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Current LOS Systems Somewhat Lacking

Current loan origination systems score low on digital mortgage functional preparedness is the conclusion of the STRATMOR Insights Report released on Thursday. The release of this report is scheduled to coincide with the opening of Stratmor’s 2017 Technology Insight Survey the last week in March. This survey will include expanded questions on LOS vendor support and lender opinions on cybersecurity.

In preparation for the Survey, STRATMOR Senior Partner Garth Graham offers an analysis of two years of Technology Insights Survey results to assess the readiness of the current loan origination system (LOS) landscape for the coming age of the digital mortgage. He says that today’s originations systems fall short in demands for digital mortgage capabilities. Most Digital Mortgage specific functional capability lacking in current LOSs must be achieved via add-on applications.

In advising clients concerning LOS systems, he said “We work toward implementing specific digital mortgage functional capabilities organized primarily around sales and fulfillment processes. Very few can currently be found in a commercial, off-the-shelf LOS.”

He said that usually there are specialized applications that need to be hooked up to the system. “Where they are currently available, satisfaction levels pale even behind those of LOSs in general.” He added that the effectiveness of any LOS depends on both the system’s functional capabilities and the skill with which the system is deployed.

According to Graham, technology vendors need to carefully consider where they are in the mortgage technology ecosystem and how they will compete in the future. On the other hand, he said that lenders also need to determine their current state of technology and from there, develop their own individual roadmap to the future.

This month’s STRATMOR Insights Report also looks at MortgageSAT borrower satisfaction data to determine how certain practices related to mortgage closings affect levels of borrower satisfaction. The report stated that seemingly minor events can have a significant impact on borrower satisfaction. These include making contact with the borrower prior to closing, and having the closing begin on time as scheduled.

Of the borrowers contacted prior to closing, their satisfaction rate was 93 out of a possible 100. For the approximate eight percent of borrowers not contacted by lenders, satisfaction rates dipped to 61, a 32-point differential.

Likewise, for the 93 percent of borrowers whose closings started on time, overall satisfaction ranked at 92, as compared to a score of 76 for those whose closings started late. 

The STRATMOR Insights Report also looks at data from the results of the 2016 Technology Insight Survey, which show that:

  • 83 percent of smaller lenders ($2 billion and less in originations across all channels) and 50 percent of larger lenders (more than $2 billion) reported using a single, COTS LOS.
  • 67 percent of large lenders currently using proprietary LOS’s intend to move to one or more COTS systems.
  • Approximately 10 percent of lenders indicated no preference for the future configuration of their LOS, perhaps suggesting they’re open to different options as the market changes.

About Author: Sandra Lane

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