Mortgage Delinquencies Rebound Strongly in October

According to data from Black Knight, after last month’s spike, mortgage delinquencies rebounded strongly in October, falling 8.2% from September and nearly 18% from last year. There were 165K fewer past due loans in October than the month prior. It wasn’t just early-stage delinquencies that improved, either: seriously delinquent loans (90 or more days past due) hit a more than 12-year low after falling 14K from last month and 90K from last October. Continued improvement in hurricane-related delinquencies associated with Harvey and Irma are contributing to the strong year-over-year improvements.

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Foreclosure starts did see a monthly increase, but keep in mind they were coming off of last month’s nearly 18-year low. And even with an uptick in starts, the number of loans in active foreclosure fell slightly from last month, and is down by 24% from last year. There are now just 267K loans remaining in active foreclosure; 1K fewer than last month and 81K than last month. Finally, and somewhat surprisingly, mortgage prepays (now driven more by housing turnover than refinance activity) increased 14% from September. Even so, they were still 29% below last year’s level.

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The report from Black Knight found that:

>>After rising sharply in September, mortgage delinquencies fell by 8.2 percent in October and are now down by nearly 18 percent from the same time last year

>>Serious delinquencies – loans 90 or more days past due – fell by 14,000 from last month and 90,000 from last October to hit a more than 12-year low

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>>Improvements in hurricane-related delinquencies associated with Harvey and Irma – which spiked in late 2017 – are contributing to the strong year-over-year improvements

>>Despite foreclosure starts seeing a monthly increase from September’s nearly 18-year low, the number of loans in active foreclosure fell slightly from September and has decreased by 24 percent from last year

>>Prepayment activity – now driven primarily by housing turnover – climbed 14 percent, but remains 29 percent below last year’s level

The Power Of Artificial Intelligence In The Mortgage Industry

These days, it’s hard to miss the buzz about artificial intelligence (AI) and its impact on industries such as health care, automotive, education, financial services and retail, to name just a few. From the ability to diagnose diseases – to the development of driverless cars – the potential applications of AI are extraordinary. In our daily lives, we already are experiencing the use of AI when we communicate with customer-service chat bots, ask Apple’s Siri for information, perform Google searches, or use navigation apps to help avoid traffic, as a few examples.

Despite all the recent discourse about AI, this technology is certainly not new. There are countless examples of AI use over the past several decades, including the reliance of commercial jet flights on AI to power autopilot, and internet bots that index web pages. But the more recent interest, innovation and investment in AI are due to a combination of factors – including greatly increased computational power, big data, greater infrastructure speed and scale, open source technologies and advancements in machine learning techniques.

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And today, the mortgage industry is able to reap the benefits of this incredible technology. For example, HeavyWater, which was recently acquired by Black Knight, is a provider of AI and machine learning-based capabilities specific to the financial services industry. The company has already built a platform that completes business tasks using synthetic read-and-comprehend analysis and conclusion skills, and applied these capabilities to the loan origination process.

What is Machine Learning?

The terms “machine learning” and “artificial intelligence” are often used interchangeably, however, there is a distinction between the two. Using a very broad definition, artificial intelligence replicates human reasoning through learning, problem-solving and pattern recognition. Machine learning is a subset of AI and is a process by which AI deepens its knowledge through continually performing tasks and processing information.

Let’s consider a simple, industry-specific example. AI-powered machine learning enables technology to “remember” standardized forms. For example, it can review thousands of paystubs and determine exactly where the pertinent income data is located. When the system comes across a paystub that presents an anomaly, it will apply its previously gained understanding to infer the location of the income data needed. Once the technology receives feedback that its inference was correct, it incorporates that information into its knowledge base. The next time it comes across that type of paystub, the system will automatically know where to find the pertinent data.

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Machine learning also leverages big data to gain insights. The more data that is collected and reviewed, the better machine learning solutions become at making predictions.

Applying AI and Machine Learning to Reduce Costs and Turn Times

AI and machine learning already can make a difference in two of the biggest challenges faced today by mortgage originators: costs and cycle times. With the ability to read, comprehend, and draw conclusions based on context, AI and machine learning can perform operational functions more efficiently and at scale.

In fact, machine learning can work on many of the labor-intensive, “stare and compare” tasks performed by humans – such as verifying income, assets and insurance coverage. Machine learning is used to perform these manual activities much faster and more accurately than humans – a task that takes employees hours to complete can be reduced to just seconds with machine learning.

By automating manual routines, machine learning not only expedites the origination process, but also increases volume. While humans can only work a certain number of hours before mistakes begin occurring, machine learning has no limits to the time or energy it can spend performing these tasks. By increasing loan processing volume and reducing mistakes, imagine how machine learning can drive down origination costs – and risk.

AI-powered systems enable processors and underwriters to dedicate more time to addressing exceptions and solving problems, which will improve transaction turn times. Also, AI can help avoid last-minute delays by prompting a lender’s staff to take early action when there is an issue, keeping the origination process moving forward. Additionally, by delegating work to AI-powered technology, a lender’s staff can focus on delivering a more positive and personalized consumer experience.

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As AI and machine learning are used to perform manual, repetitive tasks, allowing mortgage professionals to work on more value-added responsibilities, lenders can increase their focus on their company’s growth strategies. As they scale and reduce the cost per loan by keeping staffing levels flat, lenders can invest more in product development, marketing, infrastructure, and other growth-oriented initiatives.

Additional Applications of AI

AI can also leverage visual recognition to image and index a wide variety of documents that are typically reviewed by processors and underwriters, such as tax returns, W-2s, property titles and appraisals. A lender could even use AI and machine learning to better manage vendors. Based on past performance and cost, AI could provide recommendations on which vendors would be optimal for each loan going through the origination process.

Voice-integrated AI brings further opportunities to create efficiencies. This technology could look at information under review, evaluate results and automatically employ interactive communication bots to advise employees of any issue that may need attention. Additionally, via a conversational interface, processors and underwriters could ask for information they need – just as we use virtual assistants like Apple Siri, Amazon Alexa or Microsoft Cortana to get answers. These capabilities certainly could help move a loan through the origination process faster.

Leveraging AI to Enhance Customer Service

Of course, most of us have experienced first-hand how AI is applied in retail to deliver a more personalized consumer experience. For example, when we shop online, we receive targeted product recommendations the next time we visit that site; or receive faster service though chat bots.

To help personalize and enhance the borrower’s experience, lenders can leverage voice capabilities. A mortgage virtual assistant that engages customers by answering questions, walking them through the application process and even offering advice could be employed using voice-integrated AI.

Impact on Jobs

When the subject of AI in the workplace is discussed, it inevitably raises questions about its impact on jobs. Will jobs be lost as a result of these technological advancements?

There is no perfect answer to this question since the utilization of AI is different from company to company. But, it seems certain that future skill sets will be required to support this shifting technological paradigm. As it applies to the mortgage industry today, however, AI can enable professionals to spend less time on remedial work, becoming knowledge workers instead of task executors, and provide additional value to a company.

The Future Is Limitless

AI and machine learning offer tremendous potential to advance the mortgage industry, and we are just beginning to experience the technology’s capabilities. As AI-powered systems ingest more data and perform an increasing number of tasks though machine learning and other techniques, the possibilities are unlimited.

Imagine the power of AI as it learns to handle the entire point-of-sale process and speaks to an applicant directly through a mobile phone; or as it systematically searches a lender’s portfolio for qualified prospects and offers a customized home equity loan or line of credit, and so on. As we all know, the average cost to originate a mortgage loan is exceptionally high – today it is nearly $8,500 according to the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report, and the typical time to close a loan is 41 days. Any opportunities to reduce costs and increase process efficiencies will add value to lenders and consumes.

What’s more, the transformative power of AI doesn’t stop in the originations space. Servicers will also be able to reap the benefits of this advanced technology. For example, the technology could learn how to detect risk and any compliance issues before they occur, enhance loss mitigation decisioning, provide voice integration capabilities to help staff work faster and smarter, and so on. What’s amazing is that these examples only scratch the surface.

Of course, human interaction will always be needed to originate and service loans, as people will still decide how they want to leverage technology and determine the problems that must be solved. Humans must also still play an active role in loan decisioning, identifying which kind of data to consider and determining risk appetite. Furthermore, research indicates that despite all the advances in point-of-sale technology, consumers still want the comfort of human interaction at some point in the process of purchasing what is most likely their largest and most important investment.

AI and machine learning offer great promise and will likely usher in a new era of production excellence. Lenders that take advantage of this advanced technology will be choosing a bold new way to address origination costs, improve turn times and transform their origination processes to support a brighter, more successful future.

About The Author

Soofi Safavi

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.

May 2018 Sees Second Fewest Foreclosure Starts In 17 Years

Data from Black Knight showed that May saw the second fewest foreclosure starts in more than 17 years (only December 2017 had fewer…by about 500), and the number of loans in active foreclosure continues to fall. Just 303K mortgages are currently somewhere in the foreclosure process, a 15-year low. At the current rate of improvement, foreclosure activity will be back at pre-crisis averages (2000-2005) early in Q3 of this year.

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Meanwhile, improvement continues among hurricane-affected mortgages. In fact, delinquency improvements in hurricane-affected areas more than offset slight increases seen elsewhere, bringing the national delinquency rate down to its lowest level in 15 months. All in, hurricane-related delinquencies fell by nearly 30K in May (-20%) with the highest rates of improvement in Irma-affected areas of Florida (-27%).

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Black Knight Looks To Revolutionize Mortgage Servicing

Black Knight, Inc. has introduced LoanSphere Servicing Digital, a powerful and innovative new solution to help mortgage servicers deepen customer relationships and increase retention. LoanSphere Servicing Digital delivers detailed, timely and highly personalized information to customers about the value of their homes and how much wealth can be built from these real estate assets. A consumer-centric solution, this interactive tool gives customers the ability to easily perform tasks and find information related to their mortgages, while providing a platform for continual engagement between servicers and their customers.

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“Our goal with LoanSphere Servicing Digital is to give our servicing clients an engaging, consumer-centric tool for customer retention,” said Anthony Jabbour, CEO of Black Knight. “For many people, a house is the single greatest asset they’ll ever own. With that in mind, and employing a ‘design thinking’ approach, we’ve developed a solution that lets our clients provide their customers with ongoing, detailed information about their loans and homes, as well as the tools to help manage the wealth they have built in their homes.”

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Offering useful information specific to a customer’s mortgage, property and local housing market, LoanSphere Servicing Digital gives customers the tools to make more informed financial decisions related to their homes. In delivering this information, Black Knight draws upon the servicer’s data via the company’s comprehensive, end-to-end LoanSphere MSP system, as well as Black Knight’s industry-leading property records database; advanced analytics; and automated valuation models. The app – which features loan, home and neighborhood dashboards – presents information in a clear, intuitive design, with easy-to-use navigation that has been built for and tested by consumers.

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“Increasing engagement and providing tools that add value are key to deepening the servicer-customer relationship,” said Joe Nackashi, president of Black Knight. “By providing anytime, anywhere access to an array of customer-specific information and functionality, LoanSphere Servicing Digital enhances the consumer’s servicing experience and adds value on an ongoing basis, which results in higher retention rates.”

LoanSphere Servicing Digital provides customers with easy access to specific information about their mortgages, such as type of loan, interest rate and estimated PMI drop date. It allows mortgage customers to make payments, view detailed payment history and perform other self-service functions within the application. Customers can also explore various “what-if” scenarios, including options for building equity more quickly or the relative benefits of paying down or refinancing their loan. In addition, LoanSphere Servicing Digital provides up-to-date and valuable neighborhood information, such as recent sales, local school data and demographics, as well as transaction and lien history on the property.

The white-labeled solution can be branded to match the servicer’s brand identity, and will be offered as both a native mobile app and responsive web design. By providing loan and home information to customers wherever they are, when they need it most, LoanSphere Servicing Digital helps servicers regularly engage customers with insightful, value-add information that enhances the borrower relationship and supports customers’ financial well-being.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Home Equity Is On The Rise

Industry dynamics are improving in some areas. For example, this month Black Knight revisited the nation’s equity landscape, finding that as home prices continued to increase so has the amount of tappable, or lendable, equity available to Americans with mortgages. Black Knight defines tappable equity as the total amount of equity a homeowner with a mortgage has available to borrow against before reaching a maximum loan-to-value ratio (LTV) of 80 percent. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, rising home prices have pushed the total amount of such equity to a record high.

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“As home prices continued their upward trajectory at the national level, the amount of tappable equity available to homeowners with mortgages continued to rise as well,” said Graboske. “Tappable equity rose by $735 billion over the course of 2017, the largest calendar year increase by dollar value on record. At $5.4 trillion, total tappable equity is also the highest on record and 10 percent above the previous, pre-recession peak in 2005. An estimated $262 billion in tappable equity was withdrawn in 2017 via cash-out refinances and home equity lines of credit (HELOCs), also reaching a new post-recession peak. Still, Americans seem more reserved in tapping their equity than in years past, withdrawing less than 1.25 percent of all tappable equity available in Q4 2017 – a four-year low. Of that total, 55 percent was tapped via HELOCs, the second lowest such share since the housing recovery began. However, as interest rates rise, it is likely that we will see the HELOC share of equity withdrawals increase as well.

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“At the start of 2018, some 55 percent of all tappable equity was held by borrowers with first-lien interest rates below the going 30-year rate. Following the nearly 50 basis points rise in interest rates we’ve seen since the start of the year, that share has ballooned to 75 percent. While rising rates tend to dampen utilization of equity in general, the market is poised for a strong shift toward HELOCs, as they allow borrowers to take advantage of growing equity while holding on to historically low first-lien interest rates. Over half of all tappable equity – approximately $2.8 trillion – is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today’s prevailing rate, which creates a large pocket of low-risk HELOC candidates.”

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The data also showed that risk remains relatively low among cash-out refinance originations as well. The average cash-out refinance borrower in 2017 had an average credit score of 744 (down from 750 in 2016) and pulled $68,000 in equity (up from $64,000) with a resulting loan-to-value ratio (LTV) of 66 percent. Approximately 40 percent of remaining cash-out refinance candidates – those borrowers with both tappable equity and current first-lien rates of 4.5 percent or higher – have credit scores above 760. As borrowers with higher credit scores tend to have higher average equity amounts, approximately 50 percent of all tappable equity among borrowers with first-lien rates of 4.5 percent or higher is held by that group.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Integration Furthers Digital Construction Lending

Built, a provider of secure, cloud-based construction lending software, is being integrated with Black Knight’s LoanSphere platform. Black Knight is a provider of integrated software, data and analytics solutions that facilitate and automate many of the business processes across the homeownership lifecycle. The Built integration will provide digital management on any construction loan using loan data from Black Knight’s two core LoanSphere systems: the LoanSphere Empower loan origination system and the LoanSphere MSP servicing system.

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Demand for construction loans has increased with owner-occupied products and renovation markets poised for continued growth. In the past, the administrative burdens of construction loans have been a significant barrier for many lenders because of the manual processes required for spreadsheets, phone calls, email threads and other loan-related communications. With the integration between Black Knight and Built, any construction loan can be digitally managed throughout the loan life cycle – from origination through servicing.

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“We are excited to add Black Knight to our Strategic Alliance Network. Both Empower and MSP are industry-leading enterprise solutions, and this integration will provide a complete, seamless experience from loan origination through construction,” said Built President and CEO Chase Gilbert. “As construction lending heats up across the country, the timing of this integration couldn’t be better for the industry.”

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LoanSphere is Black Knight’s end-to-end platform of integrated software, data and analytics supporting the entire mortgage and home equity loan lifecycle – from origination to servicing to default. The platform delivers business process automation, workflow, rules, and integrated data throughout the loan process, providing a better user experience, cost savings and support for changing regulatory requirements.

“Both lenders and servicers will benefit greatly from Built’s integration with LoanSphere, which connects lending functions and data to help clients reduce risk, improve efficiency, and drive financial performance,” said Black Knight President Joe Nackashi. “Built’s technology complements these capabilities by offering real-time data access to improve the overall experience between mortgage professionals, builders and their borrowers.”

A Good Day For Digital Closings

Black Knight has announced the first phase of LoanSphere Expedite Close will be available later this year. Expedite Close is an advanced hybrid and full digital closing solution that supports data and document exchange, workflow and processes associated with real estate transactions. Expedite Close provides an electronic closing fulfillment process, enabling seamless and secure online interactions between the real estate agent, lender, settlement agent and consumer from contract through closing.

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Black Knight has developed Expedite Close with the end user in mind – creating a solution flexible enough to meet the unique process requirements and business needs of each participant along the way. “What sets Expedite Close apart from other eClosing solutions is that it’s built to support the needs of all users – settlement agents, lenders, real estate agents, consumers and investors – providing them with the capabilities to do what they need to do, when they need to do it, in a way that doesn’t call for significant changes to current business processes,” said Tom Peterson, president, Black Knight’s Lending Solutions division. “Because it does so in a way that is entirely ‘agnostic’ to existing platforms, this is more than a solution. With Expedite Close, Black Knight is building an industry utility.”

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Leveraging Black Knight’s suite of integrated electronic signature and documentation fulfillment services, Expedite Close includes enhanced workflow and decisioning capabilities, as well as increased automation to support the full closing process. Lenders, settlement agents and consumers can securely collaborate online, and either use the solution with the portals, source systems and document providers they currently use, or integrate additional Black Knight solutions where needed. The solution tightly integrates with Black Knight’s LoanSphere Empower loan origination system and Black Knight’s industry-leading LoanSphere MSP servicing system.

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Expedite Close will seamlessly support all consumer interaction and workflow fulfillment requirements. With this solution, consumers are able to access a secure portal to review and sign all of their closing documentation online, and “wet sign” any specific documents that require a physical signature for jurisdictions not yet accepting electronic notarization. A consumer can also choose to wet sign all documents in the closing package. If this process is chosen, Expedite Close will provide the loan documentation to the settlement agent within the required timeframe, eliminating any document fulfillment workflow gaps.

Expedite Close significantly enhances consumers’ experience by providing them with a more streamlined closing; the ability to review all necessary documents and update the loan’s status; and more control in the overall process. Lenders and settlement agents not only benefit from improved borrower satisfaction, but also from reduced risk and enhanced process efficiencies using their current processes.

“Our goal is to streamline the closing process,” said Peterson. “Today’s borrowers are accustomed to anywhere, anytime connectivity and the freedom to choose how they want to interact with businesses. Expedite Close gives them that freedom, and will help to advance the mortgage industry by making it possible for electronic fulfillment for closings to become the norm rather than the exception.”

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Robotics In Origination

Over the past decade, mortgage originators have seen the average cost to originate a loan nearly double. As we all remember, the rush of post-crisis regulations required originators to quickly ramp up staffing, change processes and implement new technology to meet these regulatory demands. At least for now, the dust has settled on the regulatory front, and originators are now able to look more closely at other operational concerns and opportunities.

Today, originators are increasingly focused on identifying efficiencies that will enable them to decrease turn-times from application to close and to decrease the average cost to originate a loan without compromising service or compliance. When considering possible ways to accomplish these goals, originators are finding that advancements in technology show great promise – in particular, Robotic Process Automation, often referred to as Robotics.

Robotics technology leverages powerful decisioning, workflow and imaging functionality to enable more complex automation than previously available in the mortgage industry. Originators interested in taking advantage of Robotics technology will not have to look too far since some loan origination systems are already using this advanced automation. While many technology providers are offering a variety of pre-configured options to automate specific processes, originators can also tailor Robotics technology to address their specific preferences for managing back-office processes.

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The nearly unlimited number of automation possibilities using Robotics technology may make it hard to select a starting point – but early adopters have already started by automating highly manual processes where significant efficiency gains are most needed. These early adopters have paved the way for the rest of the market to more easily implement and begin taking advantage of this new technology. Some key use cases are as follows:

Automating Disclosures

While technology development played an important part in helping originators ramp up for the enactment of the TRID Disclosure rule, Robotics now makes it possible to take automation to the next level in the disclosure process. Robotics technology can automatically assess data that has been received to determine whether or not the originator has everything needed to systematically generate the disclosure package. If not, automatic notifications can be sent to the processor for intervention.

Automating Flood Zone Determination Evaluation

As soon as the originator understands the conditions for a loan and receives borrower payment, Robotics can enable the automatic ordering of a flood zone determination from a third-party vendor. When the determination is returned, the system reviews the information and based on predetermined rules, completes the evaluation task. For example, if the determination states that the subject property is not in a flood plain, then the evaluation task can be automatically checked off as completed and requiring no further action. If the determination states that the subject property is in a flood plain, the system rules can be programmed to alert the processor, and can further assists by automatically preparing the flood notification letter for the borrower.

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Automating the Appraisal Process

Similar to flood zone determinations, Robotics can also automate the ordering of an appraisal as soon as the loan conditions have been set and the borrower payment is entered into the LOS. Once the appraisal results are returned to the LOS, Robotics can enable the automatic gathering of all third-party service data needed for the appraisal review process, such as automated appraisal reports and the Submission Summary Report (SSR) from Fannie Mae or Freddie Mac. Once all information needed for the review is gathered, a member of the review team can be automatically alerted to begin the review process.

Benefits of Robotics in Origination

When originators employ Robotics technology to automate as many aspects of the origination process as possible, significant benefits can be expected. One of those benefits is risk reduction, especially when leveraging Robotics technology from within the LOS. Originators often operate in multiple systems, which is ineffective and inefficient.

By automating origination processes with Robotics, originators enable existing staff members to focus more on higher-level tasks and less on repetitive tasks. This has the potential to create a more engaging and rewarding work experience for employees. Originators can also scale their LOS to enable existing staff members to handle more loans. If existing staff members can manage more loans, the originator can lower its average cost to originate.

Further, Robotics technology eliminates human error in the processes it automates, improving overall accuracy within the origination process. The technology also eliminates bottlenecks and speeds up processes. Faster, more accurate origination processes can improve the customer experience, lead to more referrals, and ultimately increase revenue.

In the past, technology used to automate origination processes was not as robust as it is today, and required long implementation times. However, with Robotics technology, originators are finding a different experience. Since Robotics technology is already built into some LOS systems, there is no new system implementation required. Robotics functionality for common processes such as those previously mentioned is now easily accessed through the LOS. The same functionality is also easily redeployed to automate other processes.

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Not so long ago, originators had a stronger reliance on vendors for any adjustments to process automation. Now, Robotics enables originators to have more direct control over process automation with an entirely configurable client workflow. Although advanced decisioning functionality may still require vendor consultation, originators are more empowered to manage their automation than ever before.

Transforming the Origination Process

To thrive in today’s mortgage market, originators must find ways to decrease their turn-times as well as lower the average cost to originate a loan without negatively impacting their ability to ensure compliance and deliver a high-quality customer experience. Robotics technology built into loan origination systems is equipping originators with the tools they need to tackle this challenge. Originators leveraging LOS systems that use Robotics technology are quickly transforming their origination processes, experiencing multiple benefits, and helping to ensure that they are better prepared to scale for any growth opportunities that lie ahead.

About The Author

Richard (“Rich”) Gagliano

Richard (“Rich”) Gagliano is President of the Black Knight Origination Technologies Division, where he is primarily responsible for the direction of LoanSphere Empower, Black Knight’s loan origination system for retail, wholesale and consumer-direct channels; Empower Now!; LoanSphere LendingSpace, Black Knight’s loan origination system for correspondent lending; Black Knight’s LoanSphere SalesEdge lead management solution; and LoanSphere Quality Insight, a quality control workflow solution that supports greater loan transparency and data integrity. Rich has more than 25 years of experience in the financial services industry. For more information about robotics in origination, please contact Black Knight at 844.474.2537 or

Innovating The Origination Process

Black Knight Financial Services, Inc. is a leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. The company is committed to being a premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. To this end, Richard (“Rich”) Gagliano is President of the Origination Technologies Division for Black Knight, talked to us about how he sees the future of mortgage origination and what Black Knight is doing to innovate. Here’s what he said:

Q: What are a few of the most impactful changes you are seeing in the mortgage lending industry?

RICH GAGLIANO: The impact of regulatory change continues to plague the mortgage industry with higher operating costs. While the pace of regulatory change has slowed, mortgage lenders have not seen their costs decline accordingly. To put this in perspective, the average cost to originate a loan today is nearly double what it was in 2007. Still, we believe that in time technology and process innovation will help to normalize costs.

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Digital technology has and will continue to have a significant impact on the mortgage industry. From an operational perspective, it enables innovation that can result in greater efficiency, as well as expanded product offerings. It can also help deliver the “have it your way” experience that customers expect by enabling them to interact with their lender and receive updates on the mortgage loan process from any internet-connected device. This continuity of experience has become a standard expectation from consumers, and digital technology is helping lenders meet and exceed those expectations.

Q: What is Black Knight doing to help lenders address these changes?

RICH GAGLIANO: On the regulatory front, Black Knight has been at the forefront in terms of working in close partnership with our clients to ensure that we adapt and innovate to meet their changing needs as new regulatory measures unfold. As a result, we have a highly collaborative and productive working relationship with our mortgage clients, and are in lock-step with them to address regulatory changes when they arise.

We also deploy robotics technology within our core loan origination system to deliver advanced automation in support of more streamlined origination operations. This innovative approach enables mortgage originators to improve operating efficiencies and drive down costs.

Taking advantage of the capabilities of digital technology, Black Knight is delivering a front-end (consumer-facing) loan application that lenders can deploy so their borrowers can enjoy a user-friendly, branded experience. Data that is entered into the application is collected and tied back to our loan origination system for efficiency and speed.

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Q: In what ways are these innovations helping the lending industry evolve?

RICH GAGLIANO: Innovation is greatly helping to expedite the gathering and validation of borrower information through fintech companies for key factors such as income and assets. This accelerates the speed and fluidity of the origination process by giving lenders increased validation certainty to support decisioning.

In turn, this gives consumers the ability to self-fulfill the mortgage origination application online, without the need to track down supporting documents and other onerous tasks that can contribute to an unpleasant mortgage origination experience.

The result is not only a more satisfying customer experience, but also a lower abandonment rate, decreased costs to originate a mortgage loan, and the opportunity to approve and close more loans overall. This offers a critical advantage to mortgage originators of all sizes.

Q: Black Knight is perceived as a technology provider for larger banks; what is the company doing to support mid-market lenders?

RICH GAGLIANO: Today, Black Knight offers a pre-configured origination solution called Empower Now! that is sized specifically for the mid-market lender. Empower Now! delivers all the functionality a mid-market lender needs, including automation capabilities and a process orchestration engine that helps support a lender’s future growth. It enables lenders to operate more efficiently and deliver a more responsive customer experience.

The system can be deployed within 4-6 months – more quickly than our robust Empower enterprise system. Additionally, Empower Now! scales to support future growth, so mid-market lenders don’t have to settle for less robust options because of their size.

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Q: How has your previous experience in the mortgage industry prepared you as President of Black Knight’s Origination Technologies division?

RICH GAGLIANO: My industry background has included both mortgage origination operations, as well as technology strategy and development. I have run mortgage origination businesses, including executive management, sales, and operations. This has given me a good understanding of the challenges associated with the origination business, including cost and margin management. I’ve also spent many years working as an underwriter, as well as in corporate finance and secondary marketing. I also have experience in business engineering, helping to identify opportunities for operations to be more efficient across people, technology, and processes. Finally, I have a great deal of experience in regulatory and compliance, and have been working closely with our mortgage clients on their readiness initiatives and risk mitigation programs.

Insider Profile

Richard (“Rich”) Gagliano is President of the Origination Technologies Division for Black Knight, a leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. As the division’s leader, Rich is primarily responsible for the direction of LoanSphere Empower, Black Knight’s loan origination system for retail, wholesale and consumer-direct channels; LoanSphere LendingSpace, Black Knight’s loan origination system for correspondent lending; Black Knight’s LoanSphere SalesEdge lead management solution; and LoanSphere Quality Insight, a quality control workflow solution that supports greater loan transparency and data integrity. With more than 25 years of experience in the financial services industry, Rich offers a wide range of lending-product knowledge and insight. He supports Black Knight’s efforts to provide advanced, high-performance technology and data solutions to help clients succeed in the evolving mortgage industry.

Black Knight Updates Its LOS To Tackle Industry Issues

Black Knight Financial Services, Inc. has made several significant enhancements to LoanSphere Empower, the company’s loan origination system (LOS) that supports the retail, wholesale and consumer-direct lending channels. Empower’s features and functionality help lenders increase efficiencies, maintain regulatory compliance, mitigate risk and improve customer service. Key enhancements delivered in version 7.0 of the Empower LOS include:

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>>Updates to support the expanded data collection requirements in the CFPB’s final rule for the Home Mortgage Disclosure Act (HMDA). This includes borrower demographic information, loan costs, automated underwriting system evaluation information and property information, as well as the Legal Entity Identifier and Universal Loan Identifier.

>>Establishes the architectural standards and protocols to support multi-device user experience, including the Representational State Transfer Application Program Interface (REST API) framework that enables lenders to access Empower functionality and data from various mobile devices.

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>>An enhanced user interface to help increase lender productivity using a more intuitive navigation and a simplified screen presentation.

>>New capabilities for home equity lines of credit (HELOCs) that allow clients to configure special introductory promotional rates and perform mass repricing of HELOCs in the pipeline.

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Empower 7.0 also includes technology integrations that help further streamline lenders’ processes, such as:

>>Access to quick, reliable property tax data through Black Knight’s Tax for Loan Estimation and Tax for Closing Disclosure products

>>A new LoanSphere Loan Boarding optimized file for servicing

>>LoanSphere Expedite to support eSign and eDelivery capabilities

>>Additional support for managing fraud-risk detection through PitchPoint

“Empower 7.0 offers dynamic, innovative capabilities to help clients deliver an exceptional customer experience, increase productivity and address regulatory requirements,” said Jerry Halbrook, president of Black Knight’s Origination Technologies division. “This is just one example of how Black Knight continues to make significant investments in Empower to provide clients with a sophisticated loan origination system that has superior capabilities.”

The Empower LOS delivers the functionality to electronically capture and process data for every facet of loan origination and can be hosted by Black Knight at its data center or self-hosted by a lender. To support regional and mid-market lenders, as well as independent mortgage bankers, Black Knight offers Empower Now!, a version of Empower that greatly streamlines the implementation process, resulting in reduced timelines and costs. Empower is seamlessly integrated with Black Knight’s LoanSphere MSP, a comprehensive, end-to-end loan servicing system that encompasses all aspects of servicing, from loan boarding to default, for first mortgages and home equity loans.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at