Susan Graham: Lessons Learned From 40 Years in Mortgage Servicing Software


PERSON OF THE WEEK: Financial Industry Computer Systems (FICS) is one of the oldest mortgage software companies in the industry. Since 1983, the firm has provided financial organizations nationwide with Windows-based mortgage software systems, as well as document management and web-based ancillary applications.

FICS has built its reputation by emphasizing outstanding customer service in addition to its software solutions. 

During a recent interview with MortgageOrb, Susan Graham, president and COO of FICS, revealed the lessons she and other FICS leaders have learned over the past four decades.

Q: FICS has been providing software to the mortgage industry for 40 years – congratulations! What inspired the founders of the company to build mortgage servicing software back in 1983?

Graham: Carl Gahan was a consultant in the mortgage industry for eight years before he and John Saar founded FICS in 1983. As a consultant, Gahan worked with big banks and savings and loans, overseeing the development teams in charge of writing mortgage servicing software for mainframes. 

Gahan realized that small mortgage companies, who had contracted with service bureaus and were incurring fees on a unit cost basis, couldn’t compete with the big banks and savings and loans. Mortgage software running on a PC would be more cost-effective for the smaller mortgage companies.

In the early 1980s, personal computers were just beginning to take off. The first mass-produced PC had only been introduced on the market two years earlier when the IBM PC became available. When Gahan first started writing mortgage servicing software for FICS, the original PC only had a 10 MB hard drive capable of supporting a few hundred loans.  Very quickly, the industry learned and planned for increased capacity both in speed and disk space giving the PC the capacity to handle substantially more loans, thus allowing smaller mortgage companies to grow and compete against the larger players.  

The very earliest versions of FICS’ mortgage servicing software provided key functions that are still important today such as loan-level windows, payment processing, investor reporting, and T&I analysis. 

Over the past 40 years, we have continually expanded the processes and functionality of our base products by adding commercial mortgage loan servicing software and loan origination software, and by updating all our systems to the Microsoft .NET Framework. 

Gahan wrote the following vision statement in 1983, and that vision has never deviated. FICS employees are reminded daily to pursue the FICS vision:

“FICS will provide reliable, efficient, economical, and accurate loan processing and servicing software to the mortgage industry. Our customers deserve, and will receive, the finest service, training, and support ever offered by any software organization.”

Q: What are some of the lessons you and your colleagues have learned over the decades that have helped FICS be successful as servicing software has evolved?

Graham: Several key lessons have helped us succeed for four decades. First, it’s important to maintain a good relationship with the government-sponsored enterprises so they know firsthand what our systems offer lenders and servicers. FICS developed this relationship with the GSEs early on, and over the many years, they have recommended our mortgage servicing software to their approved servicers, who are looking for automated, comprehensive investor reporting and the ability to easily comply with general servicing requirements. 

Second, mortgage software must be quickly updated to accommodate regulatory changes. During the early years, in addition to mortgage companies, FICS focused on providing a solution for financial institutions that preferred the real-time aspect most systems couldn’t provide and still remain compliant. Some banks and credit unions were using their core system to service mortgage loans, but their core system may not have been able to keep up with the constant mortgage regulatory changes or were processing them as non-mortgage loans. FICS provides a way to efficiently service these loans while maintaining compliance with regulations and investor reporting changes, and with the preferred real-time functionality.  

We also learned that lenders needed a solution that made it easy to sell loans to the secondary market while retaining servicing. This is crucial for financial institutions that want to maintain enough liquidity to generate more loans to help their customers attain homeownership. Of course, the added benefit to selling loans servicing-retained is additional revenue and establishing a close relationship with the borrower for future transactions and earnings potential. 

Finally, over the years we’ve observed the increasing role of automation in the mortgage industry. During our early years, we developed tightly integrated interfaces with core processing systems to allow greater efficiencies. We’ve also automated many previously manual tasks to help our customers save time and money, including the development of APIs to accommodate repetitive tasks whether daily, monthly or annually.  These automated solutions help customers accurately run programs and various events as needed and eliminate after-hours work, which helps attain a better work/life balance. 

Q: What have been the biggest changes you’ve seen in the mortgage servicing industry? What has stayed the same since 1983? 

Graham: One of the biggest changes we’ve seen is the shift from many of the manual processes early on to increased automation and much heavier reliance on software today. This shift has resulted in greater efficiency and better compliance. Manual tasks were time consuming and prone to errors, but it was also at a time when staff had more in-depth industry knowledge and could actually perform these tasks manually. Today, the level of mortgage industry knowledge and servicing experience of staff tends to be on the light side. The reliance on automation and software to perform what used to be manual tasks requiring greater knowledge and experience is a positive outcome on how far we’ve come with technology.  

On the flip side, relying on mortgage software to perform servicing operations without being able to verify the outcome and explain the process to borrowers is problematic. Too much reliance on software isn’t always a good thing, especially since bad data into software can yield incorrect results. Mortgage servicers still need to understand the processes and know how to perform the tasks that are being automated.  

We’ve also seen major changes in how servicers do their jobs, often due to regulatory changes. 

For example, RESPA changes in the late 1990s caused major changes to escrow analysis. The new Credit Bureau reporting format, Metro 2, created by the CDIA (Consumer Data Industry Association) in 1997 pushed the industry to standardize reporting.

As for what has stayed the same, three things are just as important today as they were in 1983: User-friendly software; regularly updating software to meet changing regulatory requirements; and excellent customer support and training.

Q: What are the most significant challenges or needs that mortgage servicers face today? How is software helping them address those challenges?

Graham: Our customers tell us they are struggling with hiring experienced staff, and they rely on mortgage servicing software to help bridge the gap. Partnering with a vendor that provides outstanding system support is key.

Mortgage servicers need solutions that support work/life balance. Automating servicing programs and processes (such as end of day or end of month processes) can alleviate the need to work late hours or weekends.  

Mortgage servicing software and web applications help servicers deal with a staffing gap by providing borrowers with real-time access to their mortgage information. This can take many forms, such as via a home banking system, mobile responsive web application or audio response system. These tools help reduce the call volume to a servicer.

Finally, mortgage servicing software helps servicers handle periodic increases in delinquencies. Servicing software helps servicers be proactive in keeping borrowers current and reactive to borrowers that struggle to avoid foreclosure as they work toward a solution to stay in their homes.

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