Monday, March 31, 2008
Using Zaio's Propertywise Qualified Appraisal product, mortgage brokers can place an order that Zaio will then assign to an independent, pre-screened appraiser. When the appraisal is returned to Zaio, Zaio will review the appraisal, and reconcile the value against automated risk indicators. Once completed, the appraisal will be delivered to the broker along with a Propertywise Seal of Approval, which indicates to the broker and to investors that the appraisal was independently ordered and reviewed.
It's not yet clear what the value of the company's seal of approval will be to the GSEs or New York's attorney general, but at least one lender has already agreed to use the product. GMAC ResCap recently reached an agreement to use Zaio's Propertywise Qualified Appraisal program for certain mortgages purchased through its Homecomings Financial wholesale channel.
Zaio says that GMAC-ResCap worked with the company to create quality control procedures that promote the independence contemplated in the proposed Home Valuation Code of Conduct recently advanced by Fannie Mae and Freddie Mac. No information was included in the release about the GSEs' reaction to the product.
I applaud this effort. First, any institution that is committing funds to the future when there is so much uncertainty about the present is doing what a leader should be doing. Secondly, patronizing a university that has worked so hard to make its courseware available to anyone who wants to learn isn't just doing something good for their own company, they're helping all of us.
Here are some of the questions they will be posing:
“How can every customer be empowered with the knowledge and tools to take better control of their financial futures?”
“How will banking interactions evolve as a customer’s physical and virtual worlds become completely intertwined?”
“How will social networks and mobile platforms transform customers’ banking experiences, making it easier, more convenient, and better integrated with their daily lives?”
Now, for those of you who don't have a few million to spend on illuminating the future, let me make a few predictions about what this new partnership will uncover:
-- back when money was minted into little slivers of precious metal, banking was about counting and keeping deposits safe. Today, it's about information. While banks have done a decent job of giving customers anywhere access to account information, they have done little or nothing to provide other financial information that is critical to the financial well-being of their customers. That will have to change.
-- the bank checking account isn't really a service. At least it's not a service most consumers are eager to purchase. It's not like you're offering them a speedy alternative to fishing cash out of their pockets. We're not using cash anymore. Consumers just need it so their employer has a place to dump their paychecks electronically and so they can get a debit card to buy groceries to feed the kids. Remember that when you're coming up with new account-related fees and hope that the nation's largest employers don't go back to the "company store" model and just offer employees debit cards instead of making HR do all those direct deposits into your mainframes.
-- the ATM is the new branch and the branch is no longer the place people want to do business. Take everything to the hand held device. And about those credit cards, get rid of them. You can use the phone for that, too. In the future, people will expect their bank to travel with them. Get on board.
-- social media websites will be important for institutions that hope to build relationships with customers who believe their banks only see them as account numbers. This will require institutions to provide much more information to their customers and advance experts that customers can believe in and trust, as opposed to brands that are becoming more difficult to define for customers.
-- the metrics banks use to measure customer interactions and overall success will change. Non-traditional competitors will force institutions to market real services to customers who no longer see banks as the only source for the financial services they require. Instead of share-of-wallet (how much of the customer's assets the bank can charge fees against), banks will determine what percentage of the customer's financial success can be attributed to its efforts (share of net worth?). Instead of lifetime value of the customer, it will be lifetime value to the customer.
-- consumers in the future will need a range of on demand services that allows them to make better decisions about their finances where ever they happen to be. If the bank of the future hopes to hold onto the information about the consumer's financial accounts (and that's really all we're talking about now, information about assets and some custodial services), then it will have to begin offering services that actually help its customers make better use of their assets. While the wizards at MIT's media lab will doubtless come up with much better ideas than these, some early iterations might include
- a service that displays the cost of a similar product at other nearby retailers based on a camera phone snapshot
- real time information on the value of a customer's certificate of deposit and 3 places those funds could be sent at the touch of a button for a higher return
- online dashboards that help customers configure incoming electronic payroll deposits to meet savings and investment goals
- an online community of experts that can answer tough financial questions anytime the consumer logs on
Wolters Kluwer Financial Services announced today that its technology would be used by the auto leasing industry. The company will be offering auto dealers, workflow aggregators and lenders new standardized and easily customizable motor vehicle lease agreements in an electronic format. The company will offer its electronic forms in 51 jurisdictions around the country.
Other vendors that have provided doc prep, electronic disclosure or eSignature services are also moving beyond the mortgage arena in search of new clients. eLynx is another firm that has been looking outside of mortgage with success, most notably to auto lenders and insurance companies.
For years, people have lamented the fact that the mortgage industry is the most document-heavy, highly regulated and confusing of all businesses. Those firms that have developed the technologies to tame it are going to be well positioned for success in the future if they are willing to move out of their comfort zones and into other lines of business.
Friday, March 28, 2008
In addition to former executives from Expedia and Hotwire.com, Richard Barton, CEO of Zillow is in the C-suite.
One source cited by TechCrunch suggested that the new offering may have something to do with employment conditions in the market.
It is possible that the company name is a play on "revolving door." There are certainly enough displaced pros from Wall Street and the mortgage industry to make a company some money over the course of the next few years. The company is based in Sausalito, Calif. Any firm hoping to use social networks to help displaced professionals will have to do better than what's already available. For simple job searching, it's hard to do better than LinkedIn if you have a half-way decent network.
One idea that might work would be to provide a bit more transparency to allow job applicants to get a better idea of the viability of the company before they take a job. A glass door. Conjecture. I'll be interested to see what they come up with.
In particular, those firms that rely on technology to aid lenders and servicers in getting transactions complete (compliance checking, doc prep and delivery, e-signature, etc.) are doing fairly well. While their fee per transaction may be much lower than the originator's their costs are also much lower.
Yesterday, DocuSign, Seattle, released news that it has surpassed 8 million e-signatures delivered, more than 70 percent of which were completed during the last 12 months. This echoes what I learned at the recent eLynx IdeaWorks conference in Las Vegas and what Tony Garritano, editor of SourceMedia's Mortgage Technology magazine, said in a recent column.
“During these uncertain economic times, customers are only purchasing technology that offers immediate profitability improvements without up-front capital investments,” said Matthew J. Schiltz, CEO and president of DocuSign. “DocuSign is a perfect fit for companies since we offer immediate, positive impact and because we are a software-as-a-service (SaaS) there is no capital investment required. Our rapid growth is also due to the fact that in uncertain times smart companies embrace transformational technologies like DocuSign.”
MISMO standards and industry-wide support for SOA have made it easier for settlement services companies to offer Web Services to lenders and servicers, saving them the cost of developing the software or delivery infrastructures themselves. These developments, along with tightening margins and increased competition for fewer borrowers using fewer loan programs, have increased adoption of electronic signatures, something vendors have been waiting on for years.
Robert Nilsson, VP of marketing for Cincinnati-based eLynx agreed that eSignatures are finally getting traction. The company offers eSignatures as part of its electronic document delivery offering. "In 2007 alone, we processed over 12 million financial contracts."
eLynx maintains a counter on its Web page that indicates it is currently approaching a milestone of its own, 2 billion electronic pages delivered.
Thursday, March 27, 2008
Under the terms of the new referral agreement, Open Solutions will recommend PowerSite to its clients and prospects. This partnership provides Open Solutions’ clients with another option to choose from when looking for Web-based software tools that can be used to take full advantage of the growing online mortgage channel.
The company's point to surveys that show, in some market segments, as many as one-fourth of all lenders are now originating more than half of their loan volume online.
Open Solutions SVP and chief marketing officer Mike Nicastro says that nearly 50 of the company's LOS clients have already implemented Mortgagebot's PowerSite solution.
ServiceLink itself is a member of the Fidelity National Title Group family of companies.
Behning will handle all development, product management and business analyst efforts for ServiceLink’s technology group. He formerly served as senior vice president for business development for Lenders First Choice. He also previously worked with PNC Financial Corp and was also on the team that developed Gators.
I've heard Chris speak at a number of industry conferences and he's a real asset.
Stephen Massein, formerly with October Research, was recently hired by this comapny to lead its efforts in developing and implementing marketing initiatives and overseeing a brand strategy. I worked with Steve when I was editor of RETI, so I know he's good.
This appears to be a good time for companies that believe they can weather the environment to harvest some experienced executives.
Wednesday, March 26, 2008
Mortgagebot says its search engine is already unique for a number of reasons. First, it's easier. One screen, three data fields and you get search results. Second, consumers are not asked to reveal personal information. Third, the company says the results are more accurate because they pull the data from the On Demand LOS/online lending system they supply to the lenders, Mortgagebot PowerSite.
The new functionality is designed to align Mortgage Marvel with the hyperlocal Internet, according to the company, a concept first popularized by futurist and author Bruce Sterling.
"The difference between the old-fashioned Web and the hyperlocal Web—that’s hyper as in hyperlinked and local as in location—is that the databases of the new Web are stuffed with geographic coordinates. Real positions. Real distances," Sterling told Wired Magazine.
If that's what consumers want, Mortgagebot plans to give it to them by adding functionality to Mortgage Marvel that enables loan seekers to filter rate-search results to display only those Mortgage Marvel lenders that have branches within 5, 15, 25, or 50 miles of a specified ZIP code. Borrowers can also display the locations (address listing and map view) of the 10 closest branches for each lender shown on the comparison table—and the estimated distance to each branch from the specified ZIP code.
I spoke to Mortgagebot's Chief Marketing Officer Dan Welbaum at the recent Mortgage Bankers Association Technology in Mortgage Banking conference in Dallas. He told me that Mortgagebot clients are embracing Mortgage Marvel and it has become a good source of leads for them.
"Our clients report that, on average, same store sales are up 22%," Welbaum said. "And this is in a year that originations are down 15%. It's working."
Welbaum says Mortgagebot added 140 new lenders this year, but did not say how important Mortgage Marvel was to their decision to implement PowerSite. I'm sure it didn't hurt. Lenders are already working harder to find good leads and their disappointment with online lead vendors is growing.
A video overview of Mortgage Marvel is available online.
With BlitzDocs deployed, loans generated from PML are seamlessly dropped into a collaborative e-folder and transformed into electronic documents for underwriting, auditing, transfer and archiving.
"The integration of Xerox’s BlitzDocs with PML has resulted in a paperless initiative that drives greater efficiencies throughout the entire loan lifecycle,” said Gigi Campbell, national sales director, PML.
PriceMyLoan is a proprietary product of Insight Lending Solutions (ILS). Founded in 2002, ILS provides web-based application service for the mortgage lending industry and software as a service (SaaS) to its clients to enhance productivity, reduce IT dependency, and accelerate time-to-value for mortgage companies.
On a personal note: Greg Smith, founder of Advectis and still leading BlitzDocs development, shattered his leg in a skiing accident recently and was unable to speak at the recent MBA Tech show in Dallas. Judson Phillips stepped in and did a fine job, I'm told. Meanwhile, Greg participated in an industry conference call, putting off his next dose of pain medication until the business at hand was concluded, according to buzz in the halls at MBA Tech. Best wishes for a speedy recovery.
Thursday, March 20, 2008
Rifkin has spent much of his career analyzing trends in economic data and trying to determine what they will mean to humans in the future. One of his conclusions is that soon we will leave the era of mass wage labor. His conclusion is based on his identification of trends in two industries, communications and energy.
Rifkin says that any time big changes in communication technology coincide with big changes in the availability of energy, you'll have an industrial revolution. The first one we experienced happened in the early 1800s, another occurred near the beginning of the last century. Soon, says Rifkin, Internet technology will converge with the business of delivering power and we'll experience a third industrial revolution.
He envisions a world where the need to combat climate change coincides with the drive to find more affordable energy than fossil fuel (he says oil will continue to become more expensive--approaching $200 per barrel in the near future). The result will be green buildings that combine solar, geothermal, ocean waves or river current, biomass and wind technologies to produce more energy than they need. Excess energy will be stored using Hydrogen-based fuel-cell technologies or sold back to the energy supplier.
For their part, suppliers will used lessons learned from the World Wide Web to create wide area power transmission networks that will essentially make power a cheap commodity. He mentioned four Southwestern energy companies that are already working on this.
Update: Here is a story about one company apparently moving in this direction.
Building out this infrastructure will be expensive and will constitute the last gasp for the wage slave economy. After that, things will change.
"Every building will become a power plant," he told the audience. "Buildings will go up where renewable energy is plentiful. We'll all be generating power like we generate information today."
He's very passionate about his message and I look forward to reading more of his ideas, but judging by the looks on the faces of some in his audience, I think many were asking themselves one important question: who will finance these buildings and where will those lenders find liquidity?
Considering the rise in investment from Sovereign Wealth Funds and the new proficiencies on the part of middle eastern countries for building new cities, if we're not careful we'll be the wage slaves swinging the hammers and someone else will end up owning the world when the dust clears from Rifkin's third industrial revolution.
Tuesday, March 18, 2008
Wednesday, March 12, 2008
There can be no comparison between an investor underwriting deals via an automated system and one doing it by hand, especially when the investors have little previous experience buying Jumbo loans.
Freddie will also be looking to buy some additional products, including cash-out refis. That could be a one-two punch that allows the smaller GSE to gain some ground on its larger competitor.
Thanks for the tip, Paul.
Monday, March 10, 2008
The problem for Fannie is that all of the new business will have to be underwritten by hand since its automated underwriting system doesn't understand nonconforming product.
Now the industry will see why all of our new technology is being built on Services Oriented Architectures (SOA) and to capitalize on Business Rules Management (BRM). If Desktop Underwriter was a newer tool, Fannie could just plug in any number of third-party AU systems and bounce the deals out for fast, cheap underwriting before making a decision. Instead, the GSE will probably have to hire a staff of outsourced underwriters who will add additional layers of process to the transactions at that same time it piles on the risk of human error, lost paperwork and lots of extra time.
In Fannie's defense, DU (and Freddie's Loan Prospector, for that matter) were developed long before the new technologies were available and helped drive technology development for the entire industry. That's the bleeding edge. Why the GSE didn't plow some of the profits it has realized over the past 5 years into upgrading the technology isn't clear.
I only bring it up to point out that while we may be tired of hearing all the tech acronyms, they really are important.
I am currently working on a feature story that I hope will appear in an upcoming issue of Mortgage Banking about tech firms in this space that may be for sale or in play. I'll be poking around at the Mortgage Banker's Association's Technology in Mortgage Banking conference next week for that and welcome any tips or information you care to share with me (on or off the record). While I expect to find a number of players that wouldn't mind being adopted, I'll be surprised to find SWFs filling too many tables at the mixers.
My feeling is that most tech players, with the possible exception of some brands held by the F companies (Fidelity, First American and Fiserv) are probably not big enough fish to attract the attention of these buyers. I doubt these investors know or understand much about that part of our business and if they take only a precursory look they'll see maturing technologies (in that much of our software hasn't been fully Web-enabled for long and we're not even doing electronic documents on a production scale yet) in a rapidly shrinking market (hundreds of lenders out of business in the past 18 months, and now lenders with extremely low delinquency and default numbers like Thornburg are under the gun) with little capacity to expand into other lines of business. I don't see a lot of foreign funds making that kind of an investment.
The exception, of course, would be China, who would love to have access to technology that would stream US financial data across its dashboards like a heads-up display on its World Domination Machine. But don't get me started.
I expect any parties interested in acquiring these assets will probably come from a competing firm or from a domestic bank. Mortgage lenders are not likely to be buying much these days.
But I don't think it will be the biggest institutions. That group learned a lot from BofA's acquisition of Framework, Tarrytown, NY. Probably mid-tier banks or other tech companies funded by domestic venture capital (of which there is plenty right now). I'll continue to work on the story and let you know what I find.