The recent failure of Ellie Mae's Encompass software left many mortgage providers unable to process loans. What were providers to do? Industry veteran David Lykken talks about the importance of staying nimble when technology fails
By David Lykken
Special to MPA
The mortgage industry was recently dealt a blow from an unusual source. Typically, we get the bad news from reports of a weaker economy or stories about increased regulation. But, this time, the news came from a sphere we don't often think of as having great influence--technology.
In April, the comprehensive loan origination software provider Ellie Mae experienced a denial-of-service attack. Mortgage providers using Encompass, the company's core service, had trouble using the systems and the consequences were disastrous. Many providers had a difficulty processing loans and some were even unable to close loans. The whole thing was an utter mess. What were mortgage providers supposed to do?
Some providers found a way to adapt. Rather than throwing up their hands in defeat, they sought out other third party applications to complete some of the tasks that Encompass couldn't handle at the time. For example, some providers exported files from Encompass and then used another service to generate the necessary documents for underwriting. In other words, they found a way to make it work.
What is my point in bringing all of this up? The fact is that technology will fail. We as human beings have grown very dependent on technology. When the Internet is out, we lose our ability to communicate. When the car breaks down, we lose our ability to get around. But those who are successful will always have a Plan B. They'll always be thinking of alternatives. When the Internet is down, they'll pick up the phone and call instead of sending an email; they'll get a ride with a friend or find a rental when the car breaks down.
Staying nimble is an important in uncertain times. I am a big proponent of using technology to become more efficient and effective. However, we must realize that no technology is perfect. Services will fail, and we've got to find a way to adapt. In a competitive world, only the flexible will survive.
David Lykken is 40-year industry veteran who has been an owner operator of three mortgage banking companies and a software company. As co-founder and Managing Partner of Mortgage Banking Solutions, David consults on virtually all aspects of mortgage banking with special emphasis executive leadership development, corporate strategic direction and implementation as well as mergers & acquisitions. A regular contributor on CNBC and Fox Business News, David also hosts a successful weekly radio program called “Lykken On Lending” (www.LykkenOnLending.com) that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. Recently he started producing a 1-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper websites daily across America.
