Joe Camerieri of Mortgage Cadence: How Analytics will Drive Success in Mortgage

Joe Camerieri is an executive vice president with Mortgage Cadence, Denver. As a mortgage industry leader, Joe has more than 33 years of experience in consumer direct and retail mortgage banking. With extensive knowledge of both operational and business development of the mortgage outsourcing segment, he has executed, managed and grown most of the top private-labeled mortgage relationships in the industry today.

Working in home finance has long been about preparing to deal with the changes the market brings. Thirty years ago, the changes were smoothly cyclical but more recently the shifts between feast and famine in our business have become more abrupt. Some are predicting that we’re about to see another such shift.

Falling loan volumes, a shift in the business mix away from refinance originations and back to purchase money loans and a steady stream of M&A creating larger, better capitalized competitors are trends that have been well covered, in this publication and elsewhere.

The real question in my mind is how will mortgage executives know what changes are required to keep their institutions profitable as the market changes?

Good decisions are based on good data, and that’s one thing we are swimming in here. But making sense out of all of that information is an evolving art. Experts in business analytics have been in high demand in our business for some time. I predict they will become even more valuable in the future.

Dealing effectively with a fast-changing market is only possible when data analysts can pull real business insight out of big pools of data. Fortunately, we have access to the technologies to help lenders get this job done.

The increasing interest of industry analytics

Business analytics has been defined as “the iterative, methodical exploration of an organization’s data, with an emphasis on statistical analysis.” That’s true, as far as it goes. But like anything else, it doesn’t matter how closely you observe something if you’re looking at the wrong thing. It won’t get you closer to your goal.

The real power of BA in mortgage is when it leverages data in the lender’s LOS to draw conclusions about the institution’s current book of business and to uncover the trends that will impact the lender’s business in the future.

Even now, many lenders are seeing changes in their business due to a slowly cooling real estate market and a shift in product mix. But without analytics applied to their data, these changes are felt more than observed.

Tools like Microsoft’s Power BI are being applied today by leading lenders to make better sense of their borrower base and their firm’s growth trajectory. This is allowing them to predict future business more accurately and manage their businesses more effectively.

We know lenders well who can look at the reporting coming out of data analytics and know with a high degree of precision what their revenue will be 90 days into the future based on application data and other factors they can track.

One of the most interesting ways we’re seeing lenders use analytics in their business is to dial in their ideal clients and then shift their marketing to target those borrowers. Very large digital lenders have been doing this for some time now, targeting specific borrowers that they know they can serve well and profitably.

The more the lender knows about their specific niche the more surgical they can be about products, service expectations.

This is particularly important now when margins are beginning to tighten and lender profitability is getting harder to ensure. With rising pandemic concerns, lenders need to know when and where they can lend most profitably.

And it’s not just lenders who are interested in what analytics have to say about their data. Federal and state regulators have a growing appetite for the lender’s data. The recent additions to the fields collected as part of the industry’s HMDA reporting is a case in point. Fortunately, the analytical tools built into modern lending technology allows the lender to know what regulators will see long before they get to analyze the information.

The data lenders should be looking at now

One of the challenges we face in this industry is finding a focus for our business analytics. With so much data available to us, it can be difficult to determine the best place to point our BA in order to receive the highest return.

While there are many great applications of BA for mortgage loan servicers, including pre-payment trends and portfolio churn to predicting early payment default and predicting loss severity in default servicing, loan originators are better situated to make proactive decisions based on business insights.

We find three areas where BA can be extremely beneficial for lenders in the current market.

Borrower data

The more the lender knows about the borrowers their institution attracts, the more surgical they can be about the loan products they offer and the service expectations of the consumers they serve.

I’ve already pointed to the big digital lenders who are doing this today, but it can also be applied at the branch level to determine whether the institution should recruit new loan officers to serve underserved communities.

Production data

How long is it taking to originate? How much is this costing the institution to get the loan closed and where are loans falling out of automation or requiring human intervention? These are the insights that can guide executives to create or update the technology road map capable of helping the institution reach its goals.

We all know that the more disparate technologies a lender is using, the more friction will be present in the process, but knowing exactly where the bottlenecks are is the first step in settling on a solution.

Currently, many lenders are pulling insights from the BA systems that are highlighting the importance of becoming much more efficient in their back offices.

After spending millions on front of the house tools to interface with borrowers online, lenders are now finding that they have weaknesses in their fulfillment processes. Analytics are helping them find out exactly where these inefficiencies are and providing clues as to how to create better loan manufacturing experiences to fulfill the promises made to the consumer at the Point of Sale.

Quality Control data

Knowing where problems are occurring in your process will give you clues as to where automation is falling down and where you may need a better solution. QA/QC has never been more important.

It’s no longer just a matter of closing loans without the need for a lot of remediation before they can be sold into the secondary market. Now, it’s also about investor and regulatory compliance.

Lenders already have access to all of the data they need to create stronger businesses. Virtually all of it is locked up in the database of record and easily accessible through the lender’s LOS. With new BA tools integrated into today’s modern loan origination technologies, lenders have the opportunity to gain insight from that data and build stronger businesses, even when the market becomes more competitive.

Those that analyze their data carefully, using the advanced tools available to them today, and then take appropriate action will be more successful in the future.

(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 msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)