IT SEEMS LIKE IT'S BEEN RAINING FOR DAYS, but on this January morning the rain stops. Cumulus masses hovering over the Bellevue, Washington, hills break into segments and lumber away from the offices of Harland Financial Solutions Inc., makers of leading loan origination tools for mortgage banks.
Just as the traffic outside on Highway 520 inches toward Seattle, the people inside this building are inching closer to the "extended electronic enterprise," otherwise known as INTERLINQ [E.sub.3][TM]--the company's latest loan origination product.
If the rollout is successful, the company formerly known as INTERLINQ Software Corporation may have finally emerged victorious from recent inertia.
Optimism is rampant inside this building, especially from Michael Jackman, the former chief executive officer of INTERLINQ, who now leads Harland's mortgage solutions group. "I feel infinitely more confident," he says, "that what we're going to deliver to our customers is what they need and what they want."
Seeing clearly now?
INTERLINQ was founded in 1982 as Continental Computer. In what is largely a fragmented market, its flagship product, INTERLINQ MortgageWare. is today the leading mortgage solution for financial services companies, having captured a 21 percent share of all U.S. mortgage lenders, according to mortgage technology research firm MORTECH LLC, Chester, Connecticut.
Although by no means a flashy product-it is primarily a text-based solution--MortgageWare remains a popular item among bankers. "Even while they've been recrafting their Mortgage Ware products, they really have not lost a whole lot of market share," says MORTECH President Jeff Lebowitz. "They've been able to hold their own."
For a while at least, there was reason to think INTERLINQ wouldn't. During the 1990s, as competitors were returning to market with Windows [R]-based and later browser-based loan origination system (LOS) tools, INTERLINQ stuck with its text-based solution. Then, depending on who you talk to, the company sort of lost its edge.
By 2000, INTERLINQ was having trouble raising money, its revenues were falling and the rollout of its next-generation origination system kept hitting delays. The company had been a publicly traded entity since 1993, and none of these problems pleased investors very much. In April 2001, former Chief Executive Officer Jiri Nechleba resigned amid layoffs and executive departures.
"It wasn't that they were struggling financially," says Richard Beidl, a mortgage industry analyst and president of Denver-based consulting firm Loangevity Inc. "The biggest thing was they wanted to make the kinds of investments in their product that they needed to make, not only to bring it up to date but to bring it ahead."
For INTERLINQ, getting past this hurdle meant being acquired. After fielding offers from other suitors, the company was bought in October 2002 by Harland Financial Solutions, the software unit of check-printing company John H. Harland Co., Atlanta. John. H. Harland Co. provides banking, billing, customer-management software and other tools to more than 6,000 financial institutions.
Harland was already into the mortgage origination and compliance business with its SMART [TM] suite of mortgage products. However, Harland Financial Solutions President John O'Malley acknowledges that SMART was "very small," with few customers. "We made a decision that we either had to get bigger or get smaller," he says.
Harland decided it wanted to stay in the mortgage business, but only if it could offer leading solutions. "For us, acquisition was the way there," O'Malley says. "We looked at the market leader [INTERLINQ], and also took a look at where they were going and the investment they were making in their [E.sub.3] product."
Harland liked what it saw. For the $33 million it paid for INTERLINQ, Harland instantly became a leading LOS vendor. "We do believe that this is an organization that has a tremendous amount of experience ... that was important to us," O'Malley says. "Broadly speaking, lending is an area that we believe we can leverage a lot of our core competencies."
For INTERLINQ, Harland brought the financial stability to pursue its dreams. "It takes out a big question mark," says Jackman, who notes that Harland...