Mortgage Software As a Service Increases Operational Efficiencies and Profitability

Mortgage Software as a Service (SaaS) offers fully-hosted, Internet-based, on-demand technology that can be used to manage the life-cycle of the loan, from origination through post closing and interim servicing. Additionally, SaaS can provide mortgage lenders with automation on par with that used by Fortune 500 lenders for a small fraction of the cost.

SaaS is a software application delivery model where a software vendor develops a Web-native software application, hosts, and operates (either independently or through a third-party) the application for use by its customers over the Internet. Customers do not pay for owning the software itself, but rather for using it. The software vendor generally manages updates to the software, and can turn various modules on or off depending on an institution's particular need.

SaaS vendors often provide an even higher level of support and service than vendors using the earlier ASP model, in which the application is simply hosted by the vendor who has licensed the program. For example, operating in the SaaS environment, institutions can identify when and how they receive updates for complex processes, such as loan disclosure or compliance updates.

Advanced mortgage software as a service, or mortgage SaaS providers are fully-hosted, Internet-based, on-demand loan systems and can: 

1. Deliver best-of-breed tools;
2. Reduce the need for in-house loan technology support staff, eliminating implementation and training hassles;
3. Cut system costs (in part because they need only pay for modules that are "on" and they won't need additional hardware to support the system); and
4. Help institutions provide high levels of service.

Fully integrated Software-as-a-Service (SaaS) mortgage software solutions that are updated and maintained on secure, redundant servers provide service and performance guarantees that only the largest financial institutions can afford to keep in house. But the beauty of a SaaS system is that institutions with mortgage operations can choose several-or all-of a vendor's available modules.

Ten core mortgage business elements must be fully integrated and automated to create a best practices enterprise mortgage lending system: 

• Marketing: Providing product, service and company information to prospective borrowers;
• Point of sale: Gathering borrower information and delivering an automated response;
• Loan Origination Software: Managing loan, borrower and property data, as well as providing general status reporting, loan calculations, and standard mortgage forms;
• Vendor/contact management: Managing and communicating with providers of external data, such as mortgage insurance, flood determination, appraisals, credit reports, underwriting, title reports, and fraud detection;
• Documents: Generating applications, upfront disclosures, business processes, and closing documents;
• Loan program: Handling interest rate and fee distribution along with program qualifications;
• Automated loan underwriting: Imbedded business rules identify what is required to process and approve loans based on the borrowers credit, income, assets, and property data;
• Loan income/expense tracking: Lenders must have business logic to default and track the appropriate transaction fees, deposits, and third party income/expenses to identify loan level profitability;
• Secondary marketing: Maintaining and reporting investor relationships, tracking income and costs for base price, price adjustments, servicing premiums, and impounds;
• Loan servicing: Tracking payments and the disbursement of interest, impounds and principal reduction;
• Centralized reporting: Handling loan delivery, year-end fee reporting, and Home Mortgage Disclosure Act reporting for loan application disposition;
• Imaging: Capturing and managing data with a complete centralized process, including softcopy delivery to investors, and archiving to meet regulatory compliance mandates.

In short, SaaS helps businesses focus on their core competencies and profit drivers while allowing expert providers to supply the information and technology component. Business process automation outsourcing, SaaS, offers important advantages - primarily technology expertise specialized in mortgage lending processes.

Mortgage banks, Credit Unions, and Community Banks that want to offer mortgage lending services have been, and will continue to be, the "early adopters" of business process automation outsourcing. Although non-depository mortgage banks may have viewed best practice SaaS services as too restrictive to provide a competitive advantage and may have distrusted third-party data management, their existing systems failed to eliminate funding "borderline" loans.

Lionel Urban is a mortgage industry veteran, with more than twenty years of experience in mortgage lending and real estate. Prior to founding PCLender.com, Lionel served as a regional manager for Colorado Federal Savings Bank, where he managed branch loan production, operations, secondary marketing, and compliance.

Lionel is president and founder of PCLender.com, an industry leading enterprise Web-based mortgage software provider. PCLender's mortgage software, InHouse Mortgage, manages every aspect of the loan process, from the mortgage website, online application and loan origination software to post closing and secondary marketing. These diverse experiences have given Lionel extensive knowledge of the mortgage banking industry, operations and all phases of mortgage lending.

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