Determining what to automate - Where do you begin?

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Welcome to our open house. Instead of examining hardwood floors, closet space, and kitchen layouts, we're taking you on a tour of what's happening across today's mortgage industry. During each episode, we'll hear from industry leaders and subject matter experts to give us an inside look into a hot topic, Cuttingedge technology, or new trend that can help accelerate your digital journey. Thank you for joining us. Come on in.

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Hello and welcome to another episode of the Ice Mortgage Technology Open House Podcast. My name is Aaron Dormio, Senior Product Marketing Manager here at Ice Mortgage Technology, and I'm excited for our third episode in our Culture of Automation miniseries. Throughout these six episodes, we'll be talking to various guest speakers from Encompass customers to industry experts about the journey to automation, including what leads businesses to automating their mortgage processes.

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Cultural impact internally, as well as the impact automation has on the business and borrower experience overall. In this episode determining what to automate? Where do you begin? I'm joined by John Herring, Director of Product Management at ICE Mortgage Technology.

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As Director of Product Management for the Encompass platform, John leads all product initiatives for Encompass, including overseeing the product life cycle and ensuring close alignment with go to market. With over 20 years of mortgage experience, John has seen it all including time as a loan originator. I'm excited to get his perspective on what lenders should automate as well as the path forward. Sit back, relax and enjoy the conversation.

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Hey, John, thanks for joining me. How you doing? Hey, Aaron, thank you. I gotta be honest with you, it was difficult to work with your assistant to get some time on our calendar here for this podcast. But I really appreciate you and tell your assistant she deserves that Christmas present. I love the opportunity. And I think the problem is we're gonna have to find who this assistant is because.

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I don't have one. So someone, someone's managing your calendar, John. I don't know who I know. It's not me. Someone's got some explaining to do. Happy to be here and talking about a topic that's been near and dear to my heart for a very, very long time. Here at ICE Mortgage Technology, we've always said our North Star is automating everything automatable in the mortgage industry. Not only is this topic really near and dear to our heart, it is. It's really something that.

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That is per meeting throughout the industry and it's something that more lenders and more Los platforms in particular are trying to wrap their hands around as solutions for lenders to help them to better compete. So I wanted to really jump into getting your perspective on this. You have a lot of experience not only in mortgage but here at ICE and helping us to put forth products and solutions that help lenders better automate, better serve their borrowers. I wanted to get your perspective on what?

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Is it in the industry that lenders should be automating to better compete in today's marketplace? That's that's a great question and this is something people been talking about for a long time. I think what we're seeing happen differently now is 1 consumer patterns have changed. The idea of walking into a loan officers office and meeting face to face over a table is far less frequent than even just few years ago. And and that was shifting even.

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Pre Kovat, You know, I think Kovat has just taken that and accelerated it where now people really don't want to be face to face or they want to limit that interaction as much as possible. Consumers have also found the power of the Internet to buy everything you need. It's an expectation. I'm going to be able to do things a lot sort of as an empowered consumer to drive a process and mortgage is still one of the few industries that.

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Hasn't really been able to fully take advantage of that. And yet I think a reason we're seeing things change a lot today in the technology and vendor space is we're now in a position where technology has sort of caught up to desire. You know, we're not at a point where whether it's through API's, whether through its connectivity across different systems and different solutions, the underlying foundation of things you need to have successful automation, whether that's your document.

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Recognition, data extraction API's, etc. You know there's just a lot more tools than the toolkit to help Dr. automation than there have before. I'm glad you said that and that's also something that Amy and I touched on in the previous episode. You know like it's your point what what's driving lenders to automate? It's no longer nice to have, right. It's hey, they need this to compete and it's finally caught up. The effort is caught up with the desire, right or the technology has caught up with the desire. I would also love your perspective on you know there's there's the front.

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In the back end automation, right, how would you just right. I mean yeah, how would you describe like the, you know how how the industry has caught up to automating both the front and the back end to to to help?

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You know, to deliver that experience for borrowers. Yeah. So what you describe is the front of the back end. I usually break up into automation that touches the consumer directly and and there's some examples out there, things like helping the borrower complete the application, sending that initial disclosure package out automatically helping the borrower self generate things like pre approval letters, you know, for when they're out shopping. So I think of those sort of the automation that directly touches the consumer.

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Then there's the automation that empowers or enables the lender themselves to be more efficient. And so those are things that might help improve the quality of processing and underwriting alone, even down to having automated procedures that can help sort of post closing and make sure you've got all the trailing documents and everything you need from the closing table.

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So you canmore efficiently sell that loan or onboard it into your servicing platform without having to do a lot of manual paper chasing, Yeah, which you call front and back, I think a sort of consumer facing and and lender facing if you will. That's a great point from your perspective and certainly this is something that you're heavily involved in here at ICE.

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How would you describe the state of the industry in terms of lenders not only meeting the lender facing automation but their know how and their ability to implement that and be able to from a change management perspective have that be an effective and executable part of their their processes. We know the appetite is huge as there and I think this is a big area where a lot of larger lenders those the resources have been investing heavily.

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And you know I I'm excited about our opportunity to try to bring some of that to those that may not have that deep bench of resources to be able to build out their own solution. A lot of folks that have known me know that I come from a compliance background. I was actually doing compliance in another industry before I was recruited into the mortgage industry. And and when I came into the mortgage industry, it was working for a small multistate mortgage broker, you know, where you wear a lot of hats, you know your operations.

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Compliance and System Administrator all at the same time, you know, so from that background of compliance you think about there are things that the lenders particularly under compliance departments are hyper focused on and disclosure timing is the biggest to this day. That's one of the big concerns about lenders from a compliance perspective. It doesn't take a lot to trigger that clock that says OK you need to get these disclosures out and yet at the same time what you do get out.

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You're going to be held to so making sure the accuracy of the content of the disclosures is there and then you want to make sure that you, you, you get it out in time, get it accessible to the lenders. And so from a purely compliance perspective you think Oh my gosh, automation, first and foremost thing we want is automated initial disclosures. We want to make sure we don't miss that three day window. There's no good way to recover from that should that happen where lenders are now in their ability to actually.

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To to offer that, I'd say we've come a long way. There is services out there that can help make sure that you've got the right fees in the disclosure that are going to go out. What you're going to be held accountable for amazing consumer facing solutions that can help make sure that not only are you getting those basic 6 items that trigger the application, but you're giving yourself every opportunity to find out everything else you need to know to send those disclosures. But in a.

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Sort of a soft handed way so that you're not restricting the borrowers ability to apply but you're really kind of promoting getting the the best application as possible. You know for us we've been laying the foundation for this for for a while now. We're actually this year exposing some API's that will let lenders take advantage of the all that foundational work if if they want to do it their own sort of experience.

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But it's one that we're going to be hyper focused on this year and actually bringing to market trying to check all those boxes though you know, making sure that not only do you have the right criteria, the right conditions, the right exception management handling, but making sure that those automated disclosures are going to be the right thing. And this is where it gets a little interesting for me where the world of automation and touch sort of overlap anyone who's originated loans in the past before knows that just sending disclosures.

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To a borrower without any kind of conversation or relationship, building is really kind of a lost opportunity. There is something really powerful, even if your ability to engage with the consumer is relatively small, the importance of building a relationship around what's going to happen in that automated process is extremely important. At the end of the day, from a compliance perspective, yeah, you want to get disclosures out from an original.

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Perspective, you want to get that borrower to want to work with you just sending out automated disclosures is it going to do that by itself And I love that you just made that distinction there with the automated experience can sometimes be misconstrued as hey we're taking the personal touch out of the borrower experience. Well, not necessarily you're you're you're augmenting it and I and we had this exact discussion with Carrie Rogers from Lennar in episode one where they've.

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Implemented much the same experience that you're talking about from a nice perspective of, hey, we're actually augmenting the experience making it more efficient for the borrower because we're making it more efficient on the on the on the lender side. I want to touch on something that you mentioned a bit ago when talking about the compliance aspect, talking about the borrower experience. This is a, this is a tough decision for lenders. It it's tough to know where to start taking a step back looking at your mortgage processes, identifying where efficiency can be.

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Said And where that will ultimately impact the borrower experience because if you do it wrong, it can be undoubtedly costly, right? It could be extremely costly endeavor now that they're down this path, right, they've identified where they want to go, who should they be looking at on the on the lender side, who should they be looking at in terms of where this experience starts? Should it be the loan officer?

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Should it be the underwriter through compliance, Where should they start to look at in terms of who and what they're automating. I think the biggest opportunities and and I think there's one sort of consumer facing 11 lender facing one or two. I kind of struggle on that end I'll say from the consumer facing energy that's going to go towards helping the borrower complete the application. So it doesn't feel like I'm as a borrower I'm sitting here flipping through and completing A10 page application and and I'm I'm.

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Exaggerating just a little bit because it's not always 10 pages, right? Depends on the borrower situation. But the point is a lot of that information that's going into that application, whether it's about employment history, income, credit debts and liabilities, you know, having to go back, you know, think about, OK, what was my start date here or when did I move in here. It's not always top of mind for people you know and and yet the accuracy of the application is hugely important.

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For meeting borrower expectations, you know the underwriting decision is only good as the information that it's relied upon in making that decision. The absolute worst thing you can do as a lender is tell a consumer that they're pre approved them go into the contract cycles especially these days and sellers markets where it's highly competitive trying to find a property in the 1st place and then trying to actually be selected by the seller. The worst thing you can do is tell someone they're pre approved and then the loan not go.

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Through that. That to me is the reputation killer. Doesn't matter how much automation you have, how great a service you have, if you can't deliver on that, not only do you lose faith with the borrowers, but with sellers. And I know I'm diverging here just a little bit, but I promise it's going to come to a point.

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You know, these days more than ever as a borrower, you're trying to sell the seller on why they should pick you. A lot of times these days you're competing against cash offers. You know in some markets more than others, the reputation of the lender and the face value and knowing who that lender is can make the difference between whether a seller is going to choose you or not. You know the confidence level that that loan is going to close. So that there's.

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I bring that back to sort of one of the pitfalls of automation. You know, there's a lot of drive to automate the pre approval process, but A you have to make sure that you're not just generating pre approval letters that aren't going to result in a borrower working with you and B, you better be closing those loans against those pre approval letters if you want to, you know, stay in the game. I would shift my focus a little bit more towards completing the application itself, helping the borrower get through the application process.

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Billing is much information from other sources that don't just rely on the memory of the bar. We're sitting there at that moment in front of their screen. So you know whether that's the automated ordering a credit, whether that's going out and bringing in asset information, income information, employment information. That to me I think is where you get the biggest bang for the buck as far as making it easy for that consumer to work with you and the scenario that you just described is more.

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Have a change management issue than it is the technology right, because the technology is only as good as the users in their understanding of that technology, right. And that kind of leads me into my final question here. Imagine you're a lender when your case formally as a loan originator, you know you're you're working through your your first automated processes. Maybe you've even hired a management consulting firm to help with that organizational change management right to get that initial buy in, help people to understand.

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Where they fit and how they can manage these, these new processes in order to really understand the return on your investment because this again this could be a costly endeavor for some organizations in order to see that return on your investment and to see that scalability, where do you go from here? Yeah, you know, depending on what I'm trying to focus, you know, if it's focusing on the consumer experience, I'm going to be taking careful look at my pull through how many applications actually complete and get submission, how many of those applications turn into transaction.

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Actions and pay particular attention to the ones that fall out. Why did they fall out? You know, was it because they just couldn't get into a contract or did something change? Did you discover something new? You know, is there a way that you can kind of shore that up and catch those sooner in the process so you have a better consumer experience? Sometimes it's better to let someone off the hook early, then get their hopes up and then not be able to deliver, right. You got to be able to manage expectations and then I would look at again, you're not really.

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Replacing your people, you're empowering them and you're augmenting them. You know if you look at a lot of what we've done around AIQ and the analyzers that we bring to market, particularly around things like income and I know we're working right now on assets and and underwriting and other things. You want to be able to help them make the best decisions and help them guide the borrower to the next steps or through the process. You want to try to minimize the number of conditions.

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Have again you, you want to try to make it as easy again as the consumer to work with you as possible and you want to be able to manage those those expectations. So I would say work with your people to develop that culture of automation as not something to be feared but actually something to to be adopted. You know at the end of the day as we used to like to say, nobody gets paid until the loan closes, you know that and that's still true today. It's actually in everybody's interest to close good.

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Good loans and close as many loans as you can. Everybody, whether you're the processor, the underwriter, the originator, the admin, if your institution is not able to get loans and closed loans, you're going to have some financial challenges and difficulty. So get that culture of automation as a way of knowing that, look, this is going to help improve our quality, our efficiency and ultimately our ability to serve the consumer, which means getting the opportunity to work with more.

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Sailors, cuz that at the end of the day is how you get paid. That's right. That's right. And I think that's a fantastic close to this conversation. Definitely lean in on building that culture of automation, right? I absolutely agree. Well, I think that's all the time we have for this episode. Again, I really appreciate your time. It's always great to talk to you. And I'll be sure to find that missing assistant and send he or she a Christmas card for you. Somehow they got me on the phone, so they did something right. Thanks, John. I appreciate your time. Thanks, Erin. Take care.

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Thanks again for joining another episode of the Ice Mortgage Technology Open House Podcast. Be sure to be on the lookout for future episodes as well as the next episode of our Culture of Automation miniseries. We look forward to having you. Thanks again and be safe out there.