4 Things to Know Before an LOS Implementation

Here are some tips and advice for lenders considering a new LOS implementation.

Making changes to or installing a new Loan Origination System (LOS) is a major decision for a mortgage lender. After all, the LOS is the digital heart of your organization.

Let’s highlight four key considerations for any company that’s going down the path of LOS implementation or renewal. The following includes advice on how to pick a new LOS, support options to consider, project management assignments, and organizational expectations and commitment.

Functionality and System Compliance

Mortgage lenders should make sure any new LOS being considered will meet the current and future needs of their organization. They should consider whether the system is flexible enough to handle each business channel within their organization along with ensuring the vendor has a history of being able to adjust to regulatory changes within the lending environment.

Interviewing other lenders of similar size and organizational structure that are currently using potential vendors is a good way to research and gain the perspective of current users. Lenders should expect any new system today to be data-driven and will allow the data input to flow throughout the system to build out the application and eliminate duplicate points of entry.

The software’s technology, ability to integrate with your core system, speed, and ease of use should also be measured when making your decision.

Lenders should also investigate the list of third-party vendors (such as document prep and management, and point of sale) that are currently integrated with any potential LOS. You should take the same approach in analyzing their track record on adapting to changes when appropriate. It is recommended to consider the systems your organization currently uses and whether there is currently a relationship between the two.

Vendor Training and Support

Training needs for your organization must be taken into account during your due diligence as well.

Lenders must consider the type of training being offered by each vendor and whether it fits with their organizational needs in terms of size and structure. There is a spectrum of customization offered by different LOS providers. As one could imagine more customization leads to a greater need for good support. This may also necessitate the need to hire system administrators to ensure there is an in-house specialist to support the system.

Lenders should also look into the support offered by vendors post-implementation. Some vendors offer email support, while others have a dedicated support line. Likewise, some vendors offer support during business hours only, while others offer after hours support in addition to normal business hours. This is a key factor – especially if your organization will look to your LOS provider for ongoing system administration support.

Lender-assigned Project/Program Manager

Although vendors will have a Project Manager assigned to the implementation, it is important for lenders to consider assigning their own project manager or program manager to manage to their expectations.

Vendors and lending organizations can often take a different approach to the implementation; vendors will mainly focus on the timeline of the project to make sure deliverables are met in the agreed upon time, while the organization’s project manager can take a broader view at the functionality and the downstream implications of the LOS system being delivered.

An organization’s project or program manager will also communicate the desires of the project sponsors and influence change when needed, while the vendor project manager will focus on vendor relations and timely deliverables. Having a good manager with formalized processes on how to track, measure progress, and report to executive stakeholders is key.

Strong program management will help ensure there are no gaps between current versus future state with the new LOS.

Organizational Commitment to Change

Lending institutions should ensure their organization is fully committed to the project before they begin. Dedicated staff will need to be available to act as the subject matter expert for each role within the organization during the discovery phase of the project.

More importantly, staff must be committed to a predetermined number of hours testing as deliverables are rolled out. The lack of commitment will often lead to project delays or even failed projects.

LOS implementations will be driven by the internal corporate culture. Are you rigid in your processes or flexible and adaptable to change. The answer to this question can impact your timeline and deliverables during the project.

Projects of this size require a company to be agile, innovative in their thinking around business processes and flexible to process and resource re-alignment. Companies that can do those things usually are more successful with LOS implementation.