Portable technology is revving up its gears to make a fast break into the lending industry.
READY TO ROLL
Most of us who have been involved in mortgage banking for the past 20 years have watched the industry struggle to automate the loan origination, processing, closing and secondary marketing functions. We have also watched as the top 10 or 20 mortgage bankers' names have changed from year to year as older firms merge or are purged from the top positions by their failure to compete effectively. The 1990s will be a period of even greater competition for mortgage banking. However, it will differ significantly from the 1980s because the companies who efficiently manage information technology in the loan origination, processing, closing and secondary market areas will leapfrog their competitors.
Most informed managers today would agree that it is impossible to conceive of a loan servicing operations center without the use of automated technology. Without doubt, the 1990s will be noted as the era in mortgage banking when technology for laptop loan origination and processing caused the industry to price its products more competitively because of the resulting gains in productivity that such technology delivered. While there are many areas where computer technology can help the efficiency of residential mortgage lending, automating loan originators is the single most effective way to increase productivity.
Generally, the loan officer is compensated on the basis of production closed. Therefore, the loan officer represents a variable cost to the company. In most traditional mortgage operations, the ratio of loan officers to support staff required is approximately one to one.
This is due in large part to the loan officers' efforts being duplicated by the setup, processing and other support staff. These people must then read the loan officer's hieroglyphics on the loan application. With automated systems today, however, there is no excuse for having a ratio of less than three loan officers to one support staff person. In fact, as the technology improves further, and it most certainly will, the ratio will likely expand even more.
While many mortgage bankers agree that increased efficiency and productivity can be gained by loan officers' use of laptops, others show plenty of room for doubt. Here are some of the most common explanations which I have heard for not automating loan originators, and, in each case, a reasonable argument in favor of automation. Although these objections are only a representative sample of the most common objections raised by management, they represent real concerns about the use of new technology to originate loans.
What if our loan officers don't type?--One of the obvious answers to this objection is to select a software solution that greatly eliminates the typing by the loan officer. This can be achieved by the effective use of interfaces to CBI, TRW or TRANS UNION, and the ability for the various documents such as the TIL, GFE, Program Disclosure, 1003, VOEs, VODs and VOMs to be completed by the data flow coming directly from the credit bureau, or from preset data in the system. While the future may also enable the loan officer to obtain depository information directly from a central repository of bank account information, the loan officer today should have a database of financial institutions that eliminates the typing of bank names, addresses and zip codes more than once.
What if the laptop reduces personal contact with the customer?--The laptop will eliminate a lot of wasted time on the part of both the customer and the loan officer. Also, the customer will be fascinated with the application of the technology. The customer won't miss that personal contact if he can cut down on the application time. Realtors will be anxious to refer additional customers to the loan officer using an efficient laptop system, and the loan officer will gradually become more proficient as a result of more practice. …