A candid assessment of the anticipated value of SaaS and the actual worth.
Today’s SaaS solutions are coming up short in numerous ways. Once touted as the most economical and efficient way to utilize an LOS system, SaaS solutions are showing their real value and it’s not what was expected.
Some of the bigger issues rapidly being exposed are:
Operational efficiency – The number being projected by the primary SaaS product is approximately 1- 1.5 closed loans per FTE per month.
MortgageFlex customers are experiencing 3 - 3.5 closed loans per FTE, per month. A 200% improvement, that expands capacity without growing staff thus increasing revenue per closed loan.
Basic monthly cost – Most of the SaaS products set minimums based on your FTE count, not loan volumes. Consequently, when your volume reduces, your expense may or may not reduce accordingly. Keep in mind, you need more FTEs when only 1.5 loans are closed per month. The more FTEs the higher the minimums. With MortgageFlex, the minimums are low because our technology is more efficient and offers better utilization.
Cost savings per loan is a myth – The cost savings per loan is not related to any shared technology benchmark. For all anyone knows, the savings are compared to a 100% manual process.
No true database to support the dynamic loan origination process - Lack of a true system of record supported by a normalized SQL DB - this may not be apparent to potential new customers but to users of SaaS systems it affects them daily. In today’s world, every data change to a loan should be captured. With some systems, if a loan needs to returned to a prior status (I.E.- a counter offer is required and the loan is in underwriting and the loan is sent back to the Loan Officer status to rework the loan) it causes a loss of historical status data.
Because of the flat file structure, it cannot follow this process without a loss of the prior status data.
Restricted reporting capabilities - Access to data via reports or extracts is very limited. In a flat file structure world, Lenders struggle mightily to obtain and write reports from data that should be readily available.
Single-threaded loan access per browser session -In a modern loan manufacturing process, many things can and should be happening simultaneously. Preventing users from having two loans up at the same time or having two users work on different portions of a loan is archaic and goes against true, task-based workflow automation.
Substandard SDK abilities - SDKs that limit the number of new data fields and poor system architecture cause new lender-added custom screens to have subpar performance. Today’s lenders need robust tools to support needs that are particular to their business models. Limiting what they can do or giving them tools that cause system performance issues is simply not acceptable.
Future proof compliance - TRID required LOS vendors to either write new functionality from the ground up or take short cuts and use their current GFE functions. Most of the SaaS solution providers took the short route. Talk with industry experts such as the document providers and ask them what LOS vendors did it right.
Template-based loan programs and fees is limiting and error prone - Relying upon users to select the proper templates for loan programs and Loan Estimates is time-consuming and prone to user errors. Today’s lenders need systems with rules-based products and fees to eliminate the high overhead of user errors and template maintenance. It also allows the lenders to impose their compliance processes throughout the loan process with both hard and soft stops without having to running third party vendor services, such as Mavent. The template approach also lowers the number of loans per employee and has a negative impact on the Lender’s ROI.
LoanQuest has interactive historical income worksheets that populate the 1003 and 1008, throughout the process. The system allows each user (LO, Processor, UW) to complete and have the system store and update.
Loss of valued vendor partnerships - Lenders all have partners that help make them successful. Some LOS vendors will try to force their preferred vendors on new customers because they are being paid royalty fees per loan or they own that particular vendor.
Not so speedy - We have observed speed issues with lenders who have added anything to their base systems. Lender added fields or screens had issues with latency. Screen turn times and responsiveness are impacted by general internet traffic.
There are many other things to consider when selecting a SaaS offering. Most importantly, who is their cloud provider or do they have their own data center? Another consideration is your environment - Do you have your own installation of the software or are you sharing with other lenders? Does that limit your ability to prepare and test for new software and compliance updates?
Vendor-owned data centers could be problematic and forthright due diligence is a necessity. Ask the hard questions -
MortgageFlex uses Microsoft Azure as our cloud-provider and each customer has their own software instance with 24/7 access. We partner with industry security experts so you are assured the best, most secure environment available.
SaaS systems offer no ability to differentiate yourself from your competitors. How can it when everyone is using exactly the same technology?