What is the ideal loan origination software? Asking such a question is like asking anyone to describe his or her ideal mate, ideal car, or even ideal home. Everyone has an idea about what the ideal should be, but most cannot clearly express details. Therefore, people compromise to make progress.
Writers, of course, have no such limitations as each has the gift of perfect clarity of thought, elegance of expression and the ability to see the future as if living it today. So, collected and distilled from myriad user requests, and filtered through this author’s “perfect” visionary ability, is an overview of the prime charateristics of a quality LOS. Of course, you’ll have your own conisderations as well, but first let us define the capability and power contained in this program. One must show the sizzle first, then the steak sells itself, or so many sales folks would have you believe.
The ideal LOS provides each user with their unique view of just their own workflow. The ideal LOS automatically adjusts to changing job requirements. There are no extraneous screens or menus to wade through. This power reduces training costs, enhances productivity and streamlines all workflow processes.
The ideal LOS allows users to work from any location. It runs with full independence as a stand-alone option on a disconnected computer, and then automatically synchronizes, on a field-by-field basis, when reconnected to the network. It works equally well on a wired or wireless network or via an Internet connection.
The ideal LOS acts as a central hub for service providers such as AUS systems, appraisers, settlement services (escrow for you in California), title services and so forth. You can order these services electronically and receive the results electronically. For any AUS, system findings automatically parse into the condition tracking section to help processors and originators function with greater efficiency.
As a file moves from origination to closing, it passes through various handling stages. In each stage, that responsible person automatically gets exclusive read/write access to the file data. Other interested parties can look, but not touch. However, they can add comments, suggestions and requests to the conversation log. The log accepts entries and allows a fixed, but limited, time for any corrections by the log writer. Thereafter log entries become permanent and, therefore, can be used as evidence should that be necessary. Each entry is automatically date and time stamped and carries the identification of the entry writer.
In this LOS authorized users can enter a rate lock, thus closing future entries to the loan amount, rate, term and product type for that file. Each rate lock is time and date stamped and identifies the entry writer. The LOS accepts this entry from a frozen copy of the target lender’s fully adjusted online rate sheet for the lock date. Lender lock confirmation becomes part of the LOS record. Only authorized staff can make changes. Changes within the rate sheet are possible. Changes off the rate sheet automatically require concurrence from the target lender staff.
The ideal LOS contains template files that enhance loan accuracy and completeness. Templates include loan products, lender costs and APR requirements, and application models. Use of templates to create and modify files, automatically adjusts based on file status. For example, for new files, templates provide full details. However, to update working files, templates only change applicable data appropriate to the template type. For borrower-critical data, any data ambiguity requires immediate user attention before the change becomes part of the file. Changes to the templates can only be made by authorized users.
The ideal LOS manages required compliance information based on the property location, the borrower location and/or the loan type. Compliance updates come from selected contract service providers who are responsible for these data. The user of the ideal LOS subscribes for this service and can rely upon the provider for accurate and timely corrections.
The most-effective software also provides data connections to verify employment, deposits, loans and other important file data entries directly with source providers. This works through internal program links with appropriate data services to obtain objective third-party confirmation of all critical underwriting data.
With the ideal LOS, third-party service fees follow company contracts. Costs automatically accumulate to the Good Faith Estimate, with a clear subtotal available. Users can collect from their borrowers in advance of services, or at closing, based on individual business decisions. However, all costs are certain in advance, greatly reducing a common problem of understated service fees that balloon at closing. Origination company management negotiates all such fees and sets these as defaults in the ideal LOS. This is possible by region, by product type, by credit profile or any combination of factors management chooses to use. Only responsible management can adjust any automatic fee amounts. Any adjustment generates an audit trail identifying the date, time and responsible party for each adjustment.
The ideal LOS provides complete links between the LOS and the target lender’s computer system. Both the lender and the origination company share the same data set. Changes made by either party immediately appear for the other parties. Thus, when ordering any third-party services, such as loan documents, appraisals, credit, or information validation, all appropriate parties to the transaction see identical data. Store once, view often is the primary data set rule.
The software manages workflow and file progress according to established company procedures. This helps standardize results, smooth the process across various users, and ensure that customer service remains at a high level. Any loan that falls “off track” for any reason, generates an automatic error message for the assigned user. If not corrected within established time intervals, the error escalates automatically to progressive management levels to ensure prompt correction or other loan level decision.
With the ideal LOS, user status reports present appropriate information in easy to read formats and/or graphically, if preferred. This makes it simple to spot business trends, identify areas for additional training, and provides highly effective management guidance for each operating level in the company. One can easily compare the number of loans opened in any time period against the number of loans approved, or loans closed, or loans still in process, within company objective time intervals. One can view reports isolated by user, by task function, or by loan type, branch or marketing area. All such reports present with minimal selection requirements. However, drill-down detail reports are also available for appropriate management levels. All work from the same report engine. Learn once, use often.
The ideal LOS manages client marketing to ensure timely follow-up of information requests, important re-contact dates, service set points and in-process client management. Each user selects from available communication sets for each client. Contact may be by any combination of electronic, paper mail or telephone contact. Learn once, use often, to automatically provide exemplary customer service, exceed all customer expectations, and retain your past client business to grow referrals and business stability.
Having set these base objectives for the ideal LOS, there are many competing systems available. These include, but most certainly are not limited to, Ellie Mae Inc. with Encompass™, Pipeline Solutions™, Dynatek with MORvision™, Fiserve with Easy Lender™and Unifi™ LOS systems, Calyx Software with Point™, CBC with Byte™Mortgage Software, Dexma with Transaction Director™, Gallagher with Millennium™, GHR with Loan Origination Studio™ and others.
By Bruce Forge