Magazine article Mortgage Banking

New Challenges for LOS

Magazine article Mortgage Banking

New Challenges for LOS

Article excerpt

ATRIFECTA OF NEEDS is causing many lenders to look for new loan origination software (LOS), observes Lionel Urban, chief executive officer of Reno, Nevada-based PCLender LLC. First among them is rising consumer expectations that demand "streamlining the borrower experience," he says. [paragraph] Mortgage firms also are struggling to reduce overhead. Yet they still must produce "perfect loans" that won't attract negative scrutiny from regulators or the secondary market, Urban adds.

PCLender attempts to satisfy this gamut of LOS requirements by offering small to midsized mortgage bankers software that provides adequate flexibility while remaining simple to implement. Lenders don't need teams of business analysts or programmers to get started, explains Urban.

Different distribution channels are supported, because lenders may have retail, wholesale, correspondent and consumer-direct channels, Urban comments. He emphasizes that PCLender's 55 staff members include many with mortgage banking experience.

Urban has worked in just about every aspect of the industry since 1987. At PCLender, he's established a team that understands the urgency bankers feel about closing and selling loans. PCLender is used primarily by firms producing between 50 and 500 loans per month, adds Urban. However, some are sending as many as 5,000 units monthly through the system. He says new clients can get up and running within 60 days.

Consumer-direct changes lending

Urban doesn't want to offer technology tools that must be configured by mortgage firms. Yet presenting lenders with a system that's ready to go requires more than an awareness of mortgage business practices and compliance rules.

Consumers also are interacting with lenders in new ways--and that impacts every aspect of the business. "Mobile lending is the biggest change since I've been in the industry," Urban says.

Today's consumer-direct lending channel functions differently than retail lending, according to Urban. "The loan process online isn't sequential," he says. While a loan officer will take borrowers straight through the application, a new approach is needed with online customers.

Consumers are becoming more comfortable about obtaining a loan online, adds Urban. "Lenders can get behind" if they aren't prepared to work with those prospects, he says.

Technology providers currently are finding ways of collecting data electronically rather than waiting for customers to provide paper documents to verify income or down payments.

Urban notes that Fannie Mae and Freddie Mac also have "strong interest" in eliminating traditional documents. Not having to collect pay stubs from borrowers makes the process faster and more accurate. Automation eliminates steps while also requiring less analysis of data and documents by underwriters, Urban notes.

A lender's workflow then may need to be changed as well. Yet Urban sees this scenario as being a positive for small and medium-sized lenders.

Altering work habits--along with the technology supporting those practices--is more complicated for a national lender, he believes. Smaller lenders, asserts Urban, "can implement and execute faster" than larger operations are able to.

Rolling out automated tools for verifying assets and income will be easier for midsized companies. And these practices will grow as secondary market loan buyers approve vendors, Urban believes.

The loan officer's role

A larger question for mortgage firms is how they want to work with the growing number of consumers who are ready to apply online. …

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