0:04 Hi everyone.
0:04 Thank you for joining us today for another LinkedIn live session.
0:07 It's actually carry on from one of our more popular sessions we had experienced 23 earlier this year, really just talking about demystifying underwriting during the session.
0:16 That experience, they basically talked about some of the best practices, things to share with your teams about using mortgage automation and underwriting.
0:24 And this is actually more about demystifying some of the fact versus fiction type topics.
0:28 So we're happy to have them join us again on this session.
0:33 We're really excited to kind of talk about this.
0:34 So I know you guys have joined us from multiple areas.
0:37 Please interact with us as we kind of go forward.
0:40 Ask your questions that you need to tell us why you're here.
0:43 Tell us what you want to hear about our team standing by to answer any questions you guys have.
0:47 So we're really excited to kind of engage with you, but we're very, very happy to have Michael Hammond, Susie Lindbaum and Kim Hoffman joining us again to kind of again demystify automation in the mortgage underwriting space.
1:00 So if you're not already following us on LinkedIn, please do so.
1:04 ICE mortgage technology on LinkedIn and then that way you can get updates like this and real time information is a great resource for you to use kind of going forward.
1:11 So without any further ado, let me pass it over to Michael Hammond.
1:15 Michael, take it away.
1:16 Welcome to the Demystifying Underwriting Automation webinar.
1:21 My name is Michael Hammond.
1:22 I'm President of Next Level Advisors and host of the Fintech Hunting Podcast.
1:27 Thank you, Ice Mortgage Technology, for bringing this incredible content to our audiences.
1:33 This is the continuation of a powerful and dynamic session during the Ice Experience conference early there this year.
1:41 We have two amazing guests for you today.
1:43 They stole the show at ICE Experience.
1:46 I couldn't be more excited to welcome Susie Lynn Bloom, Chief Operating Officer of Ark Home Loans and Kim Hoffman, Head of Mortgage Operations at Sofi.
1:57 Welcome, ladies, it is great to see you.
2:00 And I can't wait to further our discussion from Las Vegas.
2:06 Thanks, Michael.
2:07 Hello, Kim.
2:09 Hey, Susie, love being here.
2:12 Michael, as always it's awesome to see you.
2:15 Well, it is great to see you guys.
2:16 So you know in Vegas when we talked we had a room full of people and we we really talked about underwriting.
2:24 It was all kind of predicated on the cost to origination continues to rise.
2:29 People are looking for how can they start cutting costs on the back end.
2:33 We started the discussion with the importance of storytelling and really bringing the loan file to life for the underwriter.
2:41 And then we really transitioned to how can automation help do that.
2:46 And what I really want to ask you guys and kind of start the discussion is when we start talking automation, people's alarm bells go off a little bit and they're hesitant, they're scared.
2:58 So Kim, let's start with you.
2:59 What are some of the challenges that lenders face when we're dealing with automation that we really want to overcome and demystify today before we jump into some of the solutions?
3:13 Yeah, absolutely.
3:15 And you know, it's interesting because whenever I bring up automation, whether it's a big group or a small group of people that I'm talking with, the first thing I hear is, oh, you're talking about eliminating jobs in the mortgage space.
3:28 And what about the displacement of people?
3:31 I mean, there's really a fear around the impact for people.
3:36 And to me, while that is a huge concern, I also feel like there is such a burden placed on these people that if we don't use automation, if we don't seek out those solutions, our people will never be able to perform at an optimized level, right, because it is so difficult to underwrite, process, close fund loans.
3:58 And as I've said before, you know it's over 2500 data fields we got to stare and compare and over 300 pages of content typically that we're having to to, to review.
4:08 So to me just giving people these tools will help amplify the impact that our people can actually have on the process, not displace them.
4:19 You make such a good point, and I think that's one of the biggest fears right out of the gate is soon as you're talking automation, it's going to take my job.
4:27 And I think your point about it is a tool that if we lean in and help people do their job better, it's a win win if we really embrace automation.
4:37 Susie, what are some of the other challenges you see as a lender for why people haven't fully embraced some of the new technology, some of the new automation out there?
4:49 You know, Michael, thank you.
4:50 It's, I agree with Kim.
4:51 Number one, that is one of the biggest fears.
4:54 But another thing that I see companies, what they don't do is they don't involve the end user as much as they need to.
5:03 That takes away some of that fear.
5:05 They understand, you know what we're trying to do and how we're trying to help them.
5:11 I think there's two issues that I see.
5:13 One is not involving the end user and you're not trying to solve a problem, you're trying to solve what is your end goal.
5:23 And I don't think a lot of people go into looking at the technology with the end goal in mind.
5:28 They look at what the problem is and they're fixing that problem and the connectivity isn't there.
5:35 Well and I think that really leans into that kind of misaligned expectations, right of leadership may have one view of where this technology could potentially take them and that's what the lender has state or the vendor has stated they could do.
5:50 And then the end users are kind of thrust upon here's some technology and you've got to figure out how to use it.
5:56 And Kim, I think that also leads to poor user adoption.
6:01 Talk to me about kind of user adoption when the technology is just kind of thrown upon the end users to use.
6:09 So I I agree with with Susie.
6:11 So I I agree with Susie on everything Susie says because she's brilliant.
6:16 But from from my seat look, if you're not looking at the target operating model, you're in game and you're adding ancillary technology here and there, it's not solving the bigger problem.
6:30 And so people, if it's only having incremental lift, people tend to believe, well, I can just do that.
6:36 I'm just going to have to do that myself or I'll just continue to do that myself.
6:41 And they don't use it or some do and some don't.
6:45 But there's only incremental lift.
6:49 I also feel like specifically in underwriting, you know if you're giving people tools but you're still holding underwriters accountable through prefund QA&QC results, they're still going to manually do every piece of that work and have a bias towards their ability to to seek and find risk versus dependent on automation.
7:15 So I think you really have to, one, it takes some of that burden off of the underwriter allowing them to trust the automation, trust the solution, otherwise you're just going to have redundancy or low adoption.
7:33 And and Kim that is so true and I know you mentioned this in Las Vegas about that redundancy.
7:38 If the underwriters Commission structure, scorecard is all based off of their set criteria, then as you had mentioned, they're going to just continue to do all of the work themselves.
7:52 And then when you get both on this automation, it was a lot of money spent with very little return.
7:59 So what are some ways we can combat that?
8:03 Well, what I've seen people suggest, and what I think you do is you, you, you, you blind out.
8:09 You eliminate the view of the things that you don't want them doing because you're trusting the automation or you have the automation in place.
8:17 But I want to make sure that everyone understands you don't just set up automation and then just let it free flow and freely do its business, right?
8:26 Somebody in your business unit is responsible for the controls, right?
8:30 Checking and testing the output of automation on a weekly, monthly, quarterly, whatever is appropriate for your organization to ensure the output is exactly what you expected.
8:43 And if it isn't, you're able to catch and tweak immediately.
8:47 Otherwise you're going to have problems and then and and those problems will be in terms of prefunding results, QC results and and worst case scenario, you know is repurchase activity and you want to prevent that but you want to be able to rely and trust on your automation and then have your people paying attention to the most high valued work well And as soon as those things happen people lose faith in the system they go back to their bad habits of I'm just going to do it myself.
9:21 Susie share with us kind of some of your experience along these same lines.
9:25 You know it.
9:27 It's exactly what Kim said you and and actually you said it as well management wants to has a problem looks for a solution comes in with a solution.
9:40 We don't talk to the people and we don't let people be the voice of reason.
9:46 They're the ones that do the daytoday job.
9:48 And so as they're looking at this you have to ask the whys and the why nots, right.
9:54 And people don't go into that depth.
9:58 Once they go into that depth and they use the the end user as part of their voice of reason, then you're going to get a lot more adoption and making sure that they know where that fits in their job.
10:11 They then begin to trust it and then you get the benefit of them going quicker and more efficient.
10:20 You know a a great example of something I just saw.
10:23 We we do a check at the company that I'm at right now and one of the checks is to run our eligibility check which is automated, right.
10:36 But then we ask the same questions over again.
10:38 So you you have to get to where you trust the automation and then stop asking those additional questions.
10:46 And I think a lot of that, to Kim's point is underwriters are getting graded and until they trust that technology, they're not going to do stop all the manual work.
10:58 So you have to get them engaged up front.
11:01 You have to get them comfortable with it and where they trust it.
11:04 So Kim had a very good point.
11:07 You don't just put the automation in and train and then go, you reinforce, you reinforce, you talk about it, you, you know show them the results and we don't go back and always do that.
11:20 And I think that's a very, very critical step that we miss.
11:24 Well, as we talk about some of the things about how we can implement and improve adoption, one of the things I want to make sure that we're very clear on because you guys have a wealth of knowledge and expertise, there is a lot of positive outcomes to using automation when done right.
11:39 Let's kind of go through what are some of those positive things that can happen when you leverage automation and then we can dive into some of the best ways to implement.
11:50 Jim, do you want to start there with some of the things that ways lenders can benefit when automation is done properly?
11:58 Yeah, I have there's such a long list but you know you get speed, accuracy, transparency right people getting to do the work that's really value added.
12:10 And I and I I lean on the the accuracy because I seek out a a manufacturing process that manufacturers loans defect free, let's prevent the defects, not fix the defects.
12:25 And so those are my top ones.
12:28 But ultimately that would all end on an extraordinary consumer experience, but also an extraordinary employee experience as well.
12:39 Yeah, but you just brought up so many good points that I want to make sure that our audience heard those.
12:44 First thing is let's do it right, so that we're not solving for problems.
12:49 We're already coming up with solutions because we've manufactured it properly and we've created better speed, better transparency.
12:57 And then you bring up two other critical points.
12:59 It's not just the borrower experience which we want to deliver a great borrower experience, but it's also delivering a great user experience through our employees because that helps with retention, that helps with adoption, that helps with them buying in.
13:15 And both of you had mentioned trust Susie.
13:17 What are some of the other additional things you would add to what are some of the positive outcomes we can get when we leverage and lean into automation?
13:27 You know, I don't think I have many more than what Kim mentioned, but one of the things that she mentioned I think is so critical doing it right the first time.
13:38 Automation allows you to do it right the first time.
13:43 And think about that down the line.
13:45 Not only if the if a processor or an account manager has that automation and does it right and it helps the underwriter do their job better than the underwriter does it right, It helps the closer then it helps post closing.
13:59 So the automation as it goes through and if they trust it and it does the exactly what we need it to do, which if you plan it correctly at will it the employee retention and the satisfaction of both the employer and the customer because they're going to get better service and faster service is just exactly what you want with the automation.
14:28 And so that's why it's so important to spend that time up front.
14:33 Don't rush it.
14:34 Do it right and you will get the results that you want.
14:39 Great point, Susie.
14:40 Can I add, Michael, can I just add cost?
14:44 Because the other day, you know, I've been going off, well, you know, now it costs $12,000 to originate alone.
14:51 And then the other day I saw, well now it's up to 13,000.
14:55 You know, that's an extraordinary amount of cost involved in manufacturing alone.
15:02 But I also think that mortgage lending is basically the Ultimate Team sport.
15:06 I mean when you think about the constituents in, in our ecosystem, right, you have the consumer, you have a loan officer, you have processors, closers, funders, underwriters and ultimately all.
15:21 And then you have the investors who ultimately are going to monetize the transaction for us.
15:27 And so when I think about today, all the manual processes, it's kind of mind defined for me that people want to still lean on manual processes when you have this much going on.
15:40 And in a purchase money market, you know we've got 30 days to close and people say, oh we've got 30 days to close, well technically you have 21.
15:48 Automation to me is the only way to finesse this process into that 21 days where you do yield speed, accuracy, transparency, experience and cost.
16:02 It's just when you can, you can dig a ditch.
16:04 I say this all the time.
16:05 You can dig a ditch with a with a shuttle or you can do it with a backhoe.
16:10 I know that most people would prefer the backhoe.
16:14 That is so very true.
16:15 And I have, Kim, you brought this point up earlier and I want to drive deeper into it is when you talked about one of the things that I think is adding to the cost is when people just keep bolting on these little add on technology tools that don't really solve for the big problem.
16:33 How does a lender go about evaluating technology and looking to solve the big problem and not just adding more cost and more tools to the equation?
16:46 Well, I I may be unique in my view, but I don't think you start with evaluating the technology.
16:52 I think you start with evaluating your core processes, your manufacturing platform.
16:59 What do you want to say to the to the world, to the consumers, to the industry about what you do and how you do it and then you seek out solutions to help make that or to make that a reality.
17:15 I think that that's what part of the challenges that people have today.
17:18 We are overwhelmed with the amount of vendor opportunities and solutions that are available.
17:25 But how do you knit that together or I think it becomes incredibly complex if you try to knit it together.
17:32 Verse this is my target operating model.
17:35 From the time a consumer engages with me until the time I deliver my loan into the secondary market.
17:42 What do I want this process to look like?
17:45 What do I want the experience to feel like?
17:48 What do I want my milestones to be at each toll gate and then seek out what solutions make that become a reality.
17:59 And by the way, I think that's a more simplistic way to look at it and try to get you know all the way kind of a nose to tail experience and technology versus adding on all these ancillary.
18:11 And by the way if you have a legacy platform, you'd still do your target operating model and then seek out the solutions that would optimize your existing world.
18:23 I'm not advocating stop what you're doing and go buy a new platform.
18:27 But technology overlaying bad or underperforming processes just speeds up bad or underwhelming processes.
18:37 That is so very true.
18:39 And we see it over and over, right?
18:41 If there's a bad process and you throw technology into it, it just may make that bad process happen quicker, faster and more often.
18:52 Yeah.
18:52 So, Michael, that's that's actually where I was going to go.
18:56 What, you know, not only look at the process, but you know, the milestones that Kim talked about.
19:03 Do you need those milestones?
19:06 That's one thing that I think we forget to look at is do we need to do everything that we do?
19:13 Do we need to do it in the order that we do it?
19:16 Can we do it together So you're not so linear in your process.
19:22 Those are things that I think we forget to look at.
19:25 We look at our existing process and we say okay, we need this technology.
19:30 And to Kim's point, there's a lot of vendors out there.
19:32 There's a lot of shiny objects and people want to grab this and this and they look at their current process versus really looking at that in in goal that we want and do you need all those milestones and do you need all those things that you do.
19:50 It's always amazing to me to look at a company and really dive deep and find probably 10 things that they really don't need to do that they're doing today and still getting that end result.
20:06 And so I think that's one thing that we miss is we try to take really new slick technology and apply it to an old process and we've got to stop doing that.
20:20 We certainly do and I I think we we've all seen that in a number of organizations of.
20:25 All they do is map out their current process and then try to apply the technology to that.
20:31 And then they're surprised that they're not getting the uplift or the cost of reduction.
20:35 Kim, I think you phrased it so well when you said you know what is your ideal operating model start there.
20:42 How does a lender go about defining that?
20:45 And then what I really want to get into is we wind down this webinar is once people identify that ideal operating model and they find the right technology, what are some of the big lifts that they can expect when they do this and do this right, Kim, you can go first and then I'll come in the first part and then I'll pun it to Susie.
21:09 And I bet Susie would do the same thing because, you know, I think she and I are both big proponents of drilling down into the current state.
21:19 You know, there's I always laugh when there's there's the work you think that's being performed and then there's the work that's actually how it's being performed, right?
21:27 And the only way to truly understand processes and what's happening is to just tear them apart.
21:35 And I like to go level 1-2 and three to truly understand how the work is being done and then get that on paper and understand what you can eliminate, automate and maybe even right shore.
21:51 You know maybe some of this work could be done offshore at night while your people are sleeping, right.
21:57 And and that's how I think the the, the the easiest way to know where to start is understanding your current state and then defining out what you want that to truly look like.
22:09 I think I told you guys before, in the past life we did a time study.
22:14 It's 16 hours worth of work, fingers on keys to originate a loan in operations and yet it takes us on average 45 days and a lot of that is wait time.
22:26 We need to eliminate the wait time, give our members a great experience or our consumers a great experience because we're leveraging automation and asynchronous processes in order to manufacture loans.
22:39 And then I'll kick it over to Susie because I know she's got great ideas.
22:44 You know, Kim, you, you actually made me think of something that I hadn't thought of before.
22:49 That I think is really important is really important.
22:53 It's not only what the automation can do, but the output of that automation that we don't always look at because the output could be different than what you're teaching your employees or quite honestly, or what you're giving your customer.
23:11 And we don't always look at that.
23:12 Let's take an approval certificate or an approval letter.
23:17 How is that formatted?
23:19 Is that formatted that the client knows what they need to do or does it?
23:24 Is it all jumbled up with what the company needs to do and what the client needs to do, whether it be the customer, whether it be a broker or correspondent?
23:34 Those are things that you have to look at not only what that technology does, but what the output of that technology is.
23:42 Is it in a language that an underwriter can understand, that a closer can understand?
23:49 Or is it written in a technical language and you know it?
23:55 It differs for everybody, but a lot of times we have our IT departments writing the output and we again, we need to really talk to the end user and make sure that they're involved and what, you know what works for them.
24:12 I'm a big one on focus groups.
24:15 A lot of people don't like focus groups because they think they're negative and they're and it's how you approach that focus group.
24:22 And I think that's really important.
24:23 When you bring technology on, you don't go in and say what's wrong and what do we need to fix.
24:29 You go in and say what can we do better, help us do you know, decide what we can do better.
24:35 Let's look at it from that aspect, not solving necessarily a problem because you don't want to solve a problem on a bad process.
24:43 You want a new process that is going to flow very well and use that technology Very well said.
24:51 I just want to add on to what Susie was saying.
24:55 I use almost every time I do this.
24:58 I use a third party to help me with this.
25:02 Third parties, consulting firms, solutions architect, have a way of helping you surface what it is you're doing today.
25:10 But they don't have a bias, They don't have a love for your current state, right?
25:15 They're not going to cling to how you've always done it or how you feel good.
25:19 It's just going to be them facilitating you through a process that helps you get your current state and then helps you think about what your future state could be.
25:31 And once you eliminate all the bias and you think about clearly the art of the possible, it becomes very clear as to what the next steps would be.
25:42 Yeah, I agree.
25:43 A friend of mine just recently did a podcast on The Voice or Reason and that's what you need in these.
25:50 In these groups, you need a voice or reason that isn't biased either way.
25:55 That actually really forces you to reason out why you need this and how you approach it.
26:04 You guys make so many good points and we can keep going on.
26:06 I know we've got to end soon, but I want to cover a couple of other things as we're winding down.
26:11 I think we all agree that if done right, leveraging technology and automation can be a huge advantage and even a competitive advantage in the market.
26:22 When done right, it can help lower cost, it can create greater efficiencies.
26:27 What are some ways that you guys go about as you implement new technology to get buy in from the staff?
26:33 What are some of the ways that you get people excited about this new technology and this new automation and solution?
26:40 Kim, I'll I'll start with you.
26:43 Well, I would tell you that change management is critical to anything that you deploy that's new, right.
26:51 And it starts with the why you're doing something, the expected impact of it.
26:59 So it shares with the the users what that positive impact will be with them.
27:06 And so I think that's critical.
27:09 But I'm also going to say that while you share with them the you know, The Who, what, why and when and the impact of it.
27:16 It is critically important that you test the output of these new deployments so that your people, when you start this, they will all adopt it and use it.
27:28 And in 30 days they will move back to the way they've always done it.
27:32 If you don't have a way to keep them on track and a way to report out the results and show them the results of the technology, Otherwise in 90 days it'll be abandoned and you will spend a ton of money and a ton of time for half the people to do it and half the people to nod.
27:49 And those that are doing it are doing it every one of them a different way.
27:53 So I think a true good change management protocol that can be managed and measured.
28:00 It's a great point about the managed and measured aspect of that.
28:04 Susie, what would you add to that?
28:08 You know I the the end result as Kim said is is really important to do the testing.
28:13 But again it's getting the end user engaged early and making sure that they know they have a voice because engaging them doesn't necessarily do it.
28:25 You have to get them to feel that they can, they can speak and be listened to.
28:32 And you know that's that's one of the key parts is that we do a lot of technology without engaging them.
28:41 And to Kim's point, they go back to their old habits because it's too hard.
28:45 They don't understand why what this technology can do for them and so they revert back to the old process.
28:53 So again, looking at the end result that you want, not necessarily looking at your current process flow, looking at what you want to become and engaging the end user upfront and giving them a voice.
29:10 You guys shared so many key insights.
29:13 Go ahead, Kim.
29:15 Well, I'm just going to say Susie's absolutely correct.
29:18 You know, if you don't make people feel part of the build, then they will feel like it's something you're putting at them versus for them.
29:26 Yes, absolutely.
29:29 And you guys shared so many key insights.
29:31 I know people are going to go back and listen and take notes as we wind down the session
29:36 What's one or two tips that you guys would leave people with so that they can embrace automation and really start seeing the fruits of it.
29:43 Susie, I'll start with you.
29:44 What's one or two key takeaways that you would suggest for lenders so that as they brace automation they can really leverage it and maximize its usefulness.
29:55 One dig deep, Kim talked about that earlier and Kim and I both dig deep.
30:00 When we look at anything, why is why is this process broken today?
30:07 What do we want our end result to be?
30:10 So dig deep and figure out what the real issue is.
30:13 Talk to people.
30:15 Engage with your staff and understand what hurdles they're going through and get them as involved with this new process as you are and this new technology as you want.
30:29 You know you are and they will.
30:31 They will engage.
30:35 So I I would recommend education.
30:40 The technology is happening.
30:42 We can't uninvent what's already been invented.
30:45 It's coming.
30:46 It's here.
30:46 It is only going to get more robust, more accurate and more prevalent as time goes on.
30:54 We can't fear it. We have to embrace it.
30:56 And the easiest way to do that is to go out and become educated on it through YouTube or through the mortgage bankers associations or any of the other channels.
31:08 But you cannot wait for it to happen to you.
31:11 You need to lead it in your organization and if you don't like, change the mortgage indices.
31:20 That's probably a head scratcher for me, how you pick this industry.
31:24 But change, you've got to be nimble and you've got to embrace brace change because you will be left behind by those who are going to be early adopters and who are thinking about how to deliver a truly modern mortgage experience.
31:42 On behalf of our industry, I can't thank you guys enough and I'd like to thank ICE Mortgage Technology.
31:51 They're a great collaborator with us on all of these initiatives.
31:55 And I think when we share these ideas and insights, we can come together as an industry and continue to kind of move the industry forward lower cost and really leverage technology to its maximum benefit.
32:08 Thank you so much for being on this webinar today and sharing your insights.
32:14 Thanks, Michael.
32:15 Bye bye, Kim.
32:17 Bye Susie.
32:18 Talk soon.
