MortgageOrb recently interviewed JP Kelly, President of OpenClose to learn more about the changes and challenges currently facing LOS providers.
This is the second of a three-part series.
Q: There is a lot of ongoing talk about what truly defines a Software-as-a-Service (SaaS)-based LOS platform. Can you weigh in?
Kelly: By definition, SaaS is a software distribution model in which applications and associated data are centrally hosted by a vendor, typically in the cloud. With SaaS, there is nothing for an organization to install in terms of software applications or data hosting.
As it relates to LOS platforms, once the mortgage industry no longer had an appetite for self-hosted and self-managed applications (which were expensive), had lengthy installs, required significant IT resources, and were onerous to maintain, the use of SaaS terminology became popular among mortgage technology vendors.
Many vendors that claim to be SaaS term their systems "Web-based" or "Web-enabled." This generally translates to there being some sort of an install on the client’s side. A truly SaaS-based LOS platform, however, is 100% accessible via a Web browser - from any computer, anywhere, and without installed software. Web-based/enabled (non-SaaS vendors) must rely on installed applications to extend their applications to the Web, such as Citrix.
There are a lot of LOS platforms in the mortgage industry that do not have a true SaaS model but lay claim to it anyway for the sake of sales and marketing purposes. There aren’t very many true SaaS LOS vendors for lenders to choose from. True SaaS offers faster implementation, reduced costs through little to no upfront investment for new servers and infrastructure, seamless automated updating, virtualization and reduced need for internal support.
Q: How are LOS vendors working with other vendors and lender clients to address the sea of ever-changing compliance rules and regulations in today’s highly fluid marketplace?
Kelly: It’s very hard for Loan Origination System vendors that developed an end-end-end platform using different code bases to produce a seamless workflow and offer lenders full control over their data, and hence compliance. Once you have too many code types, databases and/or integrations involved you’re going to encounter issues. When it comes to compliance in today’s market, it’s like a mish-mash of poorly paired food groups and wrong ingredients - a recipe for disaster.
An end-to-end LOS vendor has the ability to better control data across a seamless workflow. At our company, we developed automated compliance monitoring functionality. This enables us to track things such as, for example, potential ability-to-repay/qualified mortgage (ATR/QM) compliance issues where we provide instant change of circumstance notifications to our clients. With the best-of-breed approach, you often have a lot of chefs in the kitchen all doing things a bit differently. Our approach is streamlined compliance monitoring across our clients’ specific workflows within our LOS.