Never-ending Sea of Mortgage Muck
Article by: Doug Perry
Unfortunately, it seems evident that most mortgage brokers and lenders are at the mercy of the SS (software salespeople) who contribute to the many misconceptions that are prevalent in our basic understanding of what is a good software utility, and what is not. If you get nothing else out of this article, remember this: "Salespeople are paid for selling you a product or service without regard to whether or not it is right for your business."
can we blame?
However, this is where our reliability system starts to break down. And, it's not because anyone is misrepresenting the software programs to us. It's because the developer is just as confused about what the loan industry needs as the broker or lender is about which programs are the best for their business.
I will try to shed some light on what is really going on here. If blame must be placed somewhere, then let's be fair. It is as much the lender's or broker's fault for ending up with software programs that won't do the job as it is the developers who peddle them.
chooses the software you use in the first place?
In the same light, most mortgage software programs are developed by programmers who have never done a loan for anyone in their lives. This creates a huge gap between what the broker or lender is looking for, what the programmer's are programming and the borrower's who may be using the software online.
did the "gap" get there?
The marketing tactic worked and a few years later they ended up being a major player in the LOS world. However, their impact on the market by doing this crippled the LOS industry because it lowered the average established market price of loan origination software (now around $800.00) and made it a lot more difficult for good LOS companies to be able to afford to create better and more dynamic software in a short period of time.
Even though their product may not be as good as others on the market, they now claim in their advertising that they have a huge percent of the LOS market and therefore everyone should "make the change" based on the "wisdom" of other lenders and brokers who have purchased their software.
This is a great marketing campaign. It reminds me of internet access ad campaigns that offer me 1000 free hours to use their inferior, buggy software. The bottom line is that any company can sell anything with enough money behind them, but if you fall prey to this kind of advertising, you will get what you pay for.
gets more complicated.
is not necessarily better!
look at "Loan Tracking" software.
Great theory, but it doesn't work that way in the real lending world. Here's some reasons (in my opinion) Loan Tracking software doesn't work well in the loan business.
1) On every loan, each time one of the conditions or stipulations are met on a loan (like the completion of the appraisal, the submission of tax forms, paycheck stubs, bank statements, credit explanation letters, etc.), the loan processor is supposed to update the LOS, then upload this information to the borrower's private web page. Not only does this process make extra work that takes extra time for the loan processor, it is rarely updated on a timely basis because loan processors are very busy people.
2) In relation to the above, loan officers don't wait for the loan processor to update the borrower's page hoping that the borrower will eventually go online and find out if information they sent in was received, or to get a list of what to do next. The loan officer "always" contacts the borrower by phone or in person when they need the borrower to provide information the loan officer needs to close the loan. The faster the L/O gets this information, the faster they close their loan, get their commission, and the faster their borrower's are taken care of which translates into repeat business. In short, L/O's and borrowers don't wait on the Loan Tracking system. If they did, borrowers would not get good service and the L/O would make less money.
3) Our feedback from borrowers, brokers, lenders, and software developers over the years indicates that less than 1 in 10 borrowers visit their private loan page more than one time. My guess is that this one time is the time the borrower is introduced to the system.
4) If you're a loan officer, is it a good idea to leave your borrowers in the hands of a Loan Tracking system instead of contacting them in person? The less contact you have with your borrowers, the more chance they have of being tempted to move their loan to another loan officer who will contact them in person. Borrowers employ you to do the work for them, not to have to log into a Loan Tracking system and do it themselves. Loan Tracking systems, in most cases, promote a lack of communication between the borrower and the loan officer. This can't be good.
about automatically generated online GFE's?
how do you wade through all of this mortgage muck?
You probably spend lots of money attracting borrowers through your ad campaigns, so why use online applications that aren't borrower-friendly and have functionality that is not to your advantage? Ask yourself an honest question: Which online loan application would you fill out if you were applying for a loan? Just because you happen to have a particular LOS doesn't mean you have to have their version of an online mortgage application on your website, especially if borrowers don't like filling it out.
a checklist of things to consider when
1) Test these software programs yourself before you make a commitment. Make sure they perform as advertised and will represent your company in a good light to your clients.
2) Is the software easy to use for your company AND your borrowers? If it requires anything more than easy steps for the borrower to take, find something else.
3) Are there too many required fields on the online form? Many people still have a problem entering certain personal information and sending it via the internet. Some online applications won't let the borrower submit the form unless all required information is filled in.
4) Can the borrower edit or update their information easily after submission? Some borrowers need to return and complete the application at a later date, and some need to correct mistakes or enter updated information. If your borrower can't edit the application with a minimum of effort, don't use the software.
5) Will the online application software import the borrower's information into your loan origination system (LOS)? This feature will save you a lot of time if your loan processor doesn't have to re-key the application information into your LOS.
6) Can you and your borrowers view and print the Fannie Mae Uniform Residential Loan Application online? This is certainly not a requirement for a loan, but has lot's of advantages.
7) Additional features to look for that make it easier for the borrower to apply: color-coded navigation buttons, category specific help files, self calculating form, redundancy features, error-checking, etc.
In short, if you stick with software that is the easiest for the borrower to use and does what you as a lender or broker need it to do, then you can't go wrong!
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