In a paper, “Why the Bright Line Helps Mortgage Markets,” MBA argued that bright line provisions in S.190, the bill introduced by Sen. Chuck Hagel, R-Neb., that would reform oversight of Fannie Mae and Freddie Mac, would add “certainty to the housing finance markets” and better define the primary and secondary markets.

“Congress prohibits the GSEs from originating loans, but does not clearly define loan origination,” MBA said. “Similarly, their charter acts clearly restrict the GSEs to the secondary mortgage market, but the charter acts do not define where the primary market ends and the secondary market begins.”

Freddie Mac asserted this week that the bright line language in S. 190 would “fundamentally alter” the GSEs charter acts and prohibit the GSEs from their “duty to foster relationships with housing groups.” It also said that the bright line would prohibit the GSEs from enforcing predatory lending standards, inhibit their ability to work directly with borrowers, hurt multifamily lenders and end uniform mortgage instruments.

But MBA discounted Freddie Mac’s arguments. “Having a bright line separating the primary and secondary markets would provide more than mere clarity,” MBA said. “It would retain competition, especially in the primary market loan underwriting function. MBA very strongly supports competition because competition, more effectively than anything else, spurs innovation and lowers prices to consumers.” 

“Competition keeps markets healthy. The bright line, through promoting competition, will help shore up and expand the mortgage industry, which has been a bulwark against recession and has been a mainstay in the economic recovery of recent years.”

The bright line would force the GSEs to open their doors to competing, privately developed technology, MBA said. In a recent paper distributed on Capitol Hill without attribution, Freddie Mac asserted that the bright line provision in S. 190 would “preclude” automated underwriting systems (AUS). “It would not,” MBA said. “It would merely introduce competition and transparency into the loan underwriting technology market…AUS as it exists today has problems. Both GSEs used to clearly delineate the criteria by which they decide what types of loans they would or would not buy. But with the advent of technology, the GSEs were able to make secret their purchase criteria.  The GSEs do not divulge how their technology decides who can get a mortgage loan approved…MBA believes that, given the GSEs’ public mission and government sponsorship, secrecy is inappropriate.” 

Another problem with the GSEs’ technology is that the GSEs do not permit outside competition in technology for underwriting loans, MBA said. “The bright line would not end Loan Prospector (LP) and Desktop Underwriter (DU).  Rather, the bright line would promote competition and transparency in loan underwriting technology.  Both of these improvements would greatly benefit borrowers.”

The GSEs’ practice of protecting GSE technology and punishing non-GSE technology is anti-competitive, MBA said. “The GSEs force private technology vendors out of the market. These anti-competitive practices should be prohibited under any reasonable construction of the GSEs’ charter acts. Freddie Mac cannot claim that it gives advantageous terms because of any need to protect itself from credit risk.  Freddie Mac gives advantageous terms to loans underwritten through Fannie Mae’s technology, as Fannie Mae does for loans underwritten through Freddie Mac’s technology.” 

MBA said the lack of competition for loan underwriting technology limits innovation and choice, and keeps prices artificially high. “If there were additional vendors of AUS technology, the vendors would vie for market share by offering innovative ideas and advanced technology,” MBA said. “They could create technology that could handle new products, for example, even when those new products benefit consumers but not GSEs.  In this way, competition would benefit consumers directly.”

MBA also said Freddie Mac tries to argue that its duopolistic, noncompetitive loan underwriting technology somehow helps small lenders who have no choice but to use the technology and to pay any noncompetitive price the GSEs charge. “Small lenders are not on equal footing with large lenders in loan underwriting technology because small lenders have fewer resources to keep pace with technological advances,” MBA said. “Many small lenders, and some not so small, are wholly dependent on the GSEs for AUS technology. They simply cannot stop using Loan Prospector and Desktop Underwriter because they have no other system to underwrite loans. This total dependence on the GSEs for the ability to underwrite loans puts lenders at risk. Should one of the GSEs have a fault in their technology, or should a GSE become financially distressed and unable to update the technology, lenders who cannot convert immediately to alternative technology could be severely damaged.”

MBA said the bright line would not “fundamentally alter” anything, but rather ensure that neither Freddie Mac nor Fannie Mae do not originate loans. “Congress created the GSEs for the purpose of promoting liquidity in the secondary market. Because the GSEs do not today have an effective mission regulator, they have encroached into the primary market, beyond their Congressionally-mandated secondary market role, to the detriment of borrowers. All the bright line would do is add clarity about what is and is not permissible,” MBA said.
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This guide was developed to address questions of lenders and document custodians regarding eVaults, the virtual warehouses used to store and retrieve eNotes and other supporting electronic mortgage documents.

"This is not a piece of credenza-ware, but a practical guide to the future. It will allow the industry to gain a better understanding of eVaults," said Chip Register, CMT, chief technology executive with Netbank and chair of MISMO's eMortgage Workgroup. "Many of the workgroup members are experts and have generously contributed their knowledge to this I-Guide release."

This product, developed by the volunteer participants of the MISMO eMortgage Workgroup, provides information on an array of topics about eVaulting in the eMortgage process. These include:

• Existing Law and Legislative Overview
• Agency Requirements
• Practical Considerations
• Data Standards for eVault Interfaces
• eVault Provider Requirements
• Glossary
 
The eMortgage Workgroup was established in January 2001 to develop standards, specifications and guidelines toward fully electronic (paperless) mortgages that correspond to the Electronic Signatures in Global and National Commerce Act (E-SIGN) and the Uniform Electronic Transactions Act (UETA) legislation enacted by the federal government in 1999 and 2000.

The eVaulting I-Guide will be posted at www.mismo.org in the eMortgage section.
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Fiserv President and CEO Leslie Muma said the acquisition is part of the company’s strategy to provide end-to-end services to the mortgage industry. “This acquisition is another key milestone in our goal of building the industry's most complete information technology solution set for the lending industry," he said.

"We're very excited about this next step in the evolution of our company," said John Walsh, Del Mar Database president. "We believe that the breadth of Fiserv's products and services, financial resources and industry reputation all support our goal of providing small to mid-size mortgage lenders the best technology and solutions available in the market."

Del Mar Database recorded revenue of nearly $12 million in 2004. Del Mar Database’s 40 employees, including Walsh, are expected to join Fiserv. Fiserv acquired Del Mar Database from MHT Partners L.P., Timeline Ventures and Titan Investment Partners LLC.

Del Mar Database products, including DataTrac and WebTrac Pro, serve as a hub in the loan processing cycle by linking loan origination systems and relevant ancillary products while providing additional functional, process management and security tools.

Fiserv Lending Solutions offers products and services for consumer and mortgage lenders. Fiserv's lending services set includes automotive finance portfolio management, vehicle remarketing, mortgage lead management and customer loyalty programs, automated valuation model (AVM) products, mortgage banking software and services, appraisals, broker price opinions, credit reporting, closing services and default management.

"Del Mar Database offers products that form the technological heart and soul for mortgage brokers and other small to mid-size lenders," said James Puzniak, president of the Fiserv Lending Solutions Group. "This company will be a great addition."

Fiserv was ranked the largest provider of information technology services to the U.S. financial services industry in the 2004 FinTech 100 survey by the American Banker newspaper and the Financial Insights research firm.

The announcement was made at the Mortgage Bankers Association’s National Technology in Mortgage Lending Conference & Expo in Orlando.
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eLynx WPS will be offered to GreenPoint customers as, “GreenPoint eDocs; The new GreenPoint Electronic Doc Delivery System provided by eLynx.” The transaction was made official in August 2004 and implementation completed three months later.

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DocuTech Corp. (DocuTech), Idaho Falls, Idaho a provider of compliance service and documentation technology, announced establishment of a dedicated processing center to manage initial disclosures for its customers.  The processing center provides services to help lenders reduce their level of liability and eliminate the risk of lawsuits due to perceived compliance issues with initial disclosure documents. 

DocuTech’s processing center provides all retail and wholesale channels with services for initial disclosure requests, enabling turnaround time for these requests and ensuring that all loan documents, including initial disclosures, meet all federal, state and investor compliance regulations.

DocuTech also announced that it has launched an initiative to satisfy the growing needs of the Hispanic mortgage market by providing its customers with compliant mortgage documents in Spanish.

DocuTech also announced the availability of DT WebXpress, a new service enabling users to meet government-mandated timelines for initial and closing disclosures while providing increased speed and security. DT WebXpress enables users to manage files by equipping them with tools to record and update all loan documents.

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Fiserv Lending Solutions, Lake Mary, Fla., announced that M/I Financial, the mortgage-banking subsidiary of Columbus, Ohio-based M/I Homes, selected the Fiserv UniFi PRO Mortgage eX loan origination software (LOS) system to modernize, streamline and expand its mortgage business.

UniFi PRO Mortgage eX is a customizable, enterprise-wide lending product of scalability for larger, multi-channel lenders.

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WellFound Decade Corp., Jacksonville, Fla., a provider of business integration software, announced the launch of InvestorExpress, a software product that enables mortgage sellers to electronically deliver mortgage loan data to their investors. InvestorExpress reduces funding and post-closing time and costs for investors and lenders. 

WellFound Decade and PaperClip Software, a developer of integrated document management and loan processing services, also announced that they have partnered to provide a product for simultaneous loan data and document delivery.

With data and documents merged, lenders will be able to deliver loans to investors via a simple two-click process. The combined electronic data and document delivery is designed to reduce the time and cost to deliver loans to correspondent lenders/investors. Company officials said time is expected to reduce from five days to one, and costs are expected to be reduced of those currently experienced through paper-based processes.

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MSI Services, Sunrise, Fla., a contact center provider, and ApprovalWare, a provider of automated, multi-lender credit processing and lending services, announced a strategic partnership to equip customers with credit decisioning capabilities via contact center technology. ApprovalWare will leverage MSI’s CallCenterExpress hosted contact center technology as the call center for its credit decisioning solution. MSI will also be entitled to offer ApprovalWare’s services to its customers.

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Mortgage Cadence, Denver, a mortgage lending platform provider, announced that Homeowners Loan Corp.’s wholly-owned subsidiary, RateStar Inc., a retail conventional lending provider, went live on Mortgage Cadence after a 60-day end-to-end implementation cycle.
 
Homeowners Loan Corp. launched its initial use of Mortgage Cadence in early 2004 to support its non-prime channel and document services.
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At the end of 2004, $2.29 trillion in commercial/multifamily mortgage debt outstanding was recorded by the Federal Reserve, an increase of $219.5 billion or 10.6 percent from the end of 2003. In the fourth quarter alone, commercial and multifamily mortgage debt outstanding increased by $68.6 billion, or 3.1 percent, also a record. At the end of 2004, multifamily mortgage debt outstanding stood at $601 billion—an increase of $44.1 billion or 7.9 percent over the year, and $12.1 billion or 2.1 percent in the fourth quarter alone.

"The commercial and multifamily mortgage markets continued their strong growth in 2004 showing record levels of commercial/multifamily mortgage debt outstanding and record amounts of new capital coming into the markets." said Doug Duncan, MBA's chief economist and senior vice president. "With the tight integration that has developed between commercial mortgage markets and capital markets, both domestic and international, the first few months of 2005 are showing that trend continuing."

The Federal Reserve Flow of Funds data summarizes the holding of loans, or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in the Federal Reserve data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS) for which the security issuers and trustees hold the note (and which appear in the Federal Reserve data under CMBS issuers).

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with $982 billion, or 43 percent of the total. Many of the commercial mortgage loans reported by commercial banks, however, are actually "commercial and industrial" loans to which a piece of commercial property has been pledged as collateral, and it is the borrower's business income—not the income derived from the property's rents and leases—that drives the underwriting, pricing and performance of the loan. Since the other loans are income property loans, meaning that the income primarily comes from rents, the commercial bank numbers are not comparable.

Commercial mortgage-backed securities (CMBS) pools are the second largest holders of commercial/multifamily mortgages, holding $423 billion, or 18 percent of the total. Life insurance companies hold $251 billion, or 11 percent of the total, and savings institutions hold $182 billion, or 8 percent of the total. Government sponsored-enterprises (GSEs) and federally related mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $125 billion in multifamily loans that support mortgage-backed securities they issue (referred to here as federally related mortgage pools) and an additional $57 billion "whole" loans in their own portfolios, for a total share of 8 percent. (As noted above, many life insurance companies and some GSEs also purchase and hold a large number of CMBS issues. These loans appear in the CMBS category referenced above).

Looking just at multifamily mortgages, the GSEs and Ginnie Mae hold the biggest share of multifamily mortgages, with $125 billion in federally related mortgage pools and $57 billion in their own portfolios - 30 percent of the total multifamily debt outstanding. They are followed by commercial banks with $119 billion, or 20 percent of the total, savings institutions with $88 billion, or 15 percent of the total, and CMBS issues with $75 billion, or 13 percent of the total.

Record Levels and Change in Commercial/Multifamily Mortgage Debt Outstanding
Between December 2003 and December 2004, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt—an increase of $114 billion, or 13 percent, which represents 52 percent of the total $220 billion increase. CMBS issuers increased their holdings of commercial/multifamily mortgages by $61 billion, or 17 percent—representing 28 percent of the net increase in commercial/multifamily mortgage debt outstanding. Savings institutions experienced a net increase of $15 billion, or 9 percent.

In percentage terms, CMBS issuers saw the biggest increase in their holdings of commercial/multifamily mortgages—a jump of 17 percent—while nonfarm, noncorporate businesses saw the biggest drop (a net change of -16 percent).

The $44 billion increase in multifamily mortgage debt outstanding during 2004 represents an 8 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt—an increase of $14 billion or 14 percent, which represents 33 percent of the total increase. Savings institutions saw an increase of $10 billion, or 12 percent, in their holdings. CMBS issuers increased their holdings of multifamily mortgage debt by $8 billion, or 12 percent, and government-sponsored enterprises increased their holdings by $4 billion or 8 percent.

In percentage terms, commercial banks recorded the biggest increase in their holdings of multifamily mortgages, 14 percent, while nonfarm, noncorporate businesses saw the biggest drop, -19 percent.

New Quarterly Records for Level and Change in Commercial/Multifamily Mortgage Debt Outstanding
In the fourth quarter, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt—an increase of $31 billion, or 3 percent, which represents 45 percent of the total $69 billion increase. CMBS issuers increased their holdings of commercial/multifamily mortgages by $22 billion, or 6 percent—representing 32 percent of the net increase in commercial/multifamily mortgage debt outstanding. Finance companies experienced a net increase of $5 billion, or 9 percent.

In percentage terms, finance companies saw the biggest increase in their holdings of commercial/multifamily mortgages—a jump of 9 percent—while nonfarm, noncorporate businesses saw the biggest drop (a net change of -6 percent).

The $12.1 billion increase in multifamily mortgage debt outstanding between the third and fourth quarters of 2004 represents a 2.1 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt—an increase of $4 billion or 4 percent, which represents 36 percent of the total increase. CMBS issuers saw an increase of $3 billion, or 4 percent, in their holdings. Savings institutions increased their holdings of multifamily mortgage debt by $2 billion, or 2 percent, and federally related mortgage pools increased their holdings by $1 billion or 1 percent.

In percentage terms, real estate investment trusts (REITs) recorded the biggest increase in their holdings of multifamily mortgages, 10 percent, while nonfarm, noncorporate businesses saw the biggest drop, -7 percent.
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CRM Companies, Lexington, Ky., manages the property, located six miles from Hilton Head, S.C. Built in 2001, the newest hotel in the city has a business center, a fitness facility and an on-site florist.

Stephen Henderson, senior director in the Hartford office of Tremont, arranged the $7 million fixed rate loan, which was funded through a CMBS (commercial mortgage backed securities) lender. The 10-year, non-recourse loan provides acquisition financing, and carries a 6.2 percent interest rate and a 25-year amortization.

The borrowing entity was a TIC (tenants in common) comprised of twenty separate TICs. “The borrowing structure created some unique problems for both the acquisition and the loan,” Henderson said. “However, Tremont worked closely with the lender to create a loan satisfactory to all parties involved."

The Boston office of Tremont Realty Capital arranged a $34 million, five-year, fixed rate loan for the refinance of 19 industrial properties located in Texas, N.M., and Fla.

David Ross, senior director, and Rick Gallitto, executive director in the Boston office, worked with Santa Teresa Realty Trust to arrange the 80 percent LTV refinance. The sponsor, Santa Teresa Realty Trust, locked in a fixed rate loan to pay off floating rate debt.

“Some of the challenges overcome in the transaction included the sponsor simultaneously selling four properties in the portfolio and trying to satisfy the timing and capital allocation requirements of the existing lender, the new lender, as well as equity partners,” Gallitto said. “All this occurred while the Borrower was managing a very dynamic rent roll and leasing environment to maximize and meet lender coverage requirements.”

Ross said Tremont Realty Capital previously arranged the preferred equity investment.
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The CMT designation is presented to Information Technology professionals, including managers and executives, in recognition of their industry experience, professional education and knowledge of the unique technological needs of the real estate finance industry. The first class graduated in 2004 and to date 30 have received the designation.

"Information technology in the real estate finance industry continues to evolve, and CMTs help create milestones in advancing this dynamic part of our industry," said Stephen Gozdan, member and past committee chair of MBA's Residential Technology Committee. "Recipients of this designation are not only leaders in their field, but they set the professional standard by obtaining the CMT designation."

To be eligible for designation consideration, candidates must meet rigorous standards. They must have a minimum of two years industry experience, have a technology background, and be in a technology leadership position within the residential or commercial real estate finance industry. They must acquire 75 points in the areas of industry experience, education, and participation.

After meeting the point requirements, candidates move to the next step of the process, which includes submitting a thesis on a specific initiative, implementation or conversion in which they actively participated and passing a two part oral presentation/exam conducted by a panel of industry experts. Designees must meet continuing education requirements every two years to remain in active status.

The following earned their CMT designation:

Elaine Beck, CMT, E-Business Project Manager, AIG United Guaranty;
Mohan Chhabra, CMT, Senior Vice President, IndyMac Bank;
Julie Cline, CMT, Chief Operations Officer, Metrocities Mortgage Corp.; 
Jimmy Craig, CMT, Assistant Vice President, Cavalry Banking;
Philip Eugene Evans, CMT, Business Technologist, GMAC Residential Funding;
Matthew Grieb, CMT, Senior Consultant, Fidelity Information Services;
Michael Hammond, CMT, Director of Sales & Marketing, Dynatek, Inc.;
Jeffrey Kenny, CMT, Computer Support, Jersey Mortgage Co.;
Mike LaRose, CMT, Vice President, Flagstar Bank FSB;
James Leone, CMT, Product Specialist, Harland Financial Solutions;
Tom Litke, CMT, Executive Vice President of Marketing and Products, WellFound Decade Corp.;
Todd Luhtanen, CMT, Chief Technology Officer, Dynatek Inc.;
Sean McGillen, CMT, Vice President and Chief Architect, WellFound Decade Corp.;
Shylesh Nadig, CMT, Vice President, IndyMac Bank;
Albert Ogrodski, CMT, First Vice President-Technology, Mavent Inc.;
Sanjeev Rastogi, CMT, First Vice President, IndyMac Bank;
Chip Register, CMT, Chief Technology Executive, Netbank Inc.;
Warren Royal, CMT, Vice President of Technology, SouthStar Funding LLC;
Ram Sen, CMT, Senior Vice President, IndyMac Bank;
Timothy VanTassel, CMT, Managing Consultant, C.C. Pace;
Elizabeth Williams, CMT, Senior Project Coordinator, Triad Guaranty Insurance Corp.;
Russell Wilson, CMT, Director of e-Commerce Solutions, NetBank Inc.;
Gilbert Wolverton, CMT, Project Manager, Fremont Investment & Loan; and
Robert Woodall, CMT, Business Technology Officer, Opteum Financial Services LLC.

To learn more or enroll in the Certified Mortgage Technologist designation program, visit Professional Designations at www.campusmba.org or call (202) 557-2763. For more information on CampusMBA, winner of the 2004 Best Virtual Corporate University/Best Use of Technology CUBIC Award, visit www.campusmba.org or call (800) 348-8653.
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Employers–from member companies to MBA itself–can post job openings and search the resumes of potential employees for a small fee, and job seekers can review those job opportunities and submit their resume free of charge. Plus, employers can now post internships for free for 60 days. Those looking for an internship can search those listings for free. At any one time, 400 or more jobs are posted to the site and the Lender Careers database can contain 250 or more resumes.

In addition to these posting tools, Lender Careers offers access to a broad range of free services and publications to provide guidance to managers and job seekers as they go through the hiring process. A salary wizard is also available to help guide the salary negotiation process.

MBA also uses this job board to find the most qualified candidates with a combination of Real Estate Finance industry knowledge and experience in a variety of career fields for positions within the association.  Here is a brief listing of what is currently posted:

Director, Housing Finance
Economist, Macroeconimic Forecasting
Associate Specialist, Designations

For more information, go to http://jobboard.lendercareers.com/search/results/index.cfm?job_company_id=76246.
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Today, concerns about outsourcing or offshoring have popped up throughout all industries, but the mortgage industry is one industry that has embraced the concept. A number of financial institutions have outsourced call center functions to countries such as India and the Philippines.

Prashant Kothari, president of String Information Services, Washington, D.C., and Gary Clark, executive vice president and chief information officer with IndyMac Bank, Pasadena, Calif., broke down the benefits and challenges of offshoring here at the Mortgage Bankers Association’s National Technology in Mortgage Banking Conference & Expo. Kothari said from a business standpoint, the decision to offshore is simple.

“Keep the best, make it better and outsource the rest,” Kothari said.

According to Kothari, a few items determine whether a process is outsource-appropriate:

• Can it be done remotely?
• Can you create a stable rules-based process?
• Does it have a substantial labor cost involved?
• Is this a significant source of competitive advantage, if it is you may want to keep it in-house?
• Are there suppliers out there who can provide you with your process?
• What is your comfort level?

“Most mortgage firms outsource a combination of insurance, appraisals all the other services,” Kothari said. Other items that can be outsourced include functions, processes, such as administrative or financial, mortgage banking/brokerage, such as origination services and service providers.

Companies benefit from outsourcing by allowing the company to focus on its core competencies, Kothari said. “As businesses get more and more competitive, the focus will shift to customer acquisition and cross process outsource,” he noted.

The benefit of outsourcing is the variable cross nature process. “Going forward, as things slow down, there will be more and more lender buying into the variable cross nature of outsourcing,” Kothari said. “It’s much easier to hire or scale down when you are working with an outsource vendor than in-house.”

Another benefit of offshoring results in a 24/7 processing. Since most of the outsourcing does go to India, many processes can be completed overnight, allowing U.S. businesses come back the next day with a day’s work completed.

The more obvious benefits include lower labor cost. However, there is also the possibility of obtaining additional services. In IndyMac Bank’s experience with offshoring, the company found that the vendor could provide additional suggestions to streamline their processes while continuing to reduce the costs.

However, to receive such services from the vendor, Clark cautioned that there must be an incentive for the vendor to drive process improvements.

To make sure you get the most out of offshoring, Clark suggested having a strong governance structure. Companies can accomplish this by establishing a solid Master Service Agreements (MSA). It is also important to invest in knowledge transition and business process outsourcing (BPO) migrations.

“We worked side-by-side for weeks and months to gain the process knowledge,” Clark said. “This is important especially in the mortgage industry. A business cannot expect an outsourced vendor to have mortgage domain knowledge from day one.”
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SOA is a design methodology aimed at maximizing the reuse of application-neutral services to increase IT adaptability and efficiency. While these concepts have existed for decades, the adoption of SOA has accelerated with the emergence of standards-based integration technologies such as Web services and XML and within the Mortgage Industry Standards Maintenance Organization (MISMO).

“[SOA gives us] more automated data distribution, integrating the loan data for customer service and internal analysis, and a more streamlined management of the business volume,” said Maxine Swisa, chief information officer for Thornburg Mortgage Home Loans in Santa Fe, N.Mex., speaking here at the Mortgage Bankers Association’s National Technology in Mortgage Banking Conference & Expo. “What we gained was from a service-oriented architecture, it streamlined all the multiple business processes that we have. It greatly reduces human error. Instead of having typing files, transferring files, an SOA allows you to move those file automatically in a pattern. It facilitates a workload-controlled environment.”

An SOA is a collection of services. The services communicate with each other through either data passing, or two or more services coordinating the same activity. When a loan-origination system is built on an SOA it can help to drive originations through post-closing and enables management of all back-office systems and ancillary services.

SOAs provide adaptability, said Robert Moore, chief information officer with Axis Mortgage & Investments LLC, Mesa, Ariz. “We want to be adaptable and flexible in today’s marketplace, if we need to change products or if we need to make additional products. Where we at today is not where we want to be. Our current architecture is a closed-architecture. We have trouble getting to our data. I describe it as ‘The tail is wagging the dog in the current infrastructure.’”

Automating processes makes more services available. It allows different systems to communicate with one another. “Services are like Russian dolls; some services are really big and other are small,” said Andrew Weiss, chief operating officer and chief technology officer for Overture Technologies, Bethesda, Md. “SOA-based technology allows re-use of services to move to other channels and business lines.”

When coupled with an LOS, lenders can achieve faster turnarounds. “Increased service levels results in more loans completed and that means more revenue,” Moore said. Weiss noted that SOA increase efficiencies that use less time to close loans, from 30 days to as little as 30 minutes.

Technologies required to set up an SOA include SMART workflow, bundles and XML/MISMO. “SOA makes the orchestra of all these working parts a lot easier, but there is a lot of work involved in getting the infrastructure set up. Once you have it working properly, it’s really very efficient,” Swisa said.
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