Customer Empowerment A Key Driver Of Satisfaction In Mortgage

Typical consumers are fairly comfortable with the digital world we live in today.  These savvy web-surfers confidently search online for products and services; conduct research on the performance and reputation of providers; compare the features and pricing of similar solutions; and execute on their decisions when they are ready.  If interacting with a customer service professional or “robot” is required before consumers can proceed, it can certainly dampen customer satisfaction levels, negatively impact sales and reflect poorly on the company’s brand.

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It’s not that consumers always want to do everything themselves – but they do want to be empowered to act independently if they so choose. They want the website, program or app to be easy to find and understand; available upon demand; and to be so well-designed and intuitive that little to no thinking is required to achieve their desired outcome. 

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Research findings also suggest that customers who are empowered with ready access to the information and functionality they need to conduct business independently tend to have a positive experience with the process, which often translates into a positive opinion of the company and its solutions, and ultimately sales. 

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Freeing Up Data and Information

Traditionally, mortgage servicers have been the primary gatekeepers of mortgage-related customer information, as well as the data associated with their home loans. To access this information, customers must interact directly with their providers, ask them to determine their options, and then request the analysis required to make recommendations about the customer’s best course of action. This accessibility barrier to loan information contradicts the ease of self-service options for other types of information that deliver details faster and more efficiently to customers on demand.

Widespread internet access means that most consumers can visit an extensive number of websites and apps that make self-service both possible and easily accessible. From airline and hotel apps to retail shopping, education, banking and social networking apps, consumers enjoy the satisfaction of doing business online, quickly finding the information they need and completing their transactions.  Today, people can even purchase a car online and have it delivered to their front door – all without speaking to a salesperson!

Of course, there are still a number of business sectors where consumer access to information and analysis for decision-making is difficult, if not impossible. And, many consumers still prefer to interact with a company representative to discuss product and service options before deciding upon a course of action. With today’s digital technology, this personal interaction can now be a choice based upon a consumer’s preference – rather than a requirement for consumers to get the information and answers they need.

Empowering the Homeowner with Information

One of the most important investments many consumers make is the purchase of a home. There are several helpful websites and apps that enable potential buyers to see homes that are for sale; learn about neighborhoods, schools, and crime rates; find out how much taxes are; and even see a 360-degree view of a home’s interior. Real estate agents are readily available to support the buying process with just the click of a button on a website. And, on many sites, lenders stand ready to offer the consumer approval on a mortgage loan. With these self-service capabilities, the consumer can use their personal device (e.g., laptop, tablet or smartphone) to find one of the most important wealth-building assets they will ever own.

Once they’ve secured a loan, homeowners benefit from understanding how to best manage their home loan. Certainly, many consumers can obtain information about their house payments, amount of interest paid, how much equity is in their home and other related information on their bank’s website. What may not be readily apparent to them is what to do with this information or how to manage their property wealth as the years go by.

This is where a mortgage servicing app can become a consumer’s best friend — but not just any app that provides information based upon static data. What is needed is a dynamic application that accesses up-to-the-minute data to give homeowners the information they need for future home- or loan-related decision-making.

Scenario Simulation and More

We know that many, if not most, consumers prefer to access their mortgage information online without the intervention of a customer service rep (unless they ask for one). But we also know that homeowners are not always financially savvy about how best to leverage and maximize the wealth in their homes. To help consumers make the decisions that are best for them, they need current information about their payments, interest rate and equity; how the value of their home compares to similar homes in their neighborhood; and the impact of various financial decisions they could make. And, these details need to be easily accessible and consumable. 

Today’s banking apps certainly provide basic information about the status of a consumer’s existing accounts.  But what if a mortgage servicer provided its customers with an interactive app that could do much more – such as simulate different scenarios regarding how consumers might use the equity they are building in their homes.  Such an app could offer a dashboard that would provide a quick view of market and neighborhood information, as well as the ability to click a button to make a payment. The app could also show consumers what the current (real-time) value of their home is; how a refi would impact their monthly payments or interest savings; and how making an additional principal payment on a monthly basis or in a lump sum would improve the time required to pay off their loan. This app could also show other information, such as current interest rates available or special deals their lenders may have available.

Ultimately, this is the kind of do-it-yourself functionality that mortgage customers want at their point of need. They want to be educated about what they need to know, review different scenarios, compare options, and act when and if they decide to. They want quick access to customer support if they need it, without feeling intruded upon. This is customer empowerment at its finest, and can help build the kind of customer satisfaction – and customer retention – that will last. 

About The Author

Leading-Edge AI In Mortgage Lending

Previously CEO of HeavyWater Inc., the mortgage-focused Artificial Intelligence (AI) provider recently acquired by Black Knight, Inc, Soofi Safavi now serves as Managing Director of Black Knight’s Applied AI group, bringing leading-edge AI and computing capabilities to the Black Knight product portfolio. With over 20 years of experience in mortgage and banking technology, and deep expertise in IT strategy, architecture and machine learning, Soofi is uniquely suited to discuss AI’s role in the mortgage industry.

Q: It seems as though Artificial Intelligence (AI) has resulted in incredible advancements across so many industries, but we haven’t seen the same in the mortgage industry. Why is that?

SOOFI SAFAVI: I would say that we simply haven’t seen it –yet. The mortgage industry is a very complex environment that requires vast amounts of expert knowledge to navigate effectively. That is why there is still so much work to be to be done despite a never-ending quest for increasing efficiency through technology. AI will be key for not only increasing efficiencies, but also identifying and eliminating deficiencies.

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Every day in our industry, we have thousands of experts leveraging technology to perform a series of activities and tasks that are essential to the mortgage process, from origination through servicing. The goal with a mortgage industry-focused AI is to capture that knowledge and replicate it within algorithms via machine learning.

From a high level, AI is about using computer systems that are able to perform tasks normally requiring human intervention. Machine learning is a type of AI that allows computers to learn without being explicitly programmed. It is a technology that uses algorithms to learn from and make predictions on data. It reads, comprehends and draws conclusions based on context to mimic human thinking and build expertise over time.  

An AI that can learn from the experts who are currently performing all of the many tasks involved in the mortgage process can offload much of the manual effort to technology. The mortgage professionals doing that manual work today can then shift into a different role, one more suited to the knowledge worker-based economy of the 21st century. They become teachers and guides of the AI, and make the decisions only humans can make. 

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Q: That raises an interesting question. There is a lot of uncertainty associated with AI. Many feel that individual’s jobs may be at risk if AI takes over much of the manual processing associated with the mortgage industry. What would you say to these people?

SOOFI SAFAVI: My answer would be twofold. First, I’d say look to history. Repeatedly in our industry – and others – the introduction of new technology has spurred fears of machines replacing people. When automated underwriting systems first came on the scene, many underwriters feared for their jobs. In fact, what they did was reduce friction in the mortgage process, allowing for what had been an entirely manual process to become more streamlined. The end result was increased efficiency and throughput, calling for far moremortgage professionals, not less.

While AI is light years ahead of automated underwriting, I expect the same will be true today. In the current environment, there is a significant amount of rigidness in mortgage origination, and people tend to go through this process a handful of times in their life. The potential for reducing friction in the mortgage process has increased exponentially with the advent of AI. What has for many years been a long, exhaustive and laborious process – on the part of the homebuyer as well as those of us in the industry – will see reduced friction via the automation afforded by AI. 

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An AI that has been taught to perform traditionally repetitive functions can do so more quickly and accurately than traditional methods. For example, verifying income, assets and insurance coverage; all traditionally manual activities that take hours to complete and are prone to error. Putting AI to work on these stare-and-compare tasks frees up highly-skilled mortgage professionals to focus on creating value, enhancing the customer experience and expanding production rather than simply executing repetitive functions.

Reduced friction equates to increased opportunity, for borrowers and mortgage professionals alike. If you remove that friction, and the underlying operational inefficiencies behind them, the home buying process will become much more fluid. A smoother, simpler process augmented by technology becomes one that can occur with more frequency throughout an individual’s life. And that opens the door to more innovation around products – loan products, technology products, credit products, and more – to support that increased frequency.

I would imagine that, much like was experienced with automated underwriting, a frictionless process will result in more loans being made, and more jobs for skilled professionals using AI-empowered tools. Not only that, but it will result in more jobs across the housing spectrum. All in all, we’re going to be looking at a much more interactive, more fruitful marketplace.

Q: The promise of AI in the mortgage industry seems incredible, but realistically, what sort of resources are required for an implementation of that level? 

SOOFI SAFAVI: The benefits of AI are not dictated by the size of an organization. In fact, mortgage industry players of all sizes can benefit from AI today. Black Knight’s own AI virtual assistant – AIVA – can be brought into an organization in much the same way as any other resource. An originator, or servicing shop, can “hire” AIVA to assist with specific functions or tasks. 

Much like any other employee, AIVA arrives for work with a certain skill set – it’s why she was hired in the first place. Of course, there is also an onboarding period where AIVA learns what is expected of her in this specific role, and is taught the specific process intricacies of a given organization, but after that, she is then deployed in the same way as any of the organizations other employees. And the skills she develops in the process become part of her knowledge base moving forward. 

Of course, at the enterprise level, when an organization’s operations reach across multiple verticals within the mortgage arena, the potential benefits increase exponentially. Rich, deep data is the fuel on which an AI runs, and the more data is available to AIVA, the more implementations become feasible.

But it’s important to stress that AIVA is not something that is only available to the largest lenders or servicers, but it is a resource that can be made available to organizations of all sizes. AIVA is as applicable in origination as she is in servicing, or in other facets of the industry.

Q: So an AIVA in every shop?

SOOFI SAFAVI: Let’s back up a bit, because I think this will be helpful in painting the entire picture. At the point of origination, a great deal of information is gathered on a prospective customer. That information, or some subset of it, is of use throughout the loan lifecycle – from application, through origination, settlement, closing, servicing, and if need be, modification or default management. All of these different players are gathering and processing information, and there is a great deal of overlap.

Each player in the mortgage process needs to receive a full file, and extract their own role-specific data from that document and then push it through their core system, to effectively complete their piece of the mortgage process. When you stop to think about it, for many of the players involved, roughly 60 percent of the information they need, or the calculations they make, mimic – or at least closely align with – activity the originator has already completed. 

Not only can an AI do that analysis and ascertain the 60 percent of information and analysis that has already been done, but it can go further. Rather than starting fresh each time, with the time and cost associated with these activities, those conclusions are presented by the AI, because it’s looking at the entire process holistically. Which adds to the unseen value. 

This points to the larger benefits of AI, its ability to learn. The more information an AI has at its disposal, and the more skills it is taught, the more places in the process it can add significant value. That same 60 percent share of information – perhaps more – that carries over from origination to, say, a title provider, also has value across the entirety of the loan lifecycle, to multiple players involved in the process.  

Not only can AI cut significant amounts of time from the process, it can also make data-based decision-making much more easily accessible for the all of the constituents involved. And that improves the process all across the board.

Q: Any final thoughts on AI in the mortgage industry, particularly for originators?

SOOFI SAFAVI: Black Knight’s first goal for AIVA is to drive down the cost to originate a loan by maximizing efficiencies and eliminating inefficiencies through the introduction of cognitive automation.

Whereas today’s workflow orchestration engines do a fantastic job of increasing efficiencies by alerting users to tasks that must be completed – a bank statement or paystub has arrived and is ready for review – AI can proactively evaluatethat document based upon its understanding of the mortgage lexicon. It leverages that expertise – which is continually expanding via machine learning – and a deeper understanding of associated data/behavior to see if there are any red flags or missing elements and inject a sense of urgency in getting those things addressed. 

Orchestration engines exist to help humans work more efficiently. The intent of AI, and particularly AIVA, is to help them to work less on mundane tasks so their capacity grows.  In short, work less, work better, by delegating some of the work to your virtual assistant. Then, the mortgage professional and his or her expertise shifts to verifying what the assistant has produced, providing the all-important human level of interaction our industry depends on.

Other goals focus on improving servicing functions and creating actionable intelligence, for improved efficiency across a company.

Ultimately, the name of the game is applied AI, not simply AI for AI’s sake. With applied AI, our goal is to bring cognitive automation to where the bulk of work and activity is happening. Our industry has come to accept a 45-day average mortgage cycle time, an $8500-$9500 average cost per loan, and the need for some 15-20 people having to touch a loan to get it through closing and beyond. What we’re trying to do is shake that acceptance and teach AIVA to automate the bulk of that work is being done. Again, rather than simply using AI for AI’s sake, we’re trying to introduce cognitive automation where it will have the biggest possible impact in terms of reducing cycle times and costs. And thatwill transform the mortgage industry.


Soofi Safavi thinks:

1: The industry will face a human resources challenge, as it will become increasingly difficult to entice the digital native college graduate who leaves her smart home to commute to work in her self-driving car into processing underwriting documents all day long. 

2: Technological innovation – and perhaps more importantly – adoption will continue to accelerate; expect more cutting-edge innovations. 

3: Along the same lines – much of the technological innovation in the mortgage industry has been on low-hanging fruit (point of sales systems, etc.); we will see innovators begin to tackle the more complicated parts of the process.


Previously CEO of HeavyWater Inc., the mortgage-focused Artificial Intelligence (AI) provider recently acquired by Black Knight, Inc, Soofi Safavi now serves as Managing Director of Black Knight’s Applied AI group, bringing leading-edge AI and computing capabilities to the Black Knight product portfolio. With over 20 years of experience in mortgage and banking technology, and deep expertise in IT strategy, architecture and machine learning, Soofi is uniquely suited to discuss AI’s role in the mortgage industry.

Become A Thought Leader

Are you a thought leader? Should you even try to be a thought leader? Nicole Fallon notes that “While the aim of every executive is to run a successful company, many modern C-suite members also have their sights set on another, more esoteric goal: becoming a “thought leader” in their field.” She sees this as a worthy goal.

In her article entitled “What Is Thought Leadership, and Why Does It Matter?” she points out that “thought leadership is commonly discussed in the business world, and to the average person, it may sound like another annoying corporate buzzword. But behind the jargon is the honest and admirable ambition of being viewed as a credible industry expert, one who cuts through the “noise” and offers something worth listening to.”

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Thought leaders are seen as trustworthy, go-to authorities among industry colleagues and peers, said Jake Dunlap, CEO and founder of Skaled, a sales consulting firm.

“They possess an innate ability to contribute to the conversations happening today, while also being able to speculate on what is going to happen tomorrow. Rather than chime in on every topic, they set the pace for the industry and offer intelligent insights and informed opinions,” Dunlap said.

“A thought leader recognizes trends before they happen and applies that insight to achieve actual business results,” added Numaan Akram, founder and CEO of Rally, a company that coordinates crowdsourced event travel.

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As the phrase implies, though, having these insightful thoughts and ideas is only part of being a thought leader. The “leadership” portion counts for a lot, too. So, how do you become a thought leader? One way is to use LinkedIn.

In the article entitled “LinkedIn’s Tips For Creating More Meaningful Thought Leadership Pieces” written by Olivia Atkins, she remarks that content marketing ishaving a moment, with many marketers and brands using various platforms to keep their presence alive online. It’s no surprise then that LinkedIn, the professional social network, is filled with thought leadership and content pieces. What may come, as a shock is how few pieces actually stand out or have something of worth to say, lost in the ether of cyber space.

Speaking at The Drum’s Pitch Perfect conference, KL Daly, content partner manager, EMEA at LinkedIn stresses the importance of knowing a brand’s audience and suggests this will help with cut through as it should feed into crafting the sort of pieces readers want to see. She also reveals what type of content excels on LinkedIn and gives her advice on getting content to rise to the top of the pile.

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Because the web is so saturated with content, many marketers and buyers are disappointed with the quality of most thought leadership pieces published today. In fact, as little as 30% of B2B marketers are satisfied with how their organizations are pushing content marketing. The majority of op-eds are unsatisfactory and struggle with reader engagement. Daly reveals that the industry has a tendency to talk about things we all already know, regurgitating ideas, thoughts and statistics. However, with every year that passes, more content is being released online yet in reality, new and enlightening ideas aren’t being developed and so, much of it remains ineffective. To break this vicious cycle, Daly suggests rethinking the pitching process.

To make your content stand out, Daly puts forward a three-tier process. She highlights the importance of knowing your audience, understanding your place within the market and where your company’s skills sit. Only then will it be easier for you to work out what your organization’s niche is, allowing you then to determine your target audience. The more specific the audience, the better – as it means you can talk about a subject in-depth and avoid repeating information that’s already available online, she advises.

Understanding the right platform to post on is equally important. Daly details which topics drive most engagement on LinkedIn, citing industry trends and news as the most popular subjects, followed by articles on tips/best practices and jobs/skills. Determining these themes will improve your understanding of how to manipulate these platforms and gain most traction. Case studies and infographics were the most engaging content types for tech professionals on LinkedIn, according to Daly, so marketers should structure potential pitches for thought leadership pieces around this information. Knowing this, marketers can defy a client’s expectations should they require a more generic approach to pushing out content. Inform them that this approach has been proven to better engage LinkedIn users as it taps into what readers actively seek out.

There’s a general misconception that pushing out more content will equate to increased engagement. However Daly actually warns against this. Rather than become another voice in an already crowded space, she suggests focusing on fewer things and improving the quality of each, using Hollywood as an example. Take Disney, who in 2016 only made 13 films, four of which became the highest grossing of the year. Disney has also refined its formula and knows what stories now work; they continuously tell the same plotline over and over but disguised as different fictions – something Daly suggests marketers should mimic.

Once you know what your niche within the industry is, you can continue to rehash your idea and look for new angles within the constraints of that very specific perspective. Disney also does a great job of bringing out tangential content alongside the main film, through merchandise and promos. This helps to create a buzz around each movie’s release and Daly recommends that marketers do the same and look for new avenues to entice their audiences. By spending less money on creating content and investing the cash on media placement instead, she believes that these assets will drive audiences back to the original piece irrespective of the fact that minimal creative work has been carried out.

When pitching thought leadership pieces, remember to work out your USP. A strong or controversial point of view might appeal to readers; or the company’s expertise or leaders’ approach may help them to stand-out; or perhaps their opinion on a piece of news or product release could be of interest? It’s about catching a reader’s imagination and selling the company’s unique stamp. Before pitch stage, the client may have a very clear idea of what they want said in the piece, but don’t be afraid to challenge this notion. Sometimes they don’t actually know who their desired readers are or what they want to say with their message, which in that case means the responsibility falls onto the marketer to determine the fine details. By using insights to inform the process from start to finish, there will be less unknown, grey areas and more chance of creating something that means something to the target audience and beyond.

About The Author

Helping Our Vets

NewDay USA, a nationwide VA mortgage lender, has announced Operation Home, a new program designed to help hundreds of thousands of active Servicemembers and military Veterans purchase a home with no down payment and no money out of pocket for closing costs. The official launch of Operation Home coincides with NewDay’s sponsorship of this Saturday’s nationally televised Army-Navy football game.

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While traditional VA mortgages do not require a down payment for qualified borrowers to purchase their homes, Veterans still need to bring money to the settlement table to cover closing costs. Many Veterans, however, would rather have the security of a savings account in the bank, or be able to use savings for the cost of moving or furnishing their new home. NewDay USA’s Operation Home program works with realtors nationwide to understand how to maximize a Veteran’s VA benefits.

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“Veterans and their families have made great sacrifices to protect our freedom, and we want to help them achieve their own share of the American Dream,” said Rear Admiral Thomas Lynch USN (Ret.), Executive Chairman of NewDay USA. “With Operation Home, our Veterans will be able to purchase the home of their dreams without taking one dollar out of their pockets for a down payment or closing costs.”

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NewDay employees come to work each day with the noble purpose of helping a Veteran buy a new home. Located at NewDay USA headquarters, NewDay University develops mortgage bankers to counsel Veterans to understand their valuable VA benefits, and guide them throughout the mortgage process.

“With Operation Home, Veterans and active Servicemembers don’t have to save up to move up,” said Rob Posner, CEO of NewDay USA. “We have 500 employees who come to work every day with the sole mission of serving Veterans.”

About The Author

Integrations That Make Sense

As we all know, lenders have a lot of needs that can’t be fulfilled by any one vendor. So vendors have to integrate to help their clients. For example, Mortgage Cadence, an Accenture company, has integrated Radian’s mortgage insurance – (MI) service into its Enterprise Lending Center solution, further expanding on-platform access to top-tier services.

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Enterprise Lending Center (ELC) facilitates lending in all forward and reverse mortgage channels and across all mortgage products, including home equity. Through the Radian integration, Mortgage Cadence clients can quickly obtain Radian MI rate quotes, order insurance, and receive order status updates without ever leaving ELC.

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“At Mortgage Cadence, our goal is to help our clients connect to the providers they want to work with and operate at optimal efficiency,” said Brian Benson, executive manager of services at Mortgage Cadence. “This integration extends our provider network and offers direct, on-platform access to Radian’s mortgage insurance services.”

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The integration centralizes all data and documents related to the mortgage insurance transaction and stores this information within ELC to avoid rekeying of information from external sites. This single-system approach benefits lenders by eliminating the risk of human error, reducing labor and accelerating loan closing.

“Radian’s integration with Mortgage Cadence is a testament of our commitment to making it easier for our customers to do business with us,” said Brien McMahon, chief franchise officer, Radian. “With this integration, customers can obtain accurate Radian MI rate quotes with greater speed and accuracy.”

About The Author

Home Flips Reach 3.5-Year Low

According to data from ATTOM Data Solutions, its Q3 2018 U.S. Home Flipping Report shows that a total of 45,901 U.S. single family homes and condos were flipped in the third quarter of 2018, down 12 percent from a year ago to the lowest level since Q1 2015 — a 3.5-year low.

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Homes flipped in Q3 2018 represented 5.0 percent of all single family home and condo sales during the quarter — down from a 5.2 percent home flipping rate in Q2 2018 and down from a 5.1 percent home flipping rate in Q3 2017 to the lowest level since Q3 2016.

“Home flipping acts as a canary in the coal mine for a cooling housing market because the high velocity of transactions provides home flippers with some of the best and most real-time data on how the market is trending,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “We’ve now seen three consecutive quarters with year-over-year decreases in home flips. The last time that happened was in 2014 following the mortgage rate jump in the second half of 2013, but it’s still far from the 11 consecutive quarters with year-over-year decreases in home flips extending from Q2 2006 through Q4 2008 and leading up to the last housing crash.”

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Homes flipped in Q3 2018 sold for an average of $63,000 more than what the home flipper purchased them for, down from an all-time high average gross flipping profit of $68,000 in the first quarter and down from an average gross flipping profit of $65,000 a year ago to the lowest level since Q2 2016.

The average gross flipping profit of $63,000 in Q3 2018 represented an average 42.6 percent gross flipping return on investment, down from an average 44.1 percent gross flipping ROI in the previous quarter and down from an average 48.1 percent gross flipping ROI in Q3 2017 to the lowest level since Q1 2012 — a 6.5-year low.

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The share of homes flipped that were sold by the home flipper between $100,000 to $200,000 made up 31.6 percent of all flipped sales, while those flip sales that occurred on homes sold for more than $5 million saw the highest gross flipping return on investment (ROI) of any price range.

About The Author

The Strength Of Digital Lending

PRMG didn’t get to where it is today by putting its proverbial head in the sand. Founded in 2001, this privately held mortgage banker  and residential home lender is unafraid of change; constantly seeking out ways to improve efficiency, closing times, and create a better borrower experience.

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Although not a proponent of the bleeding edge, PRMG management is fully committed to staying on the leading edge of technology. That commitment was the catalyst for what has become the company’s own digital transformation.

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We knew that digital technology had become part of  everyone’s lives, but a conversation with one o four  branch managers drove it home. You know, 30 percent of my borrowers don’t have a computer, a printer or a scanner, but everybody has a smart phone. At that moment, I knew we needed to go mobile first, and do it with the best mobile platform out there. It was the best way to serve our borrowers.

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And so, the search began.

I literally spent a year interviewing and  vetting 30 different FinTech companies  that offered some kind of digital mortgage experience before making a decision. I wanted to find the best option for the long run, so I wanted to spend the time on due diligence. We didn’twantanyfalsestarts.

My first step was to look at the borrower experience that each solution offered.

For me, that’s what it all comes back to, the borrower—that experience has to be best-of- breed. So, part of the process was looking at the features and the user interface of the mobile solution—as well as our ability to customize and brand it. Would it help our loan officers connect with their customers and generate more business?

Because I wanted to make the best decision for PRMG the first time, I was quick to weed out the one-hit wonders early on.

I saw some companies with are ally good first version of a platform, but then saw that they hadn’t changed anything for two or three years. So, it’s important toask,‘When was the last time you updated?’ Yes, look at the product now, but also, take the time to watch how those firms and their products evolve over time. If they’re constantly ‘working on’ their updates, but nothing ever changes, that’s a red flag.

How does this make our process and operations more efficient? Can it help us get from application to underwriting more quickly? And, of course, does it integrate with Encompass? Those were our critical questions. It’s that combination of user convenience, mobility and operational efficiencies that make a true digital experience.

The last factor I evaluated was cost, comparing the price of the platform with the projected revenue gains (in terms of more business) and cost savings (in terms of operational efficiencies) it would bring.

After weighing all of these factors together, we determined that SimpleNexus was going to give us the biggest bang for our  buck. It had the features and offered the efficiencies we were looking for.  SimpleNexus also had a great relationship with Ellie Mae, and tight integration with Encompass, which was critical for us.

PRMG branded the customized version of SimpleNexus as NEO, which stands for Next Evolution of Origination. I was certain that I had the right combination of technology in place. However, the success of this initiative was dependent on adoption.

We have a distributed retail model, in which each individual branch functions like an independent broker. They have the ability to make their own decisions and devise their own borrower experience. Unless the solution is very good, this makes adoption a challenge, because we don’t force anyone to use what we introduce.

We started talking about NEO at an all- hands sales rally long before implementation, followed by an internal email campaign and video to generate excitement just prior to rollout.

We have 700 loan officers, with about 250 of those  funding two or more loans a month. In five months, 220 LOs have adopted and actively use NEO.That speaks to how good the solution is and the value it brings.

In addition to NEO, PRMG management is investing in the fundamentals—namely, a more advanced phone  system, and new computers for each of the company’s 1,800 employees.

It sounds so basic, but I’ve sat and watched how slow  some of those computers were. You can bring on all  of the innovation you want, but if you don’t also invest in the basic business equipment, you’ll slow down productivity. No magic bullet makes a computer with 8 gigs of RAM go faster. We now have a contract in which we update our computers every 36 months, so our staff will always use the latest, greatest technology.

PRMG’s new phone system seamlessly integrates with Salesforce, Gmail and a variety of marketing software, with the goal of increasing customer intimacy with every interaction.

We’ve spent a lot of time and resources building a state-of-the-art data warehouse for internal reporting, where we can measure the difference of how long it takes to collect borrower documents from loan officers who are on NEO(SimpleNexus)versus those who are not. I can tell you that those using the mobile application get these documents about two days faster than those who are not using NEO. So, the loan officer gets two days back to sell more business and the company becomes more profitable because we’re processing loans with less time and resources.

The tight integration between SimpleNexus and Encompass makes managing documents collected through the application easier, as well. When PRMG originators log into Encompass, they see a little envelope icon that tells them that documents have been entered through SimpleNexus. When they click on the eFolder, those documents, pay stubs and W2s are loaded into the Encompass eFolder. Everything happens automatically with no other manual intervention.

The way we’re set up, our e-consenting process and the loan application process is as efficient as it can possibly be. You literally send a text to your borrowers. Instead of going to the App Store or Google Play Store, they click on the link and download NEO. They have status, they have notifications, they have e-disclosures right there. We’ve gotten a lot of positive feedback from our borrowers, which I  believe will positively impact referrals and retention as time goes on.

In a few short years, I believe there will be an even  larger paradigm shift in our industry. Borrowers will continue to choose value and price, so, the perfect lending experience will be both the  cheapest and the best. That’s the challenge.

I believe that the more widespread adoption of machine learning and artificial intelligence will be key to operational efficiency in a low-margin environment.

I think competing is going to mean closing  loans in seven days with the lowest rate out there, and finding a way to do it profitably. That’s where it’s heading.

I predict the companies with staying power will be the ones that are embracing digital lending today.

Anyone in the industry has to recognize that  the digital mortgage is here to stay. We are in the middle of a fourth Industrial Revolution. The winners will be the ones that are taking action now, and making the investments that will position them to compete as the mortgage environment continues to evolve. The others will be left to watch everyone else lap the track while they sit on the sidelines.

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Generate Revenue While Serving The Underserved

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We, as a country, have made huge strides since the civil rights movement of the 1960’s. The U.S. luckily came to the realization that all of its citizens, regardless of race, must have the opportunity to succeed in every facet of life if our country was to succeed as a whole. The disparity in minority homeownership and access to capital for that purpose came to the forefront of the national discussion, which prompted Congress to pass the Fair Housing Act as part of the broader Civil Right Act in 1968. Despite this crucial piece of legislation, it was discovered that banks were engaging in a practice called redlining, which essentially identified low to moderate income neighborhoods and refused to make loans to any residents of the residents therein. This obviously had a disparate impact on minorities who made up the majority of residents in these low to moderate income areas. To combat this practice, the Community Reinvestment Act was signed into law in 1977 which required banks to ensure that all communities that they served were afforded equal access to capital. 

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Despite these regulations, the debate about access to housing for minorities, and the home ownership divide still rages today. Unfortunately, a very large gap still exists between white and minority homeownership despite the concerted effort to remedy the issue. The Urban Institute presented data analyzed by the American Community Survey from the 100 cities with the largest number of black households. Its analysis found that Minneapolis, Minnesota had the largest disparity where the white homeownership rate was 74.8 percent compared to a black homeownership rate of just 24.8 percent; a 50 percent gap. The smallest disparity was observed in Killeen, Texas where the rates of white and black homeownership were 63 percent and 48.5 percent, respectively; a 14.5 percent gap. According to the US Census Bureau, the overall homeownership rate for black households across the country has reached a 50 year low of 41.7 percent. Our country has not seen homeownership rates this low in black communities since before the enactment of the Fair Housing Act, when it was still legal to discriminate on the basis of race. 

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Hispanic homeownership rates, although slightly higher, still pale in comparison to the national average. According to the US Census Bureau, the Hispanic homeownership rate was at 46.2 percent as of 2017, 17.7 percentage points lower than the overall national average of 63.9 percent. Freddy Mac released a report entitled “Will the Hispanic Homeownership Gap Persist” in which it estimates that Hispanics will close the gap with white homeownership rates by 5.1 percentage points by 2035. However, it bases this projection on past immigration patterns which, in this day and age, are far from certain to repeat themselves. 

Many experts believe that the housing bubble and subsequent 2008 recession is the number one contributing factor to the current gap in homeownership. Although the recession impacted all Americans negatively, regardless of demographic, it had a disproportionate impact on minorities who purchased homes at much higher rates during the height of the market. Furthermore, many minority borrowers were steered toward subprime loans despite the availability of other financing options, which resulted in several banks settling for millions of dollars with the Justice Department. 

Although the effects of the recession still affect the vast majority of Americans, they are amplified within minority groups in terms of the lingering damage to their credit. The credit profiles for the majority of those individuals who were able to obtain a mortgage just prior the recession have been scarred by foreclosures and, in many instances, crippling credit card debt incurred in the aftermath to cover necessities. Because these factors can affect credit scores for years, without assistance, the future looks bleak for many of these past borrowers.

Minority credit issues, however, aren’t just limited to those individuals who were directly affected by the housing crisis. The Urban Institute reported that in 2013 only 41 percent of Hispanics and 33 percent of black Americans had credit scores over 720 compared to 64 percent of white borrowers. Minority groups, specifically those who are black or Hispanic, are often plagued by lower credit scores because of the methods by which various scoring models generate credit scores. The CFPB found that minority populations are more likely to be credit invisible because they are less likely to have traditional sources of credit such as loans and credit cards. One solution proposed by Experian in a 2015 white paper entitled “Let there Be Light”, was to incorporate utility bill payments into the credit analysis. The white paper estimated that the inclusion of this data could reduce the number of subprime borrowers by as much as 47 percent. Until alternative metrics are devised to take these extenuating circumstances into account, however, leaders in the housing industry must work to find solutions to bridge the homeownership gap.

Many financial institutions are required by law to provide loans and extend credit to those individuals in low to moderate income communities, but they must do so in a manner consistent with safe and sound operation. Although the spirit of the law is meant to help those populations that are traditionally underserved,  many have argued that it is becoming increasingly difficult to lend in those areas because of the numerous factors discussed above. Many low to moderate income individuals, specifically minorities, do not have the necessary credit profile to qualify for the loans for which they apply. This often puts financial institutions in a bind. Although they are ready and willing to lend to qualified borrowers in those communities, precautions must be taken to safeguard the operation of their business. 

Fortunately for banks and other lenders, there may be a way to not only assist those minority groups and lower income individuals who need it the most, but generate significant revenue by tapping into a market that would have otherwise been inaccessible. The solution is to partner with not for profit companies that provide consumers with credit remediation services in addition to other resources such as coaching and education. When choosing a partner, banks and lenders should ensure that their potential borrowers have access to educational resources which will enable them to understand ramifications of their financial decisions. Doing so will ensure responsible borrowing in the future, which will help consumers and lenders, alike.

It is also imperative that any potential partner have mechanisms in place to track, monitor, and measure progress and results. Doing so will ensure the generation of data that can be studied to evaluate efficiency and the impact on those minority and low to moderate income communities. Those metrics can then be utilized by governmental and regulatory bodies to decide how best to solve the problems faced by those communities going forward. 

If key players in this sector are able to adopt and implement programs to help bridge the housing gap and raise the rates of minority homeownership, the industry as a whole will reap the benefits of a more robust market. There are an estimated 43 million black Americans in the U.S. and Hispanics, who are the fastest growing demographic, make up 18 percent of the population. These two groups represent billions of dollars in potential new loan opportunity. The only logical solution is to get these groups the assistance that they need in order to help eliminate any disparity while simultaneously to strengthening the housing market and our economy as a whole. 

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8 Steps To Jumpstart Cashflow

Cash flow. These two words strike fear into the heart of many business owners, but it doesn’t have to be this way. First and foremost, you must believe that everything will come together with your business. There will be down periods, but they won’t stay that way as long as you remain focused on your big picture vision. The cash flow will funnel in if you follow one or more of these eight tips.

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1. Open a line of credit: At first this may seem counter-intuitive, but borrow money when you don’t need it. It’s a lot easier to get a loan when you’re not in a desperate situation. Having the cash to draw from during a slow period takes off a ton of pressure. You’ll pay it back once you are busy again. Debt is not a bad thing when you’re using it to grow.

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2. Tap your existing customer base: On average, existing clients account for 41% of small business income. They are apt to spend five times more than new clients because the relationship already exists. They trust you and know what you can do. Many customers love the idea of a “one-stop shop” where they can have all of their needs provided by one vendor. Wherever possible, upsell additional products to your customer base and become that one-stop shop.

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3. Use the Product Pyramid: The Product Pyramid is a multi-tiered approach to bringing in customers at every level. Presently, you may be hitting on only one or two levels, but you have the potential to establish relationships with customers in every single one of them. For example, if you manufacture run-of-the-mill coffee makers for $79, you could also produce machines at every tier for every level of connoisseur — all the way up to the garish $2,999 model.

4. Try licensing: A great way to expand a business without stretching yourself too thin is through licensing. Some business owners feel that licensing their brands, products, or services is the equivalent of giving away their children — but it’s not. If anything, it’s a less taxing way to make more children (i.e., products, services, etc.) without having to do any of the work. Once an agreement is done, licensing becomes a bookkeeping function that brings in regular income.

5. Establish retainers: Retainers are an excellent way to generate recurring revenue. Think about what you might be able to provide to your clients on a regular (i.e., monthly) basis. Rather than getting paid per project or by the hour, you are receiving a standard payment every month ($2,500, $5,000, etc.). It could be in the form of a marketing retainer, a public relations retainer, a consulting retainer, etc.

6. Start franchising: Once you have your business model down, you can sell your concept, systems, and marketing to others to create franchises. All you need to do in this case is develop a “business-in-a-box” that franchisees can step into and run and then help them find prime locations.

7. Offer certification programs: Perhaps your business lends itself to creating a certification program. If you and your team have expertise in an area, you can build a program that trains others to become experts as well. This is a terrific way to scale because you are getting people to sign up for a number of sessions so they may fulfill the certification obligation, which means consistent cash flow with people paying up front.

8. Consider raising prices: While I’m an advocate of promotional discounts and other marketing incentives, I am opposed to pricing models that undervalue your products and services. Some business owners are afraid that customers won’t buy from them unless they are priced lower than their competitors. The truth is, you may get a customer through a lower price offering — but you won’t keep a customer this way. You want to attract customers who truly value what you offer. If you drop your prices too low, you are projecting to the marketplace that you don’t believe that your product is worth that much.

While scaling your business always monitor cash flow and prepare for ‘inclement weather but never allow low ebbs in cash flow to dictate decisions that will impact your long-term success.

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