Joe Langner: To Deliver a True All-Digital Mortgage, LOS Providers Must Re-Invent


PERSON OF THE WEEK: The loan origination system (LOS) is the central “workhorse” of any mortgage operation. It is the “system of record,” or central repository of all critical mortgage data.

And with mortgage lenders increasingly adopting the e-mortgage, or all-digital mortgage process, the role of the LOS and the demands placed upon it have changed and expanded. Today’s LOSs sport vastly more features and functionality than the ones of the not-too-distant past. As such, it can be argued that the LOS plays an even bigger role in lenders’ operations than before.

To learn more about how the LOS has changed in recent years and how it is facilitating the all-digital e-mortgage, MortgageOrb recently interviewed Joe Langner, CEO of Blue Sage, which last fall launched an all-new digital lending platform that serves both retail and wholesale businesses channels, in addition to its existing correspondent lending capabilities.

Q: What issues do LOS providers run into when trying to create a true end-to-end system and how are they capable of serving all lending channels – correspondent, retail and wholesale?

Langner: There are three key reasons why LOS providers are struggling with this. Most LOS companies built their core systems more than a decade ago, and they were typically not envisioned as the end-to-end systems that lenders need today. Secondly, many providers initially designed their solutions with a given customer type in mind, so they don’t work well with other channels. Third, most of these systems were created before the explosion of the Web and system-to-system APIs, so they cannot be modified to create a fluid end-to-end experience.

Trying to turn a traditional LOS into a one-size-fits-all, end-to-end mortgage platform is like taking a go cart and trying to turn it into a Ferrari. It’s just too much work.

To truly leverage all that new technology has to offer, the best approach is for an LOS provider to scrap what it has, leverage its team’s skills and experience and re-invent its solution from a clean slate. For LOS providers, this is incredibly difficult. It takes time, money, and an experienced focused team to pull off. Plus, you need to continue to support your legacy offering in a changing environment.

Q: How can the LOS make mortgage loan officers more efficient and improve the borrower experience?

Langner: Loan officers need to work with leads, prospects and borrowers who are working through the application process. For this reason, many lenders are seeing benefits from integrating sales automation (CRM) with their LOS. Some lenders have invested in CRM tools and are using complex integrations to connect their systems. Most of them, however, aren’t getting the full benefits such an integration could offer. For example, they typically require loan officers to work in both systems, which isn’t the most efficient way to do things. Depending on how well these two systems communicate, there are often gaps or delays in consistency of data.

A better way is to have a sales application built into the lending platform. This enables a truly digital mortgage experience that gives loan officers the sales tools they need – such as lead management, appointment scheduling, referral management, rewards and sales performance reporting – as well as all the core loan origination functionality. When the sales application is part of the same platform, all data entered in it can be immediately made available to other authorized users as well.

Let’s say a borrower visits the lender’s website and completes a loan application. When the consumer direct tools are built into the lending platform, the platform can automatically pull credit, reverify and reprice the loan, run compliance, determine the loan conditions, run AUS, produce the initial disclosures, and create a unique, secure website for the customer to log in to and upload docs and e-sign disclosures. All of this can happen without the loan officer’s involvement when leveraging a true digital and modern platform.

Meanwhile, the loan officer can be immediately notified as each step in the process is completed via text or email. Once the loan officer logs into the platform and views the loan file, everything is already filled out for them. This allows the loan officer to shift their focus from gathering information to serving the needs of the customer and making sure they are getting the best product for their needs. In sales, time is your enemy, those loan officers who can quickly connect prospects with financing solutions are bound to be more successful.

Q: In what ways can LOS platforms provide a direct-to-consumer experience?

Langner: Lenders using an older LOS have the option of bolting on a solution from one of a plethora of new 1003 app companies that have entered the market. While these tools can improve efficiency and help lenders expand their market reach, they often increase origination costs. Many of these integrations aren’t automatic and require complex integrations depending on the legacy LOS being used. They typically allow only a one-way data flow from the application tool to the LOS. If a borrower gets stuck while filling out an application or makes a mistake, the loan officer has no way of knowing and isn’t able to step in and help.

At our firm, before we wrote a single line of code, our team carefully mapped out the entire platform to include a consumer direct application with a rich, two-way interaction and advanced sales tools that included online chat and remote screen sharing and remote screen control. This way, if a borrower runs into trouble starting the loan process, a loan officer or call center sales associate can “take over” for the borrower or walk them through the application process together.

Q: What are your thoughts on “third-party add-ons?” Are they beneficial for the LOS or do they cause more problems than solutions?

Langner: It depends. Third party add-on technologies are a requirement, regardless to what LOS solution you are using. There are plenty of third-party providers with excellent add-on tools that can improve the overall loan production ecosystem. That being said, lenders need to be careful when choosing both an LOS and a third-party solution.

The key is to make sure how your LOS has been architected to support and connect with different applications. Do they have an API that allows for two-way communication? Can the integration be “lights-out,” or must users go to external third-party websites to gather data and retype it, which increases time, errors and costs? Does your LOS require certified integration assistance, or do they have the internal resources to connect, test, and support third-party integrations? How long does it take to get the systems to work together? These are all important questions to ask.

Q: What are some lending technology trends that you think we’ll see with LOSs this year?

Langner: In addition to more consumer direct applications and engagement models, I think we’ll see a huge growth in process automation that automatically assigns tasks, loans, or other work based on loan attributes, loan volume or a loan officer’s expertise. In particular, tools that automatically clear tasks and automate the ordering, receiving and parsing of data from third parties will be big.

I’d also keep an eye on advancements in communication technology, device independence, blockchain technology and artificial intelligence. Many of these innovations – such as blockchain technology, which many people associate with cryptocurrencies – may seem outside the realm of the mortgage industry. But these advancements are revolutionizing the way goods and services are sold, and they could remove an incredible amount of friction from the mortgage process. It’s definitely an exciting time for our industry.

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