Loan Origination Systems – Build vs. Buy

Mortgage loan origination systems (LOS) are critical tools for mortgage lenders and banks to manage the mortgage application process from origination to closing. When it comes to deciding whether to build or buy an LOS, several factors need to be considered, including time to market and ongoing maintenance.

Building an LOS in-house allows for complete customization to fit the specific needs and processes of the organization. It ensures that the system aligns perfectly with the company’s workflows and requirements.

With an in-house-built LOS, the organization has full control over the development process, allowing for rapid adjustments and updates as needed.

Building a proprietary LOS can provide a competitive advantage in the market if it offers unique features or efficiencies not available in off-the-shelf solutions.

Purchasing an LOS from a vendor typically offers a faster time to market compared to building one from scratch. This can be crucial in competitive markets or when regulatory deadlines must be met.

Buying an LOS often involves lower upfront costs compared to building one internally. While there may be ongoing licensing or subscription fees, they can be more predictable than the ongoing costs of maintaining an in-house system.

Vendors specializing in LOS have extensive experience and expertise in developing and maintaining these systems. This can translate to a more robust and feature-rich solution compared to what an organization could develop on its own.

Vendor-provided LOS often come with regular updates, maintenance, and technical support, reducing the burden on internal IT resources.

In terms of time to market, buying an LOS from a reputable vendor is generally faster than building one internally. Vendors have already invested significant time and resources in developing their systems, so they can typically be deployed more quickly. This can be particularly advantageous when there are urgent business needs or regulatory deadlines to meet.

With an in-house built LOS, the organization is responsible for ongoing maintenance, updates, and support. This can require a dedicated team of developers and IT staff to ensure the system remains functional and compliant with changing regulations.

When purchasing an LOS from a vendor, maintenance and support are typically included as part of the service agreement. Vendors handle updates, bug fixes, and technical support, freeing up internal resources for other tasks. However, it’s essential to carefully review the terms of the service agreement to understand what is covered and any potential additional costs.

Ultimately, the decision to build or buy an LOS depends on factors such as the organization’s specific needs, available resources, and strategic objectives. Many organizations opt for a hybrid approach, leveraging off-the-shelf solutions for core functionality while customizing or integrating additional features as needed.

Dragon9 Partners is your technology enabler. We can help you get to lending faster with our Mortgage Technology as a Service (MTaaS) platform.

We are here to work with you throughout the entire origination cycle. We can provide strategic alignment, project execution, cybersecurity implementation, infrastructure, setup and maintenance and enterprise application development. Call us. We are ready to support your organizational needs.

Richard Hernandez is the Chief Product Officer for Dragon9 Partners. Rich brings a wealth of knowledge and insight into the complexities of the mortgage lending process, specializing in software product development and management. Rich has played a pivotal role in shaping the direction and success of various mortgage-related products and services while working with lenders such as: Option One, New Penn and loanDepot. Rich’s ability to adapt to different organizational cultures and challenges has made him a valuable asset in driving innovation and growth within each company he has been a part of.

Contact Information –

rhernandez@dragon9partners.com