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Using A Lending Platform In The Cloud To Serve Your Members Jorge Sauri Chief Technology Officer Mortgage
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Using A Lending Platform In The CloudTo Serve Your Members
Jorge SauriChief Technology OfficerMortgage [email protected]
Session Goalso Understanding Mortgage Market Conditions.
We’ll take a look at the current mortgage banking environment and why it is a good time for credit unions to grow their real estate lending presence.
o Learn the basics behind Cloud Computing.Find out how the cloud computing works and why your credit union software platforms need to be full web enabled and run from a cloud.
o Discover the benefits of using a Cloud based lending platform.Learn how to improve your members lending experience, manage regulatory compliance and achieve positive return-on-investment by using lending technology built for the Cloud.
Part 1: Mortgage Market Conditions
The Residential Mortgage Market – Growth & Opportunity
o Mortgage Bankers Association early forecasts for 2012 were under $1 trillion in residential home mortgages; September 2012 forecasts now put it over $1.4 trillion and continuing to exceed $1 trillion in 2013.
Jan 2011 Forecast
Sep 2012 Forecast
0.000.200.400.600.801.001.201.401.60
2012 Total Orig-inations
Purchases
Refinances
The Residential Mortgage Market – Growth & Opportunity
o Nationwide home values increased 4.6% in Aug 2012 as compared to August 2011 – biggest increase in 6 years.
Aug-12Jan-12Jan-11Jan-10Jan-09Jan-08
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
Home Price Index Increase / DecreaseCoreLogic Sep 2012
The Residential Mortgage Market – Growth & Opportunity
o Historic low rates with 30 year fixed around 3.5% and 15 year under 3%, refinances continue to boom and purchases are on the rise.
Credit Unions and The Residential Mortgage Market
o Credit unions originated $56 billion in residential mortgage loans in the first 6 months of 2012. This represents about 1/3 of credit union total loan origination and less than 8% of all residential mortgage loans in the U.S. So there is opportunity for more growth!
Credit Unions and The Residential Mortgage Market
o Credit unions sell just over ½ of the mortgage loans on the secondary market. However, studies show that institutions which sell residential mortgage loans see greater income and profits with 257 basis point gains in Q2 2012.
o MBA reports that profits on residential mortgage lending rose from $1,654 in Q1 2012 up to $2,152 in Q2 2012.
o According to the American Customer Satisfaction Survey (ACSI) survey last year, members are more satisfied then ever before with credit unions, as the industry’s score soars 8.7% to 87 (on a scale of 0 to 100)—the highest score ever reached by any of ACSI’s 47 industries.
o In just one year, credit unions have tripled their ACSI lead over banks.
Future Challenges in Mortgage Banking
o The industry is going through unprecedented changes with the ongoing implementation of Dodd-Frank and the establishment of CFPB and future GSE reform.
o While CFPB does not have direct oversight over most credit unions, the credit union industry need to follow the rules established by the CFPB regarding financing.
o TILA modifications (new APR calcs), RESPA reform (new documents), SAFE Act (licensing of originators), Risk Retention (limits on loan sales) all will require credit unions to have leading edge technology to stay compliant.
Summary on Mortgage Market Conditions
o Forecasts and analysis show that real estate and residential financing is making a rebound.
o Mortgage Banking is profitable when done properly.
o Credit Unions have room to grow with greater consumer confidence and current low market share.
o Regulatory change will present challenges that can be overcome with proper flexible and compliant technology.
Part 2: Cloud Computing
What is Cloud Computing?
o Cloud computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid. In other words, Cloud computing refers to anything that involves delivering hosted services over the internet and encompasses any subscription-based or pay-by-use service that, in real time, extends IT’s existing capabilities.
What is Cloud Computing?
What is Cloud Computing?
o Cloud computing is where entire businesses and thousands of employees will run their computer tools as online rented products. All of the processing work and file saving will be done "in the cloud" of the Internet, and the users will plug into that cloud every day to do their computer work.
What is Cloud Computing?
o The primary benefit of cloud computing is reduced cost for everyone involved. Software vendors do not have to spend thousands of hours supporting users over the phone... they would simply maintain and repair a single central copy of the product online. Conversely, users wouldn't have to shell out the large up-front costs of fully purchasing word processing, spreadsheet, or other end user products. Users would instead pay nominal rental fees to access the large central copy.
What Cloud Computing is Not?
o Cloud computing is not your corporate data center. If you own the infrastructure. It's your network, your hardware, your infrastructure.
o Cloud computing is not what you do at a datacenter that you contract with. Whether that be a colocation datacenter or a managed hosting datacenter. If you have to specify that hardware you want to use, if you direct the procurement activity, it's not cloud computing. That's either colocation or managed hosting - respectively.
Examples of Cloud Computing in Your Everyday Life
o Email on the go – Google / Yahoo
o Local Data Storage - Data stored on your home or business computer suffers from many of the samerestrictions as email and, as with email, the cloud offers a solution. Storing your MP3 s, video, photos ′and documents online instead of at home gives you the freedom to access them wherever you can find the means to get online.
Examples of Cloud Computing in Your Everyday Life
o Collaboration - On occasion you may find yourself in need of the collaboration with your peers. Downloading files onto flash memory, emailing documents to friends or family or colleagues is inefficient and time consuming. Last year Google launched a service that allowed groups of people to work on the same document, idea or proposal in real time or whenever convenient to each participant.
o Mobility is the new internet – Books, Music and Wallet are becoming software
Part 3: Using A Cloud Based Lending Platform
Benefits of the Cloud in Lending
o The complexity and duration of the mortgage banking transaction makes it an ideal process for the Cloud.
o Let’s look at each step in the typical mortgage process and discuss how greater efficiency can be achieved by using cloud based technology.
General Benefits of the Cloud in Lending
o No data server is required for the credit union.o No software needs to loaded locally on PCs and
devices.o Any PC, tablet or mobile device can access the
pipeline – anywhere, anytime.o Central system administration of the process as no
data is stored locally and all information can be viewed from anywhere, anytime.
o Centralized lending systems have proven to reduce mortgage process expenses by over 30%.
Benefits of the Cloud in Originators
o Loan originators have the ability to take a loan anywhere from any device that has an available internet connection from your office to member homes to real estate agencies to even construction sites via a tablet or satellite modem.
o Loans can be priced immediately with current product rates and requirements, credit can be ordered and conditional approval given using automated underwriting engines.
o Members can create an application via a portal at their convenience and have it immediately available to the credit union for processing.
Benefits of the Cloud in Processing
o Loan processors can immediately start managing the application.
o Documents that are needed to process from payroll statements to tax returns to bank statements can be uploaded to the cloud by the borrower or originator to expedite the work-flow.
o Electronic access to information makes for a “greener” experience helping our environment and providing cost-savings.
Benefits of the Cloud in Underwriting
o Underwriters have instant access to conversation logs to better understand the member’s needs without time consuming phone calls or emails.
o By using automated underwriting tools like Fannie Mae DU and Freddie Mac LP, underwriters can review preliminary findings and investor requirements.
o Conditions to close can be posted to cloud and accessed immediately by originators, processors and members through a portal.
Benefits of the Cloud in Closing
o Closers can verify that all conditions have been satisfied and can communicate final requirements to all stakeholders through the cloud.
o Closing documents can be generated automatically and electronically delivered to closing attorneys or title agents for expedited loan settlement.
o Funds can be automatically disbursed via closing agents to sellers, borrowers and service providers.
Benefits of the Cloud in Post-Closing
o Post-Closers will receive notification of successful closing and can review electronic closing documents for completeness and begin managing the receipt of final documents.
o Loans can be immediately booked to the credit union or prepared for shipping to an investor.
o Disbursement of funds can be easily reviewed and applied to appropriate general ledger accounts upon disbursement.
Benefits of the Cloud in Secondary Marketing
o Loan products with current pricing can be easily entered and be immediately accessed by originators, processors, underwriters and closers.
o Loans can be registered or locked through the cloud so management is notified instantly of a members intentions.
o Loans can be delivered electronically to post-closers, servicers and investors.
o Regulatory and Investor Compliance can be ensured because no software is updated locally; all users are accessing the same version of the application.
What To See Lending Cloud Technology in Action?
o MortgageDashboard provides centralized, seamless, browser-based loan orchestration managed in a secure cloud environment. An On-Demand Solution for Loan Origination Management — Anywhere, Anytime.
o Let me show you how cloud based mortgage software works, provides an improved experience for members and achieves a positive ROI for the credit union.
Questions and Answers
Thank You!Jorge Sauri
Chief Technology OfficerMortgage Dashboard
