Discussing True Innovation

The PROGRESS in Lending Innovations Award Winners gathered to talk about the future of mortgage lending. Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Ninth Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of industry innovation right now? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

JERI YOSHIDA:Innovation is filling an unmet need with a solution that people prefer over their previous options. I don’t think that sweeping versus incremental change is a major factor in determining innovation.

STEVE VIARENGO:We define innovation as the transformation of the way a company or a process works. Disruptive, sweeping change is exciting, but unless you’re a start up, it’s rarely practical. Most companies need to protect their core business while driving change, so incremental change is necessary for success. At Capsilon, we provide disruptive technology that fundamentally changes how companies work. Over the years, we’ve learned how to implement innovative new processes in incremental ways that help companies realize an immediate, positive business impact while marching toward broader, more sweeping changes that add up over time.

Featured Sponsors:


SARA NAKAE:You can’t put innovation in a box or on a timeline, innovation happens through thought, focus, and excellence. Innovation can be either sweeping or incremental, it’s not an all or nothing process. In fact, the definition of innovation does not contemplate “how” a new product or service is introduced, innovation is taking a great idea and turning it into a valued product or service that customers will buy. From a business standpoint, incremental innovation is the more popular approach because it comes with less financial risk to the organization. But sweeping, or radical, innovation is something that shouldn’t be ignored either. Both exist and both have their merits. But the key to innovation is to focus on the impact to the customer, did you improve their user experience? Innovation can happen incrementally or sweeping, as long as the product or service creates value from the customer’s perspective.

MATT HANSEN:I like to think of innovation as something that changes the status quo. It can be organizing and making sense of other’s ideas. Innovation can also be something that is more self-created. Either way, I believe innovation requires execution.

SHAIMAA ELK:Innovation comes in all forms and should not be limited to being seen as a sweeping change. Innovation can be defined as simply as the application of ideas to remain relevant.

Featured Sponsors:


BOB BRANDT:To Optimal Blue, innovation is not a tsunami that happens, and everyone then reacts to that moment in time. Innovation is not something you revisit only when you have the time. At Optimal Blue, innovation is a pillar in our corporate DNA. We view innovation as a constant, as something that drives our approach each and every day.

ELIZABETH KARWOWSKI:Save once in a generation discoveries, I don’t think sweeping change is possible without being preceded by smaller, incremental changes. In other words, small changes to procedures or products over a period of months or years often have the effect of completely transforming them into something that’s never been done or seen before. It’s often not until we look back to where we started that we fully grasp the gravity of those seemingly small changes made along the way.

DAVE SIMS:I would define innovation as anything that has the potential to dramatically change a market. In terms of the mortgage industry – an industry where processes have mostly remained unchanged for more than 80 years – the introduction of digital automation and point-of-sale solutions have caused massive disruptions by simplifying the once-complex and non-secure process of originating a mortgage loan, thus setting a new standard in borrower expectations. Floify was one of the first of its kind to market in 2013. Since then, we have seen our user base grow to nearly 700,000 lenders, borrowers, and other loan stakeholders. Every day, more and more lending operations are transitioning to digital solutions, which is helping them remain competitive in this highly-competitive industry and allowing them to effectively fight margin compression. To me, the recent changes in the mortgage industry have been the epitome of innovation.

Featured Sponsors:


BOB DOUGHERTY:Innovation can be incremental or sweeping, depending on your business objectives and strategy. Both sweeping and incremental innovation promise great benefits—improved accuracy, speed and profits. However, incremental innovation lacks many of the challenges that come with radical change, such as significant disruption of day-to-day business or heavy time and resource investments in new technology that may or may not work.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

SHAIMAA ELK:The state of innovation in the mortgage industry is modest at the moment. If innovation is the application of ideas to remain relevant than a key element in the equation is the degree of underlying change in regulations, processes and expectations that drive that relevance equation. The mortgage industry is currently heavily regulated, which impacts its speed of change. In this current environment, industry change is still slow and limited, which has put a reduced demand on the need for innovation.

MATT HANSEN:Organization of ideas is happening in the mortgage space. There’s rarely a new idea, but execution of ideas is getting a lot more attention. Some companies are able to execute, and some are not. We’re also seeing vendors open the doors between each other, which previously didn’t happen on the same scale. This is bringing new products to the market. For this reason, I would say we are in a state of growth and innovation.

Featured Sponsors:


STEVE VIARENGO:It is an exciting time to be in the mortgage industry. There has been a significant influx of capital invested in technologies that enable a better way of doing business, legacy technology companies are recognizing the need to create more open environments and work with other tech providers, and companies in the space are embracing change. We’ve been working closely in partnership with our lender, investor, and servicing partners to build innovative solutions that solve the biggest pain points for companies in the space.

BOB BRANDT:We are in the midst of an innovation renaissance period in the mortgage industry. There are more technology vendors developing more interesting approaches to automation and problem-solving than ever before. Optimal Blue believes that the state of innovation is thriving! However, the challenge that industry innovators face is to think beyond technology silos. For this very reason, Optimal Blue has developed robust and highly unique RESTful API interfaces that +50 leading mortgage vendor partners leverage to break down the integration barriers between mortgage technology systems that have historically held back the industry.

SARA NAKAE:With today’s economy and the advances in technology and data availability, innovation in the mortgage industry is moving from stagnant to thriving. There’s been a lot new capital infusion through various FinTech companies over the past 24 months. Financial institutions are becoming more competitive every day, each one trying to produce a better product and borrowing experience. Reducing costs and turn-time are big factors for lenders who want to compete, and they are putting their focus on innovative ways to improve their product and their process.

BOB DOUGHERTY:Innovation is thriving in the mortgage industry. Technology providers are constantly launching new solutions; enhancing their existing products; and integrating with other technology providers to streamline and accelerate the mortgage origination process for everyone involved. From a broker perspective, all of this technology is empowering because it lets them focus more on their borrowers and less on manual processes or maintaining software or hardware.

DAVE SIMS:I believe the state of innovation in the current mortgage industry is neither thriving nor in a state of decay; rather, it is now in a mode of stabilization. When Floify’s automation technology was introduced to lenders in 2013, there were only a few players in the space, all vying for a piece of the mortgage tech market. Since then, dozens of hopeful competitors have come and gone. Only a few have withstood the test of time. What has set Floify apart from our competition is our ability to continue our pace of innovation and partnering with like-minded leaders in complementary spaces, including VOE/VOA/VOI, credit reporting, eSignature, and productivity vendors. This strategy has allowed us to develop a single solution that integrates with our customers’ favorite solutions, further simplifying their lending operations.

JERI YOSHIDA:I wouldn’t call innovation in our space thriving, but the work I do with NEXT has shown me that there are a lot of new technologies entering the mortgage industry. How many of them are truly innovative? That’s the question. A lot of companies want to be the one that takes the mortgage industry out of its old school, manual, paper-based processes. And a lot of them are working really hard to stake that claim by conceptualizing new technologies and bringing them to market. That in itself refutes the notion that our industry is in a state of decay.

ELIZABETH KARWOWSKI:The mortgage industry is fiercely competitive, and competition almost always breeds innovation. There is no better teacher than past experience and, as mortgage professionals learn from past missteps and accomplishments, we are seeing new ways in which technology is leveraged to increase efficiency and streamline processes. In this industry it is almost impossible to be successful without constantly tweaking and tinkering to get an edge on the competition.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

SARA NAKAE:Focus on their customer, how can lenders create a better experience for their borrower? It’s a combination of cost and time. Lenders need to focus on reducing the cost for customer’s to get a loan and the time it takes to close. Innovation that focuses on those deliverables will be winning over the next 12 months.

SHAIMAA ELK:The industry could use a fresh approach to mortgages, a re-imagining of the entire process. This would require a joint effort with lenders, investors, regulators and vendors. But in the meantime, the more pressing issue is not what type of innovation the industry needs, but how quickly can we adopt the innovation that is readily available today, like digital portals, robotic process automation (RPA), data analytics, and blockchain. Furthermore, beyond adoption, there’s the notion of packaged solutions that deliver integrated solutions from “best-of-breed” providers. This is a different perspective on innovation that could prove to be equally as fruitful.

BOB BRANDT:As an industry, we are beyond the desperate need for “the ONE innovation” that we hope will make the key difference. We believe that the industry is at a point where the most significant difference will be made by a series of incremental innovations by a host of companies. Optimal Blue has already automated the secondary marketing process, and now our focus has turned toward a series of even more granular functionalities and automation that will pave the road for an entirely new way of conducting originations in the industry. A good example of that is our “lights-out” lock desk and trading platform automations.

BOB DOUGHERTY:Since origination volume is expected to remain flat this year, more brokers and lenders are turning to non-agency/non-QM products to reach underserved borrowers. Originating these loans is typically a manual process. In order for the non-agency/non-QM market to scale, the mortgage industry needs technology that allows originators to quickly and confidently qualify these borrowers.

STEVE VIARENGO:The absence of good data is one of the most significant barriers to innovation in the mortgage industry. Having clean, accurate information you can trust is a critical element needed for automation, risk reduction, and cost reduction. Companies can now solve this problem with technology like Capsilon¹s doc and data audit tools that enable them to build a complete, accurate record for every loan. Companies who don¹t adopt these types of technologies over the next twelve months are going to find it hard to take advantage of a wave of innovative technologies coming that require clean data to be effective. The massive impact these technologies will have on the mortgage industry is now undeniable. Companies who lag will be left behind.

MATT HANSEN:Twelve months is a very short period of time. It seems most likely this idea has already been conceived and mostly built if it’s to come to market in the next 12 months. That being said, the cost of human capital has been difficult for lenders in lean times. In order to solve this, it would need to be an innovation that cuts into the biggest expenses lenders incur on a per loan basis.

ELIZABETH KARWOWSKI:I think it’s time to turn our attention to potential borrowers who don’t fall within traditional lending parameters. Specifically, Millennials and younger generations are entering the work force with priorities and values that often differ greatly from Baby Boomers and Generation X. Many of them have never had a credit card, and don’t have any credit history or credit profile at all. It is imperative that the industry begins implementing  educational programs and providing resources in order to ensure that these young people, (who will eventually make up the majority of the population) see the value in home ownership and will actually qualify for a mortgage.

DAVE SIMS:The mortgage industry would greatly benefit from an innovation that improves the accuracy of real estate appraisals. In fact, more than one in three appraisals contain inconsistencies in property ratings and values. Additionally, conflicting property condition and quality ratings can result from numerous factors, including human error, appraiser subjectivity, physical changes in property condition or quality, or even possible fraud, which has been cited by the GSEs as the top origination fraud scheme trend in recent years. Developing an innovation that would create consistencies across the appraiser network would be the perfect way to combat this troubling trend.

JERI YOSHIDA:The mortgage industry desperately needs innovative change in the way it thinks and interacts as an industry. There is no shortage of sharp minds and great ideas, but in order to fully capitalize on them, the industry needs a shift in its thinking. Day in and day out, I work with more brilliant executives through NEXT than I have at any other time during my decades-long career in this industry. If these particular executives were leveraged in C-suite positions, or if they were given a more visible platform, I suspect we’d see the start of a massive push forward—in innovation, creative ideas, opportunity, and so much more. This would in turn produce other measurable results from higher client and employee satisfaction to higher recruitment of top talent. This could set the tone for not one or two innovations, but rather a culture of innovation that yields a decade or more of brilliant, truly innovative advances in the mortgage industry.

Disruption In Mortgage Lending

The Mortgage Lending Industry, like many others, realizes the need to embrace technology to do more with data.  Industry organizations are trying new technology solutions to improve transparency and leverage data intelligence across multiple data sources.  One technology gathering buzz is blockchain buzz. What does blockchain do and how could it be applied to mortgage lending? 

As described by IBM and others, blockchain is a shared, unchangeable ledger for recording the history of transactions. Blockchain, also known as DLT, Distributed-Ledger-Technology, provides each member in the network with access rights to the confidential information when requested. By keeping a record of trusted information, blockchain can make it easier for an organization to securely access confidential information when needed.  

Featured Sponsors:


The healthcare industry is exploring the benefits of blockchain for confidential medical records.   Individual healthcare data is known to be inconsistent, especially if a patient moves between providers.  Owners of hospitals and clinics are often less focused on information technology solutions, causing data integrity concerns for patients.  MedRec, is a blockchain solution that securely associates multiple data sources and easily pulls data for health care providers. 

Similarly, major challenges in the mortgage industry include a lack of transparency between data sources, increasing costs, and lengthy loan origination timeframes. Lenders could benefit from a system that decentralizes transaction information and how records are stored.  In mortgage banking, lenders need improved access to trusted borrower information such as bank accounts, income data, and related qualifying information. 

Featured Sponsors:


How might blockchain work in the mortgage industry? All necessary data would come from a trusted source—banks, IRS, or payroll services— and would be initially verified by all the computers in the specific blockchain network according to specific network verification rules, be sealed with a lock, encrypted and would not then need to be re-verified again. The blockchain transparencies could enable industry participants to streamline labor-intensive processes and identify and make easily accessible important data in the mortgage lending process. Now, when a borrower applies for a loan, obtaining and distributing all of the documents needed to approve the mortgage can take days. And the documents that need to be verified and redelivered continue to increase. As I discussed in the book, Digitally Transforming the Mortgage Banking Industry,a single loan file can be up to 700 pages and the information contained prone to human error, causing a delay in time to close and increases in closing costs. After the lending decision is made, whether the borrower is or is not approved or not, the information must then be reported back to all the entities involved in the transaction.  Often this “back end” work is mostly done manually and requires extra labor. 

Blockchain could advance the mortgage process by streamlining the participants required to provide or validate the information in each stage of the loan process. According to Timemagazine, the data that’s requested from each entity increases the closing cost for the buyer by 1%-2% of the property value. By incorporating blockchain, lenders could detect fraudulent data early in the process or determine that data that was manipulated, preventing problems downstream in the mortgage process.  To improve customer satisfaction with a streamlined process, mortgage bankers are seeking technology solutions to securely automate labor-intensive components of the loan originating process. 

Featured Sponsors:


As noted inDigitally Transforming the Mortgage Banking Industry, an individual bank account record (say 24 months of transaction data) can be provided from a bank to a mortgage organization quickly and securely. The same goes for all data coming from a trusted source; payroll data, mortgage payment history, prior credit events, collateral information, credit report data, etc.  With blockchain, an immutable trusted source data regarding a borrower that is immutable could be utilized by authorized parties.  A consumer could grant permission to a lender to access this trusted information. Mortgage bankers could experience an enormous cost savings and customer satisfaction from the profit intelligence solutions.  

Moody’s suggests that the annual U.S. cost-savings as a result of blockchain-based application processes could be as high as $1.7 billion. Incorporating Blockchain could improve loan processing efficiency and reduce the overall time to close. Mortgage lenders could benefit from a powerful solution, as noted in Disruptor Daily. On average, a mortgage loan takes about 40 days to originate and often longer. With blockchain this could be reduced to 30 days or less, saving an estimated $177 million on a $97.7 billion book of loans (Disruptor Daily). 

Disruptive Technology Currently Being Used in Lending

Mortgage Bankers are acutely focused on increasing profits, reducing costs and fully utilizing their technology investments to empower their people to perform at the highest level. Most believe a combination of technology and human touch will enable them to enhance profitability while gaining a competitive advantage in today’s lending environment.

Featured Sponsors:


Currently use of blockchain in the mortgage industry is more theoretical then real.  However, there are powerful technology solutions available now.  Profit intelligence solutions are a reality that improve transparency and profit margins for today’s lenders. 

So how do mortgage bankers get started using profit intelligence in their business?  Mortgage bankers must find the right partner who can help guide them to profit intelligence by first evaluating their current operations and the utilization of their technology stack. The key is being able to easily identify data integrity issues with one click.  Profit intelligence can allow mortgage bankers to reduce costs by identifying subpar performance by product, channel and branch, all with real time data. Then lenders can easily access and identify whether profit, volume, mix, productivity, cash flow, loan servicing metrics are on target. 

A good profit intelligence solution should bring lending data to life, enabling Mortgage Bankers to have a better and more comprehensive view of their organizations’ profitability. 

The profit intelligence solution should take data from multiple sources and associate the data to speed up loan closing, ultimately improving customer satisfaction and profitability. The solution should also have the ability to easily identify and eliminate performance problems, waste, and revenue leakage is crucial, especially in today’s challenging lending environment.   

The right profit intelligence solution should be designed by mortgage bankers to solve issues for mortgage bankers.  More specifically, it should be made for busy executives who need to easily access data across multiple platforms to quickly make important decisions on profitability, growth and long-term sustainability.

Ideally the information should only be a couple of clicks away. Historically, pulling information from multiple data sources and silos such as LOS, CRM, POS, Servicing System, Core Banking, etc., has been a huge challenge. Those days are gone with the advent of profit intelligence solutions.

Today, a Profit Intelligence solution such as Teraverde’s Coheus enables executives to easily connect the data sources and provide near real time visual reports based on the executive’s key interests.  This data can be accessed from iPad, phone, or desktop, providing a significant advantage when it comes to increasing profits and staying competitive. Lenders must turn to vendors that focus solely on leveraging the lender’s big data to create more business opportunities.  

Teraverde seasoned mortgage banking executives in conjunction with the Coheus profit intelligence platform are making a breakthrough for executives in the mortgage banking industry, the combination of deep mortgage banking expertise with world-class technology has been proven to deliver an increase in profitability and customer satisfaction — truly disrupting how mortgage bankers deliver profitability.

Teraverde’s name for its profit intelligence solution — Coheus — arises from the mythological Greek Titan named Coeus. The Titan Coeus could use information to foresee the future. Many of Teraverde’s customers asked for reporting and analytics that permitted access to the vast array of information in their loan origination system, general ledger, hedging and servicing systems. Clients want to gain profit intelligence from associating data within and among these systems, there wasn’t any solution that met their needs, so a team of Teraverde employees led by Maylin Casanueva went to work, and Coheus was the result of their efforts. 

For example, a Mortgage Banker utilized Coheus by comparing historical data and the mortgage executive used a couple of clicks to find there was a major spike in delinquent loans. The mortgage banker immediately took action and saved the organization $4.2 million of delinquency and repurchase costs. 

Another Mortgage Banker reduced time to close by 16 days and reduced the number of missed scheduled closings to less than 1% using the Coheus Profit Intelligence platform. They were able to reduce hedge costs by $2 million, increase daily underwriter loans underwritten by 40%. Ultimately this helped the mortgage lender improved customer satisfaction by 10%.Blockchain might be part of the solution for mortgage lending in the future, but lenders need proven solutions now to address industry challenges. Today, in the mortgage banking industry Coheus Profit Intelligence is being utilized by leading disruptors in the mortgage industry to drive profitability. 

About The Author

The Digital Lending Mindset

Universal Lending Home Loans has always been about relationships. This highly successful mortgage lender was founded in 1981 by Peter Lansing, a person who built his business by working eyeball-to-eyeball with his customers. For this lender, everything is about personal interaction and trust. As the smartphone became ubiquitous and consumers began demanding more convenient ways to do everything from buying a shirt to applying for a home mortgage, Universal leaders began to look at digital options.

Featured Sponsors:


“Our challenge was finding a way to continue to be a high-touch, self-sourcing mortgage company that is relationship-based, not transaction-based, and still provide the digital options customers want,” explained T. J. Kennedy, executive vice president of production for Universal Lending Home Loans. “How could we make borrowers’ lives easier with technology, yet developand maintain those personal relationships? That was the balancing act.”

The first step, back in the mid-2000s, was creating personal web sites for each of Universal’s loan officers. Initially, borrowers could fill out a short-form application, which evolved, over time, into a full 1003, which uploaded into the company’s point-of-sale software. The borrower still met face-to-face with the loan officer. The difference was they could now spend the time building the relationship, not filling out forms.

Featured Sponsors:


“In 2014, we saw the writing on the wall. The world was quickly moving to mobile,” Kennedy said. “So, we knew we needed to get into the game.”

Kennedy and team found a provider that offered a customized mobile application that looked great in the demo and on paper—only to discover, after rollout, that it didn’t live up to all of its promises.

Featured Sponsors:


“The app just wasn’t reliable. It wasn’t consistent with its status updates, which was one of the reasons we launched it in the first place,” Kennedy explained. “People can order a pizza and use an app to see that pizza being made, or order a high-end car and track exactly where it is in the manufacturing process. We wanted to be able to provide that same kind of transparency to our borrowers throughout the loan process. And the app didn’t do that.”

Although Universal’s IT team had spent months on implementation, working with the provider on setup and confirming fields, much of that input didn’t translate over. The promise of real-time wasn’t real-time at all, but hours, sometimes a full day, later. 

Featured Sponsors:


“We gave it a valiant try for almost two years and then realized that the app was hurting us more than it was helping us,” Kennedy said. “So, we started looking at other opportunities.”

Universal’s Manager of Information Technology, Becca Wilson, was the first to discover SimpleNexus at the annual users’ conference for Encompass, the company’s LOS. A little gun-shy from that first attempt at mobile, Wilson and Kennedy watched SimpleNexus for a full year before getting serious about considering it, or any other platform.

“Becca and I did about four, five—maybe six—demos with SimpleNexus over a period of time,” Kennedy said. “We saw how fast it pulled in information, and Becca was happy with the security protocols. But, the thing that really struck us was that every time we met, they had added a feature or improved a function. We saw such an evolution with their product that we were really confident in them. Their roadmap wasn’t just something they talked about; they actually followed through.”

Universal’s leaders were convinced they had found the right mobile platform. They contracted with SimpleNexus in 2017, rolling out the application in October of that year.

The platform’s tight integration with Encompass was a critical element for efficiency gains. But, Wilson and Kennedy knew that creating a true digital mortgage experience necessitated putting as many tools as possible at their loan officers’ fingertips.

The goal: integrate as many supporting technologies as they could.

“One of the first things we did was integrate SimpleNexus with our appraisal team. So, any time there’s an update, new documents added or final inspections completed, these notifications are pushed to our loan officers through SimpleNexus,” Wilson explained.

“That means our loan officers don’t have to wait for an email update or log into the system to see what’s going on. It’s immediate, on their phone.”

The team has also integrated SimpleNexus with Optimal Blue for product and pricing, so loan officers can price loans on the fly, as well as order and view credit, securely, right on their mobile devices.

“From my perspective, the security levels around SimpleNexus are my favorite features,” Wilsonsaid. “Our loan officers can view a borrower’s credit, but that information never downloads to their devices. They can’t take a screenshot, or use the phone’s camera to capture it, so, that information stays secure.”

Universal has great customer retention, but not every customer always comes back. To give its loan officers a real advantage, Universal asked SimpleNexus and Advantage Credit to work together on an integration that would give LOs a digital heads-up in time to reclaim potentially lost business.

“Essentially, Advantage Credit notifies us if a past client has a mortgage credit report pulled by another firm,” Kennedy explained. “With the integration, when that happens, the loan officer gets a push notification that says, ‘A mortgage credit report was pulled, so you may want to reach out to your client and try to win back the business.’ Sometimes, a phone call, at the right time, makes all the difference.”

By the time Universal rolled out SimpleNexus, which the company brands as ULConnect, its loan officers were more than ready to run with it.

“Enough time had passed, and there was enough pent-up demand for digital that our loan officers didn’t hesitate to jump in,” Kennedy said. “Honestly, SimpleNexus really sells itself, and it’s definitely not difficult to explain. You can have it on your phone, show it to your real estate agents, invite them to be your partners and co-brand it for them.”

The ability to customize the application also adds to its appeal.

“ULConnect is totally branded with our name, our logo and our colors,” Kennedy said. “SimpleNexus does a great job of making it look like we built it from scratch, which makes us stand out a little more with our partners, as well.”

Looking at the numbers, Universal’s loan officers have not only adopted the platform, but are using it—particularly when you segregate the firm’s top performers. The ones who are selling the most are the ones who are using the application the most.

Sixty-six of Universal’s producing loan officers have shared ULConnect/SimpleNexus three or more times each, with the 27 of those sharing the app more than 50 times each. Universal’s top loan officer has personally shared the application a whopping 231 times.

Each of the top 20 highest producing loan officers has activated 10 or more referral partners, with the top five LOs activating double that number or higher.

Clearly, borrowers are embracing the anytime, anywhere convenience of ULConnect/SimpleNexus, as well. Seventy-eight loan officers have received two or more new loan applications through the mobile app, with that number jumping to 40 or more for the top four LOs.

Borrowers have uploaded thousands of loan documents using the application, as well.

“We use a company by the name of Stratmor Group to conduct our post-close Mortgage

Satisfaction survey,” Kennedy said. “We now have a 97 percent approval rating of our loan officers for customer satisfaction, the highest in the country. That rating has gone up since we brought on SimpleNexus and the other combined tools.”

Operationally, the organization has seen the impact, as well.

“SimpleNexus has definitely streamlined our operation. Processors can request documents on the fly, through the app, and receive them. There’s much less, ‘Alright, loan officer, you’re going to have to go get this paperwork so we can get it into the system,’” Wilson explained. “It’s a straight path from the app to Encompass.”

No question, Universal Lending Home Loans has catapulted itself into a digital lending leader, placing integrated mobile tools at its loan officers’ fingertips to help them build Realtor relationships and wow prospective clients.

What advice would this progressive lender give to those just starting their digital journeys?

“When you’re looking at digital technology, do your due diligence. Make sure you’re evaluating at least three different vendors. Make sure what they have works, that it is secure and actually fits your needs,” Wilson said. “Definitely bring in other people so it’s not one person or one department decision. The sales team is going to approach the vetting differently than IT or operations. The choice impacts all of those.” Finally, make sure your solutions and your own organization are constantly evolving. Because the world—particularly the world of mortgage lending—is fundamentally changing.

“These are really just the first steps. The industry is heading toward a fully digital process from start to finish, where borrower documents are replaced by financial information downloaded directly from the bank repository and electronic W2s from employees; and e-signatures and digital notaries replace the traditional closing process,” Kennedy said. “The companies that will succeed as the industry evolves are the ones who are positioning their organizations as digital lenders today. If you’re not taking action, you’re going to be left behind.”

About The Author

Using A Legacy LOS In The Cloud Is Costly

You get what you pay for, the saying goes. But in our industry this rule doesn’t always apply—especially when it comes to loan production. Today’s lenders have made major investments in producing high quality loans and improving the borrower experience. Yet, too often, they don’t receive the results they expected.  

This is particularly frustrating given the current lending environment. For lenders, producing high quality, compliant loans designed to meet federal and state mandates and investor requirements has meant adding staff to review loan files for accuracy and completeness. In fact, loan production costs are at all-time highs because of the new rules of the road. Higher rates and a cooling housing market have only exacerbated this situation. 

Featured Sponsors:


Meeting the demands of today’s mortgage borrower and providing great customer service have also come at a premium. This is true in spite of rapid adoption of new fintech solutions designed to make the mortgage process simpler for consumers. While these tools make the mortgage process easier in many ways, they are often poorly integrated with a lender’s back end technologies, pushing manufacturing costs even higher.

Every lender wants to provide a better customer experience and lower their costs, but limited options appear to make attaining both goals impossible. Yet, they actually are achievable. A quiet revolution is taking place in mortgage production that is reversing this all-to-familiar predicament—and it’s all happening in the cloud. 

Featured Sponsors:


A Revolution Driven by Millennials

Clearly, Millennials are behind the mortgage industry’s most important advancements in customer service. They’re the ones who literally grew up with computers all around them, even in their back pockets, and they’re the ones driving demand for more convenience and simplicity. They’re also the ones increasingly driving the housing market. 

According to Realtor.com,  Millennials accounted for 45 percent of all new mortgages by the end of 2018, compared to 36 percent for Generation X buyers and 17 percent for Baby Boomers. In order to better serve this growing market, lenders are swarming to do-it-yourself websites and mobile apps designed to give borrowers a simpler, more convenient way to get a mortgage. And they are making it easier in many ways.  

Featured Sponsors:


Another driving factor behind this “new normal” in mortgage customer service is that the lender, not the real estate agent, is now the first point of contact for most homebuyers. Most consumers are well aware that it’s not easy to qualify for a mortgage. They know there is no point in calling a real estate agent or even looking at homes until they are sure they can afford to buy, so they are more likely to look first at financing. This puts lenders behind the wheel in the homebuying transaction. The problem is how to take the borrower to where they want to go. 

Because they are so comfortable with technology, Millennials are more likely to research and shop for mortgages online long before they are willing or even interested in speaking with a lender. In response, lenders have adopted consumer-direct tools such as self-driven borrower websites, automated asset and income verifications, and credit services that let borrowers find out their FICO scores and determine what they can afford to buy. 

Featured Sponsors:


These technologies are available on a wider number of platforms than ever before. Borrowers today can literally research, qualify, apply for a mortgage and sign disclosure documents while sipping a latte at their local Starbucks. Therefore the potential for excellent customer service is evident. So is the potential for saving costs, since borrowers are able to do more of the legwork of getting qualifying and approved for loans. So what’s the problem? 

The problem is that this whiz-bang mortgage experience doesn’t last because it only exists on the front end of the transaction. Behind the scenes, lenders are still struggling with legacy technologies that hamper production efficiency. This is because borrowers and lenders are still using different technologies to create the same loan, when both sides should really be using the same system. That’s where the magic of a platform built in the cloud enters the picture. 

More Cloud, Lower Costs

To be sure, cloud technology is not a new concept for our industry. Instead of hosting their own servers and data centers, the vast majority are leveraging cloud environments for their data storage needs. Unfortunately, however, the cloud isn’t being properly leveraged to create a faster, more efficient mortgage production process. That’s because most lenders continue to place their trust in legacy loan origination systems that were never designed for a cloud environment. They can’t integrate easily with many newer technologies, and weren’t built for consumers for use. 

On the other hand, new mortgage platforms that have recently come into the market are built with modern technology and designed from the start for a cloud environment. They’re capable of leveraging an unlimited number of software integrations, and they’re also able to handle multiple lines of business, including wholesale and  correspondent lines, traditional retail and  consumer-direct business. Most importantly, they can be used by borrowers to apply for loans using a common web browsers or even mobile apps.   

While it is true that several traditional LOS solutions are now being migrated to cloud environments, they are still tethered to their legacy technologies—in other words, they cannot simply scratch everything and start over. Even as they shift to the cloud, they still have to support their legacy systems. That comes at a cost that is inevitably passed onto clients. 

According to a recent MBA study, approximately 80 percent of a lender’s costs to originate a loan is tied to human staff, while roughly 10 percent is spent on technology. With a cloud-based mortgage platform that is capable of automating more pieces of the loan process, however, lenders can start making serious dents in these costs. The beauty of a cloud-based mortgage platform lies in its ability to improve process automation at practically every stage of the loan production process. 

These new platforms do not require lengthy, complicated and ultimately costly integrations that require site visits and repeated testing and retesting. Because they are built in the cloud with modern technology and flexible application programming interfaces (APIs), they are able to make interoperability between third-party technologies completely seamless. These third-party technologies can include credit reporting services, pricing engines and document services and many more. As a result, lenders are able to automate various steps in the loan production process and deliver a totally end-to-end mortgage experience at a lower cost. 

For example, cloud-built platforms are able to integrate software that provides real-time fees from thousands of different service providers, which can be used to populate loan disclosures. This allows lenders to manage an endless supply of accurate closing cost data, so that lenders no longer have to verify fees for accuracy by hand.If there is a change to any loan data, the fees can be instantly recalculated and repopulated throughout the loan file, reducing costs even further. Performed manually, these tasks could easily take an hour or more. When automated, they just take a second. 

No Better Time Than Now

Of course, lenders could build a cloud-based mortgage platform themselves. But very few lenders have the staff resources, the technology expertise or the necessary capital on hand to make this happen. On the other hand, there are new mortgage platforms that have already been built that can be customized to fit a business’ needs at a fraction of what it costs to build such a system in-house.

Today’s new breed of mortgage platforms also cost about the same or less than any legacy mortgage production platforms on the market today. And they pay the cost several times over by reducing manual tasks, such as collecting borrower documents or using staff resources on “stare and compare” methods of reviewing loan documents for accuracy.  

The only obstacle for lenders, it seems, is leaving behind technology that manages to get the job done—even if a better way is possible. And I get it. It’s a pretty big deal to put aside technology that the vast majority of our industry still relies on. After all, many American households – roughly 46 percent – still have landline telephones, according to a National Center for Health Statistics survey. But those numbers are dropping fast, because better technology exists. Better technology exists in our industry, too. And with so much at stake – especially with soaring loan production costs and Millennials poised to drive the future real estate market – there is no better time to use it.  

About The Author

AI Has Come To Mortgage Lending

Artificial Intelligence is coming!  The use of artificial intelligence is beginning to make its mark across most, if not all, industries.  A current TV ad shows a worker in the Carlsbad Beer company explaining how they develop new products using artificial intelligence.  More and more we are seeing and hearing about how it is impacting our lives.  It is foolish to deny that it will have a huge impact on the mortgage industry or that this technology will have significant impact on the overall operations of an organization, whether it is origination, servicing or secondary.  

Featured Sponsors:


The advancement of artificial intelligence technology opens new opportunities for lenders.  Most common discussions include the reduction in costs, coming primarily from the elimination of staff positions that will no longer be needed to complete repetitive tasks. Among these positions loan officers, processors and closers are most frequently mentioned.  Yet backroom operations seem to be a perfect fit for this type of technology.  For example, Narrow AI is focused on a single task reflecting work that is a comparison of documents delivered after the disbursement of funds.  Setting up loans for delivery to a servicing system and filing and payment of insurance are also single focused tasks that an AI program can easily accomplish once trained.  

Featured Sponsors:


Today’s focus on providing exemplary customer service can be aided by the use of properly trained bots. These programs will be able to handle more questions and explain more of the product features than ever before. This will give loan officers, processors and closers the opportunity to spend less time on answering these standard questions and will allow these individuals to focus on the more complex issues facing their applicants.  

Featured Sponsors:


One of the best suited for the type of activity that is best served by AI is the post close review processes and back-office reviews such as the quality control function.  Currently agency requirements include a pre-funding review and a post-closing review.   Most lenders have implemented two separate functions to meet these obligations.  In addition, because of the current emphasis on regulatory requirements, lenders have also implemented a third group of individuals who review only the documents associated with these requirements. AI technology can be trained through machine learning to conduct these reviews.  Not only does this reduce the headcount and general overhead costs, the reviews could be conducted on 100% of the loans.  While there will be variances that require human review at first, as the technology becomes adept at recognizing these variances and how they are resolved, the issues will also be addressed by the technology.  More importantly, as the volume of loans processed by this technology grows and the actions taken to resolve the issues become repetitive, AI can learn how to handle more and more of these processes. 

Featured Sponsors:


Servicing also has significant opportunities with the introduction of AI technology.  Most of the positions involved in the administration of payment processing, escrows and related activities are typically uniform and repetitive.  These are prime opportunities for this technology to be embedded.  The technology can be taught to handle these functions and when unrecognized variations occur, the issue and the related loan function can be given to a human to resolve.  

Default management will undoubtedly be one of the biggest beneficiaries of AI. This is not only due to handling of the functions associated with these activities, but with the opportunities of identifying potential defaults long before an actual default occurs. Using “deep leaning” AI, the neural networks can incorporate more and more external databases into its analysis which will increase the probability that warning signs of default will become familiar and reliable.  Imagine the system using not only information on the borrower’s credit and property value changes, but economic data, news related to job growth and company movements and historic performance of similar loans, to analyze if a borrower will continue to pay.  

Another area that holds great promise for servicing is mortgage insurance claims.  Anyone who has worked in servicing is aware of the difficulty of getting claims paid, especially FHA loans.  This technology can be taught the allowable amounts reimbursable and prepare claim forms.  Based on any rejections received, the technology will adjust going forward until very few, if any, are rejected.  Furthermore, it can adapt the payment rates for the property preservation and marketing specialists involved in the process.  

The secondary market will also be the recipient of the benefits of AI.  With the depth of information used in RMBS pools, AI will be able to provide analyses that reflect the true risk of performance rather than the quasi-accurate data used today.  It is conceivable that as AI matures, lenders will be able to “score” each individual loan and thus have the ability to provide individualized pricing. 

Despite the benefits envisioned by this technology, there are risks.  Some of these are specific to the mortgage industry while others are expected to have a profound effect on the economy as a whole.  According to many futurists and technology developers, 40 % of all companies that exist today will not survive the adaptation of artificial intelligence.  There is nothing at this point that tells us whether or not they will be large or small, local or world-wide.  Much depends on how rapidly the technology advances and which of these companies have a management team that leads the changes or instead resists this technology to the detriment of their organizations.   Ultimately as the technology matures there is the potential for massive economic and job market disruptions.  

What then are the most pervasive risks that the industry faces?  The most critical is Data.  Data is the primary fuel that powers this technology and is the most critical factor in the success or failure of AI.  The more data available to “teach” the programs, the stronger and more meaningful the results.  For example, in developing “Watson”, the trainers feed the program over one million books which contained all types of information.  With the massive number of neural networks created by this data it provided the information that allowed Watson to beat the two Jeopardy champions.  

While there are millions of mortgages with corresponding data in existence today, lenders have been notoriously hesitant to share any of the data associated with these loans, especially the servicing data.  In addition, the data found in origination systems is also critical along with the quality control data which identifies the variances found in loans and can relate these findings to loan performance.  Unfortunately, QC data has had the least structure associated with it and as a result, there are have different definitions and input across the industry.  

Without the ability to combine these massive amounts of data while ensuring its accuracy, AI results are less than reliable.  While MISMO has done a stellar job of defining data fields, they cannot control what is input into those fields in every system.  In addition, some of the most critical data is found not in the data fields, but in free form notes and comments.  While AI has the ability to review and classify unstructured data, the ability of the industry to collect and validate these extremely large amounts of data is a huge risk and will require a massive industry wide effort to have what is necessary to support AI programs.  

Another risk facing lenders is the inherent bias unintentionally built into the programs by those who are teaching it to learn.  For example, if the program trainer taught the pronoun “her” when referencing a nurse, an application for a male nurse would most likely be rejected by the program. This type of unintentional bias can exist in numerous programs and would not necessarily be discovered until it was identified by those individuals impacted by it.  

The use of AI programs would ultimately change the operations processes and the jobs associated with each piece of the operation.  While on the surface, this may appear to be a non-issue.  Human based jobs associated with the development and use of these programs focus mostly on functions that are a hybrid of technology and human knowledge.  The need for experts in all areas of the organization will be necessary to complete the programming of these programs is critical.  Yet, since the introduction of automated underwriting systems, we have seen a drastic decline in the number of specialists in each area decline. Underwriters who have spent years learning what an underwriter needs to know are rare these days.  It is more likely to have “underwriters” who are simply inputting data and taking the output from an AUS system in making a final decision, without understanding what is needed or corrected. 

Government regulations, that have put a virtual stranglehold on the industry and its operations will most likely be adapted to this new work environment.  While machines can be taught to produce disclosures and documentation, their necessity will need to be examined more thoroughly.  The risk of course is that any old regulations will be replaced with new ones, regardless of the industry.  For example, property values that are developed through on-site inspections and evaluations may be entirely replaced by deep learning programs and huge databases which are currently being developed by companies such as Zillow and Google.  

Artificial intelligence will not impact our industry, or any other industry for that matter, in isolation. The changes brought about by the advancement of this technology will impact everyone.  We have already begun to see the shift of employees away from working in offices every day, to one where many people now work from home, wherever home may be.  We see more interactive work experiences achieved through technology rather having to actually go to another office in another state or even country.  

We are also more likely to see new types of organizations or combinations of work types that have never before been considered.  Capital One has introduced the idea of “Capital One Cafes” where banking and coffee needs are serviced in one spot and I’m sure it is not the last, or only one that will occur.  AI analytics can identify where “life events” intersect and provide opportunities that will change what we need, what we expect and the timing of its receipt.  

Based on “deep learning” patterns and relationships found in lending and servicing data, it is most likely that the credit culture prevalent in the industry today will shift from a front-end focus to becoming servicing results driven.  Because of the ability to identify patterns of loan attributes, economic data, demographics and even global issues, the actual performance of loans can be translated into the ability of companies to identify the most advantageous risk profiles.  These profiles can then be incorporated into the decision tools used for evaluating applications.  

With this type of technology and the ability to predict performance, will the delivery of loans to the secondary market change?  There is a distinct possibility that lenders of all size and scope, will be able to negotiate individualized product sales, thereby eliminating the need for secondary market intermediaries.    

A study by the board of Governors of the Federal Reserve found the pace and ubiquity of AI innovation to be much greater than expected for the financial services industries. They also found many positives in the use of AI as well as the risks.  Whether you have begun to work with artificial intelligence tools or not, they will have an immense impact on mortgage lenders.  

The issues discussed here are mainly focused on the broader problems and opportunities facing us in the near future.  What we cannot ignore however, is the issues surrounding how our work is to be done. In the final article of the series, I will take a look at the potential processes and job functions that are the changes job functions will incur and the skills and knowledge necessary for management and employees. 

About The Author

Integrations Further Digital Lending

There is no doubt that the industry is moving toward igiral lending processes. Vendors are helping move that ball forward in many ways.

Featured Sponsors:


For example, EXOS Technologies, a ServiceLink company, and Blend, two leaders in the digital mortgage space, are collaborating in a dynamic partnership to further extend and enhance the consumer digital mortgage experience.  

Featured Sponsors:


As part of the mission to offer a complete consumer digital experience, EXOS and Blend are partnering to deliver exact real-time appraisal scheduling functionality for lender clients using EXOS Appraisal, a core offering from the EXOS platform. This integration enables consumers seeking a new mortgage to seamlessly schedule appraisal appointments by accessing live calendars of tens of thousands of licensed appraisers in all 50 states.  Borrowers digitally select the exact date and time of their preferred appointment and receive instant confirmation plus a photo of their appraiser and the make and model of their vehicle. By automating appraisal orders and empowering the home buyer to self-serve, lenders can deliver on faster closings.

Featured Sponsors:


“This is an exciting partnership as EXOS will help extend the level of digital connectivity for lenders utilizing Blend’s platform,” said Kiran Vattem, EVP, Chief Digital and Technology Officer. “EXOS helps address critical consumer touchpoints overlooked by most lenders.” 

Featured Sponsors:


The EXOS Appraisal platform eliminates the back and forth that often slows down the appraisal process, therefore giving lenders the ability to close loans faster, improve pipeline management and boost consumer loyalty and satisfaction. “Blend is committed to streamlining the mortgage workflow, and EXOS adds yet another dimension when it comes to driving efficiency and automation in the appraisal process,” said Brian Martin, head of Business Development at Blend. “Partnering with EXOS provides the opportunity to offer a more complete digital mortgage experience and help our customers interact with borrowers on a deeper level.”

About The Author

Keep Your Customer Happy

In the article entitled “How To Create Customer Retention Strategies That Actually Work” written by Claire Cortese, she rightly says that every company wants to keep their customers happy – maintaining satisfaction amongst your customers is the number one way to increase customer retention.

Featured Sponsors:


New business is always great, but the clients who come back again and again to do business with them define companies.

Client retention refers to a company’s ability to retain repeat clients – that is, customers who continue to return to do business with you over and over again. If a company has low client retention, it means that customers do not typically return to do business with them again.

Featured Sponsors:


Ideally, you want a high customer retention rate because it saves your company both time and money in the pursuit of converting new clients. In general, it costs a company seven times more to acquire a new client than to retain an existing one.

That’s right – it’s actually cheaper for you to keep an existing client than convert a new one.

Featured Sponsors:


In fact, increasing your customer retention rate by just five percent can lead to an increase in your company profits by up to 95 percent. If you ask us, those are not figures to scoff at.

Additionally, having a high customer retention rate means that your clients are satisfied and have strong brand loyalty, and loyal customers are more likely to promote you to others and bring in new business.

Featured Sponsors:


Ask yourself this question: What would make your clients happy? What would your customers appreciate?

There are numerous ways to increase customer retention rates, but here are a few of the best, most basic starting points to begin implementing.

1. Always Thank Your Customers.

It might seem small, but saying thank you to your customers can go a long way. A handwritten thank you note makes your customers feel appreciated and valued, and it may just keep them coming back.

2. Own Up To Your Mistakes.

There’s no way around it – mistakes happen. One way or another, every company has a hiccup at least once in a while.

When this happens, make sure you address the problem head on. Tell your customers what went wrong and why, ensure them that it won’t happen again, and make sure you rectify the situation.

3. Ask How You Can Improve.

Create a survey to get feedback from your customers and find out about the quality of their experience with your company.

This is one of the best ways to find out what is and isn’t working for your customers, and how you can improve to provide better service. You should always be aiming to get better, and customer feedback will help you direct that pathway of improvement.

4. Go The Extra Mile.

Putting in effort to go the extra mile for your clients is a key retention tactic to ensuring customer satisfaction. Going the extra mile can mean different things for different companies, and it will most likely depend on the services and products you provide.

But it can be as simple as taking the time to check in and call your customers to make sure that everything is up to their expectations.

5. Talk, Talk, Talk! 

The more you interact with your customers, the better.

Find out how the majority of your clients communicate socially – via Facebook, Twitter, or Instagram – and get on those platforms! Make sure your company has a social presence, and stay engaged in conversations with your clients!

Now that you know about a few of the basic customer retention tactics, take a look at some real world examples of companies that have put effective strategies into place.

When you read through this list of examples, take careful consideration of how each company has implemented a unique retention strategy into their business model and how you might adjust that tactic to fit your own company.

First, Geico often promotes its slogan, “So easy, a caveman could do it.” This slogan is what drew me to sign up with them when I was tasked with finding car insurance after moving to a new state, and this is whatkeptme with them after I got in a car accident and totaled my car, just a week after signing up with them.

Geico’s services are as accessible as it gets – almost everything can be done through their mobile app – including calling emergency services, filing a claim, and even switching out vehicles and drivers on my plan. I can view all of my policy information right on my phone. After totaling my car, I expected the claim process to be a major headache, but was pleasantly surprised by how easy and painless it was with them.

I was so impressed by Geico’s quick and quality service that I even recommended it to my family members, who then switched their car insurance over to Geico as well. Not only is Geico retaining my business, but they’ve also managed to bring in new customers by delighting me with their exceptional service.

Second, the mission of a company plays a major role in both attracting new customers and retaining current ones. People stick with brands that align with their own interests and passions.

The TOMS business model is centered around a cause that people care about. They started with a “one for one” policy – for every pair of shoes bought, they give a pair to someone in need.

TOMS gives back to people, and their customers like this. Thus far, they have donated over 60 million pairs of shoes to those in need. Now, TOMS is adjusting their business model, refocusing on ending gun violence in the United States.

Nevertheless, their brand is still aligned with a good cause, and customers appreciate that they’re contributing to a company that gives back and works to make the world a better place.

Third, clients like to know that they’re doing business with the best of the best. Proving that you’re an expert in your field will keep your customers satisfied and ensure their peace of mind. But how do you do this?

Inbound business Software Company HubSpot established an educational platform, HubSpot Academy, to educate their customers on absolutely everything to do with inbound.

They provide an abundance of information and resources to help their customers learn, including full marketing certification courses and a consistently up-to-date informational blog that covers all the latest industry news.

With this plethora of information, clients know that they are working with a company that really knows their stuff, and they’re not likely to switch to a competitor when they’re already being continuously educated by HubSpot.

Fourth, Wendy’s is known to have a particularly hilarious Twitter account. In fact, customers actually tweet at Wendy’s just so they can be “roasted” by the restaurant’s account.

While Twitter may not have a lot to do with fast food, Wendy’s has identified a social hub where they can build a presence and interact with their customers in a fun way. The customers clearly love it, and it builds great brand awareness for Wendy’s.

Fifth, can you even remember what the world was like before Amazon? Because we can’t. What was life like before free two-day delivery with Prime? Amazon completely changed the game with the launch of its subscription program, Amazon Prime.

Customers were thrilled by the idea of free delivery in just two days, and it has kept them coming back to Amazon again and again. For a low monthly cost, Amazon offers huge benefits to its subscribers, which now also includes access to its movie and TV library, Amazon video (I don’t know about you, but it’s a rival to Netflix in my house).

Personally, I don’t know anyone who has ever canceled their Amazon Prime account – who would want to give up those benefits? Amazon Prime is a great example of a subscription plan that delights customers ensures a very high customer retention rate.

Lastly, most major airlines have some kind of frequent flier incentive program for their customers to enroll in, but for now, let’s just focus on JetBlue.

If you sign up for JetBlue’s customer loyalty incentive program, TrueBlue, you receive 2x TrueBlue points for every $1 you spend when you book a flight with JetBlue. When you have acquired enough points, you can use them to purchase a flight – essentially meaning you’ve got yourself a free flight.

While you have to acquire a lot of points to afford a flight, the incentive is clearly there, and it definitely works. People will typically choose to fly with an airline that they’ve enrolled in a frequent flier program with, because they want to earn more points and eventually build their way up to have enough for that free deal.

JetBlue’s points don’t expire and don’t have any blackout dates, and you can even pool your points with friends and family.

Frequent flier programs are just one common example of an incentive you can use to reward customer loyalty. Ask yourself – what incentive program would work best for my industry? How can I reward my clients for their loyalty, in a way that will keep them coming back?

The customer retention best practices listed above are a great launching point to increase retention, but if you really want to capitalize on repeat clients, you should develop a fully fleshed out strategy to do so. Going forward, ask yourself this: What retention strategy would work for your company?

About The Author

Optimal Blue: Monetary Policy Impact On The Mortgage Market

U.S. monetary policy is the purview of the Federal Reserve (Fed) and is broadly responsible for the health and stability of the economy. The Federal Reserve Open Market Committee (FOMC) is the group that decides the monetary policy that the Fed will implement in order to fulfill their dual mandate of stable prices and full employment.

Featured Sponsors:


The FOMC meets for eight regularly scheduled meetings per year. News of the FOMC’s policy decisions and their movement of the Federal Funds Rate have a significant impact on financial markets, including the mortgage market. It is therefore important to be mindful of the timing of FOMC meetings to remain protected against the potential impact of shifts in monetary policy and the resultant impact to mortgage profitability. 

Featured Sponsors:


We have compared the OBMMI conforming 30-year fixed rate index against the FOMC meeting dates to measure the relative impact of monetary policy announcements. Our findings indicate that the absolute value of the percent changes the day after the announcement is 0.64%, while it is 0.41% for all other days.

Featured Sponsors:


This shows that the announcement days are approximately 56% more volatile than all other days.  The impact of the FOMC’s commentary on monetary policy and, as a result, mortgage rates, is clear as some of the largest movements over the last two years cluster around the end of FOMC meetings.

Featured Sponsors:


Digging a little deeper, when there is positive news for the mortgage market (rates decline), the rates on the conforming 30-year fixed mortgages move on average by -0.63% the following day, compared to an average positive day of -0.42%. Likewise, when there is negative news for the mortgage market (rates increase), the rates move on average by 0.54% the following day, compared to 0.41% on the average negative day.

Furthermore, Fed news often changes the local trend of rates with the turning/pivot points happening around the FOMC news events (03/15/2017, 12/13/2017, 03/21/2018, and 11/08/2018 are a few evident examples). 

Unfortunately, there’s no way to know which way the FOMC meetings are going to drive the market for any given meeting, but we do know that rate swings caused by monetary policy lead to a great deal of risk or exposure to a mortgage pipeline. This is clear as both the probability of a loan pull-through and the final loan price received on the secondary market can be significantly impacted. Consequently, a well-defined and managed mortgage pipeline hedge program is vital to the health, stability, and profitability of any enterprise with a mandatory delivery structure.

Prepayments Are Up

As Black Knight Data & Analytics President Ben Graboske explained, prepayments are up across the board, but some cohorts are seeing greater levels of activity than others.

Featured Sponsors:


“Overall, prepayment activity – largely driven by home sales and mortgage refinances – has more than doubled over the past four months,” said Graboske. “It’s now at the highest levels we’ve seen since the fall of 2016, when rates began their steep upward climb. While we’ve observed increases across nearly every investor type, product type, credit score bucket and vintage, some changes stand out. For instance, prepayments among fixed-rate loans have hewed close to the overall market average, rising by more than two times over the past four months. However, ARM prepayment rates have now jumped to their highest level since 2007 as borrowers have sought to shed the uncertainty of their adjustable-rate products for the security of a low, fixed interest rate over the long haul.” 

Featured Sponsors:


“Likewise, while all loan vintages have seen prepayment activity increase, they are all dwarfed by 2018. Prepays among the 2018 vintages have jumped by more than 300% over the past four months and are now nearly 50% higher than 2014, the next highest vintage. As of June 27, there were 1.5 million refinance candidates from the 2018 vintage alone, accounting for one of every six such candidates in the market, matching the total from the 2013-2017 vintages combined. All in all, some 8.2 million homeowners with mortgages could now both benefit from and likely qualify for a refinance, including more than 35% of those who took out their mortgages just last year. Early estimates suggest closed refinances rose by more than 30% from April 2019, with May’s volumes estimated to be three times higher than the 10-year low seen in November 2018. Given that interest rates have fallen further from May to June – and that we’ve yet to see the calendar year peak in terms of housing turnover related-prepayments – we may very well continue to see rising prepayment activity again in June’s mortgage data.”

Featured Sponsors:


This month’s Mortgage Monitor Report also revisited the nation’s equity landscape, finding that after two consecutive quarterly declines, tappable equity rose in Q1 2019. Nearly 44 million homeowners with mortgages have more than 20% equity in their home. With a combined $5.98 trillion, that works out to an average of $136K per borrower with tappable equity. While tappable equity is nearing last summer’s all-time high of $6.06 trillion, and will likely surpass that peak as home prices rise seasonally over the summer months, the annual growth rate has slowed considerably in recent quarters. The annual growth rate of tappable equity slowed to 3% in Q1 2019, down from 5% in the prior quarter and 16% one year ago, as slowing home prices – especially in the nation’s most expensive markets – have curbed tappable equity growth.

Featured Sponsors:


About The Author