David Aach is the current COO of Blue Sage Solutions, and has more than 25 years of experience in the mortgage and finance industry, with a focus on increasing relationships with industry partners, clients, and prospects.
Based in Englewood Cliffs, New Jersey, Blue Sage Solutions is a cloud-based digital lending platform for retail, wholesale, and correspondent lenders. The company’s technology is 100% browser-based, and provides end-to-end functionality for the entire lending and fulfillment process, regardless of channel. All Blue Sage solutions include mobile applications, and are delivered through a secure, fully-managed cloud service.
Prior to Blue Sage, Aach led the sales and marketing team as EVP of Docutech, helping the company more than double its revenue and become an industry leader in its field.
Before Docutech, Aach worked for 10 years at IBM Corp. as Director and industry expert in its mortgage practice. He previously served as COO at Palisades Technology Partners, which was acquired by IBM in 2006. At Palisades, he worked with its Founder and President, Carmine Cacciavillani, who later then founded Blue Sage Solutions.
We recently had a chance to chat with Aach to discuss the current landscape of the industry and what lies ahead in the tech space of the mortgage finance arena.
With the factors of high rates, high prices and limited inventory working against today’s prospective buyers, which of these factors will be the first to break or bend to provide relief to the mortgage marketplace?
David Aach: As is often the case, lower rates will probably be the first to move potential buyers and sellers off the sidelines. Many existing homeowners have been hesitant to move up the property ladder because they are holding onto historically low mortgage rates. A significant drop in rates, possibly by next spring, could be just the incentive they are waiting for.
For new homebuyers, the path forward is less clear. Home prices are at record highs in nearly every market, partly driven by high demand and limited supply. However, a substantial drop in rates could take hundreds of dollars off a new buyer’s monthly payments, which could be enough to get them in the door. New policy measures, such as those aimed at increasing housing supply and affordability for first-time buyers, could also have an impact, but we’ll have to wait and see.
With the recent release of the Biden Administration’s Commercial to Residential Conversions: A Guidebook to Available Federal Resources, what role will housing providers play in the conversion of commercial properties to properties of residential use and mixed-use development?
David Aach: Converting commercial properties to residential or mixed-use developments has gained attention in urban planning and real estate circles as a strategy to address housing shortages, revitalize urban areas, and repurpose underutilized or vacant commercial spaces. There is the potential to incorporate affordable housing into conversion projects as well.
Housing providers can play a key role in identifying suitable commercial properties for conversion. This involves assessing the location, zoning regulations, and market demand for residential or mixed-use spaces, working closely with local government authorities to navigate these processes, and exploring financing options and incentives provided by federal, state, or local governments to support the conversion process.
Lenders also play a huge role in addressing what is, by all accounts, a historical shortage of housing inventory. For them, the key lies in an ability to develop and originate innovative financing solutions tailored to properties that may not conform to the typical single-family home profile.
To achieve this type of agility, however, they will need to have digital mortgage platforms that can quickly adapt to these new types of mortgage products. Platforms like the Blue Sage Digital Lending Platform excel in this need, allowing lenders who leverage it the ability to capitalize on emerging opportunities in the mixed-use property space, and create a significant competitive advantage.
As the number of extreme climate events and risks mount, how are you dealing with rising costs? How are investors expanding their due diligence to understand these risks and protect their investments?
David Aach: As a technology company, we are not impacted by climate events the same way lenders are. But our cloud-based ecosystem is protected by the highest levels of security and data redundancy—in fact, the same levels that the world's largest tech companies use. This protects lenders from experiencing excessive costs associated with significant downtime and loss of business in the event of a disaster.
Climate events and their associated risks represent a huge unknown for investors. The increasing frequency and severity of these events require investors to expand their scrutiny of loan portfolios that include assets in these high-risk areas. Because certain areas of the country are prone to certain types of disasters, such as wildfires in California and flooding throughout the Southeast, it's likely we're going to see a stronger focus on due diligence for loan portfolios with assets in these regions.
Investors are also likely to employ more sophisticated risk assessment models that account for climate-related hazards, such as analyzing the vulnerability of properties in certain areas to such risks and evaluating the potential financial impact.