Burning Question: Which LOS Offer The Best ROI?

Want to know which mortgage loan origination systems (LOS) deliver the best return on investment (ROI)?

Well, you may never really know for sure because according to Len Tichy, head of IT and operations advisory services for STRATMOR Group, it’s almost impossible to measure the ROI for any given LOS.

“From 2005 to 2015, lenders’ costs per loan doubled, but productivity was basically cut in half,” said Tichy in a statement. “It’s no wonder that lenders are constantly asking STRATMOR to measure the ROI from LOS implementations against the claims and promises of various vendors.

“Unfortunately, there are just too many variables in individual business environments for us – or anyone else for that matter – to offer credible evidence that one LOS is outperforming another,” he continued. “While we can help calculate total cost of ownership, without some sort of useful, credible, readily repeatable method for comparing LOS ROI across vastly different lender environments, true ROI is frustratingly unmeasurable.”

STRATMOR, however, is “aiming to change all of that with our LOS Performance Shootout Methodology,” a standardized LOS comparison methodology for mortgage lenders, he said.

As Tichy explained, the need for such a standardized testing is pressing. Currently, no credible, readily repeatable method for comparing LOS ROI across vastly different lender environments exists.

STRATMOR claims that by defining criteria for testing how subject-LOS solutions (including a lender’s incumbent system) perform in specific loan production scenarios, one can make an “apples to apples” comparison between or among LOS solutions.

For its LOS Performance Shootout Methodology, STRATMOR will design three to four key task completion scenarios for each of roughly a dozen functional stages or domains in the mortgage origination sales and fulfillment loan lifecycle and then subject those to rigorous time and motion measurements and tightly scripted system configuration and test loan variables.

In addition to such productivity-focused measurements, STRATMOR will also monetize the value of performance findings, applying normalized industry benchmarking data that will allow lenders to adjust for variances in relevant labor market data.

“We know that this sort of comparison will require the participation of the lender community, and we invite all interested parties to contact us for details on taking part,” Tichy said. “We also know that applying this type of comparison would be impossible without the willing cooperation of the LOS providers themselves, so we look forward to engaging with the vendors on this project, as well.”


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