As originators and servicers brace themselves for the predicted slowdown in growth within their businesses, John Vella, Chief Revenue Officer at Altisource, shares his insight on how they can remain successful in a new housing environment.
MReport: What trends are you currently seeing the mortgage origination and servicing markets happening right now?
Vella: An overriding theme from a trend standpoint is operationalizing the compliance aspects of both servicing and originating a loan. I think the common theme we've seen is the integration of technology, changing of workflow and processes, hiring of different people with a variety of skill sets to make sure that the compliance, procurement, and vendor management teams are all well-staffed in the current environment.
There is a lot of emphasis on compliance throughout the process of originating and servicing a loan. The structure within the organizations of companies and cultures has changed the way servicers and originators communicate internally as well as with vendors and clients.
Being a vendor on both the origination and servicing side, we have a good perspective of what exactly servicers and originators go through on a daily basis and what they have gone through to get themselves in pretty good shape. It's just been this shift of high-volume transactions into creating an infrastructure of compliance and operational excellence.
MReport: Many economists are saying that 2016 will be a year of "slow growth." How can lenders, servicers, tech providers, ect capitalize and still create those opportunities that are predicted to be missing from the housing market this year?
Vella: With flat volumes, servicers and originators will have to become more efficient on the cost to originate a loan and the cost to service a loan as those margins continue to decline. So the question is... How do you squeeze more margin out of the process, still comply with the rules, and maintain proper customer service. That's where vendors and third-party companies come into play with either technology enhancements or the use of data and analytics to run your business with modeling, workflow, and more and better information on the levers that you have that can help you manage your costs and become more efficient.
What you're seeing the vendor world is the requirements that are being placed upon them require them to pass all of the major tests that the banks and financial institutions require. So vendors have to be well-capitalized, experienced, and have lead data, technology, and security infrastructure that meets the standards of the compliance tests. Therefore, certain vendors are either selling or join with other firms, while some just go completely out of business because it's more competitive. The vendor oversight process includes more scrutiny than ever before as far as hiring a vendor and the requirements of a vendor.
It's about efficiency, data and analytics, maintaining margins, and technology in this flat-to-slow growth environment.
MReport: Speaking of technology and compliance, how does tech help lenders and servicers within their businesses?
Vella: We are very in-tune with what is happening in the housing market. Our technologies have been adjusted to meet the demands of this new regulatory and compliance environment be it an LOS or default system in the servicing world. We touch the spectrum of originating and servicing a loan throughout all of our technology and processes, and what we’ve seen is that technology integration are becoming the key to success in the mortgage industry. We have complete integration, which means that the data is easily integrated from ancillary systems into the main servicing and loan origination systems. There is really little to no work being done outside of the technology. Therefore, when you process a loan or service a loan, you have easy access to the data and there is less room for error with either manual input or insufficient third-party systems because they are all properly integrated.
Looking from a compliance standpoint, there are proper audit trails where you can look at decisioning and proper documentation for policies and procedures. The integration of data into the mainline and ancillary systems, along with documents, has allowed for workflow management, efficient processing of loans, data and document access, audit trails in compliance.
MReport: Compared to where servicers, originators, tech providers, ect were in the times of the housing crisis, was there some sort of “silver lining” to the suffering?
Vella: The housing crisis has made the industry stronger and more innovative. As an industry we have been able to grow the businesses back up through the experience of going through the financial crisis. So it’s made our processes, hiring of people, and reporting analytics much better. It’s also made the industry stronger with fortitude to succeed. A lot of people that have moved to new business units or to new lenders and servicers because their previous employer was impacted that experience has been used in a positive manner to help this industry start growing again and make the process better for the customer and investor. The lessons learned have done us well as we get back in business.