MBA Staff
MBA NewsLink spoke with Craig Bechtle, executive vice president and COO of MortgageFlex Systems, Jacksonville, Fla., which provides loan origination, secondary marketing and servicing software to the lending industry.

A seasoned technology executive, Bechtle has more than two decades of management, technical product and services experience and project management expertise. He has held vice president and director positions at PNC Mortgage, Chicago, and Fiserv, Ft. Lauderdale, Fla.

MBA NEWSLINK: How has MortgageFlex adapted to changing client needs?
 
CRAIG BECHTLE: Increased business with the federal government, mainly through FHA, has represented the biggest shift for most mortgage originators and the technology that serves them. Fortunately, our LOS, LoanQuest, was designed with regulatory compliance in mind, so most of our clients have found that the system already supports many government lending requirements.

We regularly monitor ever-changing rules and adapt to them proactively. We are finding that originators want and need more training and appreciate the free training sessions on hot industry topics that we regularly offer. These classes review any adaptations that new regulations have driven.

MBA NEWSLINK: How do you and other vendors convince a client, who says he/she has a shrinking budget, to invest in technology?
 
BECHTLE: Basically, by being cost–effective, reliable and innovative. MortgageFlex offers a variety of administrative services—web hosting, database administration, process review, system administration services—that our clients find extremely cost-effective. As their personnel/IT budgets shrink they are looking to us to fully support some of the functions previously handled in-house. That same logic applies to prospective clients; they are looking for a full-service provider that knows the product and the industry. We are fortunate that the LoanQuest product suite is robust enough that we can package it as stand-alone products or combine several to function as components. We also offer SaaS and web-hosting in our SAS 70 II data center, which gives clients the security features necessary today.

MBA NEWSLINK: What are the key trends you see going into 2009, and how has MortgageFlex positioned itself for them? 
 
BECHTLE: One key trend will be a paperless origination process, which is a significant step in the direction of supporting full eMortgages. Much has been written and documented on the advantages of a paperless process, and many vendors have added a paperless process to their system.

Our new LOS version, scheduled for release later this year, will be centered on a paperless process. We chose a slightly different path by designing it to be paperless first.  A paper-based process is still fully supported but there are no extra steps to go paperless. By doing this, we reduce the hurdles to go entirely electronic and begin to address some of the issues presented by a paper-based process; i.e., expense, data transfer and security.

Lenders will also need a rules-driven system that can be adapted globally by administrative personnel, instead of IT. Business rules create a check-and-balance environment and can interface directly with a workflow component, driving compliance intuitively. Other key trends will center around compliance and fraud. We expect to see a continual release this year of new regulations designed to protect the consumer.

Depending on the technology a lender has deployed, adherence to these new regulations will vary dramatically. Keeping pace with both legal compliance and fraud monitoring will become more labor-intensive and exasperating unless lenders utilize available system opportunities and smart interfaces that respond in real-time. With stricter government guidelines and the ever-present opportunities for fraud, lenders no longer have an option of practicing haphazard due diligence.

We’re seeing more demand for services from our lender customers who are looking to off-load some functions that can be easily provided by their vendors. It is important to provide turn-key, compliant systems that allow the lender to focus on their core competencies and let us worry about the technology. MortgageFlex is positioned extremely well on all accounts through the release of our .NET platform, revised origination and a new menu of services. 

MBA NEWSLINK: Why has the embedding of business rule engines into loan origination systems become the norm?
 
BECHTLE: The simple answer is it’s the “logical” thing to do. A Business Rule Engine stores and controls all the logic of a system’s processes. Business rules transform a company’s concepts into definable business logic that is contained within a structured format and can be easily obtained by the end-user from the engine. By capturing business intent, authoring and verifying complex rules and calculations, a business rule engine enables a product to be adaptable and efficient without the overhead expense of a major system overhaul, translating into immediate benefits in the areas of system security, product and pricing criteria and process compliance.

LoanQuest is bundled with the third-party Business Rules Management System, InRule.  InRule is a .NET based rule engine that supports decisioning, complex calculations and decision logic. Business Rule Engines challenge us to think through incremental business processes which create a synergy between business philosophy and Information Technology.

MBA NEWSLINK: How does the R&D investment by a technology provider come into play for lenders selecting new software and services?
 
BECHTLE: The amount a technology provider invests in research and development is an indicator of several telling factors:

* The vendor’s financial stability,
* The vendor’s approach to system development, and
* Their longevity.

When shopping for a technology vendor, lenders should always look for an on-going, dedicated R&D budget and request the past three-year’s budgets for R&D investments. Approximately 3 to 5 percent of overall income is a solid ratio. A good example is our decision to continually add new LOS features. Instead of developing a toolkit that requires the lender to build their own system features, we build the system, the lender uses it. They stay focused and so do we.

By associating with MISMO, MBA, Freddie Mac and the International Business Rules Forum, we keep abreast of compliance issues that allow us to proactively adapt LoanQuest instead of making knee-jerk market reactions. If a vendor shows no on-going R&D budget or a very low one, the odds are they aren’t going to be very flexible or quick to address the latest (government) changes with actual system revisions. They may suggest work-arounds or something a lender can “get by” with until they can fund the actual coding modifications. Consistent R&D investments also go hand-in-hand with their longevity. If a company can’t budget R&D to improve their product they won’t prove to be much of a long-term partner.

MBA NEWSLINK: What results can the industry expect from an integration of various mortgage systems into the service-oriented architecture format?
 
BECHTLE: Overall, the industry will see more consistent results. The true advantage is on an individual lender basis. They will have a bigger variety of vendors and services they can choose from and will be better able to sync their needs with their selections. Additionally, by developing services for common origination functions, a vendor can insure consistent results whether the application is originated in a branch office or over the Internet. This goes a long way to consumer confidence when the information is not changing all the time.