Contagion.

The mortgage technology market's fortunes have always been tied to the health of the overall mortgage market. So, understandably, in the current market things are not looking that great for many smaller vendors that lack large corporate parents. This is especially true for technology vendors whose solutions catered heavily to customers in the subprime world.

Yet many mortgage industry technology vendors have ridden these cycles before. For them, it is like deja vu all over again (to quote a famous American). We pay tribute to some of these tested entrepreneurial companies (and their top executives) in this year's selection of information technology (IT) All-Stars. Read about this motley crew of technology leaders in an article this month by Dona DeZube called "A Posse of IT All-Stars." This year we wanted to single out for special commendation a group we are calling LOS Pioneers. Over the years many of them have not only risked their own jobs (and those of family members), but also their own capital. And the mortgage industry can be extremely unforgiving to a small company when it gets in one of these down cycles. But many of the old-line LOS companies we salute have brought valued and reliable solutions to the mortgage business over the years--and are still out there competing.

[ILLUSTRATION OMITTED]

The current market downturn is not the only challenge facing mortgage lenders and their technology vendors. A new survey done by STRATMOR Group's Len Tichy and Tom Bascom sheds some light on the prevalence of failed IT projects in the mortgage indusutry. The survey findings are, frankly, disturbing. An article this month titled "The Business End of IT Project Failure" showcases the results of this new survey. STRATMOR found only 11 percent of survey respondents reported that their IT projects (restricted to LOS projects) had succeeded. And for this survey, "success" was defined as a project that came in on-time, on-budget and delivered all expected value. A whopping 78 percent reported their IT project fell into a category called "challenged." Those projects were either late, over-budget or delivered less than full expected value. No wonder there is such angst surrounding technology in the mortgage business.

Finally, in this issue we visit the subject of automated underwriting (AU) and weigh the question of why it couldn't flag all those bad loans that are now kicking up delinquencies and foreclosures. We study the subject from two angles: 1) Why an AU company that sold its system to a lot of nonprime lenders could not survive the meltdown and what it learned along the way; and 2) What the future of AU systems is and how they can be used to avoid another credit-quality fiasco. The first angle is covered in an article by Ed Jones, founder of ARC Systems (now closed), titled "What's Next for Technology?." The other topic is examined in an article by Bill Lehman, director of CC Pace's Mortgage Strategy Practice, Fairfax, Virginia. His article is titled "The Future of Automated Underwriting." Both articles offer worthwhile insights at a time when the industry can use an unlimited supply of good insight from the best thinkers in the business.

Janet Reilley Hewitt

Editor in Chief