I remember watching reruns of Agent 86 Maxwell Smart, wonderfully portrayed by Don Adams, bungle his way through one case of espionage to another. He and Agent 99 would provide great slapstick humor, countless laughs and always manage to save the day even though Smart was clearly anything but. This June Steve Carell and Anne Hathaway will revive both rolls on the big screen. I hope the movie lives up to its TV predecessor.
So, what does this have to do with mortgage technology? In the past the industry has gone through these cyclical downturns but has always bungled through and turned out OK in the end, just like Agents 86 and 99. However, this time around the industry is going to have to take a step back, re-evaluate the business and actually re-think the process. The industry will quite literally have to get smart.
The familiar is comfortable and sometimes it takes an unpleasant happening to move away from the doing it the same old way simply because it’s been done the same old way for the past 20 years. A stagnant anything can’t survive in the long term. In keeping with the teachings of Darwin, the mortgage industry has to evolve.
So, how does this evolution start? Research and education. I had the great pleasure of reading a report done by Mark P. Dangelo, Managing Principal at Innovative Relevance called “Mastering Survival Integration for the Mortgage Industry” and boy was it a good read. And the report does exactly what the title implies.
The deck for the report states: “Covering over 200 processes within eight functional classifications, this detailed sector report provides the framework for sustainable operational improvements that must be made by organizations seeking answers, while incorporating downstream financial implications.” What struck me is the holistic approach the report took to the business by talking about everything a mortgage lender does. When discussing the process, the report doesn’t just talk about processing a loan.
This point is made in an illustration called the Mortgage process wheel, which has FSI/Mortgage Banking at the core, but it’s surrounded by, Marketing and PR, Human Resources, Compliance & Risk, Information Technology, Research & Analytics, Finance & Admin. and Legal. From there the report details the different pressures being placed on the industry and how the process must change. The following chart details some pressures being placed on the process and possible solutions.In summarizing how best lenders can use the report, Mr. Dangelo told me, “You can’t go to the market looking for a solution to suit your process. So, we thought: What are the typical processes. We isolated 205 processes that go into making a mortgage. We built a process framework from there. Once you build the framework you can better understand how to automate.”
The report uses Six Sigma principles and is written in plain English. In talking about the deficiencies in the current process, Mr. Dangelo noted, “You clearly have to understand all the process elements before you make purchase decisions. You need to think holistically and execute discreetly. If we were to look at the relative efficiency of the industry relative to other industries we’re about a four in a scale from one to 10, with 10 being the best. There’s a lot of efficiency to be gained by adopting straight-through processing that we have not achieved.”
Besides, if the mortgage industry doesn’t start re-thinking the process, Washington will have no problem doing it on behalf of lenders. This report provides a framework for the industry to start the process of self introspection. For more on the report go
