Affordable lending - How to serve the underserved

0:03
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.

0:27
What is up, ladies and gentlemen? And welcome back to another episode of Women in Mortgage Technology. And I've got two of the best women in the entire industry hanging out with me today. And we're talking about really, when it comes to affordable housing, this is one of those conversations in the industry that is going to help all of us.

0:45
And like I said, I have two of the absolute best women in this industry to help us have this discussion. We're going to be talking about affordable any, we're going to talk about some of the program. We're going to be talking data and analytics and it's all to help you today. With me, I've got core Dunn, Director of Government Affairs and then Lisa Fiondella and that's how I'm going to say it today because she is the Vice President of Product Management and Ladies so excited to sit down with you and have a brilliant conversation about this. So you're both.

1:12
Veterans within this mortgage industry, this isn't a your first walk in the park. So I'm excited to have both of you talking about this. Can you share? Tell me a little bit about and let's start with you Lisa, how did you start in this industry? Were you one of those little girls and said mom, Dad, I want to be a mortgage professional when I grow up. I want to talk about data and affordable lending. But is that what your was that your dream as a little kid? Actually, no. I wanted to be a banker because I thought money was really cool. I like playing with cash so I don't know. But no I got into this industry through the credit Bureau world so.

1:42
So I started my career and working for Equifax and just really got to muck around in all different parts of the financial industry and I really fell in love with mortgage because it's such a complicated transaction like this is. It's so important but so complicated. So I spent a bit of time there in the mortgage industry, left and went to a number of different other parts of the financial services space and doubled back a couple of years ago when I landed here at ICE Mortgage Technology.

2:09
I love what I'm doing. As in love every minute of it along the way, right? Absolutely. See, and I'm sure, Corey, you're one of those same ones. You probably didn't imagine yourself being at a mortgage professional, but how did you get to where you are today? Sure. First of all, thank you for having us. I'm thrilled to be here. Pleasure. Super excited to talk about something Lisa and I care so deeply about. So actually, my origin story is similar, I think, to a lot of us in mortgage, which is that my mom was actually in mortgage, so she's a notary and title agent and growing up.

2:38
I had the benefit of hearing stories directly from the closing table each day, and she was helping families get into homes. It was the family of immigrants who had saved enough money to finally purchase their piece of the American Dream. It was a single mother who had saved up enough money for a home for her and her kids, and there was so much dignity that she brought to just helping an individual family every single day. That really made me see a piece of the mortgage industry that.

3:04
I thought, wow, I can really do something where I would actually help real life people and you need to be a little bit entrepreneurial. And I think that spirit seeped in in me over time. I did, I I went to law school and I was a litigator during the financial crisis, which also showed me a different piece of it, right. So I got to see a little bit of like the front end and then a different piece before I joined actually, what was ISIS first investment in tech? Isomar technology, which is called MERS.

3:33
Yes, I was an inhouse lawyer and then came across to do to ICE to do government affairs full time and talk about all these exciting issues as I say and we are talking about and what I love about both of you ladies is you can feel the passion from both of you because this is typically one of those topics. It's like, well, there's a lot to, it's a very, it could be a deep conversation, but we're going to be breaking it down for all of you very simply. And like I said, let's dive right into it. So court, let's stay with you for a second because what the heck is affordability When you hear the word affordability, what are we actually talking about?

4:03
Sure. So affordability I think used to mean to most people basically the cheapness of being able to get something. And I think what's interesting about the term affordability, at least from my corner in DC and the government affairs and policy world is that this has become so much more. It's not just does someone qualify for a mortgage when they apply for it. Affordability now means can they sustain that. You know, we're using data and technology at ICE as as Lisa will talk about.

4:31
To discover the true cost of home ownership. So what is, what does that mean? It looks different for different people. And I think what you see from a DC perspective is that conversation about what does affordability actually mean evolving because this is not even in the past five or ten years we've seen a lot more data come forth, technology to discover a little bit more about how do we first help people get into homes, but then.

4:54
Provide some education and information to help homeowners maintain and then maximize that homeownership, which is so awesome and it's such a unique part of our culture here in the US maximizing. You use a couple of words in there that I'm really excited about with the maximizing and not just affording and being able to stay within our homes as well. We all remember the great financial crisis that we went through and affordability has become such a hot topic and Lisa, I kinda wanna switch that over to you because.

5:19
Getting to where we are today, like how did we get here and how is technology playing in a role of where we're going to see it evolve and where we're going to see it go. Yeah. So listen, you know how we got here. So like, let's just talk about the last few years, right? Sure. So I mean for 2020 and 2021 and really part of 2022, all we were really focused on was just this mass volume of refinance and.

5:42
The market, you know, I feel like affordability just sort of kind of got left by the wayside through all of that, right? How many people were really talking about it, how important was it during that time? We've also seen the price of homes just skyrocket. So when that happens and when the when when rental prices go off the charts it, it basically prices people out of both rental and home ownership which is a scary proposition really when you think about the low end of things. I think longer just in terms of.

6:13
Okay. So the market's now shifted, right. And we're sitting here and we're in a purchase market. We've got these, you know, higher than ever home prices and we've got people who are saying, especially first time home buyers are saying I'm trying to figure out how to get achieve that American Dream. Like I want to be part of that, What do I have to do to get there? And the reality is just in a nutshell that the affordability proposition is broken.

6:41
It's just broken because the reality is there are so many different ways that consumers can be helped in terms of achieving this and but it's it's a disaggregated array of programs and services and so forth and there's not really one solution that brings it all together. That's everything from your credit and and and how you qualify into it. It comes into like your down payment.

7:08
How do you if you don't have a down payment, how do you achieve down payment assistance, Where does that come from to repayment? Like what are the programs that are available that meet your financial situation and allow you to actually get into a home. And I think the how we got where we are is there's a there are a lot of options out there, they're just not all together and we're not doing enough from an educational point of view to to teach people and quite frankly, it's not just the consumer.

7:38
It's also the people operating the ecosystem and it's not, it's not a criticism, it's just it's hard. This is a tough financial transaction. So how do we ensure that the right people are educated so that they can bring the buy, you know, the buyer together with the program and achieve the drain. So with I, I love this and I love it like you're mentioned some of the challenges and as you're kind of alluding to it, how how is technology actually playing a role in solving some of these issues and problems?

8:07
Well, I mean look it's slower than we all like, but we really want like I, I, I, I can envision what this thing looks like, but it's it's getting there takes time, right. And I think you know what we have to do as technology providers at ICE and and and working with our customers and our partners and so forth is figure out how to bring these pieces together. And then I do think there's a big, big educational component to that, to that technology can play a role in education. So how do we ensure that that's.

8:37
Operating at it at the most efficient level, right. So I, I don't know there, I mean there's there's just we've just got to connect the dots at the end of the day. So I like, I like that, connecting the dots. And you talked about education and I want to talk about education a little bit because you recently joined the NBA Council of Home ownership, affordable home ownership and shared a little bit about some of the key focal points. Like what does this council actually do? How is it helping us achieve this? Sure. So thank you for that question and.

9:06
At least this point there's a lot of education to grow around and remember that's also on the regulator side, so not in the mortgage market. Something that makes this a little unique is the complexity. So as we're talking about, it's not just can you make the down payment and you know do you have certain numbers on paper, it's understanding really that there are, it's a pretty complex regulatory scheme and so the NBA put together this, it's called the Ownership Advisory Council for Affordable Lending and the focus actually is like a think tank.

9:36
So it's fascinating in that it's really set up of a group of a wide array of stakeholders. We have everybody from lenders to MI companies, home builders, folks you know like me, I bring that technology and data angle and through ICE you know we touch a lot of markets. So we have a really unique viewpoint into this because again it's not just the consumer because remember consumers.

9:57
Only really face the lenders, but there's a very wide capital markets and secondary markets who are chopping at the bit to learn about the borrowers and who want to invest. You know, we're hearing this, you know we're not only just making the connection with our technology, but we're trying to make the connection through the markets so that people can invest, they want to support these programs, they want to be able to understand how to manage their risk also and investment in these fields. So the council really is.

10:27
Looking at opportunities for the NBA, the North Bank Association to advocate for policies. We work closely with our policy team and then also make recommendations to what's called resbod which is their that means residential Board of Governors. So we we sit down, we actually have 5:00
work streams for 2023 and they focus on a couple of the big items that the NBA and our staff side director, the amenable Jordan Hartsman has helped us put together for this council for this year and the work streams are.

10:56
Fannie Mae, Freddie Mac, home, possible home, affordable program and at least we'll get into that a little bit more. But they're really looking at the criterion for that program. Are they, you know, is it appropriate, is there room for a little bit of growth there to to allow some extra room for people to get in? We have manufactured housing. We have, there's something called F FHA2 or 3K which has to do with some like rehabilitation issues. We also have the positive rental income.

11:24
Because that's also a new area of evolving information to come in to understand affordability a little bit better. And so we will work throughout the year, you know with the MB a send some recommendations and say, hey, this is from our perspective, this is our view. I've had meetings already where in in the Fannie Mae and Freddie Mac program, which I'm leading where we're asking each other questions saying, oh wait, did you see this? Yes. So we're already collaborating across.

11:53
Stakeholder groups to say hey, do you have this? And some folks have come to me and be like you know what, you guys have done this, but you know what would be great for us? It's great to have the home builders there because they understand they see it before anybody else. So I'm really excited about it. I'm very honored they've allowed me to work on this council with them and I'm excited about what we're going to be able to sort of provide in terms of just industry feedback and education that the NBA can then take to the hill and take to their.

12:19
You know Board of Governors to say these are some actionable items for folks who do this every day, they're on the ground with people. Seeing the council like that is just so beneficial to again, we're all trying to help the consumer achieve that dream of homeownership, bringing those minds, that collaboration to truly come together and say hey, we can't like we can talk through this, we we can't come up with these solutions. So it really is an exciting time in the industry. I know people are mentioning it's challenging their difficulties. Absolutely we go through those, but now more than ever.

12:49
Being able to leverage data and with ICE in the way in the position that they are, there's just so much opportunity, which at least I want to mention because court really brought up the the home ready and the home possible. There's those programs in particular. Sometimes lenders just don't quite understand them and identifying the borrowers that might fit the needs or that might be in their pipeline of really being able to put them in those. How is data being able to leverage data, in particular, how is it helping us to identify those people who could qualify for those programs better?

13:17
Sure. And that's a great question. And before I answer that one, I want to double back a little bit on the technology question because I I want to make sure that this point gets across the the concept of of achieving affordable, a real affordable lending program ecosystem is connecting a lot of dots, right. We said I said that a moment ago, but it it take technology can do that for us, right, like if you've got this program sitting here.

13:44
You can basically technically enable it, bring it into the ecosystem and then push it to whatever end point needs to achieve, understand it so that it can actually be utilized. And I think that's one of the things I listen, I was not an expert on this. I'm certainly still not. But I've learned a lot in the last year as we've been as an organization sort of talking about this challenge and really trying to, you know there's a lot of great product leaders on the ice team here and they all, you know many of them come from the industry.

14:13
Lots of years of experience and you know, last June we sat down and we said we were like, what can we actually do to start raising awareness, What's within our purview that we can do now but won't take three years to build And you know all that some fun stuff. And So what we we decided to do was we literally started, decided to start with data and we basically said okay, well, what if we took the criteria for home ready and home possible and we automated that and said hey.

14:43
For all of our encompassed lenders, as your loans are flowing into your pipeline, we're just going to bounce those loans against this criteria and we're going to tell you whether that consumer may qualify for one of those programs, not definitively, but may qualify. Then we're going to give you a set of analytics that are going to say, hey, here's the consumers that ended up in your ecosystem yesterday. You may want to take the birth take further, a little deeper dive.

15:10
So this was something like I said, we were trying to get something done quickly and and so we could start understanding really what was going on in the ecosystem. We identified 10 beta customers and they started going live in the beginning of January of this year through like the 1st, 39 days with these guys rolling on. You know over that time some of them have only been in the program for like 4 or five days. We've identified almost 7000 potential affordable candidates.

15:40
At an average of about $205,000 per loan, that's $1.4 billion in low value in 39 days, 30-9 days. So when you say, I mean, I get chills every time I look at those numbers because I'm like if this is just 10 lenders. So what happens when we roll this out to our entire lender base? It's a great example of how data can help us identify and understand what's what's what's really happening in the ecosystem today.

16:09
Now the interesting thing is the 10 beta lenders are all saying, hey, can you can you put this information back into a compass so I can actually have my loan officers take action on it And we're like, yeah, that's what we need to do. So as a matter of fact, we're working on that right now. So I don't have a date on it yet, but in the next, you know, several months that's what we're planning on and rolling out. So taking the analytics, dumping them back into a compass and then just trying to bring this thing to a circle and and I think.

16:39
This program, I was so excited for us to be able to take this live and to share this with people because I think this highlights what ICE does best, right, is that we have a unique, you know we're not a lender, you know we're not underwriting these loans, we're not an investor, but we do see things uniquely. So we're able to use technology and I think one of the blessings of technology we've seen DC, the housing agencies really focus on this. You know we had FHFA stand up and Office of Innovation and technology, the NCUA, the credit union association has stood up in office and they're asking what can we do.

17:08
To solve some of these historical ills. And the reality is when some of these processors are being automated, you can save time, you can save costs. And more importantly, I think there's also an opportunity to solve, you know, this education gap. You know, our lenders are busy. The elders are busy. And I think I think even there's an opportunity to say let's just say in a in a worst case scenario, maybe somebody didn't think to mention this type of program to someone or or maybe there is a little bias there and and you know, they didn't realize that immediately some some studies showing that.

17:38
If someone, particularly the historically disadvantaged communities hear no when they finally apply for mortgage cue and a lot of folks still think you need $20,000 to put Dow and if they hear that no, and they don't realize they actually are the perfect candidates to qualify for these. They actually won't come back for years. And our clients are there that the truth of all of this is that our clients are there. They want all of us. We're talking about our origin stories, appreciate how personal a home is and this process and it and it can be tough.

18:08
But we all want to put people, you know, in homes that are affordable and sustainable because that's the name of the game, because most of us do have such a personal connection. So I think I'm excited, I'm like so excited to see where we are in six months because it's something we, again, we've been talking about in DC How do we make this better and easier with the programs that already exist? Because also from from a DC perspective, you know, we now split Congress.

18:36
We have a presidential election in a couple years and the reality is we need to be thoughtful. We have great programs out there, but people don't know about that. Absolutely. So let's save them the time and energy. You can't. Consumers for some time buyers don't know to ask for a 3% down program or how they would qualify. So we're trying to make it easier for everybody so they can do what they're good at, which is serve the people on the ground where they are. Well, and that's just it you mentioned for best practices and that's one of those things.

19:04
Especially with lenders right now, what are some of the things that they can be doing when it comes to best practices of integrating the affordable lending into their businesses but also doing good in their communities? Sure. So I think I'm a refrain you'll hear from me quite often is that hope is not a strategy. And one thing that is notable and some data that we've had again from the MBA and from others is that the cost to obtain a home loan now.

19:30
And this is I think the NBA data from its last published survey is over $11,000 fully loaded. Now think about that, that's the same for a $70,000 mortgage as it is for $1,000,000 mortgage on the 70,000 side. That price is someone out. I mean 11,000 is incredibly high number. And the other data point I would mention is that despite decades actually of of regulation and the Fair Housing Act that minority home ownership is, is arguably worse than it's ever been.

19:59
So I think we sort of have to look at that and think really hard. I mean you know all of us are working hard on this, but we need to try something new to achieve these numbers. So again hope is not a strategy. You know we've we've hoped some of these regulations would would have worked, they didn't in the way that we anticipated. So my recommendation is make it intentional. You know you have to actually deliberately put down a plan and I think again from the regulator perspective I also actually think that's that's helpful and that's a that's a different podcast but.

20:27
And do you think it's, it's helpful to have a plan where you lay out your strategy, you make it thoughtful and then you have quantifiable numbers because on the data piece, the data we have now is incredibly different from what we had five years ago. We talked about the financial crisis. I mean we used to look at information. You might have a loan application. Now we're able to see that there's more to a consumer than just their W2. We have different ways to look at this stuff and you peel back the data.

20:55
You know there is a lot more particularly in our sustainability side and some of the social credit scoring. You know Fannie Mae has been working on this and FHFA actually has an RFI out similarly situated for for a bond that would take some of this information in and the climate related data, you can discover the true cost of home ownership, figure out what it means. And I think when you have these lenders and they get the data, it's exactly what Lisa was talking about. You can't just look at it.

21:20
Right. You know you look at what you have and then and then say okay, well what does this mean? What do we do with this? What's the next step, what are the next five steps? Where do we, where do we see ourselves in 10 years because unfortunately you know it's been a very tough market for us recently, right. We all, we all are painfully aware of that, but but that's the time to invest and and and ICE has been dedicated. You know we've done this in many markets, right, We've we've made the digital transition from analog.

21:49
So this is the time when it's down to say, OK, during the pandemic, what worked with didn't work. The DC regulators are looking at the same thing. What worked in the pandemic didn't work. There were a lot of revised, but certain communities were excluded. Why was that? And this is the time for us to do that and we can really come together as we sort of search through this and make it better and we're Evergreen for the next time around. So I think that that's something we want to work on. The more conversation, the better. You know, we had ICE always encourage everyone to come to us.

22:20
You know, Lisa's getting feedback. You know, we, I get feedback a lot. I'm always happy to talk to people. I'll talk your ear off about mortgage policy as you can tell. But we want that feedback from our clients and our base to say what's working for you, what's not, what do you need? Like how can we help. And I think the more we sort of work that conversation through, we will identify solutions like this that are that are new and that are seeing results, I mean almost instantaneously. I know it's crazy. It's it's, it's amazing actually. Well, it's it's so.

22:47
You say you can talk people zero, but you guys, both of you ladies are so brilliant with it that it's like and again, it's something that we need to be having more of these conversations, right, and something that's kind of just swept under the rug almost. It's just like why are we not having these? We want to help these underserved communities, which Lisa, I really want to, I just have to wrap things up here. What advice can you give to lenders to go out there and help really better serve these underserved communities? Well, I think you listen, I I think the automation journey is ideally where we need to go. I think we really need to.

23:15
Bring all the pieces and parts of this together as much as possible so that the that we can facilitate the transactions whether it's down payment assistance, You know for consumers have who have thin file or no file credit reports. What are the alternate data alternatives for them? How do we get them into programs that are helpful they where they can meet the monthly payment obligations without breaking the bank and they can actually achieve this dream. So we need to work on that that ecosystem.

23:45
I think in the short term awareness and education awareness and education the most, the best things we can do because just one of the things we've seen with the just the, the small amount of analytics we're starting to produce is that the lenders can then go back to their loan officers and say you know, because sometimes these programs are, it's hard to navigate, I'm going to go tap a down payment assistance program. I've got to get them into you know home ready, home possible I've got to.

24:11
Pieces and parts together and it's a harder transaction to execute. Maybe I don't want to deal maybe I've got other things I can work out or maybe I just don't understand enough to pull it together. What can we do to educate those officers so they've got everything at their fingertips that so they can actually do this. What can we do to help educate the consumers so they the first time home buyer listen as a first time home buyer I was working in a bank okay and then I went to work for a credit Bureau and.

24:40
I just happened to know that my husband, who was exmilitary, had access to the VA Right Home program. That was the only way we bought our first house. We would not have bought our first home for probably another five years if we hadn't had access to that program. It was brilliant. I mean, it was and we were. So I'll never forget the day we closed on our line. It was just, it was two days after we got married. By the way, we got married on the Saturday, closed on our mortgage on Monday, but.

25:09
Anyway it was it was it was it was exciting and I and like I said there's just and that's just one example, but there's so many things we need to do in this need to get awareness out and then we also need to be working on this automation. And I think that's you know I I take that very seriously as part of the ICE family. I think it's you know we we are responsible for a big part of the technology ecosystem of this industry.

25:37
You know, I think it's important for us to be super mindful of this and do the best we can to make Frank together. So that's mine. I think both of you ladies have done such an amazing job and explaining that. And as you talking about the collaboration, working together, the education, we're here at the ICE Experience 2023 event, you can hear the collaboration, you can hear these conversations and it is just more of that. It is educating not only our mortgage family but also the consumers in a better way.

26:03
And how we do it is great conversations like this. You ladies are sharing what we need to be talking about. So I cannot thank both of you for taking some time out, sitting down with us. This has been an absolutely brilliant conversation. And this is just getting started. There's like you said for this is just the tip of the iceberg here. There's so much more we could get into and so much more you can share. So thank you so much ladies for sitting down with us and sharing everything you did with the affordable affordability of housing, getting consumers educated and getting our industry.

26:30
Educated as well. You ladies are absolutely brilliant. This has been absolutely amazing. Thank you so much for joining us. Thank you for having us. This is so much fun. This was again, ICE has done an amazing job in really highlighting so many of the women in mortgage technology. And again, it just goes the show. As both of you mentioned, ICE is truly ICE memories technology is truly focused on bettering our industry and bringing people together so we can all win. And that's just it. So guys.

26:54
These ladies are absolutely brilliant. Thank you to ICE again for another amazing episode of Women in Mortgage Technology. Make sure you check out the past episode as well. And so much more to come from here at in Las Vegas from the ICE Mortgage Technology 2023 Experience event.