Moving automation from vision to reality

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, cutting edge 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 another episode in our Culture of Automation miniseries. In this 5th episode moving from Automation vision to reality, I'm joined by Chris McClendon, Vice President and Executive Accounts Leader at Ice Mortgage Technology. As a 20 year veteran in the residential mortgage and financial services space, Chris has spent the vast majority of his career.

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Developing strategic relationships with the largest lenders in the industry and his role as executive accounts leader at ICE Mortgage Technology. Chris is keenly aware of the challenges lenders face as they navigate delivering amazing borrower experiences with changes in the marketplace. I'm excited to get Chris's perspective on how lenders are leveraging automation to meet borrower demands and Dr. greater efficiencies and internally. So sit back, grab your coffee and enjoy the conversation. Hey Chris, thanks for joining us. How you doing today? Good. Thanks Aaron. Thanks for having.

1:27
You're a person I've been, I've been trying to talk to for for a while. I know this is our, this is our fifth episode. Not only have I been trying to get you to talk off offline, you're a busy guy. But this is a great opportunity for us to have a person with you know of your background in a person with the position that you're in as you work with customers day in, day out. I'd love to get your perspective on really you know, understanding their needs. You know, what are some of the advantages right, that that that they've seen as they've been adopting automation.

1:57
What has pushed them to make that switch, right, Those larger organizations they're not in in, in many cases, sometimes they're trying to play catch up and in many other cases they're on the front end. But I'd love to get your perspective on that. In what areas do lenders in understanding their needs, In what areas do they need to better compete in this changing marketplace?

2:19
What if they conveyed to you in terms of, you know, here's what we need, here's what we're lacking, here's what we need to adopt, maybe you can, we can start there. You know, really I think the, the technology journey and you know, iPhones have been around for, you know, 1012 years, whatever it's been at this point. But really that customer experience portion of the automation, to me it really kicked off, you know, whatever it was five or six years ago with the Super Bowl dad, you know, for the original.

2:45
You know application interview style, you know web experience before that it was more of the traditional borrowers talking to loan officers, you know calling into call centers. But really where the borrower experience and kind of self-serve model that you know had been in the consumer banking but you know mortgage seems to to lag a little bit behind some of those tools.

3:05
You know mortgage has changed a lot. I started as a clerk and secondary marketing when I was finishing up my undergrad or during my undergrad and and kind of bounced around and some technology stuff a little bit after. But you know when I started in the business, you know it was more on the wholesale side and you had you know customers were were faxing in lock confirmations and getting lock confirmations fax back and the Internet was there but it was really just there and like a brochureware kind of way it wasn't really actionable things and then as.

3:34
Isthe.com revolution. You saw a lot of really cool technology going into the 2008 you know, crisis. A lot of that got put on pause and then kind of, you know, rebounded after that. But you know, really, I think for for a modern experience, it really started with the with the consumer piece and now.

3:53
Especially, you know, who knew what was going to happen during the pandemic. I mean, no one expected the volumes and and and and the disruption that we saw. So technology even became, you know, super important in the back office. So I think you're seeing that now with a lot of the ADRADE, you know, OCR technology that's been around for a long time, but really making that actionable, making people more efficient.

4:18
Having to operate you know on the fly, I mean you know March of 2020, early March everyone was in the office and the March everyone was was out. So you know I think technology played a key role there. But yeah it's it's been an interesting you know evolution I would say over the last at least in my experience in the business from you know call it 2000 to 2022 today you made two fantastic distinctions there I want to call them out. So you called out that front of the house right. So the the bar were touch point how the bar were starts the application and.

4:48
That communication Tonch point with the loan officer, you mentioned the the ADEADR solutions technology right. So that's very much an underwriting component, right. So and and we're doing that today with with the Encompass AIQ right where we're perfecting that data into an automation ready data set to your point that is an area that the industry is you know, you know they're still playing catch up in those areas it's been around, but as far as the adoption of it.

5:17
The industry is, is is really playing catch up. So I I love how you really kind of balanced hate on the front of the house. We need to do better with, with communicating with customers with with borrowers and providing them, providing our team that touch point with them. So if you're looking at the B to C side right the the shopping cart don't let them leave the shopping cart, well don't let them leave the the the loan application right and on the back end right from A from a servicing that loan standpoint, underwriting and servicing that loan standpoint.

5:47
Point, let's continue with with automation through through that process right. And that's a really good way of segment of Segway into you know the larger organizations they have homegrown things in place or they're or they've adopted an Los provider and they're they're doing things on top of what an Los provider has for borrower communications, for loan processing, for underwriting. What are some of the advantages of let's build that and.

6:17
House let's build these these experiences, let's build that automation in house versus we should probably really find an Los provider that is an expert in this area that can help us help us create amazing borrower experiences.

6:30
Hey Chris, I was, I was hoping you might be able to speak to the advantages when it comes to you know choosing either do we do we go proprietary or do we choose an Los provider to help us with you know, implementing the right solutions and identifying the right areas, you know from which to automate. I was hoping maybe you could speak to that. Yeah, it's an interesting question and it's one that you know I've been asked by clients many times I've been fortunate enough to be with.

6:57
ICE mortgage technologies now for a little over 7 years and it worked with clients really of various all sizes from from small to some of the largest in the in the country. It's a question a lot of folks as they you know they get to an inflection point where there is a large technology spend or a big investment in the platform or core solution that they're using that they ask themselves.

7:19
And really the advice that I always give is I think they have to focus on their core competence, you know, which is obviously originating mortgages. That's why we're in this business, you know, working with your clients, making sure the client experience is the best it can be. And when you start going down that track of proprietary technology, it can get very expensive and very complex. And even though someone you know today thinks they have all the pieces to the puzzle and can make that happen all the way around both internally and externally.

7:46
Inevitably their major market changes rather that be and and and volume up or down and also being able to fulfill those you know needs, but but also just in general of regulatory changes where a highly regulated industry those changes hit and they're big.

8:04
I mean really if you look from a nice perspective the R&D that's been spent and in the last few that will come to mind. You know either the the the Earl of changes the TRID changes, the ability to repay changes the the old GFE going to the new GFE and then all that at those are huge expenses that require a lot of technical resources. So you know are you a technology company that does mortgages, are you a mortgage company that leverages technology to.

8:33
You know, do better and I I think that's really the, the, the question that someone has to ask themselves to, to me this, this, this whole Fintech mortgage experience is evolving so quickly that you know the solutions that are available today, you know, would have seemed crazy five years ago. And I think we'll look at that same experience later on.

8:51
Yeah. And that cost as you said is it's a huge pain point, right. Going back to understanding lender needs, understanding how they need to better compete in the marketplace, cost of origination, cost of maintenance of maintenance, overtime cost is probably the largest piece of the pie. In terms of budget for an Los system, yeah, I would say from for most clients their technology backbone which I would consider the Los the most important, it's one of the most expensive parts of the process. I will, you know I'd stack us up with the variability.

9:21
Ability credit is another but you know it's you know the technology pieces is, is, is very important and when when folks are shopping you know there's there's a couple different methodologies. You know one is you know you go customize your entire stack. I mean some folks you know if you're really looking at cost to manufacture, you know one of the benefits of of of leveraging ICE is is the bundle itself. I mean the bundle of the point of sale, the bundle of the Los, the bundle of the compliance, the documents.

9:51
You know all that being part of that core offering because if you do start to go you know and and pick you know vendor A, vendor B, vendor C for different experiences that process you can easily double your cost of manufacture and at some point margins do matter. You know at the end of the day for the customer, you know they do this transaction a few times in their life, it's about rate and it's about price and and you have to kind of balance all that out. I I I think it's very important for for lenders to think about that.

10:21
What, what would you say is perhaps the benefit to you know let's say for example a lender was looking at one provider for POS and they were looking at another provider for Los right. And then they were looking as as as part of the loan processing and then going into you know underwriting they were looking at, they were leveraging us for a IQ but they were leveraging another Los provider can plug into other Los platforms. What, what's the benefit in having that sort of model in place as opposed to like you mentioned?

10:51
Kind of using one provider for you know all inclusive end to end. Again I kind of circle back to the borrower experience because that's really the borrower experience is so important because that's that's that's what you're leaving behind after the close. And and and being in a business that you know really where referrals are so important in making sure that that technology ties together well and that experience is seamless and I know that's a word that gets thrown out but.

11:15
Just like you said, Aaron, like if you're using one provider for your point of sale and you're using your Los and you may be using different E sign vendors, it could be something as simple as just different signons And borrowers are going to have to create different accounts. You know, they have their, their bank accounts, their Facebook, all of these different accounts and all these different signons and passwords. And it can get very frustrating, especially to folks that are busy managing work families.

11:44
Everything that they have to do, remembering individual passwords and going to this system and missing this e-mail, that's where I really think the seamlessness comes in. The easier it is, the more simplified and like we were talking about before, it's a complicated transaction.

11:59
There's so many different variables that that come into play when you're getting your loan or customers getting their loan from from from the underwriting on on the mortgage side to the title insurance side. So there's just a lot of, there's a lot of things happening for that 45 day cycles with the customers going through the journey every way you can make it a little bit easier, you know, I think that that adds to the positive experience, yeah. And to expand on that point that you just made, it makes the that change management aspect of of adopting.

12:29
Those systems internally, it makes it messy, not just on the borrower side because in the borrower side it can look very disjointed if it's not managed well internally. So for those lenders that are making that switch, whether it's point of sale automation, whether it's automated underwriting, whether it's, you know, automated loan processing, you know, automated workflows, what have you seen from the customer side as as as how they've been able, as lenders have been able to capitalize?

12:57
Right. When looking at you, you return on time invested, increase compliance. What have you seen from from that side? You know, I I think what if if lenders are starting this journey, it's definitely not a boil, the ocean.

13:11
Type of of project I think when you look at it in chunks, so you have your like we talked about the point of sale, the borrower experience, you know that that initial loan set up which is so very important because we all know anyone that's originated. If the loan isn't set up right it's there's going to be problems all the way through. So the smoother you can make that initial interaction and gathering those documents.

13:32
You know also looking at the at at the operational side of it as you mentioned with a IQ and leveraging some of the functionality that we have there. You know really capturing that automation, it's eliminating the human aspect of it more automation and and it's not about positioning people you know out of out of jobs or anything like that. It's about just making there's there's a lot of work to do to get a loan through the process.

13:55
And if you can speed up you know those those bottlenecks which are generally after you have the customer you know intent to proceed Okay they're they're ready to go getting getting that initial foundational set up, making sure that file gets into processing, gets into underwriting. The smoother underwriting can be the smoother the conditions get cleared, the smoother you have a clear to close. And and I think that's really you know what lenders are driving towards is it's managing to the exceptions. You know if if you have things that can be automated like W twos and pay stubs.

14:24
And that data doesn't have to be stared at and then loaded into the system manually keyed, you know making that part automated if you're if you're really working to the exceptions, you're closing loans faster, you're getting that loan off your warehouse line. It's increasing profitability all the way down the line. So you know and like I said even you know going back to the, you know the days when I first jumped in the business, faxed price sheets and you know looking at low level pricing adjustments on a grid and sliding down the sheet. You know today we have pricing engines that have eliminated a lot of that there's.

14:54
Really taken out the the pricing errors, limiting changes of circumstances through automation, you know, just making that process run smoother to get the loan close faster because ultimately that that's really where we're driving to right, you know taking.

15:08
You know, a process, you know, down from 45 days to 30 days to 15 days. It wouldn't surprise me if in the next five years that's what that's where you're seeing is kind of industry standard, maybe a 1520 day closing versus where we're at today, right, right. Improving the cycle times, right. Yeah. I think that that is a wonderful through line in each of these episodes using automation as a way of augmenting what the human capital, the people are doing internally. In many cases, you don't have to remove people, you can by using automation.

15:38
Help augment that, right. That's, that's that's the absolute through line for all these all these episodes. Chris, I hate to cut this short because we don't have enough time, you and I. But this has been an amazing conversation. I really appreciate your your insights and I appreciate you know you taking the time to chat with us today. It's been really nice talking to you. Yeah. Thanks a lot, Aaron. I appreciate it. Thanks, Chris. Take care. And thanks again for joining another episode of the Ice Mortgage Technology Open House podcast. Be sure to be on the lookout for future content as well as future episodes of the culture.

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Automation miniseries. We look forward to having you thanks again and stay safe out there.