PERSON OF THE WEEK: Aaron Lynch is vice president of technology and chief technology officer for FICS, which offers a loan origination system (LOS) and a servicing platform to the mortgage banking industry, among other industry solutions. MortgageOrb recently interviewed Lynch to learn more about ‘technical debt’ and what lenders and servicers should be doing to stay ahead of the technology curve.
Q:Â What is ‘technical debt,’ and how does it impact the rate of technological change in the mortgage industry?
Lynch: Technical debt, a term coined as an analog to financial debt, is used to describe the impact certain architectural or programming decisions can have on the cost (time and/or money) of future maintenance and enhancements to an application. A quick fix made today to patch a program is not unlike buying something on credit. You are eventually going to pay, with real time and money, for that decision.Â
As technology continues to advance at a rapid pace, it is critical for software vendors to consider the long-term implications of their technology decisions. This accumulation of debt over time is why many in the mortgage software industry are still supporting decade-old file formats and why vendors continue to find themselves worried about regulatory changes and how they may require large-scale changes in their mortgage software system.
Business owners, regardless of the industry, spend a substantial amount of money on their software, so it is understandable that decisions about future enhancements could be inadvertently influenced by sunk costs of the past, budgetary constraints of today or the risk of disrupting backward compatibility. In light of these challenges, mortgage software is not immune to the risk of becoming increasingly complex as large systems are built, at great time and expense, and then maintained over a long period of time.Â
Along the way, many vendors may opt for the ‘quick-fix’ answers to reduce expense or choose to delay refactoring when otherwise appropriate. Over time, this technical debt can cripple an application and is one of the main factors that reduce development throughput and increase cost. One such example of this phenomenon is the fact that flat file formats still exist as the underpinning of several mortgage software systems operating today, and legacy formats such as the 1003 file continue to be widely used and supported.
When bygone file formats are still commonly used in the same space as comparable, more recent, Mortgage Industry Standards Maintenance Organization specifications, it is an indication of the slow adoption of the new standards by the industry as a whole.
Q:Â What trends do you see taking shape in software that you feel are most pertinent to the mortgage industry?
Lynch: The most significant trend is the continuing growth of automation in every step of the mortgage process. Lenders are doing everything they can to preserve thin margins, and automation helps to reduce the man-hours and cost on each loan.
Along the same lines, rapid response to regulatory changes and the ability to quickly react to major changes in mortgage loan documents is critical. Lenders must be in compliance with new laws by certain deadlines, and delaying delivery of the software to meet those needs is just not an option.
The third major trend I see is the growing comfort and adoption of fully electronic loans. The E-Sign act is gaining more traction, and lenders value the time savings, not to mention the cost savings and reduced paper load of electronic disclosures, loan documents, signings and delivery.
Q: What are some of the most important factors to consider, from a software design perspective, when solving the problems introduced by constant regulatory change?
Lynch: The best thing technology vendors can do to solve problems introduced by constant regulatory change is to design ‘defensively.’ This begins with strong general software design fundamentals. More specifically, mortgage technologists need to embrace abstraction when designing programs.
Vendors should also be creating new software with an eye toward smart re-usability, using a foundation that can be utilized for several upgrade cycles or across multiple platforms. Good integration testing is also critical, especially when ensuring that the software meets all of the criteria of the new regulation.
Q: What role does mobility play in tomorrow's mortgage software?
Lynch: There is an ever-increasing percentage of overall Web traffic coming from mobile devices. And this growth is not just in general Web browsing, but even among financial institutions and mortgage lenders leveraging tablets and smartphones as tools in their day-to-day business needs. This growth is being fueled by more powerful devices – as well as consumers choosing tablets as their primary devices. Mortgage lenders have been slow to embrace the mobile channel, but moving forward, a full-featured Web and mobile presence will be necessary to keep pace with consumer trends.
Q: What is FICS working on that focuses on these trends?
Lynch: FICS has undergone a series of full system rewrites, utilizing the .NET platform, creating an environment full of options, faster development cycles and providing our users with more intuitive and easier-to-navigate interfaces.
We are also working on a mobile application for eStatus Connect (our online servicing consumer application), fully rewriting the user interface for the Web and a programmable REST application program interface (API).
We continue to upgrade Xcluso, our Web-based loan application software, to offer loan officers powerful loan origination tools with the portability of a Web application that seamlessly integrates with Loan Producer.Â
We are in the process of developing an API for our flagship servicing platform, Mortgage Servicer, to allow integration into other enterprise automation systems, such as SMA Solutions' OpCon product. This API will allow a great deal of flexibility to our customers, including the scheduling of nightly jobs using the scheduling system of their choosing.
A new document services interface in our Loan Producer LOS will soon offer complete flexibility to choose from several document vendors to best meet the lender's needs.
And, E-Sign support in Loan Producer, Mortgage Servicer and eStatus will allow lenders to reduce costs and offer consumers the ability to opt out of receiving paper copies and receive only electronic disclosures.