Mortgage Broker Loan Origination System (LOS)

Mortgage Broker Loan Origination System (LOS): Everything You Need to Know

Mortgage brokers have a unique set of advantages and challenges. They’re agile and have the flexibility to find the best possible loan product for borrowers. But as “solopreneurs,” they rarely enjoy the support of large teams of operations, marketing and technology systems experts. To compete with enterprise lenders who are comparatively flush with resources, brokers need a comprehensive and well-integrated mortgage loan origination system (LOS) that enables them to work smarter, not harder.

This guide will cover the following:

• Key features and benefits of a loan origination system
• How an LOS helps mortgage brokers
• Ways to evaluate mortgage broker software
• How mortgage origination software is adapting to changing market needs

A loan origination system is a mortgage lending software platform that takes a mortgage transaction from origination to post-closing. An LOS is an essential tool for mortgage loan originators because it helps them manage tasks that must be completed for purchase loans and refinances, like origination, pricing and eligibility and document management. A comprehensive mortgage origination software supports brokers in their day-to-day work by centralizing these key components of their mortgage transactions in a digital platform.

A loan origination system can offer brokers deeper insight into how much mortgage an applicant can afford, which increases the likelihood of approval and hastens the loan origination process. With a complete database of loan and borrower information, mortgage brokers are rewarded with improved accuracy, enhanced productivity, better decision-making, fraud detection and more.

A substantial loan processing and servicing software can help mortgage brokers grow and differentiate themselves by powering a more efficient, customer-focused and secure homebuying experience.

Streamlined loan origination process

Out of all the advantages of a mortgage broker loan origination system, time-savings is one of the greatest. An LOS platform helps mortgage brokers achieve maximum efficiency by streamlining the process of finding, vetting and originating loans from a wide range of lenders. This enables brokers to find and present the best possible loan options for each prospective homebuyer immediately, rather than conducting manual research or relying on outdated, inaccurate loan product information.  

Enhanced customer experience

According to Investopedia, a mortgage broker typically earns around one to two percent of each loan they close. Since their compensation depends on a loan closing, mortgage brokers are incentivized to work quickly while delivering a quality customer experience. 

A loan origination system helps ensure customer satisfaction by giving borrowers a convenient, single-sign-on portal for completing tasks related to their loans. Homebuyers can submit documents and connect with their broker anytime from their mobile device. Brokers can then respond to their client’s inquiries and access critical information while on the go. In short, an LOS gets busy mortgage brokers to payday faster! 

Improved compliance and accuracy

Loan origination systems can also help mortgage brokers reduce regulatory compliance risk by giving mortgage brokers a centralized platform for managing loan documents, automating compliance checks and integrating with other compliance tools.

Increased productivity and efficiency

Mortgage broker technologies optimized for mobile use allow brokers to access LOS features from their smartphones or tablets anywhere and anytime. Maintaining a close digital connection through their loan origination software enables brokers to respond quickly to client inquiries and access critical information while on the go. As a result, brokers can close deals faster and improve overall efficiency.

Access to real-time data and analytics

A loan origination system provides brokers with real-time updates on the status of loan applications, approvals and disbursements to help them make faster, better-informed decisions. Real-time loan product data and analytics within a loan processing software help mortgage brokers reduce and otherwise manage mortgage-related fees and eliminate some of the legwork of shopping for mortgage rates.

Choosing a new loan management system for your mortgage brokering business is an important decision that can make day-to-day activities easier. Knowing what to look for in new technology goes a long way in making the right decision, so be sure to consider these critical factors.

Loan application management

A top-tier LOS will be able to compile information from consumers, credit bureaus and other third-party sources to streamline the application process. From a single platform, brokers can track the status of each loan application, communicate loan milestones with borrowers and other parties involved in the process and ensure that all necessary documentation is completed promptly.

Document management

An LOS also provides mortgage brokers a centralized platform for managing and storing critical loan documents, such as loan applications, borrower financial statements and closing documents. Centralizing these sensitive documents in a digital repository helps ensure all required documents are collected and retained as part of the loan file, which is necessary for compliance with various regulations. 

Loan product pricing and eligibility engine

Mortgage brokers can use their LOS to calculate the price of a loan, either with built-in pricing features or through an integrated product pricing engine (PPE). Single-sign-on access to risk indicators like credit score, loan amount, loan-to-value ratio and other factors helps brokers quickly and accurately determine the price of a loan based on its specific type and eligibility criteria. Mortgage broker software with scenario analysis capabilities will even let mortgage brokers test how different loan scenarios would impact the price and eligibility of the loan based on a particular borrower’s situation. 

Electronic disclosures and eSignatures

Mortgage broker loan origination systems automatically generate and deliver electronic disclosures, such as the Loan Estimate and Closing Disclosure, to ensure that the borrower receives all required disclosures on time, further reducing the risk of non-compliance with regulatory requirements.

The best mortgage broker technologies will even include an electronic signature (eSignature) capability that allows borrowers to sign loan documents and disclosures electronically. Enabling borrowers to review paperwork and submit their eSignatures through a mobile-responsive interface streamlines the loan process by reducing the need for paper documents and in-person signings.

Mobile optimization and accessibility

A mobile-optimized LOS can provide a streamlined process for brokers to input client information, pull credit reports, and obtain pre-approvals. The process can be made faster and more efficient as brokers can do it from the convenience of their mobile devices, avoiding the need for paper-based forms or manual data entry.

The from-anywhere accessibility of mobile-optimized mortgage loan origination software also leads to a better borrower experience. Mortgage brokers simply share the LOS platform with their clients to give them the ability to complete their loan applications, check their loan status, submit and sign documents, ask questions and more — all from a smartphone or tablet. 

Reporting and analytics

A quality loan origination system will come with built-in reporting tools that allow brokers to create reports that can be used to identify trends, track progress against goals and analyze loan performance. Generating custom reports that hone in on specific business goals or priorities can also give mortgage brokers a deeper understanding of their business and help them make smarter decisions backed by reliable data.

There are countless loan origination systems for mortgage professionals to choose from. Still, mortgage brokers should always proceed with caution before signing a contract with a mortgage technology vendor. Otherwise, they might end up with an unsophisticated or buggy tool that delivers more headaches than ROI. Before writing a check to an LOS vendor, mortgage brokers need to understand how a loan management platform could enhance their business.

Determine your business needs and goals

The first step a mortgage broker should take to determine measurable, achievable business goals is understanding their target markets and the specific clients they want to work with. A solid foundation of understanding will help brokers tailor their services and develop a marketing strategy that attracts their ideal consumer base. Then, mortgage brokers should review their financial performance over the past year to ensure their business goals are achievable. 

Quantitative insights help brokers identify specific areas to improve, like reducing costs or increasing revenue. Mortgage brokers can use these insights to inform a precise and repeatable action plan that outlines steps to achieve their business goals. For instance, a broker with poor engagement metrics may want to prioritize new marketing strategies, while low profitability may be solved by implementing new revenue-building technology.

Evaluate software providers

Adopting a new mortgage technology requires brokers to sacrifice the cost of a platform along with time and effort to implement and learn the new system. Here are some helpful questions that mortgage brokers should ask mortgage technology providers before entering an agreement:

• What is the scope of your mortgage technology solution, and how does it integrate with other platforms?
• How is your solution specifically tailored to the needs of mortgage brokers, and what features does it offer that differentiate it from other solutions?
• How has your technology helped other mortgage brokers increase their efficiency, productivity, and profitability?
• Does your tool ensure data security and compliance with industry regulations?
• What type of support do you provide to your clients?
• How do you ensure that your technology remains scalable and adaptable to changes in the mortgage industry? 

Consider the total cost of ownership

Ultimately, mortgage brokers must consider whether the benefits of a new loan origination system justify the costs. To make a fully informed decision, brokers should carefully evaluate the potential for return on their investment — whether it’s increased efficiency, improved customer service or higher loan volumes — against the total cost of the LOS platform.

Ask for demos and references

Before purchasing a new digital solution, it’s important to thoroughly vet the system and its provider to ensure it will be an effective and meaningful addition to the broker’s tech stack. Requesting a personalized demo can help the mortgage broker assess the features and capabilities of the digital solution so that they can make the best-informed decisions for their business.  

Talking to existing vendor customers or requesting customer testimonials can also help mortgage brokers gather feedback on the average user’s experience with the solution. Customer feedback can learn about the vendor’s level of broker-focused support, the quality of the solution and any potential challenges they may face during implementation.

Check for compliance and security

Like all loan originators, mortgage brokers are obligated to maintain compliance with rules and statutes implemented by governing institutions like the Consumer Financial Protection Bureau (CFPB), the National Credit Union Administration (NCUA) and the Federal Financial Institutions Examination Council (FFIEC). When selecting a loan origination system, a mortgage broker should prioritize compliance and security features that help ensure they operate within legal bounds and, perhaps most importantly, protect sensitive borrower information against cyber-attacks and data breaches.

A loan origination system should be stacked with features that monitor compliance with all relevant regulations and guidelines, such as the Truth in Lending Act (TILA).

Implementing a Mortgage Broker Loan Origination System (LOS)

Once a broker chooses a new loan origination solution, they must implement, configure and optimize it for their business needs. Mortgage brokers should prepare to collaborate closely with their LOS vendor through the implementation phase, which may require actions like setting up user accounts and permissions, attending product training and configuring workflows and integrations.

Training and support for users

To wield their loan management system effectively, brokers must first invest time in learning how to use it. Fortunately, high-quality mortgage technology vendors offer comprehensive training and ongoing support to ensure brokers are comfortable with the new technology. Even after completing system training, brokers should continue monitoring and adjusting the system’s performance to optimize the user experience.

Integration with existing systems

As a broker assesses potential mortgage loan processing solutions, they must consider how the tool will mesh with their existing technology stack. Does the LOS platform they’re considering feature native integrations with popular broker customer relationship management (CRM) or business intelligence tools? If not, a broker may endure a drawn-out implementation process and face months of troubleshooting before their technologies finally communicate correctly. 

Similarly, if a broker does not yet have a comprehensive lineup of digital solutions, they should ensure their loan origination system offers a robust feature set and is well-integrated with mortgage broker technologies they may want to adopt down the line. 

Data migration and management

Generic loan origination software can help brokers perform essential mortgage tasks to a degree. However, a broker-focused solution’s layered data and sophisticated features can offer them an ever more modern, customized experience. 

For example, when integrated with a point-of-sale (POS) platform, a mortgage broker loan origination system can facilitate the borrower application process, processing the loan and preparation for delivery to lender partners. While separate POS and LOS systems can be integrated using different mortgage technology vendors, certain LOS platforms offer a combined approach that helps to reduce the number of integrations required post-implementation.

Mortgage brokers should consider enrolling in educational webinars and continuing education courses to stay ahead of the curve on housing finance industry trends and innovations. The National Association of Mortgage Brokers (NAMB) offers a wide variety of educational courses designed to give brokers the advanced learning and certifications they need to further set themselves apart. 

Other resources brokers can tap into to help keep their fingers on the pulse of the evolving mortgage industry include: 

• The Mortgage Bankers Association (MBA)
• The Association of Independent Mortgage Experts (AIME)
• The National Association of Minority Mortgage Bankers of America (NAMMBA)
• State and local industry associations

How LOSs are adapting to changing market needs

Despite being a relatively new advancement in the mortgage ecosystem, loan origination systems are continuously evolving in response to changing market needs. 21st-century innovations have fueled a wave of consumer demand for digital experiences. In response, mortgage broker technology vendors seized the opportunity to adapt to evolving market priorities by developing features that support a user-friendly digital customer experience via features like online loan applications, mobile apps and automated customer support tools.

Future outlook and predictions

With the increasing availability of data and advanced analytics tools, mortgage brokers can expect loan origination systems to offer even more robust data analysis and real-time loan monitoring capabilities in the coming years. 

One significant up-and-coming innovation that will help brokers originate loans more efficiently than ever before is automated underwriting assistant, which could help brokers gather the documentation wholesale lenders need to underwrite borrowers. Artificial intelligence (AI) and chatbots are also becoming more prevalent in the financial services industry, and mortgage brokers can anticipate more loan origination systems incorporating these tools as they evolve. 

Mortgage brokers need a reliable way to reach and engage prospects, source leads and convert applications into loans while working with more limited resources than a big-box lender. A mortgage broker loan origination system is a crucial tool to effectively manage the homebuying process from application to processing, document management, underwriting and closing. 

Want a catch-all mortgage origination solution custom-built for mortgage brokers? Look no further than LoanCatcher® by Black Knight.