The #1 Misconception about Loan Origination Systems

In the fairly recent past, small and mid-sized lenders didn’t have access to the same technology as larger lenders, even though their needs are largely the same in terms of streamlining operations and ensuring compliance. Today, that’s changed as companies like PCLender have come in with solutions that level the playing field for small to medium lenders, or those that fund 50 to 1,000 loans a month.

But whether small or large, many lenders hold a common misconception about what constitutes the best loan origination system (LOS) for them.  They compare and contrast available technologies, but miss one important consideration.  And it can make all the difference in a lender’s success.

The inescapable truth in buying almost anything is that it is easier for the provider to do it their way, not yours.  In the 1920s, you could have any color Ford Model T you wanted, the joke went, “as long as it is black.”  It is simply easier to produce things with limited variations and let customers adapt, and we see this in daily life.

With the largest LOS vendors, software is typically designed to match the best practices of large lenders.  The biggest banks have built their own platforms for years and their features have often been emulated by industry vendors.  But is what’s good for the largest mortgage companies good for the rest of the industry?  That question is especially interesting now, at a time when the smaller lenders have access to technology that is every bit as sophisticated as that of the mega-lenders.  In fact, it can be just as fast, much more nimble, and far less expensive to use per loan.

And with the right vendor, that most important consideration mentioned earlier, the one that makes all the difference in success for mid-tier and smaller mortgage companies, boils down to a simple question:

“Will they listen to us?” 

There may be some comfort in going with a well-known vendor whose ads you see all the time or that you read about in the trade press and the financial pages. For big lenders, bigger may be better when looking at LOS providers after a long and complex RFP process.  For most others, it is not necessarily true.  All too frequently, smaller lenders find they are lost in the mix when they go with a large LOS vendor, and they don’t get the support they need. And having a voice in the way an LOS is designed or enhanced? Unless you’re a huge lender, that’s rarely possible with a large LOS provider.

By contrast, an LOS vendor created to serve the smaller and mid-sized mainstream lenders has a real-world perspective on what works for this market segment, and understands that the best ideas come from its users.  Whether it involves setting up workflow and document management when the platform is adopted, or making small changes that streamline the loan process, listening to users is the best R&D tool there is.

At PCLender, we value our lender customers’ input. After all, it’s the lender that knows best what will work for their business. That’s why we’ve deliberately chosen to hire former mortgage bankers who understand what it means to miss a lock delivery or lose a referral source due to an unnecessary glitch in communication.

Your company should not be left to the uncertainty of “one size fits all” technology and being marginalized because of its size.  Lenders using large LOS vendors are often hobbled by work-arounds, manual processes and low expectations from their systems.  Unfortunately, that may be the price of going with a high profile provider.  A high price to pay for a familiar name, particularly when there is an alternative like PCLender with legions of fans enjoying the best technology and astonishing support.

And that’s what we see as the biggest misconception many lenders have when it comes to choosing an LOS: bigger is not necessarily better.

Choosing an LOS provider is one of the most important decisions a mortgage lender makes, and the tools the LOS provides directly impact efficiency, profitability and marketing reach.  Small to midsized lenders in particular need an integrated solution from their LOS that is affordable and easily maintained with minimal staff.  Reach out to us today at (877)536-6886 or to learn more about how we can streamline your process, ensure compliance, and save you money.