MReport March 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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10 | M R EP O RT M // How can the industry best leverage technology in order to adapt to changes in the marketplace? CASON // You have to introduce process changes to best take advantage of new technology. We've always felt that you can't just do it by implementing tech- nology alone. You have to think about everything holistically. The customers who blend emerging tech with process innovation are going to be able to make those pivots and realize the gains and benefits. It could be increasing efficiencies and lowering the cost of origination. It could be doing more with the same amount of staff. It starts with asking the question, "What are you trying to solve for?" The lenders that have actually blended emerging technology and process innovation will continue to push the envelope around efficiency and cost savings. For example, you have seen wide shifts in loan volume from pur- chase to refinancing. As a lender you have to create more capac- ity, and then you are faced with figuring out what to do with that additional capacity when demand for refinancing fades. Lenders who figure out how to maintain a certain level of capacity and take on new volume efficiently are going to win. M // Is there a tendency to focus narrowly on the emergent tech at the expense of reevaluating processes? CASON // You're absolutely right. You've got AI, blockchain. I can go on and on about these emerg- ing technology buzzwords. Before Fannie Mae put customers at the center of its efforts to encourage innovation, we probably would have led with those buzzwords. Now, we don't even talk about it that way. We sit down with a customer and ask, "What are you trying to do? Let's understand where you're headed from a stra- tegic perspective. Let's understand what you're trying to do within the context of mortgage origina- tion or servicing. And, then let's solve for that." It's a mindset shift. I'm not a firm believer in sitting at a table and building for where you think your target state is. We have seen on multiple occasions that you start out with an idea, and as you get into building and solving for that idea or that problem, you make a lot of pivots. It's fascinating to see this in action, not only with our cus- tomers but with Fannie Mae in general. For example, we have a piece of AI machine learning tech called Ask Poli. We originally went into Ask Poli to automate our guides [for sellers and ser- vicers]. We expect our customers to know how to navigate through that guide, so we originally went with this natural language search- and-machine-learning product to create some efficiencies for them. But, as we started seeing our cus- tomers use it, and as the product matured, we were able to see patterns in the data and harness it like we could not previously. With the data garnered from queries made on Ask Poli I can see where I may have some dis- crepancies in the guide because of the way my customers are posing questions on it. Also, I was able to see the [industry] shift to refi because of the types of questions our customer lenders were asking. That wasn't our initial vision for Ask Poli, but as we got into it and we started working with it, we saw that the data can be used in a different way. M // Which areas of technology are poised for transformative innovation within the next few years? CASON // If you leverage AI and machine learning and use it as a tool to help your human staff, that's where you're going to get the most efficiency and gains. Every time I add a certain condition to the validation of a loan, I'm going to add it for every loan, regard- less of whether it's intended for that initial loan or not. If you can apply the right machine learning and AI algorithms, your under- writers can pay attention to the issues they really need to focus on. We don't think there's a world where AI is going to make every EXPERT INSIGHTS ON: GOVERNMENT Technology vs. Processes Fannie Mae's Henry Cason spoke with MReport about how the industry can adapt to changes in the marketplace and the transformative advancements over the next few years. A t Fannie Mae, Henry Cason is responsible for the design, development, and launch of a digital suite of products and services across the single-family residential mortgage loan's life cycle. He also works to foster integration of Fannie Mae's technology and busi- ness infrastructure with that of its customers, striving to help Fannie's customers grow and create value within the marketplace. With his tenure at Fannie stretching back 26 years, he has his finger on the pulse of industry innova- tion, working closely with lenders and servicers in order to try to best align the GSE's products and services with the needs of the customer base. Cason spoke exclusively to MReport about why techno- logical advancement is much more effective when paired with process change, the value of test-and-learn, and the transformative power of tying innovation to constant communication.

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