Friday, August 2, 2013

The Big Project

In my July 9 post, I mentioned business was going well, keeping me very busy and that I had several large projects underway.  All were occupying most of my time.

One of the big projects culminated yesterday with the announcement that Mortgage Cadence has become part of Accenture.  I can honestly say I had very high hopes for this little company when we opened the doors 15 years ago.  I think I can speak for the founding Prime Alliance team when I say they, too, had great aspirations for our shared idea: mortgage lending is a manufacturing process, that it could be made more compliant, efficient and cost-effective and that the financing experience could also be greatly improved for the borrower.  None of us, it's also safe to say, imagined our company and these ideas would be recognized by a global consulting, technology services and outsourcing organization the magnitude of Accenture.

What happens next?  Plenty.  I've joined Accenture as Managing Director of Accenture Credit Services.  I remain as intrigued by the mortgage industry as I was at my first encounter.  Certainly it has changed and definitely it has become more complex, yet to a large extent, the structural issues and the fundamentals are the same.  We simply have to make it adapt to today's possibilities.  This is one of the opportunities I look forward to.

My team - the entire Mortgage Cadence Team - joins Accenture and will continue to provide our solutions to our customers and to all mortgage lenders as part of Accenture Software Services.  They are a committed group of driven professionals.  As a team their accomplishments over the years have been remarkable.  And, if you've been following us, you know we have been growing rapidly since last summer.  Demand has never been higher, driven by all the new dynamics of this ever-changing business.  We thought business was brisk before.  Now it accelerates.  Greatly. 

After reading this, you might be thinking it is business as usual, albeit on a bigger stage.  While there is some truth in it, another aspect of this project is very exciting for us.  Our technologies will also be used to power Accenture Credit Services’ mortgage business process outsourcing (BPO) capabilities.  Outsourcing is one of Accenture's main businesses; mortgage outsourcing is a relatively new focus.  Mortgage Cadence's technologies will shape the mortgage manufacturing process of the future, exactly what we set out to accomplish in 1999!

I say the project culminated yesterday with the announcement, though it's far from complete.  We've come a very long way, and there's further to go.  Mortgage lending became efficient, once, before the bubble burst.  It's gotten inefficient again.  Compliance, too, was easier in the early 2000s but has now become one of the biggest concerns most lenders have.  And there is plenty of room for improvement in the financing experience.  The team and I, all now part of Accenture, have a great deal of opportunity in front of us.  The project continues, then, until closing a mortgage is just as easy - and fast - as closing a car loan.  I'd say we have our work cut out for us.

Friday, July 12, 2013

It's Been Awhile

Hard to believe it's full-on summer.  Harder to believe the last time I posted snow was flying in all parts of the country.  Everyone was wearing parkas and boots. We're definitely into shorts and sandals weather now.

Time has flown by because the pace of our business has increased exponentially just since the first of the year.  Our growth has been remarkable.  The many and varied changes taking place in the mortgage industry have led to interesting, productive conversations with lenders.  Not only have I been busy, I've been having a lot of fun as well.

Business at the current pace would be enough to keep me occupied.  I like to be really busy, however, so I've taken on a number of big projects as well.  While I am not ready to talk about what they are or how they might further improve on the mortgage process it won't be long before I can.  I will say this, though, the new customers who have joined us combined with the projects underway make for exciting times and opportunities for our business.

You know I like to read.  While traveling this last week I finished Susan Cain's book Quiet.  Cain is a corporate attorney and an introvert.  Quiet is about thriving, and helping introverts thrive, in our extroverted American culture.  When she began practicing law she thought she might struggle because she tended to listen intently rather than talk frequently.  When she did talk she tended to ask questions - lots of them - rather than make statements.  She also knew she preferred, or even required, very quiet spaces in which to work.

What she found was her introverted nature served her well.  Turns out listening carefully and asking many thoughtful questions are qualities of a good negotiator, and a good lawyer.  Also turns out the detailed study of law and legal cases is often best done in quiet places.   Being an introvert not only worked, it made her very successful.  History, too, is full of successful introverts.  Vincent van Gogh, Bill Gates, Meryl Streep, Clint Eastwood, Albert Einstein.  Cain is in good company.  

That got her thinking about how, as a culture, we came to celebrate extroverts while dismissing introverts.  I wondered that, too because I work with a lot of introverts. As I was building the company I was careful, and adamant, about having quiet spaces where our developers could create.  I suppose I knew intuitively they would have a hard time thriving in noisy, open office environments.  It also seemed pretty obvious we could not or would not attract the creative software and other artists we needed to be successful if we didn't have the right environment.  There wasn't any hard evidence at the time that supported these ideas.  For that reason Cain's book was a revelation, and one of my best reads this year.   If you're an introvert, celebrate it.  I am and I do.

It won't be six months between posts.  Not this time.  Might not even be six days.  Check back next weekend.  One or two of those big projects I mentioned might just be ready for bright, summer sunlight.

Wednesday, January 2, 2013

Confident Leadership

Welcome to 2013! One thing I have learned and will be keeping top of mind this year is Confident Leadership. I have never had all of the answers, but I have always had the confidence to know that I could find them or find people who had them. Confident leadership is a must in today's business world. Teams of competent individuals need a leader to rally them with vision and with cause. A leader to help them navigate the course when it isn't clear. The secret behind confident leadership is helping your team find confidence in themselves. Asking them the right questions that allow them to see they knew what to do all along. Elite CXOs can help you and your team put these unique perspectives to work in your organization. What have you learned from years past that will be top of mind for you this year?

Friday, August 17, 2012

22nd Wedding Anniversary

Marriage is as much about commitment as it is about love, and I am proud to say that I will have been married to my wife 22 years next month. The song I am listening to, Morning Parade's "Headlights" is the song I will sing my wife on our 22nd anniversary. Our marriage, like many, has been one with great joys and great challenges. I can truly say that I love my wife as much today as I did when we first met. It has been said that a successful marriage requires falling in love many times, always with the same person, and I am fortunate enough to say this has been the case for my wife and I. Happy anniversary Christine!

Tuesday, August 14, 2012

The Future of Lending: Mortgage Manufacturing

Over the years, I have promoted the manufacturing of mortgages mindset. The need for consistent, repeatable processes has only been amplified with the strict regulations directly impacting lenders today. I invite you to read my article from August's issue of Mortgage Banking Magazine, and let me know your thoughts on this paradigm. What do lenders think of this mindset? What will it take for the industry to focus in on this trend and take steps towards this goal? Or are we already there? 

Adopting a New Paradigm for the Mortgage Lending Process
Mortgage Banking Magazine

In the beginning, the process involved in acquiring home financing was much simpler than it is today. There was a great deal of time and paper involved back then, but the deal hinged on a committee’s decision, usually based on personal knowledge of the borrower. 

Today, our process is far more complex--so much so that our business has for some time compared more favorably with that of a product manufacturer than a seller of financial instruments.

Technologists began viewing the lending process under a manufacturing paradigm over a decade ago when developing software. It was necessary to see the entire process as one contiguous whole in order to create tools that would integrate and connect processes quickly to move the deal through to the closing table. 

The rise of a multitude of loan products during the subprime lending boom weakened the manufacturing paradigm as each deal became a “story loan” and the enterprise was managed by exception instead of any fixed rule.

As the industry works to recover in the wake of the resulting bust, it is clear that the rigor imposed by a manufacturer’s view of the industry would have served everyone better.

Those that continue to resist a shift to that paradigm are receiving frequent and often harsh reminders of the potential repercussions. 

The recent bump in originations, for instance, showcased a potential risk to the lender enterprise--at least to those who view the enterprise through the lens of an industrialist. Capacity is the problem or, as a manufacturer would put it, there is a lack of transparency in the supply chain.

There are at least three good reasons for mortgage lenders to begin thinking about their operations in ways similar to manufacturers, and supply-chain management issues are first on the list. The others deal with customer relationship management (CRM) and regulatory compliance.

As long as bankers have been risk managers, they have had to deal with third parties to supply them with the information and data they use to make decisions. Because much of the risk in the deals mortgage lenders originated in the past was sold off, supply-chain management was largely a matter of getting all of the vendors together and letting them decide who would offer the lowest bid for meeting appropriate service-level agreements. Those days are over.

The Consumer Financial Protection Bureau (CFPB) has made it clear that lenders are ultimately responsible for every aspect of their third-party vendors’ businesses, right down to the methods they use to train their people. While all of the rules have not yet been written, the CFPB has already established fines for non-compliance--some as high as $1 million per day.

Lenders can no longer focus on the low-cost bidder if they hope to remain compliant. Add that to the fact that obtaining talent is now more expensive as there are fewer experienced workers to fill more demanding jobs, and supply-chain management becomes nearly as important in the banking enterprise as risk management.

The tools required to effectively recruit, vet, manage and score vendors in the mortgage space are very similar to those that manufacturers use to run their operations. The Quality Assurance/Quality Control (QA/QC) processes required are also nearly identical.

In the past, many have claimed that there is no true customer relationship management in the mortgage industry. In truth, there is precious little loyalty here, either on the part of borrowers or the loan officers that serve them. 

There is “a churn and burn” business mentality where borrowers matter when they’re in the buy zone and then disappear completely when they do not qualify for our programs. CRM tools that have been offered to lenders have largely been ignored.

Consumers also have had little interest in hearing from mortgage lenders when not in the market for a new loan--but that may be changing. As part of its mandate to serve and protect American consumers, the CFPB has launched an Office of Financial Education and hired an executive in charge of “financial empowerment.” With a better understanding of the process, borrowers might learn from the government a new set of standards that they may one day apply to all lenders. As it is, CFPB has already made it very simple for a consumer to file a complaint against a mortgage lender for any reason.

To mitigate the potential risk of borrower ill will and the resulting and as yet undefined penalties the CFPB may apply to it, lenders must approach CRM in a new manner--a methodical manner in which the borrower experience is treated as one more quality of the finished product (the loan), subject to the same quality controls applied to the rest of the lending process. The ultimate outcome will be significantly higher levels of customer service, resulting in increased consumer satisfaction.

But borrower sentiment is only one of many factors that CFPB will monitor in an effort to bring to life the letter of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In fact, there are so many rules that will come out of this law that lenders will have no choice but to consider compliance with each of them as one more discrete unit of resource that must be built into every loan that comes off the line. Managing the lending process by exception no longer makes any sense.

On the other hand, leveraging the mature tools our industry has developed to ensure quality, such as enterprise resource planning (ERP) and Six Sigma, can be an invaluable source of previously unknown benefit to lenders. Even as American manufacturers have made great strides in creating enterprises capable of zero-defect value creation, so will lenders learn to use the same tools to create mortgages that are fully compliant.

There are those looking to revolutionize the industry and who wholeheartedly believe in the concept of manufacturing mortgages. Dan Green, previous executive vice president of Prime Alliance Solutions Inc., Edina, Minnesota who assumed the position of executive vice president of marketing for Mortgage Cadence post-acquisition, said at the time of the acquisition, “I expect to quickly combine our already strong companies together and create one brand and extensive product suite that continues to revolutionize the lending landscape by taking a manufacturing approach to the process and creating zero-defect mortgages.” A strong statement, if I do say so myself.

Today, our industry finds itself in a position to start over. By learning from other industries and adopting a new paradigm for mortgage lending and servicing, we can guarantee success for consumers, regulators and our own industry.

Friday, August 3, 2012

Weekend Getaway: Sturgis Annual Rally

The weekend is upon us! As I have shared in previous posts, riding and my motorcycles are a huge passion of mine and my family’s. This weekend, I am headed up to Sturgis in South Dakota for a few days for the 72nd Annual Rally. Despite what people may associate with this event, it is not the drunken debacle everyone says it is. When we are there, we fill our time with going out to nice dinners, taking beautiful rides in the scenic Black Hills and surrounding Badlands, and attending several art openings, galleries, and book signings. My family and I go up there many times throughout the year as it is just a 350 mile ride from our home in Colorado. Between the open road and the unique landscape of Wyoming and South Dakota, there is no shortage of beautiful scenery; whether the day brings ominous clouds, wildlife, or the perfect riding weather, the serenity of this ride is hard to explain without experiencing firsthand.

I would highly recommend the journey up I-85 to the Black Hills if you ever get the chance. The Black Hills can be more beautiful than even the Rocky Mountains under the right circumstances. After a brief rain shower, everything seems to radiate an inner glow of deep, yet vibrant greens. There are so many great places to stop from antique shops to restaurants in the small towns sprinkled throughout the Hills on your way to Sturgis, and the people are extremely welcoming and always friendly. I can’t wait to get this weekend started, and I encourage you all to do something this weekend that really fulfills you and helps bring you back to the simple things in life!

Tuesday, July 24, 2012

Is Your Chair-Based Lifestyle Affecting Your Memory?

Working in the Software Development industry, it’s common to see developers reclining in their "souped-up” office chairs writing code that ultimately shapes the direction of our technology. Even our other departments are seen spending numerous hours sitting at their desks taking phone calls and typing up emails. However, with more research coming out about the negative impacts of living a “chair-based lifestyle”, it is time to consider making changes within the workplace. The impacts of sitting all day go deeper than the well-known physical damages that result from reduced metabolic rates. New research has shown that in addition to reduced energy levels, being sedentary for extended periods of time also reduces overall mental activity and memory. As a result, more companies are taking the first steps towards creating wellness programs for their employees.

I understand that there will always be some individuals that prefer sitting at their desk all day, and that is a choice they can make. However, others feel the negative impacts of sitting and, I believe this creates the potential for depression and unhappiness. I often hold “walk and talk” meetings with individuals from my team while walking outside whether with a destination in mind or just as a means of getting out of the office. In addition, as part of Mortgage Cadence’s new wellness program, we are currently testing out a treadmill desk that will allow employees to make phone calls via a headset while utilizing the desk to set their laptops on. If this proves to be successful, more will be phased in. My hope is that those who test the treadmills out will experience increased focus and a feeling of improved productivity, which will ultimately lead to a happier and healthier work environment. What do you think of these new treadmill desk, and what other changes do you think would help get people up and moving while at work?