Home ownership is a sign of stability, security, and a life milestone for many Americans. Ironically, the industry providing the keys to this essential part of the American Dream is constantly in a state of transition, dependent on the political climate. Keeping up with the changing tides emanating from Capitol Hill pulls resources away from business building, hindering many lenders from remaining competitive and providing the best service and offerings to their clients.
Initially built for automation, technology is becoming a force for compliance and competition. End-to-end solutions like Asurity Technologies’ award-winning MRGDocs, a smart loan documents processing system, and RiskExec, a web-based compliance risk analysis and reporting platform, empower lenders to proactively mitigate risk. With 100% compliant loan documents, risk analysis and reporting, state-of-the-art data infrastructure, an ecosystem of expertise from engineering to regulation, and a committed customer and technical support team. Asurity is turning compliance into a competitive advantage for lenders so they can focus on business growth.
Our editor interviewed (left to right) Kathleen (Kathy) Mantych, Asurity’s Senior Director of Business Development and Sales for MRGDocs; Luke Wimer, Asurity’s Chief Operations Officer; and Chris Anderson, Asurity’s Senior Sales Executive for MRGDocs, about the state of the mortgage industry, regulation politics, the role of technology, and the impact of it all on the economy.
Q: How would you describe the current state of the mortgage industry?
Luke Wimer: The mortgage industry is at a turning point, but a slow one. Everyone is trying to figure out how to electronify processes, new entrants are putting emphasis on the customer experience, and regulatory action, while it has levelled off some, remains a significant factor. This is a challenge because although innovation with control is needed to survive and compete, we are in a sector with razor thin margins.
Q: What is the biggest challenge facing the industry today?
Chris Anderson: In today’s lending environment, it is increasingly expensive and difficult to originate a loan that is 100% compliant. Over the past seven years, an influx of third-party wholesalers dealing primarily with mortgage brokerage businesses have entered the fray, providing competitive rates and positive customer experiences that some of the bigger banks have yet to perfect. On top of that, interest rates are rising, pushing lenders to consolidate in an attempt to increase share in an already tight market. And of course, regulations are constantly in a state of transition based on the political landscape, with lenders beholden to requirements from the federal, state, and investor levels.
In response to this increasingly complex and costly scenario, savvy lenders are turning to technology to create efficiencies across the board. The greatest value we offer our clients through solutions like RiskExec and MRGDocs is peace of mind at every stage of the loan lifecycle and leading up to the compliance exams so they can focus on the business at hand, whether that’s making their customer service competitive, increasing market share, or adding new services.
Q: What trends are you noticing in compliance management?
Kathy Mantych: Compliance and technology are becoming an integrated part of the entire loan lifecycle, as opposed to just segments of that cycle. Lenders are focusing not only on automation and efficiencies, but on improving quality and cost as well.
Q: How is technology influencing the future of the mortgage industry?
Chris Anderson: Technology has been and will continue to be the driving force behind increased efficiency and better customer service. Whether it’s technology that automates previously manual processes or a platform or partner that ensures lenders are doing it right the first time, technology is enabling users and borrowers to experience a smoother process from the origination to closing.
Q: What is a major challenge facing the mortgage industry?
Kathy Mantych: One major challenge is the adoption of compliance tools and technology available to mortgage lenders and banks. It’s challenging because the regulatory environment changes constantly. From a compliance risk perspective, we need to adopt new technology in order to mitigate that risk in real time.
Another challenge is that both lenders and vendors have spent a lot of time and money implementing regulatory changes in the past few years, which has distracted them from focusing on their core business – building revenue and providing borrowers with a better customer experience.
Q: There have been a lot of regulatory rollbacks over the past year that were intended to prevent future financial crises – especially as it relates to the housing finance industry. How might that impact the housing industry over the next five years, and the overall economy?
Kathy Mantych: There have been, and always will be regulatory changes, the most significant to date being the recent impact of TRID. By continuing to monitor both sides of the lender to consumer relationship through compliance enforcement and regulatory rollbacks, we should be able to maintain a healthy balance that allows for steady growth.
Chris Anderson: I think these rollbacks can only help the industry. A number of the industry’s new regulations over the past nine years have only made it more difficult and costly to lend money. By rolling back some of the more onerous regulations, we should see consumers having more access to funds, allowing for more loans to be made to borrowers at a lower price.
Luke Wimer: Making it easier for smaller lenders to issue mortgages should have a positive economic effect, and allowing borrowers a little more judgement in loan-making while retaining risk is healthy.
Some of this boost could be offset by consumer protection concerns. For example, requiring less borrower data might lead to an uptick in fraud or less clarity on whether certain borrowers are being fairly treated. There are also indications that there will be fewer violators pursued and less of a voice for consumers. We will not see the CFPB become a “Yelp for financial services”.
We have to look at both enforcement and regulatory rollbacks together. Lenders will behave based on the rules and whether they fear punitive action by regulators. This does not mean lenders will not choose to be compliant; rather, I think their ability to comply with regulations will be reflected in the level of investment or intensity of compliance processes. It appears that federal and state regulators are still focused on consumer protection, which should prevent a complete backslide. Overall, I think banks will benefit from lower administrative costs while remaining compliant and customer-focused.
Q: How is Asurity Technologies helping mortgage professionals overcome those challenges and look to the future?
Luke Wimer: Asurity monitors, interprets, and delivers current compliance so mortgage professionals can focus on giving loans to consumers. We are making good compliance easy by helping mortgage businesses protect their consumers in an informed way.
Kathy Mantych: Our solutions look at the entire loan life cycle from beginning to end. Compliance tools like MRGDocs and RiskExec that bring together years of in-depth regulatory, legal, and technology expertise and experience create operational efficiencies from origination to servicing and beyond.
Q: What do you love about working in the mortgage industry?
Luke Wimer: Home ownership is the American dream. Fairness and consumer protection is a big part of that and an implied promise of our democratic economy and government. We are delivering on these promises every day.
Kathy Mantych: This industry operates like a large family; many of us have known each other for years as colleagues and peers. Together, mortgage lenders and technology providers are creating a positive environment for the consumer. It is exciting to be a part of that rising tide.
Luke Wimer is Chief Operating Officer of Asurity Technologies. An innovative executive for more than 30 years, Luke has depth in operations, technology, finance, and product development, and has successfully scaled and transformed businesses. Prior to Asurity Technologies, Luke served as Executive Vice President of Global Operations and Chief Information Officer for MoneyGram, International; Principal at Thomas H. Lee Partners, the Boston-based private equity firm; and as a Vice President at Capital One.
Luke Wimer thinks:
1.) Boosted by deregulation, big lenders will get bigger.
2.) The big players in the industry may be slow to adopt change but they will ultimately buy technology or copy innovation and edge smaller players out.
3.) We will continue to have cycles of regulation and deregulation. Mortgage lending will remain a difficult business throughout these transitions.
Chris Anderson is a Senior Sales Executive with Asurity Technologies’ smart loan document solution, MRGDocs. Over the past 24 years, Chris has worked in various strategic roles across the financial services industry, enabling efficiency and providing better products and services to consumers. Since joining Asurity in 2017, Chris has focused on exploring strategic partnerships, developing business cases for new products and marketing, and setting the strategic direction of product lines.
Chris Anderson thinks:
1.) As rates rise, borrowers on the fence will finally make a decision that they better purchase now or pay higher interest rates and therefore, higher monthly payments.
2.) Loosening regulations and adjustments to qualifying requirements will enable more and more younger people, like millennials who are saddled with student loan debt, to finally afford to buy their first home.
3.) With the reintroduction of Non-QM (Non-Qualified Mortgage) loans, more consumers with lower than minimum credit scores will again be able to purchase homes where they have not been able to previously since the great recession started in 2008.
Kathleen Mantych is a Senior Director of Business Development & Sales at Asurity Technologies. Kathy has a comprehensive background spanning 30 years in complex software environments providing organizations with business growth strategies and leadership necessary to drive revenue and return on investment. She joined the MRGDocs team in 2010 and has spent the past eight years driving the company’s growth and expansion by way of indirect and direct sales channels.
Kathy Mantych thinks:
1.) The industry will continue to fast-track technology adoption for operational efficiencies.
2.) Compliance complexity will increase with White House administration policy changes.
3.) The lender and vendor community will continue to condense over the next 5 to 10 years due to the overall cost of maintaining compliance amidst new regulations.