Scott Roller: Heard it in Nashville – Worry, Panic and Opportunity

(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. He is a frequent contributor to MBA NewsLink.)

So, I headed to Nashville for the 2022 MBA Annual Convention and Expo, expecting to fully partake in all the excitement that Music City has to offer. Mission accomplished, but not surprised to also witness the build-up to the industry’s looming game of musical chairs.

With the prolonged refi feeding frenzy ended, 40-year high inflation and the highest rates we have seen in two decades, the music has ended, and companies are scrambling to secure a seat for the next round. Lenders and vendors included.

It may be hard to believe that I uncovered a potentially more divided universe than the current political environment. The downward spiral in volume seems to have organizations in two very distinct camps—with worry (and some overt panic) on one side and opportunity on the other.

Worry and Panic

For weeks, even prior to Nashville, I held discussions with lenders and vendors to keep the pulse. Here is what I keep hearing:

1. It’s a balance sheet focus, driving out costs. Everything is on the table.
2. Time to stick to core competencies… underwriting loans. Outsource where possible and automate.
3. Cyberthreats always rank high, especially in the new reality of the work-from-anywhere model ushered in by the pandemic.

The urgency is unmistakable. The mission is to quickly re-tool the model and reap the gains in efficiency and cost savings—ASAP. Many lenders that have always relied upon the dreaded Request for Proposal process, which usually takes months to execute just to get to a signed contract, are now often saying, “Just tell us who you think we should talk to.” In other instances, the RFP is still in place, but far less arduous (meaning to say less ABSURD) with desired outcomes in weeks, not months.

Vendor Solutions Similar to ‘Booze’

OK, yes, you are waiting for an explanation. I met with more than one vendor in Nashville where I remarked, “What a great position to be in. Your solutions are just like booze, whereby they get people through the good times and the bad.”  (Disclaimer: In today’s uber-sensitive world, I suppose it wise to clearly say that I am not advocating alcohol use, rather, just a swig of some tasty and aged vendor services.)

A couple of parallel examples are outsourcing and automation vendors. Lenders needed them badly during the recent boom, to help process mountains of loan applications. While capacity is no longer the concern, outsourcing and automation now help solve for driving out costs while delivering efficiency. Quality and compliance can be sustained, if not improved, when implementing with the right vendors.

One caveat on the technology side. Most lenders are not making capital investments. This is why certain artificial intelligence (AI), machine learning and robotic process automation (RPA) solutions are attractive. Vendors have already built and implemented ‘bots’ for the traditional roles in the lending process, such as sales, processing, underwriting, closing and post-closing. Mortgage servicers and secondary markets players have also deployed them. Some bots are ‘off the shelf’ ready, especially true for companies using the most common production systems. Existing bots can be an overlay across another client, with adjustments.

Some See Opportunity

The masses are worried. Yet it is enlightening to talk to so many that made it abundantly clear—they see opportunity.

Many lenders are forming the ‘official but somewhat informal’ strategic alliances, leveraging each other’s strengths, tech stacks and footprints. Vendors are doing the same but have more of an M&A appetite. Some vendors made generic mention, while others spoke of specific target types, as they are reinvesting earnings from the historic boom, anticipating the future, not dreading it. 

Some organizations are increasing marketing spend—triple in some cases—a time when most budgets are being slashed. They feel they will stand out far more than competitors. Similarly, the president of a large service provider said they have become road warriors attending every industry event possible, with a larger travel team than usual.

Here is a shout-out to all of you that have managed the business so prudently, setting yourself up to go on the offensive. It had to be tempting to splurge after having a virtual printing press of money these past few years. Well done.

Solutions and Vendors to Highlight (Alphabetically)

From the discussions prior to, and during, the time in Nashville, some stuck out more than others.

Mortgage Workspace (an Access Business Technologies company – ‘ABT’)

President and Founder, Justin Kirsch, has always believed in specialization. Since 1999, they have pioneered the secure work-from-anywhere model for lenders, and they continue expanding secure remote user access and cloud desktops in a post-COVID world.

Kirsch and team predicted the mass migration to cloud computing and have become a dominant Microsoft partner in helping mortgage companies select the right Microsoft 365 (M365) license and then help configure and deploy the highly robust platform with managed services and FFIEC required security.

The immense number and depth of M365 features to address cyberthreats, control user access and data—all while delivering the enterprise-wide Microsoft Office production efficiency—are unmatched.

Lending executives love the cloud-based model but grow progressively more concerned about the work-from-anywhere staffing that often allows for ‘bring your own device’ (BYOD), and the resulting cyberthreats to company data and borrower information (‘PII’). In short, M365 Business Premium with the right configuration and monitoring allows you to control every machine, endpoint and user, no matter where they reside—even your company data residing on personal devices (BYODs).

Mortgage Workspace is an Azure Certified Microsoft Cloud Service Provider (CSP), only serving the mortgage vertical. They have helped over 1,500 lenders move to the cloud and achieve real digital transformation and have become a first point of contact when a mortgage company is phished or ransomed by hackers. They know exactly how difficult this journey can be without the right guide and daily oversight.

TrueFocus Automation

If you listen closely, you can hear the chants across the industry… ‘Bots or Bust! Bots or Bust!’ This form of automation is being widely deployed, at lenders and vendors, just as Co-founders Jimmy Lewis and Sridhar Loganathan envisioned. They spent many years working together to help build one of the largest BPO companies supporting the US mortgage and title industries. Then in 2018, they launched TrueFocus Automation because they saw an opportunity to provide more reliable and efficient solutions to enable more client control, compared to pure-play outsourcing—the lift and shift of people. Bots have become major competition to outsourcers.

In simplistic terms, bots are automated software routines of repetitive, rule-based tasks executed by technology versus humans. It’s obvious why bots grow in popularity, across originations, servicing and secondary markets. Mortgage is ‘Routine Supreme!’ There are many processes that are digitized, highly structured, repetitive and prone to human error, which are ideal for RPA.

TrueFocus leverages RPA tools to build hundreds of bots supporting unique business processes, saving clients thousands of labor hours while improving their service levels and embedding control and compliance rules. TrueFocus encourages customers to reimagine their workflows to position bots to work alongside humans, driving improvements in production, predictability, cost and the customer experience.

Big budgets, an army of resources and long deployment times—NOT necessary. RPA is a faster and less expensive way to automate compared to capital intensive enterprise system changes or traditional coding methods. TrueFocus generally needs a single SME per task being automated, walking thru inputs, screens, fields, outputs and such. This is followed up by QC testing and results reviews prior to sign-off into production. Clients can then redeploy people to more meaningful and satisfying tasks.

Investing in automation in a major market downturn like now positions you to expand capacity when it returns, with a variable model to manage volume fluctuations without traditional staffing dependencies.

Voxtur Analytics

Jim Albertelli and team are on fire. The guy is among the most brilliant strategists around, so far ahead of the pack that you better load up on caffeine and energy drinks before you engage with him. Just try to keep up.  

Voxtur enables every facet of buying and selling real estate, with its end-to-end platform delivering a one-stop solution. Via Albertelli’s legacy businesses he has built over the years, in addition to a steady stream of targeted Voxtur acquisitions, clients can consume data, analytics, valuation, settlement, default and capital markets services. Voxtur is redefining and revolutionizing the entire real estate industry. Need proof? Find the October 2022 announcement on the launch of Attorney Opinion Letters as an alternative to title insurance for VA home loans. A true disruptor, already in 50 states and nine clients signed, despite just launching. 

Since the start of 2021 alone, I have logged six Voxtur acquisitions on our Vendor Surf search engine, where we also track vendor M&A. A few of Voxtur’s purchases include Xome Appraisals (from Mr. Cooper), Appraisers Now (Anow) and Blue Water Financial Technologies. Stay tuned, as it’s clear that Voxtur sees no finish line for disruption, with apparently more to come in valuation, tax and capital markets. 

If you’ve had any exposure with Albertelli and his team, you know they are emphatic about delivering a superior and more cost-effective experience to consumers and to clients—throughout the entire real estate value chain. While many are worried, Voxtur is poised to capitalize on solutions such as their home equity data, where there appears to be $11T in tappable equity, as well as their white glove default services via innovation in title and technology. They are a low-cost leader powered by ‘Voxtur Verified’ data.  

Wolters Kluwer

Steve Meirink and his team have been busy on both the acquisition and innovation fronts for the past two years and their efforts have positioned Wolters Kluwer as a leader in document generation, eClosings, eVaults and eNotes.

At the end of 2020, Wolters Kluwer acquired eOriginal, the undisputed leader in eVault technology, and this past Spring acquired IDS, a leading document generation provider for mid-tier lenders, banks and credit unions.

The company’s mortgage portfolio of technology, content and advisory services are used by leading mortgage companies, including many of the very largest. Other clients include warehouse lenders, investment banks, credit rating agencies, custodians, one of the GSEs and Ginnie Mae. In fact, Ginnie Mae’s new Digital Collateral Program, which reopened in May, relies on Wolters Kluwer’s eVault technology.

To get a sense of how ubiquitous Wolters Kluwer’s technology is, consider this: Through January of 2022, 92% of all eNotes registered on the MERS eRegistry were created using it.

The company is also well positioned to take advantage of shifting industry priorities, including the need for greater cost efficiency and the resurgence of home equity.

Recent ROI studies suggest that eClosings and eNotes can save lenders somewhere between $300 and $450 per loan. Considering the MBA estimates that the average lender was losing $82 per loan in 2Q, this is not an insignificant amount. While eClosings are more often associated with refinances, there is a growing interest within purchase mortgages. Some very large lenders are using, or preparing to use, Wolters Kluwer’s ClosingCenter platform to accelerate fully digital purchase closings.

As the market shifts away from refinance, banks and credit unions (and to some degree mortgage banks) are ramping up home equity programs and marketing. Wolters Kluwer recently launched its OmniVault for Real Estate Finance solution to support digital home equity lending, both HELOCs and home equity loans, in addition to first mortgages.

In Closing

Sticking with the music theme… The Winds of Change (Scorpions) are gusting, presenting Stormy Weather (Ethel Waters) to most, yet allowing several to Fly Like An Eagle (Steve Miller Band). Sadly, some lenders and vendors have already fallen, much like a Candle In The Wind (Elton John). Many friends and colleagues need our collective help to land well and begin anew.

Vendors like those we have highlighted enable clients to harness the volatile weather conditions—versus just Blowin’ In The Wind (Bob Dylan).

Quite schmaltzy, but I am going with it.

(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.)