The days of debating the best-of-breed approach where a lender integrates several different best-in-class providers vs. the end-to-end approach where one system does everything are over. Lenders have spoken. They want everything to happen in one system, but that doesn’t necessarily mean they endorse the end-to-end philosophy. A new debate has emerged.
At the MBA Secondary Market Show in Boston last week I talked with a lot of people. However, one conversation I had with Terry King, group chairman of document preparation vendor MRG Document Technologies, stood out for me. He argued that there is still a place for best-in-class providers to survive and thrive despite the fact that lenders prefer everything to happen in one system of record.
Terry argued that technology has evolved to the point where integrations can be more seamless. It used to be that an integration was just about passing the user, sometimes with a bit of data in hand, to another system. Now integrations can be so tightly coupled that the data can flow from system to system without the user ever knowing that they left their LOS.
It’s perfect! It’s ideal! Technology creates an end-to-end experience without the lender having to give up on quality because let’s face it there is no end-to-end system that does everything and does it well. This way, lenders can keep the core system they’re happy with and demand these tight integrations with their preferred partners so they can still deal with one LOS, another pricing vendor, another AU vendor, another imaging vendor, etc. and yet their loan officers never have to leave the core LOS.
A good example of this in action is the integration between MRG and Lydian Data Services that was announced at MBA Secondary. The alliance enables MRG to extend its Miracle document preparation system to Lydian Data Services’ origination fulfillment center customers, who use Lydian’s outsource capabilities to supplement or replace their own internal processes, thereby controlling fixed costs while maintaining or raising output quality. Through a custom interface created by MRG, Lydian Data Services’ customers now have immediate access to MRG’s Miracle up-front and interim disclosures and closing documentation through the Lydian Exchange Network, Lydian’s networking platform uniting lenders and industry service providers.This alliance comes at an especially appropriate time, according to Brian K. Fitzpatrick, executive vice president of Lydian Data Services. “Right now, nothing is more important than loan quality and investor confidence,” he said. “Our view is that outsourcing the fulfillment of loans to Lydian is not only about reducing the internal fixed costs associated with processing, closing and delivering loans; but also about enterprise risk management and setting controls that drive a best practices-based, standardized, repeatable process. Together, Lydian and MRG deliver the process and compliant documents our clients need to produce high quality, investment grade assets.”
Make no mistake, while this is a good example, there are literally hundreds of others that I could mention that I’ve been informed about over the years. Another such tight integration that I thought was particularly relevant today that I think is worth a short mention is the integration between Ellie Mae’s Encompass and ComplianceEase. This one stands out because there’s an increased need to be compliant and because of how it’s delivered in that Encompass users get a pop-up on their screen for free that provides a quick snapshot on the loan. If there are problems the originator can click and get a full report for a fee. Talk about everything happening in one system.
Just thinking aloud here, but if I’m a lender, and I can get such a tight integration whereby I never have to leave the LOS why would I settle for an end-to-end system that may be good in some areas but not in others? Let the debate begin.
