Gaming Out The Future Of Mortgage Lending

Mortgage Cadence says they are all about being nimble. The company realizes that there are changing market forces, like technology, consumer behavior and regulatory compliance, and when they do change, Mortgage Cadence touts that it has a plan B, C and D. The difference – the Cadence difference – is that the company solves for the entire lending process, not just part of it. It’s an enclosed ecosystem streamlined from end-to-end, not bits and pieces held together with bailing wire and bubble gum. The company’s EVP of Sales Matt Hydrew talked to us about how he sees the future of mortgage lending.

Q: Describe how you first got into mortgage lending?

MATT HYDREW: When I graduated from the University of Toledo with a finance degree, with a love for sales, I embarked on a career in financial services.  I started out with Merrill Lynch and subsequently Baird working in a fixed income security group and learned a lot about Mortgage Backed Securities.  I really started to understand, from a different perspective, the mortgage finance markets. From there, life took me to work for one of the pioneers in the settlement services industry Joe Casa at October Research.  I learned a lot from him and especially the data, title and a digital side of mortgage finance.  Unfortunately, Joe left us too early and it was fairly devastating to lose my mentor.  But, I learned a lot from him and really felt connected to the mortgage industry.  So, I reached out to Trevor Gauthier, who I knew for years to see where Mortgage Cadence was, and thankfully he was just named sales and marketing lead and looking to grow his team.  That was 2009, ya know, the best time to get into an organization offering mortgage technology services.  I say that sarcastically because it was the largest financial crisis of our generation.  That said, the mortgage industry had to transform and you couldn’t produce mortgages like we did in the past thus a larger need for technology platforms to manage the loan manufacturing process enforcing compliance and operational policy.  The rest is history really, at the time when Mortgage Cadence had just a few customers and though organic growth and acquisition grew the organization to hundreds of customers.  Been here ever since!

Q: How has the mortgage industry changed since you first entered the space?

MATT HYDREW: As odd as it may sound, the mortgage industry has stayed relatively the same since I entered the space. While loan types offered in the mid 2000’s and distribution models have changed, success in the industry still depends on the interplay of people, process, and technology. Built on that foundation the same fundamentals of lending we focused on years ago are still relevant today – we must know how to attract borrowers, keep borrowers, and get them into their homes quickly and easily.

With that said, there are a few exceptions and notable changes over the years:

First, technology is better

We’ve come a long way from the days of wheeling around paper applications on carts and sending disclosures via snail mail. Now, with the LendTech industry booming, there’s technology available to address every inch of the mortgage process. And this technology advancement shows no sign of slowing; artificial intelligence, no-touch mortgages, and open APIs promise to revolutionize the industry in years to come.

The future belongs to lenders who can sort through the noise of shiny, new technology and ultimately select the solution and technology partner that supports their unique business needs to promise industry longevity.  

Second, borrower expectations have changed

Borrowers expect the same type of “click here, pay now” service from mortgage lenders as they receive from other retailers. It’s no longer enough to simply have an online application or offer to connect via email instead of phone. Just as fax machines are all but obsolete, so too are the days of a “one size fits all” approach to meeting borrower expectations. Lenders must have the flexibility to meet borrowers where they are with anywhere, anytime accessibility, whether that means mobile applications or automated updates.

Third, regulatory compliance and scrutiny over data security has increased

With data being hosted in service providers’ datacenters and cloud environments the oversight of keeping data safe is larger than ever. The rising Cost-to-Close over the past years has, in part, been a product of the increased regulatory compliance demands. With HMDA, TRID, and now URLA, the cost to address, and implement, the changes required by these regulations cannot be ignored. With additional regulations on the horizon, ensuring compliance has become an essential part of any lender’s strategy. 

Q: As you see it, what is the true Mortgage Cadence differentiator?

MATT HYDREW: Mortgage Cadence’s mantra is that profitable lending takes more than great technology. Although this may sound strange coming from a technology company, we pride ourselves on going above and beyond the platforms we provide and establishing ourselves as true partners in the industry.  That said, the Mortgage Cadence Platform (MCP) is very unique compared to others in the industry.  Advanced workflow and automation, technology architecture that is meant to scale quickly, the reduction of integration of components with true end to end functionality provided within the Mortgage Cadence Platform such as borrower functions, document generation, advanced imaging, product, pricing and fee engine along with ACE our proprietary automation tool.  Also, we’re completing our latest upgrade which will allow us to be the only enterprise grade platform written in the latest HTML5 UI, which is important to give our users a modern experience but also some amazing configuration options they can perform all on their own.

At Mortgage Cadence, we don’t believe in “set it and forget it.” Instead, we have a different approach to delivering an exceptional client experience. With a delivery team that can get lenders up and running in as few as 26 weeks, a professional services team that continually works with our clients to optimize their experience through ongoing training, client focus groups, and the only client benchmarking study in the industry, we make sure our lenders get the most out of their partnership with us.

Q: Mortgage Cadence promotes “high-performance lending.” What does that term mean to Mortgage Cadence and how do you make it achievable for your clients?

MATT HYDREW: Mortgage lending is a business line that should be one of the most profitable for financial institutions. Truth is, it’s not. Our focus on high-performance lending sets out to change this.  Put quite simply, high performance lending means being a profitable mortgage lender by focusing on the interplay of people, process, and technology.  More specifically, our research evidences that five Key Performance Indicators (KPIs) are crucial to achieving uncommon success in the industry: Velocity, Cost-to-Close, Pull-Through, Borrower Share, and Productivity.

To help our clients achieve high performance lending, we created our annual benchmarking report.  High performance lending comes from knowing, not guessing, after all. Our benchmarking study reveals how each of our clients is performing when it comes to the five KPIs indicative of profitability. It is the only true apples-to-apples comparison in the industry, allowing our clients to use the findings to implement changes and reap the rewards.

Q: Specifically, you say “75% of Mortgage Cadence clients outperform the MBA Productivity average of 1.9 loans per team, per month.” Why is that?

MATT HYDREW: Our high-performance lenders understand that success comes from the interplay of people, process, and technology. The process element is especially important when it comes to Productivity. Our clients examine their lending processes with a fine-tooth comb by sitting on the production line and mapping the loan journey to identify bottlenecks that are impacting Productivity. Once these issues are identified, they employ our technology to address gaps and automate when possible, then train their people to adopt the new processes.  The interplay between human and machine is where we reach new heights.

Too often we see teams going into the market, purchasing the latest shiny technology, and expecting it to solve their Productivity issues. Sure, technology plays an important role, but without identifying what the new technology needs to solve for, technology alone won’t solve the problem.

Q: In the past year or so Mortgage Cadence has made headlines with some high-profile integrations. You have integrated with Radian, MGIC, LoanBeam, etc. Describe your integration strategy going forward.

MATT HYDREW: As we continue to release these high-profile integrations, we’re investing (and close to completing) what will be the most modern third-party integration hub in the industry. This is substantial because it will allow for more integrations, more quickly, increasing efficiency for Mortgage Cadence, our clients, and our partners. The integration hub will revolutionize our approach to business integration, with built-in security and best-practice integration strategies. Mortgage Cadence customers will enjoy access to increased third-party functionality, combining our platform with the best the industry has to offer.  The only way to truly produce a digital mortgage is to bring all the latest and greatest digital services together in a unified platform; that at the heart is one of the keys to our client’s success with the Mortgage Cadence Platform.

Customers care most about speed to integration. They want deeper functionality, delivered faster. Strategy is the modernized technology to get us there.

Q: What’s next for Mortgage Cadence as a company?

MATT HYDREW: Mortgage Cadence is an Accenture company.  The world’s leading provider of IT delivery, consulting, strategy and delivering the New though cloud computing, data security and more. To be backed by this amazing organization gives us a wealth of resource and again, not just financially but people, process and technology that we tap into being an Accenture company.   Mortgage Cadence will continue to differentiate ourselves by providing an end-to-end solution with a single system of record for all parties in the loan origination process. While we won’t stray from one, comprehensive solution, we recognize the need to be nimble in the FinTech era. Through an open platform, you’ll see our API strategy and partnerships expand to ensure we’re fully supporting our clients’ unique strategies in the marketplace.  I think of the Mortgage Cadence Platform as the technology nucleus.  It holds compliance controls, calculations, documents, workflow and really everything that is truly complicated within our loan manufacturing process.  If we as an organization provide those components, reduce risk for our client and simultaneously give them configuration tools, APIs and other user experience components what they do around that nucleus is truly up to them to create that ultimate experience that drives them to a better competitive advantage in the market they serve.

The Mortgage Cadence Platform, our biggest undertaking yet, will guide our company in the coming years. It includes our new Borrower Center and Loan Officer Experience, and will continue with the release of our first integration with the new technology this year!

Collaboration Center is another essential piece of the Mortgage Cadence Platform, as it focuses on what’s truly important throughout the mortgage process: collaboration with all involved parties to get borrowers in their homes faster.  You will see Mortgage Cadence continue to expand on the collaboration technology that’s recently been introduced to the market. It enables all parties across mortgage, title, settlement, and real estate industries to exchange data and documents in a private, invitation-based platform.

We will continue to deliver state of the art technology, but technology alone is not what allows our customers to gain market share – that’s people and process, combined with the technology. As a company, we’ll continue to refine and deliver our enhanced support model, exceptional client experience, and the fastest delivery in the industry.

Q: Speaking about broader industry trends, there’s a lot of talk about the digital mortgage. What’s your take on what constitutes a digital mortgage and what it will take to get broader adoption?

MATT HYDREW: The digital mortgage is not new to us; it’s the reason we got into business in 1999, and the reason we continue to exist today. The digital mortgage serves the borrower and lender by reducing the burden on the borrower, minimizing the number of days to close, while still producing a fully compliant and salable mortgage.   

The digital mortgage exists today (though it will continue to get more advanced), so the real challenge is industry adoption. To achieve broader adoption, the industry needs to accept the fact that the benefits of a digital mortgage far exceed the challenges of implementation. By choosing a technology partner that has industry longevity and a proven track record of successfully implementing digital mortgage technology, lenders can rest assured their efforts will pay off exponentially, as their comprehensive platform will exceed borrower expectations and drive borrower satisfaction in the long run.

Q: There’s also a lot of talk about improving the borrower experience. How can companies like Mortgage Cadence help lenders make that happen?

In addition to our comprehensive borrower research (performed in conjunction with Accenture) detailing key insights when it comes to borrower expectations, our new Borrower Center aids in this pursuit. It is the first next-generation release and brings significant benefits to both lenders and borrowers.

Borrowers enjoy comparable detailed pricing views for each product and loan progress trackers, all in HTML 5 responsive design, giving them mobile, on-the-go functionality.  

Lenders enjoy an enhanced Loan Officer experience centered around a loan dashboard that allows them to take applications, access pipeline details, and better support their borrowers throughout the process. Ultimately, this creates faster closings and bigger profits, as there is less time spent managing software and shepherding loans.

INDUSTRY PREDICTIONS

Matt Hydrew thinks:

1.) Increased importance of trigger marketing to drive origination

With the shift from a refi to a purchase market, attracting new borrowers has never been so important. The competition for every application is at an all-time high. So what will be the key to finding and attracting borrowers in this competitive market? Trigger marketing.

It’s not enough to simply target borrowers. They must be targeted at the right time, when they’re looking to purchase a home. A poorly timed ad or outreach to someone who is not considering purchasing a home is quickly disregarded, making your marketing spend unsuccessful. Instead, trigger marketing involves marketing automation that sends target messages to prospects that exhibit certain behaviors, such as visiting a site with interest rates. Right place, right time marketing will become increasingly important in the next year.

2.) Lenders with data will succeed

Being data-driven gives lenders a competitive advantage. Without data, there’s no way to identify with 100% confidence where the gaps in your process exist. By using data to inform process changes, lenders can quantify progress and improvement over time.

Driving improvements to the borrower experience is another benefit of data-driven lenders.  For example, every $1,000 saved in production costs could be used to decrease interest rates by as much as 10 basis points. By using data to identify gaps in processes that ultimately lead to a lower Cost-to-Close, you can save your borrower money through a reduction in interest payments (and likely attract more borrowers in the future).

3.) End-to-End with API layers will replace best of breed

Lenders have long been debating whether an all-in-one system or one that combines multiple best of breed tools is more efficient. For those that haven’t already, the end-to-end approach will increase in adoption rate in the coming year. Why? Integration is difficult, and often requires more time and money than initially expected. Is it really worth the time spent building, maintaining, and constantly training teams and adjusting processes?

Additionally, one system is much simpler. With everything in one place, there’s only one system to administer, to secure, to pull data from, and to mitigate risk. Now that’s not to say that there’s no middle ground. API layers will also increase in importance, as they make combining best of breed with all-in-one platforms an easier option than in the past.

INSIDER PROFILE

As EVP of Sales, Matt Hyrew leads the sales team in full pursuit of new small, mid-market and enterprise business. He drives growth with both Services Center and Collaboration Center platforms and assists the Client Relations team to close complex client renewals. Also, Matt oversees Sales Operations, Sales Engineering and the new Commercial management department. Matt’s nine-year tenure in sales for MC and his extensive knowledge of our products and the industry makes him the ideal lead for this team.

Matt had been a part of the Mortgage Cadence team for 9 years and has lead the enterprise sales focus throughout that time. He has extensive knowledge of mortgage banking, lending and real estate, coupled with advanced technology solutions.

Accenture software products and platforms develop industry-focused software-based solutions to help organizations meet their business goals. The company’s combination of software and industry, process, and technology expertise helps reduce implementation time and risk. Mortgage Cadence specifically provides financial institutions in the residential lending space with flexible software solutions that drive efficiency, profitability and connected customer experiences across lending channels.