Blue Sage Solutions’ Carmine Cacciavillani–How a Bridge in the Cloud Creates Endless Opportunities

Carmine Cacciavillani

Carmine Cacciavillani is President and founder of Blue Sage Solutions, a provider of cloud-based digital technology for the mortgage industry. He has over 30 years of experience developing innovative loan origination technology, including the Blue Sage Digital Lending Platform, a browser-based system that provides end-to-end functionality for the entire lending and fulfillment process. He recently introduced the Blue Sage Digital Servicing Platform, a LOS-agnostic system that seamlessly merges loan origination and servicing functions in the same cloud ecosystem.

One of the most interesting paradoxes is the Mobius strip, a two-dimensional shape made by taking a strip of paper, twisting one end 180 degrees, and taping the ends together, forming one continuous surface. Since its discovery in 1858, the Mobius strip Inspired countless innovations in science, engineering and design, such as longer-lasting drive belts for machinery, bridges, steel roller coasters, and even the recycle icon. But it’s also an intriguing metaphor for what’s happening today in the mortgage industry.

Traditionally, mortgage bankers that both originate and service loans have operated these two business in separate siloes, often using separate, poorly integrated platforms for each. In fact, this practice of siloing processes and systems is one of the major reasons why borrower retention remains such a challenge for the industry. Thanks to new cloud-based applications, groundbreaking innovations are now helping lenders bridge this historic divide, creating a streamlined, symbiotic Mobius stream between origination and servicing to open up a new era of growth and efficiency.

Why the Gap Exists

While bridging the divide between originating and servicing loans is the goal of most lender-servicers, a majority are held back by legacy technologies that were built before the cloud computing era. As a result, legacy loan origination systems (LOSs) are often difficult to integrate with other systems and third-party product and service providers, let alone a lender’s servicing platform. These legacy systems also must continually adapt to evolving servicing requirements, such as federal reporting requirements and state laws involving interest payments on escrow accounts, which should be incorporated into a lender’s servicing system.

Despite efforts from some of the largest LOS providers to bridge this gap by adding servicing functions to their origination platforms, the outcomes have been inconsistent due to the inherent constraints of these aging products. Transitioning decades-old, on premise software into a cloud environment is not only tough for these providers and their clients, but it often demands a substantial investment in resources and time. It’s like building a new house on an old foundation.

The effort and cost of maintaining legacy systems is a significant burden for mortgage banking technology providers, and those efforts and costs are exacerbated by the fact that many of those systems were designed and are being maintained using tools and programming languages that were developed many decades ago. The additional effort and cost of maintaining those legacy systems impacts mortgage bankers as well. Regulatory changes, product enhancements, and third-party integrations require more effort and take longer to implement. Those additional efforts result in increased costs to the technology provider, and those costs are ultimately passed on to originators and servicers. More fundamentally, those legacy technologies have done little to reduce loan origination or servicing costs, improve customer retention rates, or enhance the overall customer experience.

New cloud-native technologies now present an opportunity to bridge this gap by seamlessly uniting origination and servicing technologies within the same cloud ecosystem. As a result, it’s now possible for mortgage bankers to create fully cohesive mortgage operations for the entire lifecycle of every loan—and start truly building customers for life.

How the Cloud Changed Everything

Over the past five years, new cloud-built technologies have emerged that enable mortgage bankers to originate with little to no IT investment or additional resources. And now, the same type of technology is available for servicing loans from the same providers, with everything delivered in the same cloud ecosystem.

What this means is that mortgage bankers can have a modern, digital lending platform built in the cloud to originate loans—with the ability to automate some or virtually all of the loan production process. Then after closing, a mortgage banker can seamlessly onboard newly originated loans to a modern, digital servicing platform built and delivered in the very same cloud. This gives them the ability to unleash a single, comprehensive digital strategy that spans the entire mortgage lifecycle.

The key to this approach is cloud-native architecture, where all origination and servicing software is API-centric and can instantly adapt to a lender’s fluctuating workloads. Ultimately, this enables lenders to allocate their human resources more dynamically and cost-effectively between both sides of their business—origination and servicing—while maximizing operational efficiency. Lenders can also access these systems remotely from anywhere, at any time, ensuring their sales and customer service teams stay connected with borrowers and can make critical decisions on the fly, no matter where or when they work.

Digital Servicing Unleashed

While cloud-built mortgage origination technology has been available for some time, the recent advent of cloud-based servicing technology is what has finally enabled lenders to seamlessly connect both sides of their business.

New digital servicing platforms are now available that manage and streamline all functional areas in a servicing operation, accessible from all digital devices and platforms. No more green screens using 1970s mainframe technology!

Similar to cloud-built digital lending platforms, they also include advanced document management tools that eliminate manual tasks associated with storing, organizing, and retrieving loan-related documents, allowing lenders to lower costs and improve overall productivity. They include brandable consumer portals, too, so lenders can configure both the loan application process and borrower payment portals with their company’s unique look and feel.

Mortgage servicing is a challenging business. There are many different loan types, and there are several external organizations (investors, GSEs, insurers and guarantors) that impact actions above and beyond the servicer’s own internal policies and requirements. Servicers must adhere to each entity’s regulations and guidelines because one small oversight can result in a buyback or an indemnification for any loss an investor, insurer, or guarantor sustains. This is where a state-of-the-art servicing platform can help.  A comprehensive system designed to manage complex workflows can take the guesswork out of compliance, reduce the number of errors that result in buybacks and indemnifications, improve productivity and help ensure an exceptional customer experience.

Moreover, some systems fully integrate customer loan data and will demonstrate proficiency in cascading it through the enterprise, so originators and servicers have instant access to the same information. These systems provide robust pipeline management for marketing new products and services and may even eliminate the need for third-party customer relationship management (CRM) systems for borrower retention.

Timing Is Everything

The opportunity for mortgage bankers to originate and service loans in the same cloud environment could not arrive at a better time. Right now, most lenders are struggling with rising origination costs due to high interest rates and reduced demand for purchase loans. Meanwhile, organizations that also service loans face the probability of increased delinquencies in 2024, as projected by the Mortgage Bankers Association and other housing market experts.

Navigating this evolving landscape successfully will depend largely on the technologies mortgage bankers choose. Thankfully, cloud-native origination and servicing technologies are designed to evolve too. Recently, digital lending platforms have helped bankers swiftly launch new business lines, such as home equity loans. And now, new digital servicing platforms are capable of providing all the functionalities they need to reduce servicing costs, ensure compliance, and serve the growing number of homeowners who will have difficulty making their mortgage payments in the months ahead.

The only difference is that mortgage bankers no longer need to go to separate sources to access these solutions. They can certainly access them separately. But they can also choose providers that offer them both. In doing so, they can begin to transform the entire mortgage business into their own version of a Mobius strip—one in which the opportunities for growth and success are just as endless.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)