In order to help its broker and correspondent partners close loans faster and more efficiently, Flagstar Bank, the nation’s fifth largest bank originator, is adding more intuitive features to Loantrac, its proprietary loan origination system.
Loantrac has long been known for delivering a wide array of features and functionality, enabling brokers and correspondents to more quickly and easily register, lock, underwrite, close, fund and deliver their loans to Flagstar. The system has connectivity to LOS technology such as Calyx and Encompass, which provide fast access to commitment letters, funding breakdowns, status information, daily rates, pipeline reporting, appraisal ordering, approved settlement agents and more.
Loantrac can also be used to push out real-time alerts to brokers and correspondents, thus providing them with status updates on key milestones in the mortgage process, including underwriting approvals. Not only does Loantrac accommodate a fully paperless process, it also provides full transparency, as all documents are instantly viewable by users.
Flagstar recently released the first of a series of improvements to Loantrac slated for the next 12 months. To learn about Flagstar’s approach to technology as it relates to broker and correspondent lines of business, MortgageOrb recently interviewed Brian Vieaux, national sales director for third-party originations.
Q: How has Flagstar gone about developing its technology roadmap in connection with its broker and correspondent lines of business?
Vieaux: When we think about mortgage technology, we think about it a couple of different ways. First, there are certain things you have to do to meet regulatory requirements. For example, in 2017 lenders needed to prioritize technology around UCD, the Uniform Closing Dataset. That wasn’t optional. In the first quarter of 2018, it’s a similar situation with the Home Mortgage Disclosure Act.
Regulations are always going to be part of our business, and investing in the technology to implement them is a cost of doing business. So it’s a given – build in the time and build in the resources to comply with whatever regs come down the pike.
Second, our technology roadmap focuses on the originator – we put the originator front and center. In the retail business, it’s the loan officer. In the broker business, it’s also the LO at that broker shop, and it’s the broker/owner/operator. In the correspondent business, it’s a combination, depending on the size, structure or sophistication of the correspondent. It could be an LO or LOs; it could be a secondary marketing manager; or it could be someone on the operations staff.
So when we think about the things that we want to develop, enhance and improve in our technology suite, we think about that target originator audience that I just described. In third-party channels, we are behind the scenes from the borrower’s perspective. Our job is to provide our TPOs with the tools and service that present them in the best light to their customers and referral sources.
As a multichannel lender, we look to leverage pieces of technology or innovation that we rolled out in one channel and apply them to other channels. They’re not always repeatable, but there are definitely elements of what we do in the retail business that we can plug into the wholesale business and vice versa. That helps us spread the investment over a larger base, thus lowering the cost.
Q: So, can you tell us about any recent technology initiatives?
Vieaux: Yes, in fact, we recently had a big day. We launched the first phase of our Loantrac user experience enhancements. These not only benefit our broker customers and some of our smaller correspondents, but our retail originators as well.
The enhancements make it easier to input all of the fees related to the disclosures that must go to consumers. It’s an upgrade of the user interface, but it goes beyond the look and feel to changing the way our TPOs interface with us. This is the first of a multi-phase approach to enhancing our customer-facing technology.
The loan fees module is the backbone of the upgrade, from upfront disclosure of the loan estimate all the way through generation of the closing disclosure and documents. We engaged our customers early and often throughout the technology development process to ensure that we were meeting their needs and requirements. We are already focused on the next enhancements that will further improve the customer experience with Flagstar.
Q: To what extent has the bank considered “ease of uptake” for its broker and correspondent customers, with regard to its software? Do brokers and correspondents have to deploy any special software on their end in order to do business with you?
Vieaux: It’s not ease of uptake as much as it’s connectivity that we focus on. We don’t necessarily require our brokers and correspondents to take on our technology – as they have connectivity either within their own LOS or directly within our platform.
On the broker side, we have an integration with the Calyx platform. So brokers who are originating on Calyx have a seamless entryway into Loantrac. Similarly, on the correspondent side, we work with Encompass – Ellie Mae’s product – so that correspondents will have a smooth connection with our system from their main LOS.
We also have a digital mortgage strategy. For example, our broker and correspondent clients can take advantage of Fannie Mae’s Day One Certainty program. Right now, we offer electronic verification of income and employment. Coming soon is verification of assets.
Some clients have embraced the technology, and some haven’t – they like to get pay stubs the old-fashioned way. That’s fine – we want to solve for everyone on the continuum. Also on tap is deployment of a digital application process for smaller brokers and correspondents to give them the same tools that the bigger lenders have.
Q: So, when you’re planning your technology roadmap, how do you go about prioritizing which segments of the business to bring up to date with technology first? Is there a prioritization of which business lines get upgraded first?
Vieaux: You can’t do everything in terms of technology at once. So, we are very disciplined around the prioritization of our technology initiatives. We’re always considering what will maximize the revenue opportunities for the bank while creating the best experience both for the end consumer and that customer in-between, whether it is a retail loan officer or a third party that we work with.
One thing we talk about a lot internally is that the wholesale channel is really a ‘flavor’ of the retail channel. For example, if you think about the TILA-RESPA Integrated Disclosures (TRID) rule, the wholesale lender is responsible for more than 90 percent of the transaction from a regulatory perspective. So we always think about, ‘How do we manage the risk to the bank?’ given that required oversight. But at the same time, we also consider how we can help our TPOs be as efficient as possible and provide them with tools through our technology to help them ‘show-well’ to their consumers, their Realtors, in their markets.
At the same time, although there’s definitely cross-over from our retail business, there’s also uniqueness in each business line that’s always going to be there. For example, we have a TPO-branded portal where our broker customers and their customers – the consumers – receive various disclosures. We allow our broker customers to use their own logo and pick their own color scheme to brand the portal. That way, when consumers visit the portal, we’re behind the scenes – they see their broker, the originator, front and center. I think that’s another good example of leveraging technology that we deploy in our retail business and repurposing it for our TPO business.
Q: How much do you involve your brokers and correspondents in your technology decisions?
Vieaux: We spend time understanding the technology needs and wants of our customers. So, as part of our ongoing improvement of technology and functionality, we start by asking customers what they like about Flagstar’s technology and what we can do better. That becomes the basis for writing business requirements for deploying our technology.
The recent release of Loantrac is a great example – we had broker input all along the way. We brought a core set of clients to our corporate headquarters in Troy, Mich., to understand how they use our technology – and where they see opportunities for improvement. And then, as we started development via a series of WebEx-like conference calls, we were able to show them what we were building along the way and get their feedback in real time. So, it’s a very collaborative process that incorporates customer feedback.
Q: What do you think is going to be the ‘next big thing’ in mortgage technology?
Vieaux: I think our industry is in an interesting place with all the technology solutions that are out there. And I think people will especially be looking at technology over the next year as a means to reduce or eliminate redundant processes.
Take the example of a larger correspondent that doesn’t necessarily have access to sell loans directly to Fannie or Freddie. They rely on somebody like Flagstar, as an aggregator, to sell to. That correspondent has an underwriting department and a QC department – and they have checks and balances along the way that they put that loan through in terms of due diligence. When they sell that loan to somebody like Flagstar, we’re going to do a lot of similar checks and balances and due diligence again. And then, the end buyer, whoever it is, also does due diligence.
So, I think there’s an opportunity in the industry to leverage technology in such a way so that if you conduct due diligence and mitigate risk early in the origination process with a vendor or a piece of technology, there should be some reliance on the accuracy of that due diligence, so that the end buyer of that loan can say, “Hey, I trust that process, I trust that technology, and I’m not going to do 100 percent review on this. Instead, I’m going to take a sampling approach.”
I think if that starts to happen, you will begin to see things speed up from a loan origination perspective in terms of how quickly we can close loans, and you’ll see costs start to come back in line, which ultimately should benefit the consumer in the form of competitive rates and costs. I don’t think we’re there yet, but one of the things we consider when we think about how we connect our technology with our customers is how to reduce some of those redundancies.