Dawar Alimi of Lender Price on Opportunities in a Challenging Environment

Dawar Alimi is CEO and Co-Founder of Lender Price, Pasadena, Calif., a provider of cloud-native pricing technology to the lending space. He has more than two decades of mortgage industry expertise, during which he has built industry-leading technology and founded several companies. He is a well-respected thought leader in financial technology and has won numerous awards for his contributions to the mortgage industry. He can be reached at dalimi@lenderprice.com. Get more information about Lender Price by visiting www.lenderprice.com

MBA NEWSLINK: With volume down and rates continuing to rise, where can lenders find opportunity in this challenging environment?

Dawar Alimi

DAWAR ALIMI: Expand your product selection by including items that weren’t as popular during the refi boom, like non-QM, home equity, and purchase money loans. Also, take care of any technical impediments that have kept you from operating more effectively and economically. 

Home equity and non-QM lending continue to be a hot topic in the mortgage industry, as many lenders are looking for new opportunities to grow their businesses. And finally, residential purchase loans remain a key part of the current mortgage market, so lenders who are able to offer competitive rates and terms should continue to be successful.

With so many options available, lenders need to be strategic in their approach to find the right opportunity for their business. By being creative and thinking outside the box, there are plenty of opportunities available for those who are willing to look for them.

While volume is important, margin management is also crucial right now. Margin compression has also made it difficult for lenders to profit from loans. However, lenders can utilize a modern mortgage pricing engine like Lender Price to benefit from innovative loan programs before their competitors, capitalize on the market and be the first to do so, and eventually generate acceptable margins to get you through these turbulent times.

Last, given the current climate of lender consolidation, this is an excellent time to make some key hires. Lenders who survive will compete for top talent, helping  them emerge from this downturn ten times stronger than before.

NEWSLINK: How can lenders and originators best leverage their pricing, product and eligibility engines to help boost business?  

ALIMI: A modern pricing engine offers a user-friendly experience for loan originators searching for the best loan programs for their borrowers. The engine’s modern technology ensures that lenders and originators can find the best pricing and products available.

Capital markets professionals looking for an intuitive and innovative way to manage loan programs that are more efficient than the legacy pricing engines they are using today should consider using a proven pricing engine. In addition to a user-friendly interface and advanced technology, our PPE uses natural language processing (NLP) and various proprietary algorithms that simplify the management of loan programs, MSRs, and margin management which is extremely helpful for teams on the secondary side of things. 

With that said, it’s clear that both loan originators and capital markets teams should be looking for a solution that is cost efficient, easy-to-use, and delivers faster ROI than their current legacy pricing engine. A modern PPE can meet these criteria and be a good option for both groups.

NEWSLINK: How has your company been able to help your clients adapt to current market conditions? 

ALIMI: It is our goal to see our clients through tough times and help them emerge even stronger than before. Knowing that there will be shifts in the mortgage industry in the future, we aim to help our customers be ready for whatever may come. We’re committed to supporting them through these trying times and will continue to deliver the highest quality products and services we can.

We are fully aware of how crucial it is for lenders to keep expenses low and profits high right now. In addition to assisting them in streamlining their operations and increasing their return on investment, we also equip them with the tools and features they need to find new revenue streams and offer competitive rates and pricing.

Many of our clients are finding success around creating custom workflows, automating manual tasks, and bringing new loan products to the market through our platform. Take for example, capital market teams. In this market, they need extremely granular margin management capabilities. Other examples include providing deeper visibility into intraday rate changes or delivering deal intelligence back to originating teams so they can close more loans. Some very important factors for lenders to consider when it comes to driving volume and maintaining cost in this market. 

Our platform is proven and used by some of the largest banks and lenders of all sizes. Forward-looking lenders who adopt appropriate technology can have a noticeable effect on profit margins and business results.

NEWSLINK: The non-QM and non-agency markets are heating up. Should more lenders be considering these products? 

ALIMI: Many lenders are now turning to these non-qualified mortgages in order to expand their business. The non-QM market is growing rapidly, and more lenders are entering this space everyday. This is good news for borrowers who may have been left out of the market during the last two years of low rates. Non-QM loans can offer borrowers a way to get the financing they need, even if they don’t qualify for a traditional mortgage.

Non-qualified mortgage loans (Non-QM loans) are very common in the current mortgage market because of the freedom they give to borrowers. QM loans have strict requirements for borrowers’ credit and income, but non-qm loans have more flexible options for those who may not meet those standards. Because of this, they are a viable option for borrowers who might not otherwise qualify for conventional mortgages.

Lenders can certainly profit from non-QM loans, but there are a few things to keep in mind. First, non-QM loans tend to come with a higher interest rate than traditional mortgage loans. This is because they are considered to be a higher risk for the lender. Additionally, non-QM loans may be more difficult to sell on the secondary market, so the lender may have to hold on to them for a longer period of time. All of this said, there is definitely money to be made in the non-QM lending space, and lenders who are able to navigate these waters successfully can make a lot of money.

NEWSLINK: What do you envision the mortgage industry will look like in the next couple of years?

ALIMI: Lenders are assessing their technological capabilities and determining how to use both what they already have and what they will need in the new world of digital lending. They want to be able to provide a better customer experience, faster decisions, and more streamlined processes. However, they also need to make sure that their systems are secure and compliant with the latest regulations.

Lenders that can execute loans quickly and accurately will be able to charge higher margins, as borrowers will be more likely to choose them over their competitors. By digitizing the loan manufacturing process, lenders can speed up the turnaround time for borrowers, improving efficiency and accuracy. Additionally, data analytics can be used to make more accurate credit decisions, increasing margins on loans. 

Lenders that use a modern mortgage pricing engine with proprietary machine learning algorithms will be able to save time and improve their overall profitability. The engine will help simplify loan and margin management, allowing lenders to price loans more accurately and quickly. This will improve their margins on loans, resulting in more profits.

Banks and lenders will also look at using a digital underwriting engine for non agency loans to help with manual underwriting. This will help improve the accuracy of the underwriting process, reducing the number of loans that are declined. Additionally, it will speed up the process, allowing lenders to approve more loans in a shorter amount of time.

Overall, we expect the mortgage industry to become more efficient and customer-focused in the next few years. Banks, lenders and credit unions will be using new technologies to improve their operations, and this will lead to better products and services for borrowers. There may be fewer lenders to choose from, but the ones that remain will be stronger and more competitive. This is good news for borrowers who are looking to get a mortgage in the near 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.)