April, 2012

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FEATURE FEATURE "Much of our technology spending is driven Our Experience Sets Us Apart. For 25 years, Metro-West has provided high-quality valuation services for the residential real estate community. As the country's largest independent STAFF appraisal firm, our national reach extends to branch offices in 20 states. By implementing our Two-Tier Examination Process, the Metro-West team of 130 state certified appraisers is committed to providing the highest quality controlled reports in the industry. by the need for proper data reporting," said DeBroux. "We focus more and more on data because we have to." Other technologies are just as essential from a business standpoint. Still others are "nice to have" if extra dollars are available and if the additional technology can produce additional business, while certain other technologies are too costly for small and midsized lenders. After meeting compliance requirements, Churchill Mortgage finds communications tech- nologies to be the most essential, Clarke says. Lenders should look for technologies that enable them to track results, adds Jim Blatt, CEO of Mortgage Returns in St. Louis. "The vendor has to be accountable for results. You need a vendor who knows how to provide service [at the small and midsized lender] level. The technology has to be scalable and leverageable. The ability to show results is one of the keys." Even though the technologies have been available for a while, some small lenders have yet to fully adopt straight-through process- ing and workflow technologies, says Matthew Josefowicz, managing director for Novarica, New York. Both minimize movement of paper throughout the enterprises, improving efficien- cies and speed and enhancing customer service. "Anything that increases customer conve- nience is an advantage," Josefowicz adds. Even small lenders need to add new technol- ogies as they become part of the framework of the lending business, experts say, though they concur that there are many unproven technolo- gies that waste scarce resources. Yet ignoring technology just because it is relatively new can hurt a lender in the long run. There are two choices, Jones said, "Bleeding edge and cutting edge. A small or midsized lender doesn't have to be on the bleeding edge, but if you see something is catching on, you want to get involved before you get left behind." Examples would include social media a few years ago and texting a couple of years before that. "Part of the analysis is, 'What will it cost To learn how Metro-West can help you, visit or call us at (888) 676-9237. me not to have the technology?'" adds Brian Lynch, president of Advantage Systems, Irvine, California. Leveraging Investments T 30 | THE M REPORT 340_076_March_MReportAd.indd 1 3/8/12 9:15 AM here are two sides of maximizing ROI out of any technology investment: keeping the expense as low as possible while maximizing the revenue and any other benefits. Technology needs to scale to grow when busi- ness increases, so the smaller lender doesn't pay for technology before it's needed but can take advantage of it if volume grows, Lynch says. Lenders need to take advantage of inexpen- sive technologies Josefowicz adds, so prospects know about any competitive products that lo- cal lenders offer. "Local is also online," he said, adding that smaller lenders need to maximize their use of search engine optimization, social networking, and online chat. Some large lenders have large data centers and technologies to analyze and verify the data, much of which is driven more by regulatory and compliance standards than by any business strategy, DeBroux says. The additional technol- ogy large lenders use to verify data require higher volumes to be cost effective. So Fairway relies on well-trained personnel to help main- tain clean, complete data. Fairway Mortgage uses Microsoft SQL to extract real-time information from an operational data store. As a result, Fairway seeks employees with data administration experience. Outsourcing W hile they might have some technical expertise in house, small lenders have smaller IT staffs than their larger counter- parts, says David Kittle, senior director of industry relations at Investors Mortgage Asset Recovery Company (IMARC) and former chairman of the Mortgage Bankers Association. So he recommends outsourcing to vendors that can provide the necessary services as well as comprehensive quality control reports that will satisfy regulatory requirements. Some lenders follow this outsourcing ap- proach but still produce the reports internally when the vendor will provide them at a low cost, Kittle adds. Jones agrees that smaller lenders should outsource non-core specialties. Larger lenders might retain all servicing and related tech- nology. But the smaller lenders don't have the volume to support the servicing-related technology expense. Virtualization, Cloud V irtualization and the cloud are two of the biggest strategies that small firms across several industries are using to leverage their technology investments. Technology vendors have been offering Software-as-a-Service (SaaS) for several years, and more recently platform as a service and in- frastructure as a service, each of which is based on the premise of paying for services based on

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