A recent study from STRATMOR Group shows that mortgage lenders prefer the route of integrating “best of breed” applications with their loan origination systems (LOSs), as opposed to the “all-in-one” approach offered by some LOS vendors.
Driving this trend is the fact that mortgage origination costs continue to climb, with the average cost to originate a loan now averaging almost $9,000, the study finds.
As this happens, growing number of mortgage lenders are considering alternatives to the traditional LOS deployment.
Andrew Weiss, principal of STRATMOR Group and author of the report, says rising costs are “a scary trend for mortgage lenders.”
“We believe this is why more lenders are looking at alternatives to the traditional, vendor-based LOS to reduce costs and increase productivity and market share,” he says.
“Because there are so many possible technology combinations, lenders can now reasonably consider creating their own ‘best-in-breed’ platform rather than solely relying on their LOS,” Weiss adds.
Traditionally, the argument has been that when a lender purchases a platform from a single vendor, the complexities of integrating multiple technologies fade away and reduce the need for expensive IT teams.
STRATMOR says that’s now changing as more vendors – including customer relationship management (CRM) and point of sale (POS) providers – embrace application program interfaces (APIs), which allow applications to communicate with other applications or systems through standard languages that are easy to create.
“Almost every technology vendor in the mortgage space is touting their ability – or their planned ability – to interact with other systems through APIs,” Weiss says. “These ‘point solutions’ pride themselves on their ability to do specific jobs better than an all-in-one LOS can, claiming the value they deliver is above and beyond the average way a loan is manufactured.”