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Forward on reverse: Reversing the credit crisis at World Alliance Financial; A conversation with CEO David Peskin, Part I

National Mortgage Professional
Aug 18, 2008

Is your LOS only working part-time?Chip Cummings, CMCLOS, UCE, loss origination system, payroll disbursement Ah, summertime! It's time for fun in the sun, cool margaritas and family vacations. Technology allows us to be flexiblework from anywhere, at anytime and take time off whenever we want. But is your loan origination system (LOS) doing the same and only working part-time hours? The job description Just as you would with any employee, the first thing you need to do is evaluate the actual job description of your LOS. While our LOS is only software and can't be directly compared to a hard-working, coffee-breaking, dedicated, bi-weekly payroll disbursement, the process is actually the same. For an employee, you define the job function based upon the desired results for your organization. A closing agent follows a process to make sure that the loan file is complete and insurable when delivered to the investor. They know what that process is as you've defined it, and it's just one function in a string of steps that allows you to deliver your services. Similarly, you need to establish exactly how you want your LOS to function. Yes, we know that it has to keep track of loan data information, spit out 1003s and track when our appraisal comes back, but have you really defined how you want it to function as a piece of your overall delivery system? As your central business tool, in many ways, it's more important than many of your individual employees. Since employees are the ones who run it, you will need to define the role of the LOS, and then incorporate that into the job functions of those that use it. For the LOS, that means defining what I call the ultimate customer experience (UCE). The UCE is the process flow you define if everything went perfectly on a loan transaction. I mean everything. You need to think through the exact steps of what happensfrom the moment a loan file is entered into the system, until it closes and beyond. What fields do you want it to track? Who enters that information? What triggers are set up to remind people to perform certain tasks? For example, in Ellie Mae's Encompass mortgage automation system, milestones and document tracking flags are used to create an accountable flow based upon loan type, dates, forms, approval conditions and customer profiles. Your system can do the same thing. Start by breaking up each process segment: Origination, processing, underwriting, closing, post-closing, shipping, servicing, marketing and customer service. Within each segment, let the people help define the UCE for each segment, then put the entire flow together. Once complete, go back and evaluate the roadblocks. What happens when each one of those steps is missed or circumvented? For example, if the processor doesn't send out the initial client welcome letter, then we incur a delay in getting the insurance information back. What's your fix? When you hit this roadblock, there needs to be a secondary solution to get the client/loan right back on the UCE flow. Missteps like these are what lead to delays and costly increases in customer dissatisfaction. Define these steps with the help of your team, isolate as many roadblocks as possible and establish the corresponding fix and you've just defined the job description for your LOS! Part-time to full-time! So now that you know what you want the LOS to do, how do you actually get it to do that? The answer is through automation. Your LOS is only a piece of software. It is set up to provide you with basic functionality for your shop, but most people use it just that way, as a basic origination and processing tool. Face it, you're not getting the most out of your system, and most of it is because you haven't taken the time to set it up the way you operate. Take a weekend and personalize it! Everyone uses a 1003 for the application. We all know how to fill out a good faith estimate and Regulation Z disclosure. But what makes you different from your competition are the personalized steps in between. When you get your LOS system to fill in these gaps for you, it's the same as taking a part-time employee into hyper drive and not having to pay any extra! The key to effective automation is putting your UCE into your LOS system. This not only allows for you to define and track the loan process more completely, it increases efficiency, saves money and time, and allows for future niche-marketing activities that are only possible through effective database management! For example, if you do three types of loan products in three different states, then you should have nine master loan templates in your LOS systemone for each loan type in each state. There will be different disclosures and forms in each package, but there will also be differences in the letters you send to the clients in those states for those loans. When a loan is originated for a Federal Housing Administration loan in Michigan, the borrower gets a certain personalized introductory letter that is specific to their data set. A construction loan will include a UCE step with communication to the borrower about lien waivers and title company requirements. That would certainly look stupid on a jumbo rate/term refinance! The key is that each one of these steps is programmed into the LOS template, tracked electronically and flagged if it doesn't get done. Remember your last construction loan closing where the lien waivers weren't there? Yeah, that's my point. I know it takes time upfront, but it will save you boatloads of headaches in the long run. Take your UCE and automate each step of the process, as well as each of the components within that process step, and you'll get a lot more bang out of your LOS system in a hurry! Performance reviews Many loan originators and business owners believe that performance reviews are based upon bottom-line returns. Was there improvement that impacted my profits? Well, that's only part of the equation. Successful business owners know that while profits are important, the systemand even more so, the environment that runs that systemis far more important in establishing long-term success. Many successful companies have a bad quarter or two, but are quite successful over time because of the way their system is implemented. It's not only true for the McDonald's or Nike's of the world, but for you as an individual company, as well. Your success is defined by how well you create your personal business system, the execution environment of that system and the delivery based upon the clients expectations. Your LOS is the tracking and delivery system that binds the three together. However, every car has to be tuned up eventually, and your LOS system is no different. Successful performance reviews of your LOS system actually start with the team members who implement the system. When creating your UCE, make sure that your employees have an enormous amount of input and control over the design of their area segments. Not only do they probably know their job better than you, but they will be more involved and excited about the implementation and execution of the UCE that way. They will also be the first to identify and fix problems, since it involved their input from the start. This will also save you from having to tackle little issues and having to personally maintain every aspect of the LOS. I can't tell you how many consulting clients I've had where the biggest obstacle standing in the way of their success was the ownerwho was standing in front of me and who had to control everything. There was nobody to give him a performance review! To conduct a performance review on your LOS, get your team members together once every six months to evaluate your written UCE process and how that process is being implemented within the LOS. Can you eliminate or combine steps? Do you need to add certain tasks or forms? Is the data being collected and tracked correctly? Can we implement effective marketing campaigns and niche-marketing events based upon the LOS structure? Can we track and measure the impact our LOS is having on the customers' experience in dollars and referrals? Only after you've established the role of your LOS system, effectively implemented it into your environment and measured the results can you take a vacation and be sure that your LOS is still working for you full-time while you're gone! Now if you'll excuse me, I've misplaced my lime around here somewhere & Chip Cummings, CMC is president of Northwind Financial Corporation, an international speaker, trainer and consultant to the mortgage industry, and author of "Stop Selling and Start Listening!Marketing Strategies That Create Top Producers." He can be reached at (616) 977-7900 or at www.chipcummings.com.
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