10 Ways to Accelerate your Mortgage Loan Origination System (LOS) Implementation

Maturity among mortgage loan origination platforms, coupled with the move to a SaaS model and robust base product functionality, has created an opportunity for lenders to quickly and cost effectively upgrade their Loan Origination Systems (LOS) without sacrificing value to the end-user. 

This starts with approaching an LOS implementation as a software configuration and installation exercise rather than a software development project. Today’s LOS systems are controlled by robust configuration that lenders can easily control on their end, reducing the need for lengthy business and functional requirements documentation and excessive customizations. With this approach, the traditional SDLC model need not apply to LOS implementations, and organizations can leverage a more streamlined process to speed implementations and reduce costs.

Here are 10 practical ways to reduce the cost of and accelerate timeline of your LOS implementation:

1. Start with a problem statement. What are you trying to fix or enable? Drill down on the business benefit, or acknowledge if your case is driven by other factors such as regulatory compliance.
2. Set the tone at the top for speed and your case for change. Sharing a strong vision, including the willingness to compromise some functional nuances to ensure speedy and on-budget delivery will help to shape the mindset of the team driving the change. Communicating #1 above will help with this. Then, stay engaged: a leadership team that is willing to make tough decisions and stay actively involved in the program provides the focus required for long-term transformation.
3. Design your future state processes upfront. The ‘blueprint’ for your system will serve as a guide to ensure finer-grained configuration decisions align in a coherent way, and help to manage scope creep. Understand this may change as you refine the configuration requirements.
4. Get SMEs and key stakeholders involved early in the process —Leaders should ensure that the top resources with the right experience and expertise play critical roles on the project from the beginning. Consistency between resources providing requirements and performing user acceptance testing will reduce the number of issues found during UAT and production. Consider adopting a “champion approach” where critical users are identified as champions to promote, teach and foster adoption of the new LOS.
5. Re-think your business requirements documentation. The days of lengthy business requirements documents are over when it comes to base LOS implementations. Instead, build your target state process (see #3) and develop a set of use cases that must be supported based on your product set, footprint and loan dispositions. Then, move directly to functional specifications in the way of configuration templates provided by your LOS vendor, instead of creating traditional SDLC documentation. Leverage vendor-provided system documentation to fill in any gaps. For example, most lenders now provide documentation evidencing how the base software supports key compliance rules so that lenders don’t need to recreate this.
6. Limit customization. While customizing to support exception workflows and products can be tempting, the impact to timeline and long-term maintenance costs is significant. Instead, leverage the base product and customize only where needed. During LOS selection, pick the two or three things that matter most to your organization and hone in on which vendors provide the best support for those differentiators. This holds true for interfaces and services as well (e.g. credit, appraisals, etc.). Determine which are business-critical and accept pre-built integrations for those that aren’t.
7. Allow for iteration and refinement. Instead of a big-bang approach to going live, pick a location, channel or set of products to pilot and refine the new system on before rollout to the broader organization. Framing your go-live as a pilot will also help to ease user concerns about functionality limitations and residual defects. An agile development approach is wonderful, but even organizations who use waterfall methodologies can leverage this approach to iteration.
8. Identify downstream reporting and data needs early on — A lack of focus on reporting and downstream data requirements can result in poor reports and/or insufficient data sent downstream. This often leads to delays for lenders late in the implementation process. To mitigate this risk, incorporate SMEs for downstream data needs for regulatory reporting, finance and other business users of the data early in the project, to ensure these requirements are adequately addressed during requirements gathering.
9. Ensure access to a sandbox environment during design— In the past, vendor provided software was not available to teams until formal user acceptance testing. This is changing, with more vendors embracing iterative and agile methodologies and leveraging cloud-based infrastructure. Early access to the product promotes the ability to test alternative processes and standard functionality limiting costly enhancements or changes that are usually not necessary. Have the vendor provide interactive sessions on the new LOS with project participants to establish a baseline of system capabilities.
10. Get help. Some organizations try to utilize a team comprised of all legacy individuals lacking the knowledge of the vendor, new technology, and a “what could be” mindset. Utilizing an integrator with strong LOS implementation experience paired with existing employees who understand the nuances of your operation will help to avoid common pitfalls, challenge conventional wisdom (‘this is the way we’ve always done it’), and drive the transformation process in a way that enables efficiency and quality.