Thursday, January 26, 2006

TALX: Helping lenders streamline

Having been a journalist focusing on technology for so long, I always think of it first when the goal is to streamline operations. But increasingly, lenders are finding that the right outsourcer can be a great solution that requires a much lower investment.

A case in point can be found in St. Louis-based TALX, a provider of payroll-related and human resources services. The company provides automated employment and income verification via The Work Number and unemployment tax management via its UC eXpress.

The company recently reported 54 percent growth in third-quarter earnings from continuing operations to $7.4 million from the year-ago $4.8 million.

Revenues from The Work Number, an employment verification service used by many lenders during the origination process, rose 41 percent, and revenues for the tax management services business increased 27 percent from year-ago levels.

VOE/VOI may be a small part of the mortgage transaction, but many lenders are finding it expedient to outsource it and TALX is finding it profitable to do it.

We recently spoke with Steve Kropper, a consultant for Equinox, for our Executive Podcasts program. He told us how lenders intent on outsourcing are starting small, sending out non-mission-critical processes before delving deeper into outsourced solutions. TALX is one company that has capitalized on that trend.

Monday, January 23, 2006

QuestSoft: Forms alliance with Harland

Actually, QuestSoft has formed an additional alliance with Harland Financial Solutions, according to one of the company's recent press releases.

The Laguna Hills, Calif.-based company reports that a new interface combines QuestSoft's HMDA and CRA RELIEF with from Harland.

This interface enables customers to seamlessly transfer data, automating the compliance process for regulations governing both the Home Mortgage Disclosure Act (HMDA) and Community Reinvestment Act (CRA). Users of can utilize the integrated platform to originate loans and manage borrower data more efficiently, while checking the compliance status of loans against the latest HMDA and CRA requirements. The interface also increases efficiency and profitability for mortgage lenders by decreasing the time needed to make and close loans.

"We formed our alliance with QuestSoft to offer customers a tool for simplifying their HMDA and CRA compliance processes," said Bob DeLay, director, Lending Systems Product Development for Harland Financial Solutions. "This integration helps meet lenders' demands for an enhanced level of compliance, which enables staff to maintain their focus on boosting profitability." is a browser-based loan and deposit account origination suite. Its interface with QuestSoft allows users to instantly import names, property addresses, and up-to-date HMDA data. Users may create more than 30 graphically detailed analysis reports while automatically checking and correcting dozens of common HMDA errors. The integrated solution provides a faster reporting process, which could save users up to 90 percent of the time it takes to manually prepare HMDA reports.

eLynx: Adds new executives

eLynx, Cincinnati, has expanded its executive staff with the addition of two top people. Scott Carstens has joined the company as Chief Financial Officer and Alexander Pozin comes aboard as Director of Product Marketing.

The firm is a leading provider of secure document delivery and business process management Web services for the financial services industry. According to the company, these new execs will help position the company to move into additional vertical markets with existing and new products including general financial services, auto finance, consumer lending and insurance. eLynx has been working on moving into new markets for some time now with some success.

Carstens comes to eLynx as a proven business leader with various finance, accounting, merger and acquisition, planning, treasury and sales roles with global organizations and start-up information technology companies. Previously, he worked for Dayton-based NCR Corp, Cincinnati-based Convergys Corp., Cleveland-based OfficeMax, Inc., Cleveland-based TRW Inc., San Francisco-based Oracle Corp. and San Francisco-based Siebel Systems.

Pozin will develop market segment and product marketing strategies, product marketing communications plans, and internal and external positioning and launch activities. He has worked in product marketing management in the largest software business unit of a major electronic content management (ECM) vendor, negotiating enterprise software deals for a Fortune 500 organization and participating in enterprise software integration and consulting projects within Fortune 500 customers. Prior to joining eLynx, Pozin worked for Waterloo, Ontario-based Open Text Corp., as a product marketing manager, with Seattle-based Washington Mutual in strategic sourcing and with New York-based Deloitte & Touche in consulting.

"Scott Carstens and Alexander Pozin have gained invaluable experience during their tenure within the information technology and financial services industries," said Phil Huff, president and CEO of eLynx, Ltd. "As we continue to experience steady growth in providing critical services to financial institutions throughout North America, I am confident their impressive leadership, operational, and analytical skills will continue to solidify eLynx as a leader in the industry."

IMX: Long-awaited payday from LendingTree

You can develop a startling new technology, but can you defend it in the marketplace? This has been a particularly important question for developers of Web-based technology. In our industry, it was a real question for the original investors of IMX. According to a press release issued by the company today, that question -- at least for IMX -- has been answered.

A jury has awarded the Houston-based company $5,794,400 in damages after deciding that LendingTree LLC willfully infringed upon its intellectual property rights. IMX owns a patent that provides an Internet-accessible, interactive, real-time network whereby borrowers and lenders exchange information in the pursuit of securing a loan.

"We are very pleased with the verdict," said Michele Buschman, acting CEO of IMX. "We've maintained all along that LendingTree infringes this patent."

There is no mention of the decision on the LendingTree site, but the company does point out there that "LendingTree technology and processes are patented under US Patent Nos. 6,385,594 and 6,611,816. "

This case reminds us that lenders must take care to not only choose technology that works from companies they believe will be around long enough to support it, but they must also take care to ensure that the tools they invest in are actually owned by the vendors that offer them. This isn't an issue with LendingTree, as the firm is little more than a lead generation site for lenders. But when it comes to a decision between Web-based loan origination systems, these issues must be considered.

Thursday, January 12, 2006

Feedback: Dangelo comments on 'babble

The following comment was received from international business principal, advisor, and author Mark P. Dangelo in regard to a recent post on Mortgage Banking magazines expanded technology coverage.

The challenge has been and continues to be about real and measured business benefits. The use of technology terms and marketing “euphuisms” has been around since the early days of the mainframe (believe it or not nearly 60 years). Additionally, the practical and real-world usage and integration of software into the millions of lines of code resident in any one given organization (probably approaching trillions today) is the real measure of success for a vendor, a customer, and a reviewer/reporter.

Failure to speak with customers on their usage, perceptions, and expense of deployment and maintenance is just as “heinous” as claiming they have techno-babble in their marketing literature. As a CEO bluntly put it to me 15 years ago, “it’s about the numbers; it’s always about the numbers!” It’s time our industry and publications takes stock in more than “cursory” reviews. It is notable that the MB Tech article begins to take a critical eye on vendors and their claims – that’s only the toe in the water.

The need for independent validation and verification has come and is just waiting for someone/some organization with the credibility and forum to make it work. Without this, the “justification trips” to the corner offices of the CFO or CEO for investment will continue to be an “art” and not a science.

Wednesday, January 11, 2006

Trendwatch: More technology in the news

The January issue of Mortgage Banking, the magazine of real estate finance put out by the Mortgage Bankers Association, features a new section. MB Tech is the publication's quarterly mortgage technology report. The first one is well worth checking out.

Of particular interest if the Technobabble column. Of the sales material provided by one unmaned LOS manufacturer at a recent conference, the editors write:

"Clearly, this is an energetic company with talented people, but we found too many empty promises in the sales literature and believe it or not -- some technobabble."
When the technology firm asserted that its software is "suited for the individual broker, yet meeting the needs of the biggest banks," the editors sniffed "This is simply impossible."

With more firms investigating SOA-based architectures and building software that calls out to modules as they are required by the user, I wonder how many tech developers would agree with MB Tech? Feel free to comment below.

Whether you agree with the editors or not, technology is only going to be more important in the days ahead. The industry needs this type of content. I'm glad to see MBA stepping up to provide it.

On, and be advised, MB Tech is on the lookout for more technobable, so you might want to have another look at your marketing collateral.

Tuesday, January 10, 2006

Idea: Get your customers to refer business

Alright, it's not a new idea, but it is one that has proven difficult for many in the mortgage space to implement effectively. Part of that is because most folks who get a mortgage aren't all that pleased by the time they reach the end of the convoluted process. Another reason is that RESPA and the new RESPA Police Force are just too scary for many lenders.

Faisal Qureshi is not afraid of RESPA. He recently founded Tell-A-Pal, a service he says simplifies referral marketing by making it easy for businesses and professionals to reward their existing customers for referring new customers. Users create a personalized web page that their customers and other contacts can use to send them referrals. When someone sends a successful referral, the business rewards them. Tell-A-Pal makes its fee through a transaction charge for every referral that it receives through the system.

I asked Qureshi how federal legislation would impact his business. This is what he said:
Yes, we know about the RESPA regulations quite well. Specifically, section 8 which pertains to the anti-kickback provision. Unfortuantely, the RESPA rules are not entirely clear in all situations. We have contacted the RESPA folks to try clear up the confusion and hopefully get a clear answer. Like many things, there is a lot of gray area around what's permissible and what's not and it really boils down to interpretation. Some mortgage brokers don't see an issue with it (since there's nothing in RESPA that clearly says you can't give a "thank you" reward for a new client to an existing client). Others might think differently since RESPA doesn't clearly say it is permissible. It really boils down to interpretation. However, we should keep in mind that many (if not most) brokers thank existing clients for referring new clients today (albeit not through a formal program). And in the context of Tell-A-Pal a “referral” is really a “lead”. Also, the RESPA regulations
were put into place to prevent "settlement agents" like title companies, from striking backdoor deal with agents at the expense of the customer.

Having said all that, we at Tell-A-Pal offer our service to anyone in any industry or market. If there are areas where there are regulations around the payment of referral fees (medical profession is another example), it's up to the people in those areas to make sure they comply with them. It would be hard for us to focus on building a product that created value if we had to indemnify all Tell-A-Pal users from legal issues pertinent to their profession. I hope that answers your question.

Whether you believe formalized systems, like that offered by Tell-A-Pal, are safe for your business or not, having some kind of system for capitalizing on the relationships you've already made is important. Since Tell-A-Pal doesn't tell its users what kind of reward they must offer their existing customers, but rather simply provides the technology to effectively request and track the referrals, it could be a solution worth looking into.

Monday, January 09, 2006

Trendwatch: Who owns the customer

Everyone likes to think they are in control of the real estate transaction. But who really owns the customer?

If anyone knows, it would be Steve Kropper. He founded Domania a few years back and started helping big lenders stave portfolio runoff by providing home pricing data to consumers already in their databases. That company is now owned by LendingTree, a firm that profits from portfolio churning and isn't in the news much anymore.

But Kropper is still hard at work. Today, he is a top executive with Equinox, an international outsourcing firm owned by i-flex solutions. He has some definite thoughts on the customer ownership problem and captured them recently in a podcast that is featured on his parent company's webpage.

Thursday, January 05, 2006

Trendwatch: Learning about emerging markets

Everyone loves an emerging market. That’s where the business will come from in the future, we’re told. Of course, savvy marketers know that business doesn’t usually come; you have to go after it. That’s why I’m impressed with the work Freddie Mac has been doing in this area.

Recently, the company released a new report based on 30 focus groups it conducted with nearly 300 Chinese, Korean, Vietnamese, Asian Indian and Filipino immigrants; American-born Asian consumers; and Asian real estate professionals to gain a better understanding of the cultural norms and expectations of Asian first-time homebuyers.

Asians represent the second fastest growing minority population in the United States, and many of these immigrant households will become homeowners in the coming decades.

Homeward Bound: An In-depth Look at Asian Homebuyers in the United States is available now on Freddie's website.

According to Freddie Mac, the key findings include:
  • the need to feel financially ready, stable and secure before they can consider buying a home;
  • an aversion to debt and the need to determine the most cost-conscious financing package; and
  • a lack of knowledge about the homebuying process.

The focus groups uncovered certain cultural norms, beliefs and behaviors associated with Asians that affect their feelings of readiness to purchase a home. These factors may delay Asian consumers’ timeline for buying a home by years, and may discourage eligible low- to moderate-income buyers from entering the market altogether. If they feel they don’t understand the process, people in this ethnic group will not approach the transaction.

So how do you get information into the hands of these future homebuyers? A majority of participants, especially fluent English-speakers, said they use the Internet to search for real estate agents, properties or interest rates. Other sources of information include in-language newspapers and fliers that are commonly distributed in local, ethnic supermarkets and stores. Some participants said they get information from their banks.

It may also be useful to recall that many of the Pacific Rim counties are more advanced than the U.S. when it comes to consumer electronics. Expect many of these folks to be carrying portable MP3 players and subscribing to podcasts.

Wednesday, January 04, 2006

Mindbox: Bought by space technology firm

In my years as a journalist covering technology for financial services, I’ve heard more than one company claim to have a team of "rocket scientists" in the basement developing their products. Some of the companies I’ve covered actually do have such people. I don’t recall MindBox ever making such a claim, but they could certainly do so now.

MacDonald, Dettwiler and Associates Ltd. calls itself a provider of essential information services. It has recently signed contracts to provide a space station berthing solution to Japan, a Mars-based meteorological information station to the Canadian Space Agency and a satellite surveillance system to the U.S. military. Definitely rocket scientists.

But they are serious about providing information to U.S. financial services businesses, as well. Earlier this week, the company announced a strategic expansion in the industry, highlighting its recent acquisition of MindBox. MDA already owns Marshall & Swift/Boeckh (MSB) and DataQuick.

MDA now has the pieces to create a compelling offering. Both MSB and DataQuick are information providers (MSB provides building cost information and residential and commercial property valuation while DataQuick provides property information on more than 87 million properties). MindBox provides the brain through its AI-based BRM solution.

How is the MindBox artificial intelligence different from the other decisioning engines on the market? I’m sure they’d be happy to tell you. The big difference I see is that the company now has access to a lot more data to crunch through its engine and access to the insurance market, which will provide a steady stream of cash as the company continues to pound away at the U.S. mortgage market.

Tuesday, January 03, 2006

Idea: Get organized now for a better 2006

It's that time of year again. I resolve to get better organized. I am one of millions who resolve to accomplish this every year. Perhaps we're making it too complicated. An excellent article on the subject appeared today in the Secret! University Newsletter.

Tip 1 – Channel “Dr. Phil” One of Dr. Phil’s favorite phrases is: “How’s that workin’ for ya?” Realize that what works for others may not work for you. Before you attempt to “get organized,” take a look around. Ask yourself what’s working and keep doing it, no matter how strange it seems to others.

There are three more tips in the article. Check it out.

Secret! University is the brainchild of Peter Samuel Cugno. He is also a principal with America's Money Center, a national mortgage lending operation. Secret! University was started as a new division in the Fall of 2002 to help 'Educate the Mortgage Professional' via a variety of techniques and venues that fit today's fast moving consumer residential real estate mortgage industry, according to the firm's website. Find out more on the company's website.

Monday, January 02, 2006

Portellus: Leveraging eastern Europe in '06

Outsourcing has been a big story over the past few years, as lenders prepare for lower volumes and look to cut back on human resource overhead. Technology companies have been outsourcing for some time now.

We most often hear of tech firms leveraging programming resources in India, but there are a number of other places in the world where good technologists can be found. Northern Ireland has been making a push into the financial services world over the past couple of years.

Portellus, a mortgage technology firm based in Irvine, Ca., plans to leverage resources in eastern Europe this year. The company says it got some traction last year.

Portellus bolstered its existing staff by hiring software developers, business analysts, implementation managers, quality assurance specialists, support staff and sales executives. The company brought on board 31 new hires, bringing the firm’s total headcount to 96 full-time employees. Earlier this year, Portellus moved its U.S. operations to a state-of-the art facility in Irvine, Calif. to accommodate its anticipated growth.

The company also expanded its eastern European office by moving to a larger facility to prepare for next year’s projected growth, and to continue to recruit top-notch European software developers.

“Portellus’ growth is the direct result of the marketplace being ripe and ready to take advantage of the company’s highly flexible and scalable service-oriented Enterprise Solutions Framework (ESF), Enterprise Rules Management (ERM) solution and Loan Origination System (LOS),” said John Le, CEO of Portellus. “These next-generation solutions have attracted the attention of forward-thinking companies, who are proactively preparing to compete in what is becoming a hyper-competitive business landscape.”
The company says it won't be telling the industry exactly who it is working for until later in the first quarter, but sources inside the company are optimistic that this will shape up to be a good year.