Gabe Minton is the chief strategy office of Motivity Solutions. Prior to launching Motivity Solutions, the founders started, grew, and eventually sold Watermark Financial Partners, a banking company with annual closings of over 12,000 loans. Watermark was the 7th largest FHA lender in the country from 2003 through 2004. Its success is credited to their custom built technology platform, something Motivity is doing for other firms today.

For this episode of In This Corner, Minton discusses how much technology has changed during the financial crisis, and why upgrading an existing system beats replacing the whole thing.

In the – hopefully – wake of the credit crisis, at what intensity is the mortgage industry ramping up efforts to simplify businesses through technology?

There is an ever consistent drive to simplify business through technology. This mission has not changed during all of the tumult over the last two years. What has changed is that there is a lot less flexibility in product choice now, mostly government and conforming products, and regulatory compliance has dramatically increased. This has led to a strong need for increased automation and exception handling by existing systems particularly in originating loans.

The new RESPA compliance requirements and HVCC are examples. Lenders are thinking outside the box to be able to augment their processes and procedures to handle these requirements. Corporate executives are always looking for more ways to simplify and be more efficient in business, and they drive their teams to deliver on this objective. Deployed correctly, technology can be a very cost effective and valuable way to simplify their business – which is something that we strive to provide at Motivity Solutions.

How important is it to find a way to utilize a customer's system rather than transplanting a new one in?

Transplanting or replacing a system in a lender’s shop is extremely time consuming and expensive. There are times to make the decision to replace a system, such as when an ailing system is no longer supported and there is no way to obtain source code to support it yourself, or simply that a system does not work for what it was intended to do. However, if it is possible to surround and supplement your existing systems, while augmenting and improving functionality, this can be a very attractive option.

Software and service providers are getting very creative about providing multiple options to fill gaps in existing systems, either by acquiring additional functionality, building it, or providing flexible means by which to connect and utilize their system such that it can fit between other applications in a lender's workflow.

How much have those systems changed?

Largely, the systems used before the credit crisis are the same systems in use today. Loan origination and point of sale systems, servicing systems, secondary and hedging systems, and Microsoft Office were in use before and are still in use today. There are many of these systems that are antiquated and outdated, which is perhaps why there has been a drive recently by lenders to update and/or replace their origination platforms as an example. Again, it is important to point out that there are multiple options. If your system’s underlying data structures and logic are sound, we have found that we can augment and simplify utilizing our technology including new and innovative graphical interfaces and features, additional workflow and business rules, and layering this on top of the older system.

If researched and implemented correctly, these options can save a lot of capital.

So, we covered the systems. How about data? One month foreclosures are up, the next they're down. The markets are extremely volatile right now. How important is real-time data for these companies?

Real-time is important for the right application. Foreclosures might not be the best example because they are so slow to develop over time and can fairly easily be tracked, but a better example could be hedging data and systems which are tied very closely to market movements and because the entire stock market is very volatile (witness the VIX and related indices and the 1,000 point swing in the Dow last week) there has been a drive to make these systems (and spreadsheets) update more frequently if not in real-time. Locks are another good example. For these types of systems we have experienced that as close to real-time updates as possible helps lenders make better decisions with actionable information.

Often, the data is there, it is just not accessible. A good strategy to move you towards real-time is to implement on-demand dashboard technology on top of your reporting databases, instead of weekly Excel reports. In this way, the dashboard can give you a graphical “near real time” view of the data you are watching, because the report data structures are often updated every hour, every 5 min, etc. from the systems of record.