So you finally found the perfect single-vendor, end-to-end, all-inclusive, totally comprehensive mortgage loan origination, processing, and secondary marketing system. Congratulations! If all goes as promised, your new system will not need any custom interfaces or system integration activities. In reality, chances are pretty good it won’t happen that way. The mortgage lending business does not exist in a vacuum. Interaction with other businesses and other systems is necessary and inevitable, and therefore, the need to integrate systems is also inevitable. The question is to what degree do you integrate? How much automation of the interaction among computer systems is appropriate? How about integration of the inherently manual off-system events and processes? The answers are as unique as mortgage companies are diverse. Successful system integration can be achieved by following a few sensible guidelines

What is System Integration?

The Cambridge dictionary defines the word “integrate” as: “to be suitable for and combine with each other or with what already exists”.

Webster’s 1828 dictionary defines the word “integrate” as: [L. integro.] To renew; to restore; to perfect; to make a thing entire.

Nortre Dame’s on-line dictionary defines the word “integrate” as: incorporate -- (make into a whole or make part of a whole).

So, system integration is the process of combining, perfecting, and making systems whole.

Wow! Profound.

Does integration mean automation? Not necessarily. Some processes by nature are likely to stay manual. Examples of typically manual (off-system) secondary marketing processes are trade executions and confirmations by telephone, pool certifications, and signing and notarizing of assignments. Nevertheless, these manual processes still must be integrated into the overall system to “make it whole”. Just like interfaces are used to integrate computer systems, procedures and workflow management methodologies are used to integrate both automated and manual systems.

Why Integrate Systems?

The process of originating, selling and servicing loans requires the use of many systems. With so many related functional areas, system integration is inevitable. Somewhere, sooner or later, disparate systems must interact and exchange information. System integration offers the ability to control and influence the interaction among these systems. This is an opportunity to optimize performance of the overall process. Effectively integrated systems result in smooth, efficient, and accurate processing.

The obvious points of system integration within the mortgage lending life cycle are; from point-of-sale to processing, from processing to various service providers or b2b hubs and closing, from closing to servicing, and from all of these to secondary marketing and risk management. A somewhat less obvious point of system integration is from a secondary marketing system to point-of-sale and processing for loan pricing. Combining best-of-breed solutions for each function typically involves separate products from different vendors and requires extensive integration. These “external” interfaces may be developed using tools provided with one of the systems, may use yet another vendor’s stand-alone integration tool, or may be developed from scratch. Even all-inclusive computer systems provided by the same vendor that run on like platforms require some form of integration. These “internal” interfaces are typically seamless and hidden from the end-user, but they usually require configuration and maintenance by a system administrator. This type of internal integration, through vendor-supplied tools, provides both a control point and an opportunity to influence a system’s behavior to match a company’s business rules and processes.

Secondary marketing functions interact with and influence the loan origination cycle at virtually every stage of the process. Up front are product definition, product pricing, and rate distribution. In the middle are rate lock management, pipeline management (fallout, negotiations), underwriting to negotiated investor guidelines, and trading. In the end are closed loan inventory (warehouse) management, pooling and allocation, settlement, and delivery. Overall position and risk management functions are actively involved throughout the entire process. If any or all of these functions are supported by separate stand-alone secondary marketing systems, then integration of one or more of these functions is a necessity. Smaller mortgage lenders are more likely to install complete loan origination system solutions from a single vendor, and use in-house developed secondary marketing tools. Larger mortgage lenders are more likely to integrate best-of-breed components from multiple vendors, and use vendor-supplied stand-alone secondary marketing and risk management systems. In either case, integration of the secondary marketing system is inevitable.

Effective System Integration Strategies.... (to be continued...)


Article submitted by Andy Jakubas. Andy is a Senior Consultant with the LCS group. To learn more visit them at www.lcsonline.com

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