April 2016 - Tech Revolution

TheMReport — News and strategies for the evolving mortgage marketplace.

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16 | TH E M R EP O RT COVER STORY from their local settlement agent relationships because they haven't had a way to keep those relation- ships compliant," said Gregory Teal, CEO and president of Ernst, which creates automated fee man- agement and integration solutions for the full range of government and third-party fees that go into mortgage lenders' fee management, loan origination software (LOS) and closing systems. Genworth Mortgage Insurance, a leader in managing mortgage credit risk, has partnered with leading technology development firms to create Genie, a new proprietary underwriting platform, to deliver customers "the speed they need and the accuracy they expect," said Rohit Gupta, the company's president and CEO. In addition, Big Data and the rapid evolution of Cloud-based technolo- gies enable quicker, deeper insights into residential loan portfolios with the goal of more accurately evalu- ating risk for mortgage clients. Hurst said, "When we think about innovation, to us that represents providing our custom- ers technology that virtually fades into the background, that they do not have to think or worry about, and neither do their investors or auditors. Understanding that in today's demanding environment, industry executives certainly do not have time to micro-manage their technology… they can count on our portals and remain focused on their core operational and regulatory responsibilities." In the intensive, high-demand operational landscape of the mort - gage industry, the USRES and RES.NET senior vice president emphasized the importance of not only fulfilling customer needs, but also predicting them. Intensive research and improvement on the vendor side should equate to simplicity and seamless integra - tion for the tech user. "We look for commonalities in our customer base and adjust our platforms accordingly," Hurst added. "This approach allows our systems to inherently account for many of our customers' shared, mutual needs so we can then turn our attention to accommo- dating individual needs. As our customers find themselves manag- ing operational shifts along with changing regulations, our objective is for them to have technology that adapts quickly and remains flexible, despite the complexity of any given transaction or regula- tory demand." Freddie Mac's technology suite is designed to remediate costly manufacturing defects as they oc- cur, well in advance of the actual loan close and delivery, according to Higginbotham. Mortgage tech- nology innovation that facilitates easy installation, increased cus- tomization, simplicity of use and seamless integration capabilities will boost business for the vendor and the lender. Tech's Next I t makes sense that the U.S. housing industry, the largest consumer market, would get together with Big Data. Add to that the fact millennials, which just last year became the biggest generation in the country at more than 75 million, have really only begun to dip their collective toe into homeownership and one can see the essential and ever-expand - ing role of technology. "We're entering a new time now, driven in part by a new digitally native generation, where technol- ogy is no longer a separate issue from the consumer or business use case that it relates to," said Michael Harris, president of Glencoe, Illinois-based Exceleras. "Everything we touch has some form of tech- nology associated with it." Gupta at Genworth added, "As more millennials become home- buyers, their expectations of the process will need to be addressed. There will be less reliance on an in-person or phone call interac- tion with an originator. The desire to self-serve from a mobile device will be the expectation of this customer and the industry is moving to fill that need. We see a continuing evolution of mobile, Big Data and Cloud utilization [in the industry]." By leveraging the Cloud and Big Data technologies, tech service providers will be able to process a wealth of information that could substantially change system de- sign, business processes and cus- tomer offerings. Gupta endorses earlier and thus greater collection of customer data. "Pushing the collection of borrower data further upstream in the origination process will provide lenders with operational opportunities," he said. "New ana - lytics tools will provide lenders with greater pre-close risk assess- ments on origination pipelines." Bigger data could ironically come with fewer players in the industry. Bien-Aime of Global DMS predicts more industry consolidation, for both technology vendors and lenders. "We've already seen this happen with some tech giants entering the industry and acquiring multiple types of technology platforms," said the leader of the valuation software provider. "The mortgage industry is doing considerably bet - ter than the post-crash years and is thus a more attractive market for new entrants to penetrate. That trend will continue." Flattery aside, imitation is one of the most traditional forms of ad - vancement in the business world. Gupta broached how technology has changed the retail, cable and transportation industries in a short period of time. Even the notori- ously slow insurance industry is getting up to speed. "By using telemetric, Big Data and mobile technologies, the auto insurance industry is chang- ing how their customers file claims and get quotes," Gupta said. "Technology is changing so rapidly and it has the potential to disrupt all industries over the next five to 10 years, so we have to constantly be looking outside the mortgage tech sector to see how technology is being utilized. We've seen data play an impor - tant role in other areas in finan- cial services such as credit cards and auto insurance, and foresee it playing a very significant role in mortgage originations. We believe the role of smart uses of data in mortgages is just beginning." Hurst says that much of future technological innovation in the mortgage industry will be driven by regulation. Government is the mother of invention doesn't have the same ring to it, but Uncle Sam does have a thing about making mandates. "What's next in mortgage technology will be an expansion of enterprise software as opposed to individual, custom-built systems that have become antiquated and unable to accommodate what is necessary as an ongoing, top priority: compli - ance," the USRES & RES.NET executive said. "Instead, mortgage technology will lean toward systems that offer customization options and individualized modules within single platforms—all from the same technology provider." Eric Egenhoefer, president of Waterstone Mortgage Corp., maintains that using systems with open interfaces is critical because they allow customization to fit his company's unique business needs. It's a new era in that way. In a prior housing cycle, customization meant that tech companies would be brought in to build from the ground up a unique, compre - hensive mortgage solution for a client's specific needs. "These were seemingly ideal —platforms developed for one organization, and one organiza- tion only, created for every unique process and nuance of that busi- ness," Hurst said. "When they were initially built, they were nearly flawless, until regulatory commissions turned our industry in an entirely different direction. When a change was needed, modifying these completely unique, custom systems was no easy or quick task. Likewise, when inventory and budgets shrank, there were no economies of scale to accommodate develop - ment costs." Enterprise-level mortgage ap- plications with easy startup but also customization options result in significant operational and technology cost savings for today's financial institutions.

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