Center Stage with LoanAce

by 03 Oct 2008
Introduction / Overview: LoanAce, initially released in August 2006, is loan origination software (LOS) developed by Teravendo, Inc. LoanAce was designed for ease of use, simple navigation and provides every feature and function that a processor or loan officer would need. Most industry professionals pay a significant amount of money each year for their LOS, but LoanAce delivers its quality LOS solution to mortgage originators FREE of charge. How was LoanAce originated? LoanAce was originally the idea of a wholesale lender; it was primarily to offer a free LOS as a means to advertise. At first, it was intended to be a ?bare-bones? functional LOS ? I believe the developer quoted a cost of $65K. During development, we knew it wouldn?t matter what we thought the industry should want; success would ultimately be determined by the market ? so we gave originators what they wanted. Before deciding what would be integrated, we polled originators about what was important and truly valuable to them. $2 million dollars later, LoanAce turned out to be a fully-functional LOS with many robust features ? everything loan officers and processors would need. There are even a few luxuries many wouldn?t have thought of. How were you able to gain market share so quickly? Actually, when we first released LoanAce in 2006, gaining traction in the market was a challenge. Despite our marketing efforts, many people had not yet heard of LoanAce. Additionally, it seemed those we did reach were waiting for everybody else to adopt the idea first and then perhaps would follow if there was no bad news. Unfamiliarity was our biggest obstacle. Needless to say, initial industry adoption was disappointing. We thought most people would be inclined to switch to a fully functional FREE LOS. It was apparent that aside from price, or what LoanAce offered, getting the word out to the masses was mission-critical. So in addition to advertising, we forged business relationships with industry leaders. It was assumed some would be hesitant to change simply because they were used to their LOS ? I think its human nature. But we also knew people would consider switching if we made it easy. LoanAce is a great LOS solution. You can import all of your files from another system and it is offered for free ? switching is simple. Over time, we have started to see the network effect. The more people that downloaded and used LoanAce, the more familiar the name became to the market and in turn, the number of people downloading and using LoanAce has grown exponentially. We are very excited to see so many new users adopting LoanAce daily! Early this year, an industry resource estimated over 10% of loan officers not employed by large banks use LoanAce. Interestingly, the adoption rate varies by region ? we imagine this could be attributed to what has proven to be our most powerful marketing tool ? word of mouth. At our current pace, we think 50% of originators could be using LoanAce by 2011. There will always be some that prefer another LOS just like some people prefer vanilla ice cream over chocolate. Why is LoanAce FREE? Here?s some food for thought: There has never been any other LOS that was free. Mortgage companies and loan officers spend hundreds, if not thousands on their LOS every year; however LoanAce allows them to save those dollars. I think the real value in our software is offering services loan officers truly need in a convenient way. Nobody likes their intelligence insulted with being sold on unnecessary services. And in today?s market, every penny counts. Surprisingly, I think free is somewhat of an obstacle because it can tend to devalue the software in peoples? minds. Although now that we have gained acceptance by a substantial percentage of the industry, credibility as a quality LOS only arises for the few that haven?t heard much about LoanAce yet. Okay, let?s talk revenue. What is the strategy for profitability if you aren?t charging users a fee? First, and luckily for us, those financially backing the development work were willing to continue investing without return; they believed it was only a matter of time before LoanAce would start to corner the market. It?s looking like they were right. Second, we have integrated vendors that help us generate revenue. Through a patent-pending process, EZORDER matches the zip code of the user or borrower, depending on preference, with a vendor in the system. Originators can order title, insurance and appraisal using EZORDER. A ?Secure Electronic Courier Fee? is generated that the vendor pays us each time an order is submitted. Are there any specific features that you want to talk about? We have all the standard LOS features, but EZORDER is the newest unique feature and it was immediately popular! When users need to order title for example, they can send the order electronically to their vendor's local office. EZORDER provides users with the agents? company information next to their smiling face. The borrower data is auto-populated and sent electronically with a single click. Users can even select a vendor that is local to the borrower if they are working with a borrower in a region where they aren?t familiar with vendors. In turn, using EZORDER as the primary revenue source enables us to keep LoanAce free to loan officers which seems to be a great incentive when we ask them to start use it! We have very loyal LoanAce users and we are grateful for their support. Can you tell me about TEAM? Yes. TEAM provides a pipeline management view solution that allows brokers to view all loans in process throughout their company ? which we offer free of charge. Files can be audited for compliance and quality control prior to the loans funding. TEAM has already been adopted by many mortgage companies with a number of loan officers because they want to be able to review all files at anytime during the origination process. Moreover, regulatory agencies want to know that brokers are managing their loans from start to finish, rather than just trying to put out fires after the damage is done. Our competitors offer similar products, but they are extremely expensive. Why do you think LoanAce is the best LOS on the market? In my personal opinion, some of our competitors seem to continually invent new bells and whistles that may or may not be applicable to everyday business to justify their license fees. The problem with doing this is vital features eventually get lost beneath features that are of very little use in practice. We keep it simple. We provide everything needed to originate loans without the distracting or confusing features. According to our latest user survey, 82% of everyone that downloads LoanAce continues to use it. Because it?s free, we thought many would download out of curiosity. But given these results we are definitely on the right track. Why do some choose to pay for their LOS rather than switch? I remember receiving a call from a phone company that promised better service and pricing with an offer to switch that I couldn?t refuse. It seemed to make sense and I made the plunge....into 3 weeks of phone hell until I was able to switch back. We have all had those ?too good to be true? experiences and they make us fearful to change even when everything appears make sense on the surface. I imagine there is a similar natural reluctance when people look at our LOS for the first time and may wonder: ??so what?s the catch?? But, [more] food for thought: We?ve also all experienced paying too much on our cell phone or insurance plan for years and find out switching to another, better option would?ve saved hundreds or thousands. Hind-sight is 20/20 ? we tally up what we could?ve used that money for ?if only we could get it back?! Sometimes we are right, but we often end up spending more money than we should have. What can a new user expect when they download LoanAce for the first time? Like anything new, LoanAce will look a little different the first time but, once you are familiar with it, your previous LOS will soon look foreign to you. While I don?t want to sound overly presumptive, I think we do have the best program to offer and a business model that would be hard to beat. We have consistently been adding thousands of users and it would appear we are on our way to becoming the standard in the industry. I have to ask ? do you have a prediction for the industry? I am no economist but, as most know, the market is cyclical. I think hysteria is causing buyers to be uncertain, keeping them away from buying now, further pushing prices down. I think values will be artificially deflated below the real value because of housing market pessimism. When buyers realize that prices are not going to drop any farther, I think buyer competition will cause the market to pick up. Stability in the value of the collateral will cause lenders to feel more comfortable with reasonable risk. If I was to guess, I think things will be tolerable by the second quarter of next year and return to a good market again in 2010. Where can I find LoanAce? To download LoanAce for FREE, go to and you can start using LoanAce immediately! The Web site has a lot of great information about LoanAce and TEAM ? including a few short demos to help users get started.


Should CFPB have more supervision over credit agencies?