What obstacles are lenders facing when it comes to technology, and how can they overcome them to create a stronger business?
When we talk to lenders about breaking free of technologies that have made originating mortgage loans expensive by enacting required changes or by limiting which partners they can work with, the conversation usually turns to two key obstacles.
Most of the lenders we have visited with over the past 18 months have been concerned about (a) the cost of implementing a new LOS, and (b) the lack of internal resources to keep such a project on track and on budget.
These are serious concerns. If they weren’t, more lenders would have already moved away from older, inferior LOS technology in favor of the powerful next-generation platforms that are available now.
Leading lenders know how to overcome both of these obstacles and prevent them from keeping them from creating stronger business. Here is how they think about these issues.
Mortgage technology, in general, has moved from a fixed-cost model to more of a per-loan model. While this works better for smaller lenders than those who manage higher loan volumes, it’s the idea of building flexibility into the pricing model that appeals to everyone.
There are now a number of products and services that lenders can use in their origination process and pay for by the loan. This has been a great benefit to them.
But it’s only a benefit if your technology vendor makes it easy to switch to service providers that offer better pricing. If you are locked into a set of vendors who have partnered with your LOS provider, you won’t see this benefit.
In the case of MCP, a very powerful LOS that does require a well-planned and executed implementation process, we’ve found ways to be flexible and dynamic when pricing our client’s implementation costs. This allows them to clear this first hurdle easily.
But that leads to the second challenge lenders must overcome: having enough internal staff to manage the implementation process.
The worry is that as lender’s continue to right-size their institutions, they are left with fewer experienced staff members to lead a change effort. They want better technology, but they don’t want to live through an implementation horror story.
In response, we’ve built out teams to ensure we provide enough resources to loan our new clients in an effort to more effectively handle the onboarding and training processes. When our clients ask for a third-party implementation partner, we work with industry consultancies who have the in-house expertise to support these projects.
When the market turns, every employee in the lender’s shop is working twice as hard, especially if they are using older LOS technology that adds friction to their process. There will be even fewer internal resources to implement new tools, even if they are desperately needed.
Leading lenders realize that it may be a very long time before lender staffing levels return to the level we saw during the pandemic. If they wait that long to get the technology their loan originators need now, they will be so far behind their competitors. Leaders know that now is the time to overcome any obstacle between them and the tools they need to succeed.
By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence
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