During the 2011 Mortgage Technology Conference, MT convened its advisory board for a Q&A roundtable discussion about the latest and upcoming trends in the industry, which was published in the December issue of Mortgage Technology.
The following is an excerpt from the discussion of extra content that did not appear in the magazine. To read the full story and much more,
MT: How does a lender’s technology strategy enable its ability to expand its business? Does technology define which lenders are going to be able to succeed in the growth plans?
David Zugheri: As far as M&A, it really doesn’t exist among the nondepositories. M&A goes something like this — Another lender calls me and says, “I lost my warehouse line and I need a place to close loans tomorrow.” I really wouldn’t call that M&A as much as I would call it a train wreck. As far as technology, the acquirer is completely in control. There is no, “we’re going to let you keep your LOS, or your credit and flood vendors.” It’s, “welcome to our shop, this is how we are going to do things together.”
MT: But don’t you have to have those processes in place in order to do a quick expansion?
Zugheri: We consider that organic growth. We’ve received those phone calls, where someone says, “my company’s shutting down in two days and I need a place to close loans.” And what you do is it’s just a normal on-board and systems training. As far as M&A, it just doesn’t exist among the nondepositories. As everybody knows, banks are going and acquiring, but for the nondepositories, it just flat-out does not exist.
MT: What technologies will lenders be interested in 2012, and what is falling out of favor?
Zugheri: Other technology that we hope that we have is that we still wait for e-notes to be the standard. It seems like we’ve taken 10 steps backwards. With robo-signing, everybody’s afraid because they don’t know what could potentially happen if there were a million e-notes out there and some judge would try to test that in some way, shape or form.
So we’re not going to get much pickup out of going out there and being a pioneer and leading the charge. So for our company, we’re no longer going to be on the bleeding edge of that and I’ll bet you dollars to doughnuts that there are a lot of other lenders who are control of the doc prep process who are saying the same thing, that they’re going to wait until all of this robo-signing works itself out.
There have only been about 900 foreclosures on e-notes. Is that enough for us to feel comfortable about doing e-notes on the front end and not having any liability on the back end in case of default?
Tim Anderson: What’s really set that back is MERS and this whole bad press around MERS. If they would have used the e-note registry as a way to counter that, they could have taken a negative and make it a positive. Now’s the chance to say, “You wouldn’t lose the notes and if it were e-signed, you could authenticate who it was who really signed the documents.”
That, with the robo-signing and MERS, is what’s really set everything back. Without MERS, we don’t have somebody to register that electronic note and that asset and that whole thing falls apart. There’s a lot of bad PR out there that’s setting this whole process back.
As for the robo-signing, that was DocX, a company that LPS owned at one time, along with about four companies. And we tried to introduce e-notary because with the technology you can’t sign on behalf of somebody else, you really have to authenticate who’s signing the documents. And the servicers didn’t believe that it was technology that is real. So really, the technology can solve the problem, but there’s this whole negative backlash and everybody just wants to throw people and paper at the process.
Harry Gardner: Also, people don’t understand the difference between the classic MERS and the MERS eRegistry and the fact that they’re two really separate systems. The MERS eRegistry is not having the same struggling or having any issues with publicity. It’s really just the classic MERS that’s fighting all the lawsuits.
To read the first part of the Q&A,
