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Pricing Engines Are a Marketing Tool

SEP 16, 2013 9:53am ET
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There are almost no negative points about product and pricing engines except for the cost to the user for the tool, a leading mortgage technology expert said.

Keven Smith, the president and CEO of Mortgage Builder, said he had a hard time coming up with something that would be considered a con about having a PPE.

Another Mortgage Builder executive, Kelli Himebaugh, corporate vice president, said PPEs keep people up to date about what is happening in the market at that current time. If rates go down, the loan officer has the ability to reach out to his or her customers, thus it helps them to be more competitive in the marketplace.

The engine also lets the loan officer offer a side-by-side comparison of products, allowing the consumer to get an understanding what is being offered, she said.

Earlier this year, Mortgage Builder released LoanXEngine 7.0, its customer relationship management/PPE software product.

The upgrades included redesigned and improved non-qualifying product reporting, including detailed failure to qualify reasons; enhanced mobile device viewing; and greater functionality for third party originators.

Comparisons can be done, not just on rates, but also what they can make on the loan based on servicing-released premium information as well as on guidelines. This last function, Himebaugh said, helps the LO put the borrower in the loan, which in theory anyway, would close the fastest.

She pointed out that the Mortgage Builder product also shows products in the investor’s database that the borrower would not qualify for, so it helps to catch mistakes in data entry.

The CRM component helps the loan officer to work leads and come up with the right program and increase pull-through, Himebaugh added.

To work leads in a purchase environment, she continued, most companies have to provide separate CRM and PPE systems.

The Mortgage Builder product, among other things, allows for marketing campaigns when rates reach a certain point; the LO can also receive instant notification when a borrower is making inquiries.

The LO can take the information, immediately create one or several scenarios and go right back to the customer with an offer, she said. Mortgage insurance is also part of the PPE, because it needs to be calculated in the debt ratio to determine affordability.

Himebaugh noted the more data the loan officer puts into the PPE, the more the system is able to return a product that is likely to fit the borrower’s needs. Less information will return more results, but will also include things the borrower might not qualify for.

While there are still not many product variations yet, there are more investors in the market; among the biggest differentiators is the pricing they are offering to mortgage brokers.

Smith said when Mortgage Builder acquired the former parent of LoanXEngine, LXE Software, late last year, the system only had 60 investors. Today there are over 120 investors. This growth “drives the need even more for having a product and pricing engine.”

Later, he asked rhetorically, “Why aren’t all the loan officers using a PPE?”

Don Kracl, the founder of Mortech and the vice president of its parent company Zillow Mortgage Tools, said it is very important for loan officers to have a PPE.

“When we first started doing this, it was more about comparing rates. Now it is more important because of more of add-ins and adjustments” for things like credit scores and other issues involved in pricing.

It has changed from being a competitive tool to a system that allows for accurate pricing. Kracl noted it is hard for the loan officer to be accurate doing pricing manually when the story keeps changing (Mortech’s system is aimed more at correspondents) during the interview process.

Another complication in today’s market is all the overlays and multiple daily price changes and it is hard for a manual process to keep up with that. For Mortech, the system allows for automated responses to those consumers that use Internet shopping services like Zillow or LendingTree, he added.

“We think it is still important for the loan officer to give the consumer the best information based on the information they have available at the time that they can. And that is what we are all about; trying to provide consumers with the best information available,” Kracl declared.

Mortech’s system covers private MI along with Federal Housing Administration and Veterans Affairs funding fees.

The change in the market is causing more people to shop, Kracl noted. This in turn requires originators to be more accurate with the pricing they put out. “We just think that product and pricing engines, and in particular ours, is the way loan officers will have to do this. Or they are going to be leaving money on the table, they are going to be misquoting, they are going to be upsetting consumers, they are going to miss opportunities.

“And when there are fewer at bats, you need to make the most of every opportunity that you get,” he declared.

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