Dexma's quiet rise: with a Midwestern company's pragmatism, Dexma has partnered its way to survival in the mortgage technology business. One promising niche for the company has been wiring credit unions' mortgage operations.

Author:Bergsman, Steve
Position:Cover Report: Technology

Probably the most unusual thing about Dexma Inc., besides its name, is that it still exists today. * Dexma toils in the narrow industrial niche of mortgage technology, a veritable cemetery of high-tech ambition. * By one count, 22 technology companies in the mortgage industry have failed and, says Steve Mase, president and founder of Dexma, "We were probably at the graveside service for about 10 of them, where they divvy up the estate after it failed." * There was always too little to bequeath. So Dexma, from its outpost in Edina, Minnesota, scraped by on its own. Dexma survived and prospered because it had an old-fashioned, Midwestern philosophy: Rather than raise money, it preferred to make money. * The company wasn't an unknown. Venture capitalists often made the trek north to visit Dexma's corporate offices. "There was a lot of temptation for us to take our youthful zeal, go out and claim we were going to change the industry and raise money with that concept," says Mase. * But it didn't.

To this day, Mase asserts his company has been able to remain in the game because it flaunted conventional wisdom. "We had people who came here from very respectable accounting firms, and told us we were stupid if we didn't raise money. It was a big money grab out there, and people that did that found themselves overburdened with VCs [venture capitalists] on their board and with the concept that raising money was easier than actually doing something."

While there were, of course, many reasons why so many mortgage technology companies failed--poorly conceived models, technological dead-ends, costly infrastructure, etc.--it is really more interesting to see how and why other companies survive and continue to succeed. Dexma is one of them.

Hitting its stride

Currently, Dexma's platforms drive more than $30 billion in monthly loan volume, the company estimates. Its core technology, the Transaction Director, powers the retail and wholesale platforms for more than 50 financial service companies, including several top mortgage lenders, credit unions and mortgage insurance companies.

"One of the things Dexma does very well is move mortgage data around where and when it needs to be moved," explains Sheila Plunkett, Dexma's vice president of sales and marketing.

Today a single loan is still touched by more than a dozen parties and involves multiple transactions before it is funded. Dexma technology connects lenders with the many parties involved in a mortgage transaction, enabling lenders to drive loans through a fully automated process.

The key piece of Dexma technology, the Transaction Director, is part of every technology solution offered by the company--whether it's directed to retail, wholesale or correspondent business. The Transaction Director instantly routes the many pieces of information required for a typical mortgage and provides a centralized means of accessing all of the services necessary to fulfill a mortgage.

Dexma also boasts one of the best bragging points in the mortgage technology industry: It built Desktop Originator[R] (DO) and Desktop Underwriter[R] (DU) on Web for Fannie Mae.

Dexma's expertise from a technology perspective is really in interfacing things, explains Mase. "The mortgage industry is sometimes described as a buffet table. A lot of people eat at the buffet table, but from a technology perspective the people at the buffet table cannot talk to one another. We have had the opportunity to step in and build interfaces to all of these buffet guests that are part of the mortgage process--title companies, Fannie Mae [and the other secondary market players], underwriting companies, mortgage insurance firms, appraisers, loan originators, document preparers, etc."

A lot has changed for Dexma very quickly, Plunkett adds. "When we started in the mid-199os, we didn't have a product. We tended to build custom solutions for lenders. Now we have one of the best technology solutions for the mortgage marketplace," she says.

The brothers gather

One morning in 1995, Bill Mase, who was working for a large bank, gathered for breakfast at a local Perkins restaurant with his brother Steve and a few friends. Bill Mase had taken a job with ALLTEL Corporation, and was going to be moving from Minneapolis to., Jacksonville, Florida. At the breakfast were a number of experienced entrepreneurs--in particular his brother, who had founded a couple of small high-tech companies that serviced the Financial service industry.

Bill Mase explained to everyone that ALLTEL was trying to create technology for the mortgage industry; that it was trying to do everything for...

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