Magazine article Mortgage Banking

How to Avoid 'Buyer's Remorse': The Keys to Overcoming Shady Technology Vendors, Internal Politics and Short-Term Thinking Are Actually Pretty Simple

Magazine article Mortgage Banking

How to Avoid 'Buyer's Remorse': The Keys to Overcoming Shady Technology Vendors, Internal Politics and Short-Term Thinking Are Actually Pretty Simple

Article excerpt

INTEGRITY IS AN ISSUE IN THE MORTGAGE TECHNOLOGY BUSINESS. I am referring to the "shell game" that is sometimes played by product sellers who promise one thing and deliver another. [??] For years, one of the worst-kept secrets in data processing (now dressed up to be called "technology") was the big difference between the products offered by sellers and what buyers actually got (or didn't get--but I'm getting ahead of myself). [??] Things really got ugly during the "dot-bomb" fiasco in the 1990s, when software and hardware insidiously morphed into "vaporware," and there were more false promises being thrown around than you hear on singles night at the local bar. [??] In the end, the techno version of the familiar "bait-and-switch" game collapsed of its own weight, sucking lots of money down the drain with it. Does anybody remember "virtualpets.com"? [??] Although problems must be addressed whenever they arise, trouble often really starts to show up when business slows. The past three years have been nothing short of spectacular for our industry, and that success has camouflaged some bad technology decisions. [??] While loan originations for 2004 came in at about $2.8 trillion they will decline to $2.3 trillion this year, according to the Mortgage Bankers Association (MBA). While that still represents substantial loan volume, it's nowhere near 2003's record level. MBA projects the refinance percentage to drop to 34 percent this year--a far cry from the 66 percent refi share in 2003.

In big production years, management doesn't really have the time to look too carefully at the problems that come with technology investments. But now companies are all beginning to see that highly efficient technology is critical to survive. This makes them more vulnerable to unscrupulous sales pitches.

This kind of makes you wonder not so much why questionable product promises are made--the answer to that is as old as human nature itself--but, rather, why the buyers of such products let themselves get fooled. I say "let themselves" because there are several simple methods for avoiding this trap, yet too often they are not followed.

Do your homework

One simple way is to thoroughly evaluate a vendor company's reputation. How has the seller performed before--for you and for others? Talk to people who have used the technology to see what their experience has been and what kind of "after-sale" service was provided.

Ask about the percentage of tech people in relation to size of the total organization. (Our strategy is to have a firm sales base with as much tech support as necessary to back up what we sell.)

Asking about others' experiences sounds pretty logical, right? But would you believe that some customers don't ever make those calls--even when they're given names and numbers? Talk about asking to be misled.

Why, you may wonder, do they miss this easy opportunity to save themselves money (and grief) later? Often, the reason is a basic lack of communication, or turf battle, among players inside the buying company.

Put the decision in the right hands

It may be a situation where a mortgage executive responsible for a purchasing decision only "knows what he knows"--that is, the executive excels at sales, let's say, but understands little about technology. By far, most successful mortgage companies are run by individuals who built the company from their knowledge of selling mortgages, not from developing technology.

Or perhaps the company's technology specialist has been put in charge of the decision and is so controlling that he or she has a death grip on such decisions, preventing or discouraging the business leadership from finding out what's actually happening.

For example, I'm aware of one company that appointed an individual to make the technology decision. Wanting to be in control of the whole project, this person bought an "out-of-the-box" solution that turned out to be much too difficult for the company to implement, and the vendor wouldn't answer the phone. …

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