EllieMae_Playbook2

ELLIE MAE

ENCOMPASS
PLAYBOOK

BACKGROUND

A loan processing system (LOS) is used to originate, price, manage conditions, generate
documents, and close a mortgage loan. It is also the system of record for the
originated loan. Ellie Mae’s Encompass provides these capabilities. Larger lenders will
use their LOS as a transaction processing system, document management system, and
an ERP for managing their organization and planning. Encompass does none of these
things.
Ellie Mae’s strength is in its simplicity, fullness of the solution, and in its market
acceptance.
Ellie Mae’s background began as a desktop point of sale for the brokerage community
and many of the limitations still exist inherently in the architecture. Primarily
Encompass sits on top of a flat file system. This means that a particular file is in
essence checked out and locked by a particular user and then unlocked and checked
back in. This is a significant limitation for large lenders with higher volume and larger
number of staff members on the system at the same time.
Contrary to the way they market, it is not a true cloud based system.

02

SALES OPPORTUNITIES

In general, CEO’s and CIO’s inside mortgage origination companies
have 3 main needs in today’s marketplace:

Enhance the consumer experience
Drive more efficient operations
Reduce the cost of origination to increase earnings
Remain compliant

There are a handful of Encompass limitations that provide the
opportunity for Tavant to sell products and services.

Data
Pricing
Consumer interaction
Straight-to-close
Enterprise IT Maintenance and Performance

03

THIRD PARTY DATA

Tavant Opportunity:
Encompass makes data calls to service providers and collects data from manual input to store for
its own use. In many cases lenders would like access to all data Encompass collects for use in
processing or the consumer journey, and it is difficult to do with Encompass.
As already stated Encompass uses a flat file system preventing direct access or queries.
Encompass is not a transaction processing system in the general meaning of the term. Nor is it
multi-user.

For Example:
A large lender prospect recently told us that he couldn’t get access to Fannie’s DU data through
Empower. Empower makes a DU call and stores the finds as a document. Data is selected and
pulled into the system based on decisioning/requirement needs. Many conditions are not pulled
into the decisioning process and thus unavailable for this lender.

The Solution:
Tavant can wrap its platform and services around EllieMae enabling lenders access to data that
is key to their operations. In the case above, Tavant can call DU from FinConnect and parse the
data from the DU returned XML and provide to the lender or store. Using the same loan
application ID, a processor can make the same DU call to store liabilities in Encompass or Tavant
can store the data through Encompasses API.
In general this is a strategy of reducing dependency on Encompass and replacing services,
leaving Encompass in place as the system of record and compliance engine.

Be Careful:
This strategy is very competitive to Ellie Mae. A good amount of their revenue comes from
transaction fees from direct calls from Encompass to service providers. In fact, they charge
upwards of 40% to some vendors like CoreLogic. If Ellie finds out that we are pursuing this
strategy in a particular account they are likely to sell adversely against Tavant.
Lenders do not want to replace their LOS even if they hate it. It is important not to come across
as if Tavant is in the LOS market or wants to replace their LOS with another 3P.

04

LOAN PROCESSING DATA

Tavant Opportunity:

As already noted, Encompass stores their data as flat files. It is very hard to do analysis of that data and
impossible to perform a structured query outside of Encompass which holds the index internally. There
is no ability to:

Perform data analysis and decision support
Perform predictive modeling
Use the data for upselling

The Solution:

Tavant can wrap the file system and make it easier for lending enterprises to use the data more
powerfully.

05

CONSUMER JOURNEY

Tavant Opportunity:

Ellie Mae’s ConsumerConnect is their solution for the consumer experience. In comparison to other
solutions the experience is very flat and lacks the rich data driven experience in top sites. By flat we mean
more form-based than dynamic.
The old Consumer Direct did not support Home Equity loans/lines. It is necessary to validate if that is true
today and if they have various loan product options or if it is straight mortgages.
The old Consumer Direct also supported only the Encompass product and pricing engine. [Needs
validation]
Encompass does not support third party channels very well.

Example:

FinXperience is a learning system. In FinXperience, we wait until we get the right buying signals from a
consumer before asking to register a user name and password.
Blend or ConsumerConnect cannot yet order DU to bring into the consumer journey. In fact neither
solution calls for a full credit report, which is rich in data.

Solution:

Use FinConnect and FinXperience on top of Encompass to build a rich consumer experience. Tavant has
a long successful history of of enabling the consumer journey digitally in markets other than financial
services including customers, such as New York Times and Major League Baseball.
FinXperience supports a digital omni-channel solution that includes a broker portal and correspondent.

Be Careful:

Ellie Mae gives its consumer portal to its customers for free. Roostify and Blend offers their solutions
for a transaction fee.
FinXperience must include FinConnect and potentially finCapture in order to provide the full
FinXperience. This can be confusing.

06

PRICING

Tavant Opportunity:

Ellie Mae’s pricing engine is very rudimentary. Many Ellie customers complain that it is hard to use and
opt for a different solution such as Optimal Blue. It is a simple rules-based engine directly tied to the
Encompass client that makes it difficult to centrally maintain in large organizations.

For Example:

Very often multi-state lenders may want to do a price campaign in a particular area that is time stamped
to some future time and for a specific period. That is not possible with Ellie Mae’s pricing engine. (It can
in a round about way by creating a product that is only offered to that specific area.)

The Solution:

Tavant’s core can deploy its rules engine and expertise to create an easier way for clients to create and
maintain their product pricing. Tavant has significant experience with Empower carving out its pricing
capability for larger lenders.
[How will the rates be captured and entered in the system? Many lenders adjust rates twice a day. How is
that managed?]

Be Careful:

Many LOS’s like Encompass use pricing rules to manage workflow tasks in the system. This is a poor
architecture. That said, due to the limitations of the Encompass platform, two sets of pricing rules must
be maintained.

07

STRAIGHT TO CLOSE

Tavant Opportunity:

Encompass in many ways is a closed system regardless of market positioning. Customers want to reduce
cost by getting rid of human interaction during the loan processing cycle. Ellie Mae’s Encompass does
exactly the opposite. It acts as a case management system that defines human tasks to be completed in
a linear or synchronous way. Step 1 then to step 2 then to step 3, and so on.

For Example:

A large lender in Dallas wants to use DU findings to automatically order data services that are required as
conditions in the Mid-Office.

The Solution:

Tavant announced its FinDigital strategy during the CIO Forum in Chicago this year. Key technologies
include: cognitive computing, collaboration, and big data among others. All are Tavant strongholds.

Be Careful:

This is extremely, competitively sensitive to Ellie Mae.

08

ENTERPRISE IT MAINTENANCE

Tavant Opportunity:

As mentioned, Ellie Mae is a file-based system. It is not multi-user. It is in no way a transactional
processing system. Encompass cannot handle large loan volume. This makes it extremely difficult for
large enterprises to maintain things like security, performance, business continuity, disaster recovery,
and organizational hierarchy. In addition it is very hard to perform enterprise planning and document
management.

For example:

At JPMorgan Chase or Quicken their system of record (the underlying loan file) is a real-time transaction
processing system that is petabytes in size. It is mission critical. There is no way that either would use a
flat file system. That would be like the Central Bank of the U.S. using Excel as their general ledger.
If an LO or LP is using Encompass and his or her laptop battery goes out all the data in the experience
before a final save is lost. (There are some auto-save functions but likely data will be lost.)

The Solution

Tavant can reduce dependency on Encompass in a surround and extend strategy and allow large lenders
to keep their Encompass implementation and not have to perform an LOS change which is equivalent to
performing heart surgery on the pilot of a 747 at 30,000 feet above Saint Louis.

Be Careful:

Tavant is not replacing the loan processing system. Tavant is not in the LOS business.

09

SERVICES

Tavant Opportunity:

Tavant works with many lenders to help deploy their solution. We have a center of excellence with over
20 engineers that are certified by EllieMae and growing.

The Solution

We can not only assist with implementation, but can help keep the test and production systems accurate
Review business rules to adapt to Tavant surround and extend methodology
Create integrations direct to core servicing platform

10

REFERENCE CUSTOMERS

Tavant has performed the above strategies in the following customers:

DRB Mortgage
First Guaranty
Planet Home Lending
Guaranty Bank

Tavant is in talks with these following name-brand Encompass customers:

UAMC
US Bank
Nationstar

11

Tel: +1-866-9-TAVANT | Fax: +1-408-519-5401 | [email protected]
Santa Clara | New York | Indianapolis | Toronto | London | Bengaluru | Noida