Experienced mortgage origination executives will tell you that lenders tend to change their loan origination systems (LOSs) about every five years. There are many reasons for this, but the most common is that the firm’s top lending executives switch companies and want to manage their operations in ways that made them successful in the past. They tend to bring their LOSs with them into their new institutions. Increasingly, when a lender changes its LOS, we also see them taking steps to change out their mortgage document technology as well.
The primary motivation for the switch to a new document management technology is to move away from outdated, static forms and into dynamic technology. This is important because new compliance demands make it nearly impossible for lenders using older document technology to meet the new requirements. In fact, in the wake of TRID, a number of companies shuttered their older document technologies because the old tools just couldn’t handle it.
Even those firms that kept their older document technologies online had serious problems during the transition into the new TRID lending environment. The pain they put lenders through was enough reason to send them back into the marketplace in search of updated technology.
Changing out any technology platform is a very serious undertaking. Some have compared a new LOS implementation to heart surgery, which isn’t quite fair. Doctors get to put their patients to sleep. Lenders don’t have that luxury with their businesses. That may be why heart transplants have a better success rate than new LOS implementations. If you are considering a new LOS, it’s also the perfect time to upgrade your document technology. Here are some suggestions for a smoother transition.
Be diligent about due diligence. Switching technologies is about much more than the technology you choose. It’s also about the partner you choose to deliver it. You need to know that they have the financial wherewithal to remain in business; the experience to deliver both tech and security; and the wisdom to protect their reputation and yours. A technology problem that results in the loss of sensitive customer data is a great way to end up on the front page of The Wall Street Journal, which is nothing any lender wants. Audit any prospective partner. It’s not the most comfortable thing (we know, we go through 3 to 4 each month for existing clients and new prospects), but it’s vitally important.
Put an experienced executive in charge. We have executives on staff who have overseen hundreds of LOS implementations, and we can tell you there are a million things that can go wrong. Put someone in charge who has walked this narrow path before and know where the pitfalls are. They need to understand how many integrations are involved and have experience with user acceptance testing, procedures and workflow. If you don’t have someone on staff, hire a consultant. You’ll be glad you did.
Get the best document technology available. The lending process is largely about manufacturing a stack of documents that become a salable financial asset. Don’t install a shiny new LOS only to tack on the same old doc prep technology that couldn’t keep up in the past. Be sure to ask your new vendor the right questions. Ask them who they are working with now, what those people say about them, and why they think they are the best vendor in the marketplace. If they don’t have good answers, they may not be the right fit.
We answer those tough questions every day. For us, it comes down to having the best technology, the best implementation tools and the best people. These are the factors that have given us such a great record of successful implementations. We can also offer more advice on making your next technology upgrade smoother and easier.