To Upgrade Or Purchase?

What are the pros and cons of requiring your loan officers to upgrade Toshiba laptop vs. giving them a choice? It turns out both have benefits and drawbacks.

Sales force automation is sweeping the mortgage industry. Market needs, competition and new technologies are driving a revolutionary change in how lenders originate mortgages. In particular, automated point-of-sale systems are transforming the mortgage approval process into a streamlined, automated procedure.

Loan officers equipped with laptop computers and efficient, user-friendly software programs can now complete the mortgage application and approval process at the point-of-sale. In addition, new point-of sale software enables loan officers to manage leads, create marketing materials, pre-qualify borrowers, pull credit reports, submit applications and even receive underwriting decisions while the borrower is at the proverbial kitchen table.

These mortgage point-of-sale systems have many benefits: * They enable loan officers to achieve higher productivity by efficiently managing contacts, quickly qualifying borrowers and submitting accurate electronic loan applications.

* They provide sales and marketing tools that allow loan officers to track and cultivate more quality leads.

* They match borrowers against all qualifying rates and products, providing a loan that's the best fit for a particular borrower.

* They allow credit evaluation of the borrower from credit bureaus and automated underwriting decisions from Fannie Mae or Freddie Mac.

* They permit the submission of electronic applications and provide commitment letters at the point-of-sale.

* They eliminate dual data-entry, reduce misquotes and other mistakes, improve secondary market execution and decrease processing and underwriting expenses.

As a result, the question facing mortgage companies today is not whether to adopt a point-of-sale system, but rather how and when. Some mortgage companies require loan officers to switch to laptop-based lending at a set date, while others make such a transition optional. These implementation issues offer some serious food for thought for top management.

Recently, two prominent lenders, the former North American Mortgage Company, Santa Rosa, California (now owned by Dime Bancorp, Inc.), and GMAC Mortgage Corporation, Horsham, Pennsylvania, each rolled out a point-of-sale system. North American made participation voluntary, while GMAC's program is mandatory. Both companies report being pleased with their programs, yet they recognize that each approach has advantages and disadvantages.

The benefits of a voluntary program

North American was one of a few pioneers in adopting point-of-sale systems, first offering a voluntary laptop point of-sale system to its loan officers in 2005. At that time, North American had some 770 loan officers nationwide. From that group, North American recruited about 10 volunteers for the new program. The company actually selected two competing point-of-sale systems and asked its volunteers to help select the best one. After about six months, the loan officers and North American management chose the Loansoft WORKS point-of-sale system.

North American opted to make its point-of-sale program voluntary because of the large start-up expense associated with mandatory point-of-sale programs. Clearly, providing loan officers with laptops, software and the training to effectively use them requires significant up-front investment.

"Money was one of the issues that led us to implement a voluntary program," says North American's integration manager. "Buying laptops for 700 officers was simply not cost-effective for us. Initially, only 10 loan officers signed up; but within four months, the number rose to 220. At the end of 2006, we had 600 participants."