LenderLogix CEO Patrick O’Brien: Get Your LOs Out of Your LOS–Build Tech for Your Borrowers

Patrick O’Brien is CEO of Buffalo, N.Y.-based LenderLogix, a provider of mortgage point-of-sale and automation software for banks, credit unions, independent mortgage banks and brokers.

According to Freddie Mac, technology-related expenses per loan have doubled in the past three years, from 2% to 4%, highlighting mortgage lenders’ imperfect efforts to gain efficiency through increased digitization. “Get your LOs out of the LOS” is a commonly heard refrain, encouraging loan officers to spend less time filling in boxes in their loan origination system (LOS) and more time with the borrower by increasing efficiencies in their loan processes.

In the current market environment with low affordability and high prices increasing competition for home-ready borrowers, lenders who fail to cater to consumer standards will fall behind. A strategic tech stack can be a valuable tool to improve efficiency and become more competitive. But the keyword is strategic. Mortgage lenders, banks, and credit unions must make careful technology decisions with not only the LO but also the borrower in mind, or face little to no return on technology investments.

What does it mean to “Get your LOs out of the LOS?”

Getting your LOs out of the LOS for everything probably isn’t the wisest decision. Rather than originating loans end-to-end and disclosing from their phones, the goal is to find efficient ways of handling the repetitive, everyday tasks LOs must complete to reduce friction. These tasks might include items like updating pre-qualification letters, running closing cost scenarios, issuing closing cost summaries, uploading documents, checking the loan status, and identifying and transcribing outstanding items into a borrower-friendly format.

Take, for example, updating a pre-qualification letter. When the LO is asked to update or provide the letter, they must then go into the LOS to compliantly create the letter. To do so, they probably have to get out their work laptop–often at an inconvenient time–login to their VPN or network and find the correct file in the LOS. From there, the LO then must find the correct field to update, check the new debt-to-income ratio (DTI), generate a new doc, download the pdf, and attach it to an email sent off to both the realtor and the borrower.

This slows everything down, interrupts the borrowers’ search for a home, and adds multiple touch points that could introduce errors. It’s also a lot of work that could be better spent doing something else–which is where technology can come in clutch. There are numerous technologies offering solutions and apps meant to simplify the LOS all promise to thoroughly check the boxes. While some can be useful, others provide essentially the same functionality as the legacy LOS—leading lenders to pay for the same service twice over, ending up right back where they started but in different colored font.

What if instead, after initially qualifying the borrower, the LO could set a cap on the DTI – then let the borrower self-serve pre-qualification letters as needed? The LO could simply send the borrower a link to a calculator where the borrower can enter the purchase price and property taxes. As long as the DTI remains within the guardrails, the calculator can then generate the PDF without any LO involvement, alerting the LO and uploading it to the eFolder. If the borrower is technically challenged, the LO can easily follow the same process right from their phone, instead of undergoing the hassle of accessing the LOS.

That’s a lot less work and time on both sides either way. And instead of introducing anxiety, LOs will delight their borrowers with efficient access to documents they need to continue working towards the dream of homeownership. Another solution might present borrowers with a checklist of outstanding items right in the POS without all the technical jargon and acronyms the mortgage industry loves to throw around. This is what it means to get your LO out of the LOS: reducing friction for the borrower through simplified tech.

Tech should serve borrowers first, and the back-end second

The complex process of getting a mortgage is full of pitfalls for borrowers, from putting in an application to getting preapprovals to figuring out the best options for verification of income and employment. Even for an experienced homebuyer, the process can be overwhelming and frustrating.

We’ve all seen shiny new tech that promises to be the solution that will help LOs, but technologies claiming to address borrower pain points will make lenders far more competitive. There has been a lot of movement on this in the verification of income and employment (VOIE) space, with providers such as AccountChek and Truv promoting direct connection and consumer-permissioned VOIE to reduce the need to revisit borrowers for updated documentation again and again. It puts the borrowers in control and keeps them in contact with their LO.

Lenders must provide technology that focuses on improving the borrower experience and building stronger, lasting borrower relationships first, with back-end considerations second. In other words, the borrower’s experience should inform the structure of the LO side of the software, not the other way around. By carrying the borrower-first mentality into strategic technology decisions, lenders will be more competitive and attract more home-ready consumers.

Finding borrower-first solutions

With so many possible boxes to check, it can be difficult to identify exactly which technologies will support the borrower as effectively as they support the LO. There are three critical factors lenders should consider to determine the best options.

1. Communication Capabilities

It’s the age of the Internet, and borrowers expect their LOs to be connected. Mortgage technologies must support efficient communication with borrowers, whether it’s via notaries using video for remote notarization, LOs quickly answering questions and updating borrowers via chat, or text notifications sent straight to borrowers after their VOIE is complete. The ability to quickly and effectively communicate with the borrower, at times automatically to verify completion of steps in the mortgage process, is critical to delivering outstanding borrower experiences.

2. Interface and Branding

In 2023, monthly mortgage fraud attempts increased by 34.6%. Lenders and loan teams alike are aware of the increased rates of fraud in the industry—and borrowers are, too. Consumers are faced with fraud from all directions and lenders need to present themselves as seasoned professionals lest they get filtered out with the spam emails. Technology solutions that support white-labeled interfaces can help lenders build trust with their borrowers and avoid getting deleted because of suspicion. An unbranded interface won’t cut it when the modern-day borrower has spent decades on the lookout for potential scams.

3. Reduce Complexity

When it comes down to it, if the technology a lender selects makes a process more complex or time-consuming for the borrower, regardless of benefits to the LO, it has failed. The modern consumer is used to convenience. We’re used to ordering food on our phones and having it ready in minutes. We’re used to clicking no more than twice to accomplish any technological task before us. In contrast, getting a mortgage is a warren of complexity, so making things more complicated for the borrower will not increase retention rates.

Lenders must look for technology that simplifies the process in some way, even if only incrementally. The fact that a consumer-permissioned VOIE adds a login, for example, is hardly a consideration given the hours it saves in swearing at a payroll portal while trying to retrieve tax documents. A LOS may promise real-time notifications of the borrower’s loan status—but if borrowers have to download an app, open the app, log in, complete multi-factor authentication, and navigate through four separate screens before actually seeing that status, it simply isn’t more convenient than waiting for the LO to email them.

It pays to play to the borrower

Some technological complexity is inevitable in the modern world. It is critical for lenders to make strategic technology decisions to support borrowers without adding complexity or obfuscating communications. While LO-centric efficiencies can increase productivity, borrower-negligent technology will lead to higher fallout and fewer lifelong customers.

Using technology that simplifies communication, comprehension, and accessibility, lenders can deliver exceptional experiences that will retain customers for years to come.

(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 submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)