not ideal, but is far better than dial-up connections. You’ll be using the Internet for everything from receiving faxes to ordering pizza for the office party. Everyone in your office will need access. Not only are high-speed connections faster, but you don’t need multiple modems and telephone lines either. Compare those savings to the cost of the high-speed single connection. But the biggest benefit is the time efficiency gained working this way.
What will you use it for? Your latest LOS version has direct access to LP on the Internet and DO/DU on the Internet. Other lenders have their own automated underwriting tools on the web. You’ll use it to get rates and product guidelines from your lenders, or your investors.
Already many of us use the Internet to order title, escrow services, signing services, mortgage insurance, and flood certificates, and to order and simultaneously deliver to multiple points, the closing document package. Forget messengers, delivery services, and couriers. Use instant delivery over the web instead. It cuts days off the process of creating, processing, funding, and closing mortgage loans. Of course, days represent dollars. Days saved are also part of your competitive edge.
Get a Network
If your office has more than one computer you should have a network. In a large company, this may include hundreds of computers working together. Even in small shops with only six or eight machines, the time saved, convenience of universal data access, and resource pooling is dramatic. Networks help you ensure that everyone is “on the same page,” working from the current data source, and using your approved products and fees. Conversation log entries (yes, there is some training needed here) help maintain the information flow and reduce workflow interruptions for quick status questions.
There is a new class of product for networks called a network storage device. This is a box you plug in anywhere on your network. It adds one or more hard drives to your network without having to shut everything down. Instead, these devices install themselves and are immediately available to store data for you. Trust me here, you will always need more storage on your network.
With a central database of loans in process, loans closed, and leads, you can easily focus your marketing efforts on just the right segment of your client base for the offer you want to make. There is a wealth of marketing data in your loan files. Not to use it condemns you to a lifetime of expensive prospecting. If you or your loan originators work from laptop computers, consider installing a wireless network hub in your office for convenience. That way, when you want to use the laptop, you can use it anywhere within range of the hub without running wires. Current products are a little pricey, but offer excellent convenience and 10-megabit speeds, which is as good as most wired networks today.
Consider wireless networking in your home office, too. That way you aren’t chained to a desk if the weather outside is delightful. Wireless network products are developing very rapidly. Check out the Apple “Airport.” It works with PC products with a simple adapter and enjoys excellent reviews and a bargain price.
Consider an ASP
Application service providers (ASPs) are starting to pop up in all kinds of places. Check your local newspaper and you’ll probably find one in most metropolitan areas. These solve the problem of data backup and can eliminate, or at least greatly reduce the need for your own computer specialist in-house or on-call.
Add the savings on hardware, maintenance, software purchase, training, and the availability of occasional use software you only need from time to time, and the ASP looks like an excellent option for many users.
This will be especially true if you use a virtual office structure with everyone working from separate physical locations; usually their respective homes. All your data is safe, secure, and centrally maintained for you-yet accessible from anywhere you can get an Internet connection. Because the ASP has additional security features, you’ll know who’s working on your data and when. And, you can decide who has what access, to what programs, and for how long.
Some of the LOS vendors are moving in this direction. You won’t buy software anymore, nor upgrades, nor install various options. Just pay as you go for the latest and greatest version of their product. It is an interesting model that would not exist without the Internet as the communication platform. Whether this new model will succeed is probably up to you and other users. While I don’t underestimate the paranoia many of us have concerning our loan files, there is good evidence that we can learn to trust a central data provider.
Consider Transaction Management Services
The idea here is to create a common platform that subscribing service providers can use to get more business from you and to deliver the results of their work. These are Internet-based.
Suppose you want to order an appraisal. So you call or fax your order to the selected appraiser. Then you wait, maybe checking back in a few days to be certain they got the order and to find out when the job will be finished. If you had used one of the platform vendors, you’d order by e-mail and get a confirmation of receipt. You can track the status online, too. Then, when it’s done, you get the appraisal online the instant the appraiser is finished. There are no more mail or delivery delays.
It’s the same idea for other inspections, title insurance, settlement instructions, loan documents, and so on. Order and track every element from every provider and receive the results over your Internet connection.
One early vendor in this space is Ocwen Technology Xchange with its REALTrans system. Another is First American Title with the FastWeb product. Both already have interfaces with POINT and Genesis 2000 completed. Byte and Contour are, or probably will be ready, by the time you read this. The interface means you can order what you want with a simple import directly from your processing software leaving nothing for you to retype. Just select the service or services you want and that’s all there is to it.
Use a Free Internet Fax Service
Every broker has the same problem. Each business morning the office fax is constantly busy receiving fax rate sheets from all your lenders. Hours go by, burning pages of paper, or tons of toner and ink. Then you have to manage all that paper every day.
Instead, consider using eFax.com, JFAX.com, or another Internet provider. There are mergers going on in this field right now, so the list may have changed by the time you read this. Our office uses eFax.com with a free fax number. All faxes come to our e-mail server and can be accessed by any of the staff at any time. First user changes the identifier on the fax header to the name of the lender. Everything is filed, by lender, in separate sub-directories and automatically sorted by date. Need to see what rates were last month? A couple of mouse clicks will get you there.
You can have eFax automatically send the same information to up to five separate e-mail accounts. That will take care of most broker branching arrangements, but more can be arranged for a modest fee if you need them. No separate phone lines needed. No separate fax machines to buy, maintain, and supply. Just the information you want directly to your e-mail account. Copy what you choose to, print what you want to, and just delete any faxes that you don’t need.
Instant Tax Return Analysis
Instant tax analysis is ideal for originators who work with self employed borrowers. Carefully, and correctly, analyzing complex income tax returns is not what originators and processors are skilled at doing. Nor are many underwriters. While tax returns are less and less in demand with automated underwriting systems, the ones you do need to get and analyze are all that much more complex. Many processors simply give up and include the return in the file for the underwriter to work with. They may make a stab at the income, but aren’t really sure they got it right.
Now, from Cipher Data Resources, Inc. you can download a free copy of Cipher 1 software from their website (www.cipherdata.com). Correctly perform a qualitative and a quantitative analysis of any tax return set you have. It doesn’t matter how complex or how many related returns there are. Your borrower can have as many trusts, small corporations, partnerships, and businesses as they desire. Correctly analyzing the return and developing underwriting income is now a simple clerical function and requires only minutes to complete. The software prints a detailed analysis of the income, points out any special items for underwriter review, identifies compensating factors, and generates a monthly income figure for your file. It will also report any “red flags” in the tax returns such a missing schedules, unbalances amounts, bad social security numbers, and more.
Get Staff Tech-Conversant
It’s critical that you get your staff current with your tech plans. Whether you bring them along enthusiastically or “kicking and screaming,” they have to be on the same page concerning the future developments.
If you haven’t already done so, assign someone to be the office’s technology manager, most likely the one who most enjoys being on the Internet and testing new software programs. Someone has to be the technology champion, to help you coordinate everything. Of course, smaller offices may not need a separate tech director. The office owner or manager may also wear that hat. You may have originators and others who are behind the curve regarding technology. Hold an ongoing series of meetings to demonstrate how technology can help them be more productive. If they’re not using e-mail as a communication tool, show how effective it is. Make database development the subject of another session and explain how this will help them grow their business. Laptop originating and automated underwriting can be the highlight of still another meeting. If your staff has advanced beyond these areas, highlight other appropriate topics.
Bring in outside speakers and trainers to discuss software programs and other tech topics. If necessary, send your people to conferences and other special programs.
Set an example. You should use the most current technology you can in order to get the staff to follow.
Provide reading materials on new technology, including newspaper articles, manufacturer’s brochures, and technology magazines. Make it an ongoing focus.
Certainly there are other technology areas to explore. These are some of the most practical, the kind to make you more productive right now.
Don’t worry about change. Get on with it. This world will change around you if you stand still. Old methods of conducting business are changing. Success lies in completing each transaction in less time and with greater accuracy than the last one. Select your trading partners with and eye to compatible technology and efficient use of such products. But above all, make a profit.
By Bruce Forge