A growing number of mortgage companies are moving their systems into "the cloud."
This buzzword refers to technology providers that operate software for clients at remote locations, enabling customers to access the system from just about anywhere. Mortgage companies are looking at cloud computing as a way to help them increase efficiency in a down market.
A variety of banking technology vendors are offering such services, including the loan origination software vendor Dorado Corp.
"Dorado has a cloud that supports the lending process from lead to funded loan," said David Parker, vice president of business development. "This allows us to deliver the most robust cloud in the mortgage industry when you consider that it includes e-disclosures, e-mortgage, e-vaulting and over 500 connections."
Dorado has licensed Web services and e-lending software from First American Corp., and is combining it with its own processing and enterprise software to create a cloud-based system to handle mortgages and lending.
First American has an undisclosed financial stake in Dorado and the right to acquire an even larger financial stake later.
Jerry Hoerauf, First American's executive vice president for business development, said he expects cloud computing to become more popular in the mortgage industry.
"We think this type of technology is still in the early adoption phase," he said. "There has been a lot of activity, but if you look over the past five years people were pedaling as fast as they could on the bike they had. They didn't have time to get on a better bike. Now we feel the timing is right."
Industry-watchers speculated that Dorado's move into cloud computing may be coming as a response to growing interest in e-mortgage processing by JPMorgan Chase & Co., Dorado's biggest client.
"I think Chase is motivating this," said Tim Anderson, president of the process automation vendor SigniaDocs. ""There have been rumors that they are interested in e-signing and Dorado would be their partner in doing this. If that's true, and Chase moves forward, that would be huge for the industry. We need a big player to get in the e-mortgage space."
JPMorgan Chase did not return calls.
Dorado's Parker said that "we have customers today that want to make sure we can support where they want to go in the future."
Will cloud computing be a lasting trend? Gabe Minton, chief strategy officer at the business intelligence vendor Motivity Solutions, thinks it has merit. "Cloud computing in general is successful," he said. "Salesforce.com and Google are good examples of cloud computing. Why? You can get everything you need over the cloud. What's attractive about cloud computing is that it's infinitely scalable."
Minton said cloud computing is a good fit for mortgage companies, which tend to have fluctuating needs for processing software.
"Mortgage banks typically are in crunch mode at the end of the month," he said. "So, during that time there's more demand on systems. Instead of buying more servers to accommodate that demand, lenders don't need to worry about that because the cloud will scale and reallocate resources to the department that need" them.
Still, there are concerns about cloud computing. "The cloud concept decouples the applications from the hardware," Minton said. "With the cloud you don't have to worry about IT, but you are beholden to the vendor."
