Lenders Are Optimistic About Trump

A large majority of lenders surveyed (73 percent) believe the new administration’s policies will have a positive impact on the lending environment, according to the 2017 Lenders One Mortgage Barometer, a survey of 200 mortgage lending professionals.

“Despite some industry concerns over rising interest rates, lenders are optimistic about the potential for a more flexible regulatory environment in 2017 and beyond,” said Bryan Binder, chief executive officer of Lenders One.

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Lenders are also ready to make investments in their organizations’ business operations. In fact, 42 percent of lenders indicate their biggest investment is in operational changes (hiring new staff, compliance support and software support), and 25 percent of lenders surveyed say they are currently making the greatest investment in marketing. While these investments are necessary for the industry to keep pace with consumer demand, they may also be driving up the cost per loan, with 65 percent of respondents indicating that the cost per loan will continue to increase.

Regulations Don’t Weigh Quite as Heavy on Lenders in 2017

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Lenders are ready for new regulatory requirements, such as updates to the Home Mortgage Disclosure Act (HMDA), with two-thirds (65 percent) indicating they are very prepared for HMDA changes. Yet, the biggest HMDA compliance challenge for lenders is around additional resources needed to report transactional data, such as home equity lines of credit (HELOC) and dwelling secured loans for apartments. While lenders are investing in staff and technology, about one-third (32 percent) of them cite challenges with securing additional resources to report, connect and analyze transactional data.

E-closings See Broad Adoption a Decade after Their Inception

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Though 39 percent of lenders report they are not using electronic closings (e-closings) on mortgage loans, a third of those respondents expect their organizations to implement e-closings in one to two years, on average. The majority (61 percent), however, say their organization has implemented e-closings while seasoned lenders — those in the business for 10 or more years — are the predominant category of lenders utilizing them (67 percent).

Survey Methodology 

The Lenders One Mortgage Barometer was conducted online among a random sample of 200 mortgage lenders. Fieldwork was conducted by independent research firm Ebiquity between January 4 and 14, 2017. The margin of error associated with the sample of n=200 is +/- 6.9 percent at a 95 percent confidence level.

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Let’s Stop Trying To “Figure Out” Millennials

Millennials, millennials, millennials. Within the past five years, the term has invaded our vernacular and been used to sweepingly define a segment of the population that is apparently begging to be figured out by marketing experts in virtually every industry. But this demographic isn’t some unsolvable, complex equation. Marketers must simply work to communicate and meet the needs of each subset.

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A 20-25 year old is going to have a much different set of expectations when it comes to speed and convenience; for the most part, a world without the internet access is not one with which they’re familiar and mobility is an expectation, not a preference. In contrast, the 33-37 year old segment was coming of age at a time when the evolution of consumer technologies started taking off. As they have progressed into adulthood and into their careers, digital and mobile tools have ignited an appreciation for an ever-increasing level of ease. And then in between these two groups, 26-32 year olds became familiar with the internet as adolescents and developed an expectation that information should be easily accessible. The common denominator is convenience and the path of least resistance. My question is: are lenders equipped to provide that path?

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The industry has made significant progress in creating a frictionless, digital mortgage process. The move toward automation of income, employment and asset verification has already reduced lenders’ reliance on W-2’s, pay stubs and any other documentation that traditionally slowed underwriting. Even the manual verification process has become much more streamlined, provided that the lender is working with a comprehensive and trusted partner. In addition, the introduction of trended credit data allows lenders to to discern who, among two borrowers with identical credit scores, poses a higher risk. This facilitates more accurate and intelligent lending decisions, improving the quality of portfolios and contributing to the continuous decline in delinquencies. The pieces are available for lenders to deliver the level of convenience that will satisfy millennial homebuyers. So what’s next?

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First, originators need to become adept at converting the data and analytics into actionable components of the digital mortgage workflow to truly support the end-to-end origination process. If the borrower can use the app to transfer documents and close the mortgage, but still needs to come to the branch in person to get approved for the loan, there’s a good chance that the process will end before it even begins. Alternatively, if the borrower can get approved for a loan digitally, but needs to complete the rest of the process manually, it’s going to create friction and result in losing the business. In other words, don’t try to fool anyone.

Once the operational pieces are in place, the next thing that a lender must do is create a marketing strategy that clearly communicates and educates consumers on the value of the digital mortgage process. Shout it from the rooftops! Diving deeper, lenders must know where the borrower is in his or her respective lifecycle. Someone just out of college will be focusing on starting a career and saving money (and potentially paying down student loans). It’s unlikely that a home purchase is in the immediate future, but it is certainly on the horizon, so it’s important to establish that relationship so you’ll be the lender of choice when the time comes. An individual that is several years removed from college may have saved diligently and based on other financial triggers (paying down various loans, expanding their lines of credit, etc.), they may be a great prospect for a lender to get the dialogue started. Finally, older millennials may already be homeowners, but could also be prime prospects for home equity lines of credit (HELOCs) for home improvements or additions. As rates continue increasing, HELOCs will become more popular products thanks to the low cost of equity extraction and the ability for the borrower to tap into the funds as needed, instead of all at once.

As you can see, there is plenty of information available to lenders that will reveal where a prospective borrower is in the journey to homeownership. Supplementing that, geographical data shows the areas where low- to moderate-priced housing is plentiful or where buying is a more economic decision than renting. And as rates continue increasing, time is of the essence; it’s important to maximize the largest opportunities in each market while they’re still there.

I’m not the only one who has witnessed the evolutionary trajectory of the mortgage industry and how it has coincided with the increasing demand for convenience. So let’s stop trying to figure out millennials. The frictionless mortgage process is a reality and the tools are already there to help lenders accurately identify and appropriately market to borrowers of all ages – it’s time for us to put all of the pieces together and grow the business.

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Five Years Of Benchmarking History – And Success

What can be learned when the same group of lenders cooperate over the same time period to compare key metrics? Mortgage Cadence has worked with a group of customers for more than five years developing, refining, and presenting true peer-to-peer benchmarking results on five mortgage metrics we all agree are key to understanding lending performance. The task seems simple enough on the surface: Look at the metrics, see how they compare over time, draw some conclusions, present the results, and box the project up until next year. The thing is, though, that the five-year period from 2012 through 2016 was a period in mortgage history like no other. The data keeps raising interesting questions as well as yielding interesting results.

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The Metrics

We have published on our approach in the past. We look at the macro-level with the intent of shining light on loan velocity, pull-through, customer share, productivity, and cost-to-close. These five metrics help our customers view their business in comparison with other lenders just like them. They often raise questions that lead to performance improvements going forward. That is reason and reward enough for the research effort, yet the Study yields much more.

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The More

The five year period ending in 2016 was one of the more interesting in the last 30 years of mortgage lending. After a more than 30-year period of sustained refinancing in a rate environment not seen since the early 1940s, the mortgage market began its long-term transition to purchase-money lending. Not that rates have risen dramatically; we all know that they have not. Almost everyone who could refinance or wanted to refinance did so and at a rate they are unlikely to give up unless forced to do so. With refinance demand at an all-time low, the switch to purchase is logical as well as economically more stimulating to the overall economy.

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A long-term purchase market is good. It comes at a cost, however. One of the key findings from our Study is that purchase-lending has an adverse effect on productivity as well as cost-to-close. Cost-to-close and productivity are inversely related: One goes up, the other goes down. With purchase beginning to dominate the market, lenders can count on costs remaining higher than they otherwise would in refinance markets.

Major regulatory initiatives occupied a great deal of lender time during the five-year period covered by the Study. Performance on three of the five relevant metrics plummeted in 2014, the year the qualified mortgage and ability to repay rules took effect. Later that same year, the industry turned its attention to learning all it could about TRID, making plans for its implementation by the fall of 2015. Productivity, as well as pull-through, decreased to their lowest level in five years. Cost-to-close increased to its highest level over the same period. While this was not the mortgage industry’s worst period in modern memory, it was close.

It is only fair to mention that two other factors in addition to regulatory impact likely influenced 2014’s results. The first, purchase lending, was discussed previously. These loans are more complicated, take more time and cost more money to produce. As mentioned, however, purchase markets are good for the mortgage industry and the economy overall. The second factor is that mortgage volume decreased in 2014 from 2013. Volume dropped faster than staffing levels. This also adversely affects cost-to-close and productivity.

There is Still More

The stories from this year’s Study are still revealing themselves. The tide may be turning on the seemingly ever-increasing cost-to-close trend. For example, 2016 was better, by a small margin, than 2015, and it was far better than 2014. One year of slight improvement does not make for a trend, though it does create reason for hope. There are additional insights that we’ll share in the coming months as we continue to sift through the data and uncover other interesting items that, we hope, guide us all to better performance.

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How Texts Can Impact Your Business

Email, social, search engine marketing, and offline campaigns… can there be any more ways to reach customers?

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The folks at TextMagic say “yes,” and argue that texting can be one of the most efficient and effective ways to reach your audience, noting that SMS has open rates of 98% and conversion rates of 45%.

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And texting shouldn’t be limited to marketing, the company points out in an infographic that highlights seven ways small businesses can use text messages:

  1. Sales and marketing campaigns
  2. Coupons
  3. Order confirmations
  4. Appointment reminders
  5. Alerts and notifications
  6. Staff communication
  7. Surveys

To see more on how text messaging can be put to use for your business, check out the infographic:

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Staying The Course

In talking to individuals who attended the recent technology conference I was somewhat surprised that many brought up the fact that the industry was not only ready, but looking for the opportunities to run their companies using robot or “BOT” technology.

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While the idea that companies would be run completely by some type of “bot”, whether intellectually, or physically is still far from reality, this conference seemed to be giving signals that we are headed that way. In reviewing various summaries of the conference, it was readily apparent that those involved in the technological side of the mortgage industry are looking toward the implementation of joining current technologies to make this happen. In other words, having progressed through data consistency, compliance issues, rule-based artificial intelligence and OCR opportunities, mortgage technologists are looking forward to combining them into the ability for the technologies alone to conduct functions that are currently being completed through an interface with company personnel. While this “BOT” approach, is already in place in parts of the industry, the mortgage application process comes to mind, it has not yet reached the potential envisioned in the early 1990’s when the first automated underwriting tools were developed.

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While no one, even those who believe strongly in the potential of AI, think the industry is on the brink of replacing humans with a machine, there are many areas where this approach can provide significant benefits. Many of these areas have been within the scope of industry visionaries for years. One that I am most familiar with is the one I generated for automated quality control.

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In 1995 I co-authored an article in Mortgage Banking magazine about the changing role of QC in the new area of automated underwriting systems. Prominently featured in that article was the idea of pre-funding QC which could be built off the systems created for underwriting automation. Even though it took a catastrophic collapse of the mortgage industry for anyone to recognize the value, lenders are now required to conduct such a review. However, it has not played out the way I envisioned it in that article where automation would provide the function.

Despite the rejection of the concept I plowed ahead with visions of automated quality control and the potential value it had to the industry. In my mind the existing quality control function would be replaced by a rule-based engine that would test each step of the process at it occurred. This program would then culminate in a score that would identify performance risk due to the lender’s mistakes or variances from guidelines. This score, and the underlying data, could be used to identify process weaknesses as well as give investors an accurate risk of the loans they were buying.

Eventually I did create this program based on a risk model that I developed and which has a patent pending. Unfortunately, I tried to commercialize it in the early 2000’s when the only concern was the avarice opportunities in the industry. The program has been sitting waiting for the right time and place. By staying the course I may finally see my vision a reality.

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Effective Email Marketing Tips

E-mail may seem a bit old school, but e-mail should be a part of every mortgage technology vendor’s strategy. The big question is: How do you do your e-mail marketing right so you get real results? In the article entitled “3 Ways to Trigger a Sense of Urgency in Your Sales Emails” by Heather R. Morgan, she shares that the average adult has to make about 35,000 decisions each day. Which include things like, what to wear, which route to take to work, where to buy coffee—these are just the start, and usually the easiest.

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How does this relate to e-mail? So, you can imagine the last thing someone wants to face when they open a cold e-mail from you is a complex choice. As a salesperson, your job is to make their decision to respond as easy as possible.

The simplest and most effective way to do this is to appeal to your potential customer’s most basic human instincts: desire, curiosity, and fear. Of all the emotional triggers out there, these three can create a strong sense of urgency and increase the chances of someone responding to your e-mail.

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Of course, this is easier said than done. In the span of a single cold e-mail, you have to trigger those instincts and, at the same time, communicate that you understand the customer’s wants, needs, and worries, and can deliver the solution: you.

Here are three tips to help you do the same:


Every business wants to grow and succeed. Your e-mail can appeal to this by offering the promise of serious and direct business value. Your messaging should address, quickly and believably, exactly how your prospective customer will benefit from your product or service, and it should do so in a manner that inspires them to respond. There are two approaches you can take:

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The first is to demonstrate value by providing clear and tangible examples, or social proof, of how your service or product delivers results. This is especially effective if you can use actual numbers to demonstrate success with a competitor.

Alternatively, you can reframe your product features as customer benefits. This is a good approach if you are new to the scene or unable to reference your clients by name.


Intrigue is a powerful tool that can also be a lot of fun to use. If your e-mail hints at a solution to a potential customer’s pain point or particular need, their desire to know the full story should override any hesitation to respond to your e-mail.

For example, you might inform the buyer you have an idea or strategy that will make a significant difference to an aspect of their business. Remember, you are trying to keep their curiosity peaked, so this should just be a teaser, something that will induce them to follow up.


Fear is probably the most powerful way to introduce urgency and inspire a potential customer to action. However, it’s important to apply subtlety over aggression. You don’t want to terrify your potential clients; you just want to address their concerns. Research specific issues at play within their industry, introduce anxiety, and then end on a positive note by offering a solution.

Instead of writing, “Data hacking will destroy your business if you don’t do something now,” try an approach with less fire and brimstone: “Data hacks have increased tenfold in the past two years, making it more important than ever to protect your data.”

Hopefully these tips will help you enhance your e-mail marketing strategy.

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The Devil Is In The Details With Boxed Systems

With growing complexities around existing, new and changing regulations, companies need to realize more than ever that applications that come out of a box do not work. Any technology that claims to be a magic bullet for any issue is false. Regulations are not set in stone and technology should not be either. This is why companies that select “boxed” systems need to pay special attention to the details of the systems BEFORE signing the agreement.

Just as an example, recently, the Consumer Financial Protection Bureau (CFPB) called for another revision to the Home Mortgage Disclosure Act (HMDA), which means that all systems need to adjust to the new change. A company using a boxed system will need to make some modifications to meet the revision’s timeframe and then test, deploy and train users on the modified system to ensure the company is compliant and protected.

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Think of boxed systems versus configurable systems along the same lines of single-family homes versus mansions. Both are meant to provide shelter and comfort. Each can have its own unique features and purpose, be it a main residence or a get-away home. However, the single-family home has size and space restrictions that a mansion does not. For that simple fact, you can obviously do more with the mansion. In fact, the single-family home cannot compare to the spaciousness of a mansion.

Configurable or bendable technology as we call it allows a company to adjust it into its processes instead of the other way around. This flexibility helps in protecting a company’s secrete sauce/brand. After all, the majority of companies in any specific segment of the industry are truly competing for the same customer base. What makes one brand stand out is its uniqueness in creating a better customer experience than its competitors. A smart company that has figured out a unique way of taking care of customers cannot rely on a “one-boxed-for-all” approach provided by some technologies that claim to provide a complete solution. The fundamental questions managers need to ask themselves is if the company’s offerings and customer service is so unique, how can a common boxed system help in the effort to maintain that uniqueness?

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On the other hand, this does not mean that every company should start building their own configurable systems. However, it is practical to license a configurable system that allows a company to be efficient in its business processes while meeting its customer service goals.

The idea of using straight from the box technology usually comes from company managers who are disconnected from the actual technology needed on the front lines to effectively run the business. Sometimes, even decision makers are not that intimately involved in the operations on the front lines. Often, these decision makers are misguided by half-baked consultants. Therefore, it is important for decision makers to listen to the people on the front lines to ensure that the technology that gets selected to be implemented on the front lines is actually vetted by the people [on the front lines] who will use it. Vetting technology will allow a company to separate the “this is how we do things” from “this is why we do things” perspectives. In reality, most managers confuse the whys and hows and end up looking for a system that will allow them to continue the hows, which is another mistake.

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Boxed technology usually drags companies into adapting their processes around the technology once they start the implementation process. It quickly becomes very apparent that there is little flexibility when it comes to altering the predetermined criteria of the boxed system. This proves that the devil is really in the implementation details. And this is what can cause a company to fail in its effort to create efficiencies with technology or get totally left behind its competitors who have a better grasp on the proper use of technology.

When considering making a technology decision to assist in compliance or any other processes, company managers need to let business goals be the driving factor not the promise of one size fitting all. Boxed technology has fine print that says it cannot be changed. When you need to make changes because of business needs, then companies start having challenges with the system. Consider this: people have built consulting businesses to help companies implement so called out-of-the-box systems. This goes to show the one-size-fits-all claims of many boxed systems is not true and that it is imperative to pay attention to the details of these systems before signing an agreement.

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Email Marketing Success

I recently read an article from Cassidy Milder of Marketo, entitled “3 Steps for Successful Email Marketing Campaigns in a “Post-Email” World.”

Once you learn these three key steps, you’ll be able to send emails that sweep recipients off their feet—or at least get them to read past the subject line.

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Cast a Wider Net—But Keep Your True Blue Subscribers Front-and-Center

A lot of percentages go into email communication: the percentage of opens, click-throughs, and—most importantly—what percent converts. Naturally, those numbers get smaller and smaller as you get closer to achieving ROI, so you need to make sure you’re sending to a large enough database that by the time you get to final conversion, you’re still seeing the results you want. And that means growing your email list to get those coveted percentages.

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The Best Things in Life Take Time to Develop; Your Database Is No Different

We tend to hear about the one or two stories where marketers were able to capture lightning in a bottle, but here at, our most successful marketing campaigns rely on careful testing and thoughtful adjustments. There’s even ample evidence that data science and progressive profiling will heavily play into email campaigns over the next few years, especially as home automation devices like Echo and Google Home start to capture more and more behavioral data.

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Testing with different samples and subsets of your subscribers should become more important than ever, which means you’ll need to be patient and nurture your database in order to see the results you want.

This is your time to test the waters and see what types of content and calls-to-action (CTAs) work with your new audience. It’s often helpful to warm up your audience with content and bonus offers before asking for your conversion. Your audience should feel like they’re gaining value from your emails. If you can capture their attention with top-of-the-funnel material, you’ll gain their trust (and boost open and click-through percentages!).

Get to Know the Most Engaged Members of Your Audience

Every concert audience comes to a show armed with different expectations: from the avid fan who has all of the albums to the significant other who just got dragged along with their partner. Your database is no different: some members are just more into your content than others. But in order for your emails to accrue value, you must be able to identify and empathize with the needs of your email VIPs. Who’s opening your messages, downloading your content, or even contacting you directly?

Drilling down into these kinds of details offers a more well-formed definition of your ideal client, and it lets you target them with stronger CTAs. Once you’ve gotten them to subscribe and earned their trust with top-of-the-funnel content, they’ll finally be ready to convert—and you can watch this all unfold right from your engagement platform. When you see someone fall into this sweet spot, you can start segmenting them for more direct asks, which all translates to ROI for your company. That will certainly breathe life into your marketing campaigns!”

Email is not dead, your approach might need to change if you want to attract more borrowers in today’s mortgage market.

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An Acquisition That Makes Sense

As vendors look to serve an evolving mortgage market, they have to broaden their scope of services and their reach. Good vendors are going down this road as we speak. For example, Optimal Blue has just acquired Comergence Compliance.

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Comergence is a provider of third-party oversight solutions in the mortgage industry. Founded in 2008, Comergence provides an array of third-party originator (TPO), appraiser, and social media risk management solutions that verify third-party compliance in real-time, a capability unmatched in the industry.  Comergence has been widely recognized by the industry for its innovations in due diligence automation and ongoing surveillance services. No sale price was disclosed.

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“We are thrilled to welcome Comergence to the Optimal Blue family and we are looking forward to extending their network management platform to our customers,” said Scott Happ, CEO of Optimal Blue. “Comergence solutions help build trust and confidence among marketplace participants by verifying third-party compliance in real-time, a capability unmatched in the industry.”

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“We provide the best due diligence and ongoing surveillance services in the industry,” noted Greg Schroeder, President of Comergence. “We believe that by being part of Optimal Blue we can bring the benefits of our technology and expertise to an even larger segment of the mortgage marketplace.”

Michael Stallings, Executive Vice President of Comergence said, “Recent Comergence innovations, including an analytics tool to help account executives identify new TPO opportunities and a breakthrough solution for social media risk monitoring, strongly complement Optimal Blue’s existing product offering.”

“Optimal Blue and Comergence are well-aligned around our principal mission of facilitating transactions between buyers and sellers of loans,” added Scott Happ. “We are very pleased that Greg, Michael, and the entire Comergence team will be joining Optimal Blue as we execute our shared growth plans.”

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