Mortgage Vendor News & Views—End-of-Year Edition–Scott Roller
Scott Roller founded 3W Partners LLC and is Co-Founder of Vendor Surf LLC (www.VendorSurf.com), each dedicated to revolutionizing sourcing of vendors in the mortgage and credit union ecosystems. The companies monitor and report on the service provider market to provide participants what they need to excel in today’s market. Mortgage Vendor News & Views is a monthly feature in MBA NewsLink.)
In this ongoing article series, we report on mortgage and credit union vendor marketplace events and trends, and we then share our viewpoints. Today we focus on a subset of vendors whereby each have an intriguing model adding value to clients – and substantially serving borrowers too. Technology is blurring the lines, enabling innovation and expansion of traditional business boundaries.
Generally, most vendors are business-to-business focused and help solve business client problems via professional services and technology. Yet in our industry, the real center of the universe starts and ends with consumers – the borrowers. Lenders, on the other hand, are business-to-consumer. This unique space that we review today is more of a ‘hybrid’ model straddling B2B and B2C (to a degree).
Let’s divert for a moment to examples outside our industry. The following companies have similar hybrid models within their respective domains: Amazon; Facebook; Google; Mastercard; Expedia; Skype; Hotels.com and many others. Each of these companies offer substantial value propositions to businesses and to consumers as well. Conversely, brands like the following are almost exclusively B2B oriented: Salesforce; HubSpot; Oracle; Caterpillar; SAP; Intel and many others.
This article examines four vendors and how they have both B2B and B2C impact: Mylo Insurance Solutions; Partners Credit & Verification Solutions; Dytrix and IESS. While not all of them have a direct B2C play, the ultimate benefit to the borrower is, in fact, an essential element of their success. These four understand that when you take care of the borrower, you take care of your own business, and that of your lender clients.
Title insurance underwriters have had a hybrid model for years, most have both a Direct side and an Agency side (resellers). It’s just smart business, because when you can address both B2B and B2C, consider the following potential B2C benefits:
• Expanded target markets and geographies
• Streamlining the process
• Eliminating intermediaries
• Margin improvement
• Controlling the borrower experience
Sit tight my friends, don’t start practicing your Board presentation on your transition to the hybrid model just yet – wait for the ‘however.’ In concept and in theory, the hybrid model makes all the sense in the world. Who wouldn’t want THOSE benefits? However, easier said than done.
Simply put, the manner in which you do business with businesses versus consumers is radically different. Oil and water. Day and night. Rates and hikes! Consider the challenges in divergent marketing plans and communications (especially content marketing), distribution channels, sales and administrative support, and regulatory and compliance variances, with consumer protections being more stringent. It takes some masterful design and execution.
Mylo is a power player in B2B and B2C, including homeowner’s insurance as part of their personal lines offering, but also provide commercial lines, small group benefits, life and individual health insurance. Mylo partners with mortgage lenders via a savvy integrated solution, via one of the simpler IT integrations you will find. Mylo understands the problems that plague the mortgage process and they make life easy for everybody involved:
• Borrowers easily find the right homeowner’s insurance, at the best price, from multiple top carriers and obtain a bound policy
• Loan officers can easily help borrowers secure that policy, which is RESPA-compliant since the recommendations are from a licensed agent
• Processors and underwriters receive their insurance binders directly from Mylo, well before the closing date
By partnering with Mylo, lenders can add year-over-year significant compounding revenue and build long-term borrower loyalty. You read that correctly – a new revenue stream, plus value-add for borrowers, such as easy-to-obtain rate quotes within minutes with a savings up to 30% on homeowner’s insurance.
Lastly, cyber insurance is also one of Mylo’s specialties. The mortgage industry is being overrun by cyber fraud, and this insurance helps hacked companies rebuild their networks, cover huge fines and regulatory fees and provide crisis management and public relations expertise.
Speaking of cybersecurity, let me introduce you to Dytrix, a venture capital backed fintech that enables secure financial transactions through a cloud-based technology platform for wire/ACH transfer validation and closing agent management. When I ran Vendor Management at the fourth-largest mortgage lender about a decade ago, wire fraud and closing agent fraud were off-the-rails bad across the industry and it has grown worse.
According to a CFPB article in June 2019, the FBI estimated that in 2017 alone, such real estate transaction losses were estimated to be nearly $1 billion. Therefore, we loved recently spending time with and learning about Dytrix, founded by industry veteran Regina Lowrie, CMB, a former chair of the Mortgage Bankers Association. Dytrix uses proprietary technology to streamline the all six steps lenders must take to prevent wire fraud.
The Dytrix platform enables the lender to fully manage all closing agent risks, including agent due diligence, as well as confirming banking details, email identity and other essential risk indicators. The thoroughness and completeness of the process leaves no wiggle room for fraudsters to succeed.
Of particular concern, Lowrie and team also told us that Closing Protection Letters and E&O insurance do not cover lenders when they send loan proceeds to the wrong account. What’s more, the CPL and E&O insurance policies each contain specific exclusions regarding privacy violations. So, when the lender sends the final application to closing, there’s no coverage for an agent breach. The Dytrix process covers this privacy risk and adds a one-year LifeLock subscription for the borrower in the event an agent under management creates a breach.
Additionally, most cybersecurity coverage is often voided when lender employees or designates authorize a transaction based on improper or compromised data, unless the policy contains very specific riders. For those unaware of these things, this has surely created a false sense of security, and major financial and reputational risk. If that is not enough to make you pucker-up, then also consider the dozen or so states with new consumer protection laws (or in process) surrounding the collection, storage and use of consumer data. California’s CCPA legislation gets the most attention, but other states beat them to the punch, with more states lining up. Fines are sweeping and staggering. If you are still in a ‘wait and see mode,’ you are officially out of time. Do something!
On the surface, Dytrix is purely B2B, selling protection to lenders. However, more indirectly, Dytrix is protecting borrowers with a lender distribution channel. “When the consumer goes to the closing table and all the money isn’t there, they lose their down payment and lose the ability to complete the home purchase. It’s really a travesty,” Lowrie said. “I’m bound and determined to make a difference in our industry to protect both lenders and consumers,” she added.
Partners Credit & Verification Solutions has some major credibility in the space, having been at the center of the data availability and technology evolution since the beginning – 26 years and counting. PCVS owns and operates an advanced, proprietary technology platform which gives them complete control over meeting unique client needs. They control the IT development schedule, not handcuffed by a third-party vendor. PCVS understands that no two clients are alike and wears their commitment to client customization as a ‘badge of honor,’ a big marketplace differentiator.
Other Key Differentiators:
• SOC2–Type II certification (as good as it gets for information security, among other things)
• Fannie Mae Day-1 Certainty
• A broad product and services menu, including: Credit Reports, Verifications, Lead Generation, Compliance/Fraud/Risk tools, Flood Services, Appraisal/Valuations as well as Vetting, Due Diligence & Background Checks
We cannot stress enough the above-mentioned certifications. Each on their own merit are impressive, but to be SOC2–Type II certified and Day-1 Certainty approved is worth calling out again. Client and borrower data is locked down tight, pushing fraudsters to target easier opportunities elsewhere.
Lastly, we have Stacey Jackson, CEO of IESS, to thank for turning us on to each of the above-mentioned vendors. Stacey knows our modes operandi, relentlessly monitoring the vendor marketplace for superior products and services driving efficiency, innovation and security to clients and borrowers. I describe Stacey as ‘Vendor Surf in a suit,’ the human version of our own match-making search engine. Few in this industry have the deep and unbreakable lender relationships as she does. The IESS model:
• Partner with the industry’s top lenders to fully understand gaps impacting processes and borrowers
• Research and source best-of-breed potential vendor partners, occasionally committing to become a reseller
• When desired by lenders and/or vendors, IESS remains engaged during implementation and the ongoing vendor/client management, a veritable concierge
Stacey has perfected the reseller model of vendor services, whereby she only agrees to introduce stellar service providers that only stand to elevate her already strong brand and reputation. She has great vision to see the big picture and can effortlessly present multiple value propositions across a few different relationships, not only to lenders and servicers, but also to potential partners that can enhance service offerings by joining forces. IESS helps raise the collective IQ, pushing way past ‘good,’ only settling on GREAT.
This fractional sales model is growing rapidly in this industry. We even use it ourselves, firmly embracing the rise of the ‘influencer era.’
Our Take on These Vendors
Mylo – Simplifying a clunky and troubled process known for jeopardizing closings, making insurance affordable and easy… and a bit sexier. And, lenders can add a new recurring revenue stream. What are you waiting for?
Dytrix – An impressive client list for a newer start up, but then again, not at all surprising when you deliver such a solution to the marketplace. Beyond the technology, the Dytrix team also works with clients to build a better closing process, such as: a) Develop closing agent policies and procedures; b) Help create internal communication plans; c) Qualify and develop closing agent databases; d) Set up and train users. Oh, and those of you returning readers, you know we love the fact Dytrix is SOC2-compliant.
Partners Credit & Verification Solutions – Where you can be the ‘big fish in a smaller pond,’ getting the attention your business deserves, no matter your size. Reduce your vendor oversight costs by engaging this multi-line provider, a common trend we see… big and broad. If PCVS can impress Fannie Mae and SOC2 auditors, no small feat, your business is in great hands. SOC2-compliant.
IESS – While firmly placed between lenders and vendors, it is not what drives Stacey and IESS at all. Everyone who knows her will tell you Stacey stands for taking care of borrowers, supremely focused on delivering solutions and partnerships that protect and drive the best options and experience possible. With that as the North Star for guiding IESS, success comes quite naturally.
Do not presume any insurance policy automatically covers wire fraud. With the unprecedented increase in these fraud attempts, you are encouraged to investigate your policy coverage immediately and review your options. Find out if you qualify for better rates with a fraud prevention solution like Dytrix in place. Afterall, in our daily lives we often get good student and safe driver discounts, because we are a lower risk. Seems reasonable to get better insurance rates when you are a substantially lower risk in wire fraud and data privacy.
Thoroughly research all of the new and pending state-level consumer protection laws. In 2020, protect that money… and data. The consequences of not doing so grow daily.
Thanks for reading.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)