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   ARTICLE   |   From Scotsman Guide Residential Edition   |   October 2016

Simplifying Technology Is Hard

Next generation mortgage technology must be more user friendly

Young mortgage originators probably don’t remember a time when they didn’t have access to a loan-origination software (LOS) system. Just 25 years ago, however, loans were still being originated on typewriters with preprinted forms and carbon copies. Aligning the typewriter with the fields on the preprinted forms was frustrating and time-consuming. And, if there was a typo or any data needed to be changed, originators couldn’t write over the form. They actually had to retype the entire form.

Then came desktop computers, and with them DOS (disk-operating system) loan-origination software, which solved the data-entry and form-alignment problems. In those days, software came in bulky shrink-wrapped packages and updates arrived by snail mail on multiple floppy disks. Installing and updating were time consuming.

As the internet became more universal, LOS systems began to connect over the internet to centralized storage databases, making implementation and upgrading easier. At the same time, LOS capabilities evolved and expanded as well. When the laser printer arrived, preprinted forms were replaced by document-management technology. The growth of mobility through laptops, smartphones and tablets led to further improvements in data accessibility and security. In addition, vendors began to integrate directly with originators’ LOS programs to help streamline the way borrower information was exchanged.

Through all of these changes, one objective has remained paramount: The user experience needs to be easier. Loan originators’ time and resources are limited, so they need technology that is “friendly” and easy to use. LOS systems need simple interfaces and predictable workflows that allow originators to shorten the learning curve and minimize the risk of errors.

The complexity of simplicity

Ironically, ease of use and simplicity are two of the most difficult objectives to achieve when designing and building software. Steve Jobs, the late co-founder of Apple, once said: “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

A good analogy that illustrates this concept is the difference between a manual, or stick-shift, transmission and an automatic transmission. A manual transmission is a simple design, but it requires drivers to do more work and to master the synchronization needed to shift gears. Automatic transmissions, on the other hand, make driving much easier and have a much shorter learning curve, but the technology itself is significantly more complex.

A lot of time and energy goes into developing technology that is easy to use. Developers of user-friendly LOS programs work hard to not overcomplicate the interface and workflow. The best way to do this is to map the same processes that originators use and build a system that mirrors those processes and also supports intuitive behavior.

Simple principles, such as “copy from” instead of “copy to,” and flexible data-entry sequences that allow originators to enter data on the Loan Application first and then the Fees Worksheet — or vice versa — make the process easier to use and more intuitive. For fields where different companies handle input differently — such as “Borrower Funds to Close” in the Transmittal Summary, “Cash to/from Borrower” in the Loan Application, or “Cash to Close” in the Loan Estimate — a good LOS designer will allow originators to manually decide which path to use instead of programming the system to make the decision.

Technology should not get in the way of how originators like to do their business. It’s important to let the users do what they like to do and maintain simple behaviors with sound principles.

Simplicity 2.0

In the tech world, “2.0” means a superior or more advanced version. LOS programs have moved from inserting floppy discs to downloading from the cloud. But how can these systems become even more user-friendly? One area where LOS hasn’t evolved over the past 25 years is in the use of forms.

The standard LOS is still a form-driven platform (i.e., it emulates paper forms). This is a problem because regulations, with all their complexities, continue to bog down the mortgage industry in data. The original TRID consumer-disclosure rules clocked in at 1,888 pages, for example. Add to that the rules on ability to repay, qualified mortgages, loan-officer compensation, the updated Home Mortgage Disclosure Act, plus any number of state regulations, and you begin to see the issue.

With all the data that originators must track to stay compliant, next-generation LOS platforms need to be data-based, not form-based. Data-based LOS will allow originators to input all borrower and property information once, in logical data fields. This 2.0 LOS will then use those data fields to populate multiple forms, making it easier to adapt to and comply with new regulations.

When a new form is mandated, like the upcoming changes to the Uniform Residential Loan Application, form-based LOS requires a complete rewrite. Data-based LOS, however, would only need to add the new data fields and map them to the correct lines on the new form. This will prevent originators and their LOS providers from having to endure another TRID-like system overhaul.

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Steve Jobs may not have had the mortgage industry in mind when he said “make it simple,” but the mortgage-technology industry could certainly learn from his example.



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