2019 Trend: Mortgage Software That Can Think (And Do)

Technology is only getting smarter and more ingrained into daily life. With the emergence of technologies like AI and iBots, technology does more than just help you work, it works for you. Instead of just providing a faster way to calculate, AI can think and learn while iBots can complete scheduled tasks without constant human oversight. 

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With the term “AI” and “iBots,” assistants like Amazon Alexa or Google Home come to mind. However, these technologies stretch far beyond the consumer world. Many lenders are now using these technologies in their everyday business practices. There are a host of automation and decisioning tools out there for lenders that help them keep their business running quickly and efficiently, while staying on the cutting edge of new technology innovations.

The Benefits of AI in Mortgage Lending

This new technology is changing the mortgage industry. The use of automation brings benefits across the spectrum of lending. Arguably the biggest benefit of automating the mortgage lending process, or any type of lending, is efficiency gains. With automatic decisioning tools, coupled with automated settlement services like valuation, title, and flood, lenders can work more quickly and can more easily handle a high volume of loans. These tools are invaluable in eliminating any backlog a lender might have.

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For lenders, this clearly means that their job is streamlined and less complicated. For borrowers, however, there are different benefits. When a lender is backlogged, it hurts the borrower. Lenders not being able to turn loans around means that borrowers are not able to buy, refinance, or improve their homes. This sets borrowers back and can lead to stagnation in the market. A mortgage lender’s ability to work efficiently has ripple effects throughout the housing market.

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Automation in mortgage lending also brings another important benefit: cost savings. Lenders are already struggling to stay profitable in the current state of the market. In one case, when a lender compared the costs on 334 HELOC applications, they found that they saved $113,319 with automation tools. Costs using technology were $97,101, as opposed to $210,420 without it. These significant cost savings mean that lenders stand a better chance of holding up in tough times.

AI Powering Automated Decisioning

Just as the mortgage industry is changing, the technology it uses is changing. Automation and decisioning tools are constantly being developed and improved to ensure that lenders have the best technology on hand.

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Some decisioning tools at the forefront of this innovation push are being developed in a unique way, designed to mimic a lender’s underwriting guidelines. Lenders are able to sit down with the developers of these types of software and talk them through how they do business. They are able to explain common problems they face, how they would solve them and other day-to-day decisions they would make. The support teams can then enter that information into the decisioning system so that it is able to make those decisions in the same way. 

This essentially allows the decisioning tool to “think” like the lender. But lenders don’t always have access to real-time data, systems do, by adding another layer of data intelligence in the form of suitability logic really takes “intelligence” to a level beyond what the lender has today.  A lender’s LOS can now make the same decisions that they would, meaning, even with automation, a lender does not have to sacrifice their quality of service. With suitability logic, systems can read property data at order placement and decide whether an automated valuation is better suited than a drive-by or full appraisal.  This AI element means that no one has to sacrifice customer experience, quality or accuracy in the name of productivity. Automated decisioning that can “think” like the lender creates a win-win situation for borrowers and lenders.

Another benefit of automation that can think is true efficiency gains. Many technologies allow people to work faster, but not many are able to mimic their thought process. This means that technology can know what to do when it hits certain snags along the way. Lenders do not have to take as much time intervening in situations where the technology does not know what to do, because it is programmed to do just what they would.

This is why partnership with a fintech can be so important. Their expertise in technology can expand what a regular financial institution is capable of when it comes to technology. Fintechs are the ones that can teach the software to “think.” They can stay on the cutting edge of technology innovations so that lenders can spend time doing what they do best. Partnering with a fintech can boost efficiency in both time and finances, as financial institutions do not have to spend time working on an area that is not in their expertise and they can ensure money is being spent wisely on optimized solutions that will be sure to produce results.

Technology like AI, iBots, suitability logic and automated decisioning tools began to be adopted by pioneers in 2018, but they will come of age in 2019. In the coming year, these technologies will not be optional for lenders. They will become the new standard for doing business and financial institutions must keep up if they want to remain competitive. Partnership with a fintech can help a bank or credit union easily achieve their automation and technology goals.

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Built Technologies Deepens Banking Industry Expertise

Built Technologies, a FinTech company focused on bringing construction lending into the digital age, has added two seasoned banking industry executives with Billy Olson joining as director of builder financial solutions and Natalie Myrick as director of mortgage solutions. Olson and Myrick bring decades of experience on the lending side with prominent banks, Wells Fargo and Umpqua Bank respectively.

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“Billy and Natalie are critical additions to our team at Built as they deepen our banking expertise and help us better understand the lender’s perspective,” said Chase Gilbert, CEO and co-founder of Built Technologies. “The Built platform has served over $18 billion of construction loan volume with financial institutions—large and small—across the U.S. Billy and Natalie understand the challenges lenders face because they’ve lived it first-hand. Now with Built, they will help our clients maximize our platform and ultimately improve the construction lending process for lenders, builders, borrowers, and everyone involved.”

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Olson, who joins Built as director of builder financial solutions after nearly two decades at Wells Fargo, will aid in the development of borrowing base product functionalities and serve as the voice of the firm when speaking with potential clients. Most recently, he served as vice president of loan administration for a dedicated homebuilder lending group within Wells Fargo managing 40 thousand homes under construction annually. Previously, Olson held positions within Wells Fargo’s specialized real estate group dealing with residential and commercial construction. He holds a bachelor’s degree from Northwood University.

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As director of mortgage solutions, Myrick will lend her expertise in developing streamlined processes and procedures that ensure Built’s CTP clients are successfully implemented and getting the most out of the platform. She brings nearly a decade of experience on the lender side with a leading West Coast financial institution, Umpqua Bank. She most recently served as vice president of construction servicing for Umpqua where she managed the bank’s lending process and systems.  Before that, she held a series of positions in investor reporting and loss mitigation at Umpqua. Myrick holds both an MBA and bachelor’s degree.

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Built is a provider of secure, cloud-based construction loan administration software and the only platform to be endorsed by the American Bankers Association. Built’s collaborative platform brings the draw management process online, helping to reduce construction loan risk, increase loan profitability, transform the borrower experience, simplify compliance, and provide lenders with data never accessed before. Built serves community, regional, and national lenders coast-to-coast.

Banking Fintech Acquisition Comes Together

nbkc bank announced its investment in two Bay-area fintech companies. The announcement comes on the heels of the bank’s launch of Fountain City Fintech, an accelerator providing financial technology startups with an agile bank partner, compliance expertise and infrastructure for scale during its 75-day curriculum. 

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ProPair uses artificial intelligence (AI) to optimize the distribution and prioritization of mortgage leads to individual loan officers, rather than distribution based on seniority or guesswork. As the first customer of ProPair, nbkc piloted the software in the bank’s home loans division. “We have tremendous confidence and respect for ProPair’s founders and experienced first-hand how its smart pairing improves customer experience and loan officers’ success,” said Eric Garretson, CFO & Fintech Strategy Leader with nbkc. 

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“nbkc has a forward-thinking culture along with an uncommon ability to promote innovation and support aggressive product development goals. Having them as our first customer enabled us to develop and test our product before launching at scale” said Devon Johnson, Co-Founder and Chief Data Officer of ProPair. The investment further solidifies the joint partnership.

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Track, also based in San Francisco, uses machine learning to estimate and auto-remit quarterly taxes to the IRS for the self-employed. Track is one of six companies in nbkc’s fintech accelerator, Fountain City Fintech, and the two companies have a mutual focus on serving the needs of gig economy entrepreneurs and small business owners. 

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“Our goal at Track is to make the growing numbers of the self-employed more independent and focused on their core business, not the headaches of learning tax code. The investment by nbkc will help us in our next chapter of scaling our business so we can better serve the 50 million self-employed Americans seeking greater financial security,” said Trent Bigelow, Co-founder and CEO of Track.

Investments in fintech companies are part of nbkc’s strategic growth plan to bring innovative products and experiences to customers leveraging technology, often removing pain points or making interactions more efficient and customer-focused.

nbkc is a modern, FDIC-insured bank driven to make banking simple and transparent unlike any other bank. Leveraging technology, customer feedback and innovation, nbkc helps people and small businesses nationwide safely save, move and borrow money—whenever, wherever they are.

Co-founded in 2016 by a former mortgage industry executive and a seasoned data scientist, ProPair is a Silicon Valley innovator built on the principle that artificial intelligence is revolutionizing how lead assignments, actions and prioritizations are made. Designed with the everyday needs of sales organizations in mind, and optimized in conjunction with mortgage industry leaders, the ProPair platform replaces outdated manual processes with predictive, automated lead assignments to convert more prospects and reduce lead cost per funded loan for all loan officers.

Track Technologies, Inc., founded in 2015, is a San Francisco-based company that handles self-employed taxes for users on a daily basis, giving them a clear picture of what they have earned and what they owe by automatically keeping track of their income and expenses, withholding the proper amount when users get paid, and submitting their estimated quarterly tax payments to the Internal Revenue Service.

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How Phones And Social Media Are Setting Expectations For Mortgage Technology

Increasingly, cell phones, online shopping sites and social media apps are setting the standards by which financial institution technology or fintech, is judged.  Just a few years ago, the device you have in your hand was called a smart phone.  At the time it seemed revolutionary.  Today, everyone has one.They are ordinary and necessary, and they are known simply as “phones.”  

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Phones conditioned all of us to expect real time, easy to use, meaningful technology that is at your fingertips constantly.   When I look at the features and capabilities offered by the phone in my hand, I can’t help but realize these same features and capabilities can work just as well when applied to mortgage technology. Financial institutions should take a look at key benefits of our current technological tools, such as the phone or tablet, when developing their criteria for judging new technologies for their branches. This will give them better perspective to select and more effectively use the modern technology offered by the marketplace. 

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One of the most popular features of modern technology is the ability to deliver information faster, usually in real-time. People have come to expect it. I have seen cases where this has carried over into the mortgage industry when branch managers have said they need to be able to see loan officer production totals in real time.  Ten years ago this was a rare thing but now it’s almost the standard.

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Popular social media platforms and online retail websites are designed to attract and retain consumers. Much of the design effort has gone into enhancing the user experience.  When you shop on Amazon, or when you see pictures of your nephew on Instagram, you get used to seeing and using the content you want quickly, getting results in real time.  A manager operating a mortgage branch wants and expects the same sort of experience when using mortgage technology. This means higher demand for things like dashboards that are easy for bankers to use.

Most social media platforms allow you to fine tune the information you see.  You, the user, prioritize the people you want to see more and minimize feeds from others.  I see mortgage technology vendors now offering similar settings pages within their own solutions that were clearly inspired by those used in social media platforms. These settings pages in the fintech application are just as easy to use as those on social media and have a similar look and feel.  Fintech dashboards should allow the individual user to determine which KPIs are most important and at the top of the page, as well as which branches or loan officers they want to track more carefully.  

Feedback in the world of social media is instant, sometimes scathing, but often constructive. Thankfully, in the fintech world, feedback is generally constructive!  Fintech providers should, and often do, respond very quickly to customer feedback.  This focus on constantly updating and making the solution even more usable and friendly based on detailed feedback is key to the ongoing success of most mortgage technology providers.  It is not uncommon for mortgage bankers to reach out directly to a vendor and request a particular feature that should be implemented immediately.  I’ve even seen situations where customer attending a vendor’s user conference request specific changes and assume it will be done within days. Thankfully, most quality fintech vendors are able to accommodate these types of requests.  This type of open feedback to the technology vendor becomes a type of “customer voting system,” where the best and most frequently heard comments lead the next development initiative.  

Cell phones and social media’s wide use and acceptance causes its users to compare their experience on these platforms with every other technology solution they use. Regional and branch managers who make decisions regarding their technology solutions should take a moment to think about their user experience every time they use an app on their phone, tweet their latest news or buy something on Amazon, because those everyday events influence what they want in the fintech software they buy.

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Millennial Homebuyers Exercised Their Purchase Power

Millennial homebuyers across the country exercised their purchase power in April as competition for limited housing inventory continued. Eighty-nine percent (89 percent) of mortgage loans made to Millennial borrowers during the month were for new home purchases, up one percentage point from the month prior, and the highest percentage since May 2017, according to the latest Ellie Mae Millennial Tracker.

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Interest rates also continued to rise in April to 4.73 percent, on average, up from 4.63 percent the month prior. This is the highest interest rate recorded since Ellie Mae began tracking Millennial loan data in January 2014.

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As interest rates crept up, average loan amounts to Millennials fell. The average amount was $194,300 in February, $192,055 in March and $188,171 in April.

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“Most Millennials are buying a house because there are major changes happening in their lives such as starting a family, getting a new job, or because they’ve decided that they want to build equity and stop renting,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “We believe Millennial home purchases will continue to climb this summer and while interest rates may slightly impact the size of homes borrowers can get for their money, we don’t foresee it impacting their desire to buy.”

Overall, conventional loans represented 67 percent of all closed loans to Millennial borrowers, while FHA loans held steady at 29 percent from the previous month. VA purchase loans for Millennial borrowers represented 79 percent of all VA closed loans in April, steady from the month prior, and up from 66 percent in February.

The time it took for Millennial homebuyers to close a loan remained flat month-over-month. Purchase loans took an average of 39 days to close and refinance loans took an average of 44 days. FHA purchase loans took an average of 40 days to close, compared to 41 days in March. VA purchase loans averaged 49 days-to-close, compared to 45 days the month prior.

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Credit Interlink Integrates Income Verify With LendingQB For Faster Verifications

Credit Interlink, a provider of SaaS mortgage origination technology solutions, has integrated its Income Verify, with LendingQB, a provider of SaaS loan origination technology solutions, to facilitate quicker and more efficient 4056-T verifications.

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Thanks to certification through Fannie Mae’s Day One Certainty, Income Verify has direct access to tax transcript verifications through the IRS in order to expedite the time needed to process requests within LendingQB’s LOS. Likewise, the solution better prevents the risk of fraud through its secure interface, creating a more cost-effective way to collect borrower data.

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“In a world growing more dependent on digital technology, borrowers have come to expect the lending process to replicate experiences they experience in other areas,” said Mark Yoder, Vice President of Business Development, Credit Interlink.  “With Income Verify, borrowers are able to provide their information up front and loan officers are able to verify it without adding unnecessary delay to the origination process, all in a secure manner.”

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LendingQB’s web browser platform provides mortgage lenders with core LOS capabilities using modern web-optimized technology, enabling robust integrations to other web platforms such as Credit Interlink. Using LendingQB’s API framework, Credit Interlink is able to extend the capability of lenders, expediting the origination process and allowing more direct interaction with borrowers and other parties to the loan.

“Credit Interlink’s streamlined approach to data verification, credit and fraud is innovative and perfectly fits the ever-changing mortgage industry,” said David Colwell, vice president of strategy at LendingQB. “By utilizing Income Verify, our lenders are able to verify borrower data in a fast and safe manner, enabling them to reduce the time needed and the overall cost to originate loans.”

Enhanced Offering Provides Much-Needed Differentiator For Lenders

Mortgage Coach, creator of point-of-sale borrower conversion software, has partnered with Optimal Blue, a provider of secondary marketing automation. Through direct integration with Optimal Blue’s API platform, every Mortgage Coach application now seamlessly connects real-time, compliant product and pricing data with the compelling financial analyses Mortgage Coach is known for.

Through this collaborative effort and newly expanded product offering, Mortgage Coach and Optimal Blue enhance their long-standing strategic partnership and take their industry value proposition to a whole new level.

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“Without ever leaving the Mortgage Coach app on their mobile device, loan officers can create informative, side-by-side comparisons highlighting multiple loan programs and comprehensive pricing information in just seconds,” explained Bob Brandt, Vice President of Marketing & Strategic Alliances for Optimal Blue. “Combining the sophisticated product and pricing data at the heart of every mortgage transaction with a compelling user experience — and doing so whenever, wherever it matters most — is a game changer for the industry.”

The benefits are not exclusive to lenders and loan officers. Today’s consumers immerse themselves with the details behind major financial decisions and pride themselves on deeply understanding their alternatives. Mortgage financing is no exception. When provided with a comparative, in-depth analysis of the financial impact of their best financing alternatives in a highly consultative environment, consumers are more engaged with their loan officers and more likely to move forward with a loan.

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“In today’s price compression marketplace, converting every prospect into a borrower is the most important aspect of achieving increased profits for mortgage lenders,” said Joe Puthur, President of Mortgage Coach. “This new innovation gives lenders the instantaneous benefit of earning more commitments at a lower cost of acquisition.”

Mortgage Coach, the company’s flagship platform, is the technology behind the Total Cost Analysis (TCA), a report that illustrates the long and short-term impact of any loan program on the borrower’s financial situation. The TCA incorporates real time rates, fees, closing costs, and program information and presents its findings using simple yet powerful graphical elements like charts and graphs. The TCA provides a level of clarity that is virtually impossible to achieve without the Mortgage Coach platform.

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“The difference between using a TCA to explain mortgage options and using any other method is like the difference between having a film described to you versus watching it in high definition with Dolby sound,” explained Mike Hardwick, President of Churchill Mortgage. “Having been in partnership with Mortgage Coach and Optimal Blue for several years now, we’re happy to have helped thousands of borrowers make a better, more informed decision. These new capabilities will provide greater clarity, transparency, and confidence to any borrower – in a way that is faster for every loan professional.”

An LOS To Satisfy All Lenders

Most loan origination or LOS offerings look to target specific size lenders with different offerings for a top 50 lenders vs. a smaller lender, for example. Wipro Gallagher Solutions (WGS), a Wipro Limited company and provider of loan origination software solutions, has launched its NetOxygen SaaS loan origination solution for mortgage lenders of all shapes and sizes.

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NetOxygen SaaS brings the power of NetOxygen, an enterprise class loan origination system that helps lenders reduce origination costs and boost production efficiency through automation.  NetOxygen connects to a front end portal and fintech offerings thus providing seamless interactions to improve borrower experience. NetOxygen SaaS enables quicker deployment and scalability to match business growth with an all-inclusive, per transaction pricing, which is based on business outcomes.

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NetOxygen SaaS provides comprehensive product coverage across mortgage, home equity, HELOC (home equity line of credit) and unsecured credit lines origination. The platform integrates an extensive vendor ecosystem which provides multiple options for standard services like credit, appraisals, fraud checks, etc. NetOxygen SaaS supports retail, correspondent and wholesale markets, and also enables niche offerings like construction lending for one close, multiple close, homestyle renovation and FHA construction.

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Key features of NetOxygen SaaS include:

>>Sophisticated workflow engine, allowing lenders to implement distinct lending policies and procedures;

>>Automated underwriting for improved efficiency;

>>Comprehensive pool of rich APIs, to enable easy integration with other applications;

>>Advanced feature supporting ADR and OCR capabilities;

>>Self-service tools to enable lenders to perform more tasks, with ease and speed.

“NetOxygen SaaS offers an extensible and scalable platform that caters to lenders’ ever-changing business needs and provides an all-encompassing solution to improve end-to-end loan origination,” said Scott Dunn, Head Product Management, Strategy and Compliance, Wipro Gallagher Solutions. “Among the platform’s many differentiators, what stands out is the ability to quickly configure business rules, products, fees and deliver industry leading functionality  for compliance, imaging, reporting, and documents generation in combination with best-in-class providers.”

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Mortgage Firm Gets On FinTech Listing

Indecomm Global Services, a leader in business process outsourcing, learning, and technology solutions, announces that it has been recognized in the 2016 IDC Financial Insights FinTech Rankings for the fourth year in a row. The annual IDC FI FinTech Rankings are the most comprehensive vendor ranking in the financial services industry. They are based on 2015 calendar year revenues of hardware, software and IT services to financial institutions.

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“Technological change seems to be the greatest challenge in the industry but we consider it to be a significant business opportunity,” said Naresh Ponnapa, Group CEO and Managing Director, Indecomm Global Services. “Software as a Service (SaaS) and Outsourced Product Development (OPD) are the strategies which Indecomm uses to help its customers address these challenges. Our rise in the rankings is a harbinger of good things to come.”

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The providers listed in the IDC Financial Insights FinTech Rankings offer proprietary platforms and services in technology, which span the ever changing need for IT in the financial services industry. Global spending on IT is a rapidly growing market, expected to reach half a trillion dollars by 2018.

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“Being positioned on the IDC Financial Insights FinTech Rankings demonstrates a fintech company’s commitment to the financial services industry and the success achieved at their financial institution clients,” states Karen Massey, senior analyst at IDC Financial Insights. “The IDC Financial Insights FinTech Rankings, now in its 13th year, is the global industry standard who’s who of financial services technology providers, and we congratulate the 2016 winners.”

These rankings serve as a barometer of innovation in technology and help identify the sources who can deliver it. In addition, on a more micro level, these rankings can provide a key input to strategic and operational planning, especially in the build or buy decision.

For a detailed report on the finding, view or download here.

For more information about the rankings, see here.

New FinTech Firm Aims To Improve Loan Portfolio Management

FinTech analytics platform dv01 has debuted its portfolio management software for marketplace loans. To date, institutional investors have used dv01’s cloud-hosted web application to gain real-time insight into $23.5 billion worth of marketplace loans. Here’s how it works:

Founded in 2015 by Perry Rahbar, dv01 has raised $7.5 million of seed funding from Quantum Strategic Partners Ltd., Leucadia National Corporation, and Pivot Investment Partners. The company has applied the funding toward expanding its engineering team and launching its portfolio management software. It will now focus on its securitization offering and scaling its solution to expand into the $12 trillion consumer and mortgage lending markets.

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“Our mission is to bring a higher degree of transparency to lending markets,” said Perry Rahbar, CEO, dv01. “We take data out of archaic databases and transform it into something flexible and dynamic. As an impartial party, we deliver an unbiased view that benefits all market participants: borrowers, lenders, and investors.”

dv01’s current technology aggregates performance data from lenders including Lending Club, Prosper, Marlette Funding, and CommonBond. By normalizing data across lenders, dv01 simplifies comparison and analysis, enabling institutional investors to study individual loan performance and quickly detect issues within portfolios.

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“dv01’s analytics platform brings needed transparency to a rapidly evolving market,” said Brian McGrath, Managing Director at Jefferies, a subsidiary of Leucadia National Corporation. “We look forward to using dv01’s offerings to inform future analysis and investment.”

“We’re excited to support a company that is building technology to modernize the capital markets,” said Dinkar Jetley, co-founder of Pivot Investment Partners. “dv01 offers a reporting and analytics platform that streamlines workflows for institutional investors, making analysis of loan level data faster and more accurate than previously possible.”

Rahbar founded dv01 to solve challenges he encountered during his decade-long career trading mortgage bonds at Bear Stearns and J.P. Morgan. The team bridges Wall Street and Silicon Valley, fusing an insider’s understanding of incumbent financial processes with an uncompromising focus on technology. dv01’s investors have decades of experience in private and public financial sectors and will play an active role in helping prioritize features and growing the customer pipeline.