Mortgage lenders face a dilemma while evaluating technological needs: Buy it, or build it?
Particularly in some of the more specialized niches, they're choosing the latter - and in some cases selling their product to peers.
Celia Robinson, president of Mortgage Professionals Inc., Atlanta, discovered there were no good software programs for teaching investor accounting to mortgage lenders. So the 20-year veteran of the mortgage industry decided to develop one.
The result is Mentor, an interactive, multimedia training program for loan servicing.
"Training for investor accounting is complex and not a function that can be learned in the short time offered by seminars," she said. Mentor software provides simulated reconciliation activity at all stages of the accounting learning curve.
On the origination side, where no single computer system reigns, large lenders have taken matters into their own hands. Fleet Mortgage, Bank One, and First Bank in Minneapolis are among those that have relied on internal programmers for an origination system, with varying results.
"In the last three or four years, there has been a trend toward some of the largest lenders' developing systems in-house," said Timothy Liston, president of Associated Software.
Economy isn't the main reason that lenders eschew existing software systems, Mr. Liston said. Instead, many seek flexibility and personalization.
But "not all (software manufacturers) deliver systems that are difficult to customize," Mr. Liston said. He is, admittedly, a biased observer - Associated Software is the manufacturer of Uni-Form, a loan processing system that adapts to both mortgage and consumer lending.
The product can be customized by the end user, without any knowledge of computer programming, he said.
Uni-Form is used by more than 100 different lenders, Mr. Liston said. The product's cost varies from $40,000 to $500,000, depending on the size of the lender.
The popularity of originating loans in the field via laptop computer has spawned a crop of software - and a crop of mortgage technology converts.
"One of our objectives is to get all of our loan officers trained to use technology right at point of sale," said Tim Disbrow, regional vice president of Crossland Mortgage in Salt Lake City.
The company bought the Mobile Loan Office system from Dynatek eight months ago. The software runs about $14,000 for a five-user system, a Dynatek spokesman said.
Crossland Mortgage said the investment is paying off.
"We've gone so far as to do an in-depth cost analysis . . . and we're seeing reduced costs to originate loans. The software has paid for itself," Mr. Disbrow said.
Dynatek, in Orlando, has sold about 3,000 units of its origination software since its development, said Jack D. Luhtanen, the company's president. "We've put together a product that's a complete package," he said. The company is working on integrating imaging capabilities into the software, so on-location loan officers can scan in documents.
For subservicer Wendover Funding, buy or build isn't even an option - there is no software available to address the company's reverse mortgage servicing needs, said Mike Hyman, senior vice president for production.
Reverse mortgages, which allow older homeowners to tap into home equity, pay money out in installments, rather than requiring money to be paid in. Servicers of the loans don't collect, they disperse.
Wendover is in the throes of building the software, he said. Figuring the cost of building an in-house system is an inexact science, he added. "We're expensing these costs, not capitalizing."
But the lack of a plug-in reverse-mortgage servicing software package eventually will work in Wendover's favor, Mr. Hyman said. "Most companies feel that they have to build up a large portfolio (of reverse mortgage loans) before they can justify the cost of developing their own in-house system."
Consequently, they hire Wendover to service their reverse mortgages.
Wendover has purchased some nifty time savers, Mr. Hyman said. The company relies heavily on PhoneDisc software, a CD-ROM equivalent of a nationwide white pages. "Savings on 411 calls alone paid for that in a few months," he said.
Macrofiche, by Macrosoft, also saves time and money, he noted. The imaging software allows employees to access bank statements, expense reports, and loan balances without leaving their desks. "All the lines at the microfiche machine are now gone," Mr. Hyman said.
