Magazine article Mortgage Banking

Better and Best Practices

Magazine article Mortgage Banking

Better and Best Practices

Article excerpt

FAMILIAR INDUSTRY FIGURE DAVE Matthews, former president of RBC Mortgage, Chicago, now a self-described industry consultant, posed some interesting questions for the industry's technology leaders. "We need to understand where our profits are really coming from: Are they coming from originations or, over the past couple of years, are they really coming from trading gains?" He added: "If the losses people are reporting for 2003 are really trading losses, what does that tell us about how we should be investing our technology?"

Matthews raised these questions at Thomson Media's 7th Annual Mortgage Technology Conference in Miami in January. "Are we really an industry that creates and manufactures a product for the benefit of our secondary market department so that they can hedge it, trade it and make huge trading gains that we then report as profitability for our companies?" Matthews slyly answered his own questions. "A sage once told me that he would rather I spend dollars building models for our secondary marketing department, because they could make more or lose more in a bad half-hour of trading than we could save by cutting off a dollar per loan for every loan that we service with new technology we put in place."

On another front, at the Bank of America (BofA), Charlotte, North Carolina, "We weren't taking advantage of our retail base," said Kevin Shannon, BofA's president of consumer real estate. That base, he told attendees of Thomson Media's Mortgage Technology Conference, is "five million people walking into our banking centers every day--more than Wal-Mart!" To plumb all those customers for mortgage business, Shannon said, BofA built an "intuitive platform that did not require contact with account executives." Not surprisingly, this did not sit well with the human staff, he recalled. "We got a lot of 'push-back' from our salespeople," he said. But, said Shannon bluntly, the bank told the existing sales staff to stop complaining and "hunt business that we wouldn't get otherwise." After all, he explained, "We don't want to be paying for someone to sell what has already effectively been sold."

One way to be more effective in the use of technology, said Shannon, would be practicing what he calls "strategic collaboration"--in other words, companies sharing platforms with one another. "That would bolster our collective strength," he said. Shannon acknowledges that acceptance of this sharing philosophy is not easy. "It requires a lot of focus and commitment, [and] careful examination of all aspects of the business," he said. But once companies do sign on to the concept of sharing, "It will become clear what areas need to be protected and what areas are ripe for cooperation and partnering," Shannon explained. "We must take down some of the stovepipes and fences that have been endemic to the mortgage business for 50 years or more."

In the increasingly heated discussion over global outsourcing and/or off-shoring jobs to other countries, politics and even sociology tend to get much of the attention. But at the heart of these company moves is the motivation to save money, and thus make more of it. David Rogers, chief technology officer for GreenPoint Mortgage, Novato, California, said his company will not move a job function out of the United States unless it meets an important economic criterion. …

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