This piece originally appeared in the July 2022 edition of MReport magazine, online now.
When the fax machine first hit the mortgage space, it was like the day Neil Armstrong took his first steps on the moon.
Gone were the days it took to mail or deliver copies of W-2s, bank statements, and tax returns from the borrower to the Loan Officer. Within minutes, vital pieces of information were transmitted across a phone line and into the hands of the party responsible for accepting or rejecting the application. A process that often took weeks, with the advent of a complex machine that magically sent copies across a telephone line, would now take just days, with customers and industry execs alike reveling in this new convenience.
After having its day in the sun, however, this “breakthrough” was eventually rendered near obsolete.
Shopping for a home and a loan all from the comfort of your phone is the new norm. Customers want answers and approval within minutes, not hours, not days, and especially not weeks. Instant gratification is the mantra that rules the day. Time spent waiting equals the loss of a client’s business. Bottom line, if you are not embracing all that tech has to offer, you might as well be driving potential business to the next shop.
And as technology moves faster to solve problems quicker, customer patience grows thinner. A study of 6.7 million users conducted by Associate Professor Ramesh Sitaraman from UMass Amherst showed that viewers tend to abandon online videos if they take more than two seconds to load.
Developers in the tech space must keep pace with the increasing demands of the consumer, and today, it’s all about instant gratification and speed. The industry must answer the call with the latest and greatest innovations to appease their audience.
MReport gathered a panel of experts to weigh in on several tech-related topics. Some are new to the game, and some are seasoned vets, but the common theme among them all is that tech is no longer a tool assisting the mortgage process, but a necessity in the process of achieving the American Dream of homeownership.
Nathan Bossers, President, Boston National Title Agency
Nathan Bossers is President of Boston National Title Agency LLC (BNT), one of the nation’s leading title insurance and settlement services providers and an Incenter company. He joined the firm in 2013 as Chief Operating Officer. He spent the next seven years building out BNT’s production platform, establishing a national service footprint, developing several product innovations, and helping clients optimize their own title and settlement processes.
Vince Furey, Chief Revenue Officer, OpenClose
As CRO at OpenClose, Vince Furey is responsible for business development, sales, marketing, and strategy. He is also engaged in the customer implementation processes and customer support. With more than 20 years of senior-level banking experience, Vince has extensive multi-channel experience in national sales, lending technology, operations, credit, secondary marketing, trade management and compliance. Prior to OpenClose, Vince led the team at Ovation7 LLC, a national consulting and business services firm that he founded. Prior to that, he held senior leadership positions in the retail, wholesale and correspondent sales and operations at Mellon Bank, Bank One, and Pinnacle Financial Corp.
Richard Gagliano, President, Origination Technologies Division, Black Knight Inc.
Richard Gagliano is President of the Origination Technologies Division of Black Knight, responsible for the direction of Black Knight’s origination technologies, which includes artificial intelligence (AI) and machine learning, point of sales solutions, and its enterprise loan origination systems that support retail, wholesale, consumer-direct and correspondent channels that lenders use to originate both first mortgages and home equity loans. With 30 years of experience in the financial services industry, Gagliano offers a wide range of lending-product knowledge and insight. Before joining Black Knight, he was SVP of Direct Lending and Chief Administrative Officer at Aurora Bank.
Angela Hurst, EVP/CAO, RES.NET
Angela Hurst is EVP and CAO of RES.NET, a wholly-owned subsidiary of USRES. USRES provides financial support services for valuation and disposition of REO real estate assets. USRES’ products and services have provided the mortgage banking industry relief in origination and default valuation products, together with real estate-owned (REO) asset disposition services.
Chad Jampedro, CEO, Bonzo Group
Chad Jampedro serves as CEO of Bonzo Group, having joined the company after a 21-year career as President of GO Mortgage and GSF Mortgage Corp. His experience and leadership enabled GSF/GO Mortgage to become a top agency single-close construction-to-perm lender. Jampedro has successfully managed and developed technology and operations platforms to grow and support sales teams. He has earned numerous awards in the financial and lending space.
Asher Kahn, CEO, CondoTek
Asher Kahn is Co-Founder and CEO of CondoTek, responsible for running all facets of the business. Kahn has a proven executive management track record, with more than 20 years of experience in growing and operating real estate-related companies. He founded CondoTek in 2014 with his brother and CTO Joshua Kahn. His leadership and vision have grown CondoTek into a scaled, multi-product technology company, and the top resource for lenders providing condominium loans.
Matt Lehnen, CTO, Deephaven Mortgage
Matt Lehnen is CTO of non-QM lender Deephaven Mortgage, overseeing all aspects of the company’s technology infrastructure, customer service delivery platform, and cybersecurity program. He is responsible for continuously advancing the Deephaven technology posture to create stronger synergy between their business, their products, and their customers. Prior to Deephaven, Lehnen served as VP of IT at Wyndham Capital for 11 years. He has more than 15 years of experience in the technology field, and holds several industry certifications.
Shelley Leonard, President, Xactus
Shelley Leonard is President of Xactus, and a member of its Board of Directors. With more than two decades of experience developing and delivering technology solutions, Leonard is steering the company to drive the transformation of the mortgage verifications industry with its innovative credit and data solutions and digital technologies. Prior to joining Xactus, Shelley served as an executive at Black Knight and its predecessor businesses, where she managed multiple, complex initiatives. Most recently, she was the Chief Product and Digital Officer, and she led the Servicing Technologies, business including the company’s MSP loan servicing solution.
Phil McCall, President/COO, ACES Quality Management
Phil McCall brings more than two decades of executive experience in the mortgage industry to ACES. Prior to joining ACES, McCall’s career included posts as COO for IMARC, a forensic loan auditing and loan data verification provider, and executive positions with three privately-owned mortgage banking firms. He has been an integral liaison between his companies and various Wall Street firms, and was actively engaged as a seller/servicer with Fannie Mae and Freddie Mac.
Brian D. Pannell, Chief eServices Executive, DocMagic Inc.
Brian D. Pannell has and continues to serve as a valuable resource to the mortgage industry as a subject matter expert on technologies that digitize the mortgage process, such as eSignings, eNotarizations, eClosings, eNotes, eVaults, eRecording, eWarehouse lending, and more. He has helped countless lenders, banks, servicers, tech service providers, GSEs, and others understand the immense value of going “e.” Prior to DocMagic, Pannell was VP of Client Services at eSignSystems, and before that, spent more than 10 years at Fannie Mae as a Senior Manager in the technology department.
Dave Parker, EVP, Product, LoanLogics
Dave Parker is EVP, Product at LoanLogics, responsible for defining and executing the vision and direction of the company's product portfolio and go-to market strategy to rapidly grow sales, customer engagement and retention. He is also responsible for designing new solutions for the industry's current challenges, while positioning LoanLogics for the market's future demands.
Jim Paolino, CEO/Co-Founder, LodeStar Software Solutions
From climbing the file cabinets in his family-owned title agency as a boy, to leading the charge toward a paperless mortgage process as LodeStar’s CEO Jim Paolino has spent his entire life in the real estate and mortgage industry. He is frequently quoted in the mortgage media on technology trends as they relate to compliance, operational efficiency, and sales growth. He has presented at the MBA Annual Convention and Expo; RESPRO Conferences, and more. He is a recent graduate of the Goldman Sachs 10,000 Small Business Program, and is a current member of the Entrepreneurs’ Organization (EO). Jim also mentors local aspiring entrepreneurs at Drexel and Lehigh Universities.
Brad Sivert, Head of Proptech, Tavant
Brad Sivert is Head of Proptech for Tavant, an AI-powered digital platform that helps power more than 50% of the largest real estate proptech companies. Sivert has been in fintech and proptech for more than 15 years, pivoting between start-ups and larger companies, but always with an entrepreneurial spirit and focus.
Dan Sogorka, CEO/President, Sagent
Dan Sogorka is CEO and President of Sagent, and has led digital transformation in housing for more than two decades. Before joining Sagent, Sogorka served as CEO of digital mortgage point-of-sale provider Cloudvirga, President of EXOS Technologies, EVP of ServiceLink, and Division President at Black Knight. As CEO of Sagent, Sogorka plays a vital role in reinventing how banks and lenders power the homeownership and consumer lending experience for millions of borrowers.
Nicole Valentin-Smith, VP, Sales, Digital Lending and Origination, Fiserv
Nicole Valentin-Smith serves as VP of Sales, Digital Lending and Origination at Fiserv. Prior to joining Fiserv in 2018, she served as VP, Lending Solutions at Mortgage Cadence, an Accenture Company, and before that, Chief Sales Officer/SVP, Sales and Lending for Xceed Financial Credit Union, and VP of Business & Community Development for Kinecta Federal Credit Union. Valentin-Smith began her career with Washington Mutual Bank/Great Western Bank, rising to the role of Regional Sales Manager/VP, Branch Manager.
Mark Walser, President, Incenter Appraisal Management
Mark Walser is President of Incenter Appraisal Management, a national AMC providing professional appraisal services and the RemoteVal mobile appraisal technology. Walser is responsible for all facets of the company and its valuation offerings, including customer service, operations, business development, products, and technology. Walser joined the company in the fall of 2020 as EVP and was promoted to his current role in early 2021, growing the company’s client base and volume across banks, credit unions and mortgage bankers.
Louis Zitting, Founder/CEO, MonitorBase
Louis Zitting is the Founder and CEO of MonitorBase, a fintech company that monitors prescreened credit information and other real time behavioral data to alert salespeople when someone is in the market to purchase or refinance a home. Zitting began his career developing websites for mortgage companies before becoming a Loan Originator and Branch Manager for a large nationwide lender. His passion is helping clients find new ways to grow their business in a data-driven world, while removing complexity from the process.
How did your company pivot to handle the challenges presented by the pandemic? Were certain processes and functions more relied on over others?
Angela Hurst: The past two years have illustrated that being able to accept and embrace change is paramount. Scalability and the ability to pivot with little notice are critical credentials needed in today’s rapidly changing climate. Agile technology will continue to play a significant role in that. Innovative solutions and tools that provide real-world relief and meet client expectations are paramount. In our case, because we continuously collaborate with our clients and create continually evolving solutions, it makes for a much better user experience. This collaboration lent an opportunity to pivot and develop user-specific workflows, transparency in transactions, and robust reporting tools that allowed our customers to have a depth of knowledge across their portfolios at a critical time in our industry.
Asher Kahn: Obviously, the ability to work remotely became critical over the past couple of years. During the pandemic, everyone started using WebEx or Zoom, and these tools are now the norm for businesses across the nation. Ironically, CondoTek has been a remote workplace since our founding in 2014. We always relied on online meeting platforms, which really made us an oddity for many years. At the same time, nobody ever turned on their camera for meetings. Now, we use Microsoft Teams, and we finally see what everybody looks like!
Phil McCall: Because our workforce was already largely remote, we were uniquely positioned to help our clients acclimate to conducting their process and working in ACES remotely. Early on, our focus was on driving additional efficiencies within the system to help our users manage the tremendous volume of loans coming through the QA/QC process. Given the importance of communication in a remote work environment, we also made significant enhancements to our ACES CONNECTTM portal to facilitate a smoother and easier business relationship between the auditing teams and the business units whose work was being audited.
Dave Parker: As loan volumes went through the roof, we examined our own processes and introduced more automation so that we could maintain the service levels our clients were accustomed to. We also accelerated our ability to respond to our clients’ rapidly evolving requirements. It wasn’t just about enhancing the automations we marketed and sold to clients, but how we went about doing that. We examined our own technology infrastructure and cloud technology architectures to improve our technical efficiency.
Today, project management automation is enabling us to better prioritize where our time and investments are best focused. We’re placing greater focus on origination automation and rules-driven technology that create greater certainties, better manage risk, and improve investor confidence.
What processes and digital tools have you seen the industry embrace and gravitate toward?
Vince Furey: The pandemic accelerated lender implementations of eClose, eVault, and RON technologies. This helped transition the loan closing process from what traditionally was a manual in-person, wet signature process to a digital transaction that can be executed anywhere, anytime. These tools became a must-have virtually overnight when the pandemic hit, with social distancing being the primary driver. There is still legislative work that needs to be done to broaden adoption in all states, especially with RON, but the unexpected lift that the pandemic crisis created from an adoption perspective was significant with these digital closing technologies.
Chad Jampedro: The rise of “Textosuraus!” Very quickly, SMS/MMS have become the preferred mode of communication for both mortgage professionals and their clients. The convenience and low barrier access has become the path of least resistance for everybody. Today, point of sale, processing, CRM, and relationship management systems are all prioritizing text messaging and ensuring that text communications are secure and visible for compliance reasons. Additionally, the increase in push notifications and in-app messaging is a growing focus in captive contact environments, and can even be preferable to the almighty text.
Shelley Leonard: We’re increasingly seeing our lender customers use a combination of data sources to validate the accuracy of information they need to consider when assessing a consumer’s creditworthiness. They are not only using the data they have, but they are also going to the direct source of the data to confirm it: i.e., income and assets are being confirmed by viewing bank accounts online that are updated in real-time, as opposed to reviewing paper statements. Automation is becoming more the norm, rather than the exception.
Dave Parker: The pandemic and recent refinance boom showed us that forces beyond our control can significantly impact loan volumes at any time. These forces drive digital technology, too. At the same time, many lenders weren’t ready for this enormous market shift. As a result, many were forced to invest heavily on increasing staff. This has only made it harder to unwind that decision now that we’re entering a period of inflation and rising mortgage rates. The pandemic did push lenders toward digital technology such as eClosings, but mostly out of necessity. Speed and borrower convenience through social distancing were paramount at the time. Today, as lenders deal with lower volumes and narrower profit margins, the focus is shifting toward point-of-sale (POS) and origination efficiency to attract borrowers in a considerably more competitive housing market.
Brad Sivert: Obviously, the first that comes to mind is video communications—Zoom, etc., and digital closings, signing, etc. The pandemic forced people to embrace working remotely, and for homebuyers to talk to their loan officers via video as well. This trend is seen across all industries, but during the pandemic, it became a true necessity. Think about large companies that had to move 1,500+ employees to become remote employees almost overnight. Understandably, that wasn’t easy, but it was done. This shows that for loan officers and all members of the lending ecosystem working remotely can be achieved with success.
Dan Sogorka: In an acute market cycle adjustment like the one we’re seeing now, winning processes and tools will combine tech expertise with deep operational knowledge of the needs and challenges of servicers and their customers. The future will be centered around cloud-native, open-API models that give banks and lenders optionality, cost control, and the ability to be sympathetic and responsive to the customer. That not only creates better customer experiences, but it has significant cost-saving implications by reducing the need to reacquire lost customers.
Nicole Valentin-Smith: Lenders are trying to meet the same needs—their own and those of their customers—as they always have. They are in search of more efficient processes, lower overall costs, shorter cycle times, enhanced compliance, and higher levels of customer satisfaction.
We are seeing lenders moving away from the “bolt on” approach they may have taken to quickly add new capabilities during the pandemic, instead prioritizing a single-system approach that can enable greater efficiencies in a lower volume environment. Modern, robust API ecosystems make this possible.
Mark Walser: The use of remote appraisals with the recent Desktop Appraisal approval from the GSEs, along with the expanding use of alternative valuation products, AVMs, and remote notary services have all been indicators of a mortgage market in transformation. In the residential valuation side, these digital processes and tools are key to the transition toward increased accessibility, lower turn times, and stable fee structures. They also contribute to preserving the veracity of the appraisal process and importantly, maintain integrity for the appraiser in the process. The newest wave of technology we are seeing coming of age is that of 3D virtual scanning capabilities that allow our technology to generate floor plans and use AI and machine learning to assess the condition of a home using the customer’s smartphone. These types of advancements create an objective, reviewable framework for assessing the quality and condition of appliances, functional obsolescence, material condition, and deferred maintenance items. Moreover, they will assist appraisers and the growing population of appraiser trainees and third-party inspectors who might also be evaluating a home, which will create speed in the process for all parties.
Do you feel the industry will ever embrace an all-digital mortgage process? Is the human touch still required?
Nathan Bossers: Absolutely. However, even when it’s embraced, lenders will still need to offer a more traditional model, as some consumers will prefer this option. Not every consumer will want to be filmed in a virtual closing environment without meeting in person. Lenders will need options to fully embrace 100% digital closings that are still face-to-face. They will also still need to offer today’s traditional process to those “old-schoolers” who don’t adapt to change easily. Successful lenders who offer a variety of choices will have a competitive advantage and will ultimately gain market share.
Consumers expect choices—whether it be in what cars they drive, what cereal they eat, or what type of mortgage closing experience they have. Some consumers will absolutely gravitate toward a 100% AI-guided mortgage process. Others will not.
Richard Gagliano: We are thankfully moving quickly toward a world of 100% paperless mortgages enabled and enhanced by digital capabilities. That said, it’s important to note that, no matter how digitalized they become, mortgages certainly won’t ever be “human-less.” Human expertise is critical to the mortgage process.
As we innovate our digital tech using AI, machine learning, and other advanced technologies, the goal isn’t to replace that expertise but to support it and maximize its impact on operations.
Chad Jampedro: A 100% digital process is not out of the question, but it depends on the needs and experience of the potential borrower. Regardless of their age, borrowers who have a few real estate transactions under their belt are more comfortable with a mostly digital experience. They have already had the benefit of an originator, real estate agent, and title agent guiding them through the process and explaining the different documents and what comes next. As it relates to the transaction itself, the difficulty of the transaction based on borrower qualification, collateral concerns, or deal structure can dictate the need or desire for human assistance. Human involvement in a difficult transaction, for one reason or another, creates a sense of certainty that is preferrable to an all-digital process.
Matt Lehnen: I do feel that the industry will embrace a full 100% digital mortgage. This will be a gradual process, as consumers increasingly gravitate toward self-service models. The value of the self-service technology market has been projected to grow from $32.23 billion in 2020 to $88.33 billion in 2030. The industry will need to meet consumers where they are in adopting these solutions. A 100% AI-guided mortgage process may not be the most favorable option. For many borrowers, buying a home is still the biggest financial decision of their lives. AI is extremely helpful for alleviating redundant work and flagging potential risks, but it will always need to work together with underwriters.
Shelley Leonard: While 100% digitization is something to aspire to, we believe it must be balanced with practical considerations. We do not view the future as one that is exclusively digital. Instead, we see our role as advancing what we call “the modern mortgage.” We define the modern mortgage as a seamless blend of front- and back-office technologies and workflows with human involvement. It drives a superior consumer experience, and it is delivered more efficiently and profitably than the status quo.
Phill McCall: Looking back about three decades when the GSEs rolled out their AUSs, there were thoughts that the AUSs could replace human underwriters. An all-digital mortgage process is certainly realistic, but given the amount of evolution still required to reach that point, I feel we are still many years away. AI has also come a long way in general, but within the mortgage industry, we’ve yet to reach the point where our data standardization will support the full growth of AI. We’ve seen how that technology has changed and evolved, but in no way has it eliminated the need for an actual underwriter providing that human touch. Still, the market has continued on a path to become more digital and allowing the data that we must drive process in a standardized way, which is and will continue to create significant efficiencies.
Brian D. Pannell: Over the next few years, I do not believe that the industry will embrace 100% adoption. Is it likely in the foreseeable future? Absolutely. It is well-known that paper-based processes are expensive and inefficient and the evolution of the centuries-old mortgage industry and the processes and legalities that surround it would appear to be primed for intervention. However, many industry participants still rely on the “old way” of doing things, as the motivation and support of electronic mortgages from origination, secondary marketing, and through to servicing is inconsistent at best. All indicators show that the industry is well on its way to embracing eMortgages and on a trajectory to going fully digital.
Jim Paolino: I don’t believe we’ll ever achieve a mortgage process that’s “human-free.” And I don’t believe that we would want to. What homebuyers—especially millennials—really want is to be spared the email upsell or time-wasting conversation on the phone with an LO (such as for data collection that could be more easily and conveniently handled via document upload). I believe we are slowly heading in that direction, although I think we need to put even more investment on automating the “back end” of the consumer facing part of the process. But people still want a person to answer their questions or guide them at the difficult points of the transaction. Homebuyers will always want a knowledgeable, professional human being who understands the complexities of an extremely unique process and how to communicate those, with advice, to the consumer.
Brad Sivert: The industry will ultimately be forced to embrace a 100% “true” all-digital mortgage process because homebuyers want simplicity, transparency, and convenience when they apply for a mortgage. There was a study from 2017 that showed the average American spent more time researching a flat-screen TV than they did researching a mortgage company. That is a crazy statistic.
Now, a human touch will still be needed to be there for the people who want it, but similar to how people trade stocks and invest, getting a mortgage will be a user-driven experience with the human touch acting more as advisors … more of a true digital concierge experience.
Dan Sogorka: At Sagent, we empower our customers to combine digital simplicity with smart human advice at scale. That human touch will always play a role in the mortgage process, and the right digital tools need to drive that effective engagement with customers—not push it away. On the servicing side, we don’t want to lose sight of the fact that our customers serve human beings through good times and bad. Engaging on a person-to-person level, working to understand their situation and intent, and providing them the tools to manage their loans is an absolute necessity for servicers today, and will continue to be so in the future.
Louis Zitting: I don’t think our industry will ever embrace a fully 100% all-digital mortgage process, nor should it. Getting a mortgage is too emotional and complicated to become fully digital. Rising cases of online fraud have also made consumers nervous about a fully digital experience for something as complex as a mortgage. No doubt, there will be more and more technology made available, but borrowers are still going to need a trusted advisor.
It’s far more valuable and effective to have a conversation with someone and listen to the different tones in their voice. That’s particularly true for minority groups, who are already at a disadvantage if they have a specific question or a unique circumstance and their primary language isn’t English.