By Bergsman, Steve
Mortgage Banking , Vol. 67, No. 2
In six short years, mortgage business-to-business (B2B) exchanges virtually disappeared as the mortgage broker portal business evolved, and a technology sector where 20 companies once played is now down to a small handful of companies. [??] The sector is still not settled. Portal companies and loan origination system (LOS) providers continue to encroach on each other's turf. In fact, LOS software executives would have mortgage brokers believe the whole portal concept is a dinosaur. In all this competitive confusion, the occasional startup still arises with a niche product. [??] Meanwhile, the big news in 2006 was the withdrawal of BrokerOneSource[TM], a product of GHR Systems Inc., a Metavante company based in Wayne, Pennsylvania, which billed itself as a comprehensive mortgage origination marketplace linking wholesale lenders with mortgage brokers--as good a definition of a portal as any. [??] A more comprehensive elucidation might be this: a universal interface (Web site) used by mortgage originators to access their business partners in order to get a loan from the point of initial application to the funding table. This description is the one used by Sig Anderman, founder, chairman and chief executive officer of Dublin, California-based Ellie Mae Inc., which arguably was BrokerOneSource's main competition while it was still alive. [??] The competitive Anderman would have the market believe it was Ellie Mae's growing strength in the wholesale broker portal market that helped put BrokerOneSource down. "When we introduced our portal in 2000, we had 20 to 25 competitors. Now there are virtually no competitive portals. There is nobody in second place," claims Anderman.
However, mortgage technology pundit Craig Focardi, a San Francisco-based research director with TowerGroup, Needham, Massachusetts, two years ago was saying there were many challenges for BrokerOneSource to overcome, and that Ellie Mae would survive because it had a different model.
And GHR's view? A slowing mortgage market led to the withdrawal of the product in March, says Cy Brinn, president of GHR Systems.
A very short history
Back in 2004, Focardi wrote a lengthy and comprehensive review of mortgage B2B exchanges/portals, which he called, "Online Wholesale Mortgage Lending: The Mortgage Megachannel."
In the report, Focardi noted the rise of B2B exchanges, which, when lumped together with business-to-consumer (B2C) exchanges, were believed by mortgage futurists to be an online system that eventually would replace high-cost, brick-and-mortar retail lenders and independent mortgage brokers along the fragmented mortgage distribution chain. These predictions, Focardi wrote, "were most common in the wholesale lending channel."
However, by 2002 all of these exchanges had failed, he reported, because they delivered little value and wholesale lenders built their own single-lender online wholesale mortgage portals for their mortgage broker customers. The goal of B2B exchanges was to be a kind of multilender product catalog hub with loan transaction capability. While the portal, says Focardi, provides data transfer from the mortgage broker to the wholesale lender in a way that reflects the lender-broker business model, lending processes and third-party supplier relationships.
In particular, Focardi wrote, B2B exchanges failed because they provided lenders and brokers with weak value propositions in terms of service and price; automated only selected parts of the wholesale lending transaction; did not provide simple transfers for products, prices and loan file data; and were generally not well-integrated with broker point-of-sale (POS) systems.
While noting the decline of B2B exchanges, Focardi also highlighted the rise of portals--or, in 2004, what he called wholesale transaction facilitators. He spotlighted two--those by Ellie Mae and GHR Systems.
In a comparative statement dripping with a whole lot of prescience, Focardi wrote: "Tower-Group believes the Ellie Mae business model and fee structure is more attractive to mortgage brokers and lenders. …