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Special Reports
Origination Technology
Origination Technology Helps First Magnus Grow
By Brad Finkelstein
In just 10 years of business, First Magnus has grown to be the nation's 14th largest
wholesaler and one of the largest privately held mortgage companies.
According to its chief technology officer, Dominick Marchetti, it is because of
the way it built its proprietary technology that allowed for its remarkable growth. According to ON's data gathering
affiliate, First Magnus did $13.9 billion in wholesale production in the first nine months of 2006, up 17% from
$11.9 billion for the same time frame in 2005.
In creating the technology when the company first opened for business back in
October 1996, First Magnus wanted its platform to mimic those of the larger players in the business, Mr. Marchetti
said. It sought to automate every function.
Another advantage is because of the company's youth, it does not have any legacy
systems. Rather it uses most of the modern tools available in creating its technology, including service-oriented
architecture, XML and .NET programming.
There is a 340-person technology staff, of which 85% work on the development side.
They serve a growing operation of 55,000 employees with 350 offices located in 39 states. "Our industry is
dynamic," Mr. Marchetti said, noting the staff has to be ready for product changes. The aim was to be "nimble
in the space," with ongoing system upgrades.
What First Magnus has done, as a result, is to be flexible and meet market demands.
In an average week, some 45 enhancements are made to its platform and the tech
staff works on an average of four-and-one-half projects per month.
A key to that flexibility is that the company is privately held, unlike most of
its larger or similarly sized competitors, which are publicly owned.
Mr. Marchetti said this gives First Magnus the ability to react very quickly to
changes in the marketplace. The publicly traded firms are beholden to their shareholders and board of directors.
Not having to worry about short-term issues such as stock price allows the company
to take a long-term view in its planning, he said, providing its competitive advantage.
Among new functionalities recently added to the system is the product finder,
where the mortgage broker uploads a scenario and the system returns a match.
Mr. Marchetti noted that many of its competitors have their own version of product
finder. In creating First Magnus, and because the system is proprietary, the technology staff was able to combine
the "best aspects" of the existing systems.
What makes it user friendly, he said, is that while the system will show near-miss
products, it will not return every product where a parameter is off.
Rather it just gives those products where that parameter is under the control
of the borrower or the broker.
He gave the example of some systems return loans where the parameter that needs
to be changed is the state where the property is located.
This gives a much smaller list, typically about five different products, instead
of hundreds.
Once that product is selected, Mr. Marchetti said, the mortgage broker could lock
the loan directly from that point.
He said the impact of this product finder is the same as automated underwriting
had on the mortgage origination business four or five years ago.
The system also allows for automatic status notifications to be made. There is
a list of some 500 events that trigger a notification, with more being added.
Imaging is another area First Magnus has concentrated its technology efforts on.
The latest improvements allow mortgage brokers and their customers to view the images of documents connected with
the file.
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