What analog mortgage firms can do to enable remote work fast

Keeping the mortgage machine in motion amid a global pandemic has pushed tech vendors from the periphery to the vanguard. Inherently, they were better prepared for this than many a mortgage firm — and they’re seeing record volumes of subscribers as a result.

Some are recording an exponential increase in business — AI Foundry and Blend each reported year-over-year growth of about 400% in March, others reported 300% quarter-over-quarter increases and even 100% monthly jumps from February. Ellie Mae's platforms totaled 207,723 closed loans in March 2019 only to see that figure balloon to 363,585 in March 2020, a 175% annual rise.

Coronavirus and the subsequent social distancing measures aren’t the only reason for the spike. The Federal Reserve's interest rate cuts always bring increased activity. The most recent of those reductions resulted in the lowest rate in over 50 years and came with a spike in refinancing, sending originators scrambling for digital solutions.

"While there's the demand and need to embrace some of the solutions that allow for better virtual engagement, right now it's unprecedented for lenders on the refi side," said Joe Tyrrell, chief operating officer at Ellie Mae. "They're just trying to keep their head above water and don't necessarily have the capacity to start to adopt new solutions at this time."

AI Foundry, for one, processed several thousand loans a day for its customers since mid-March and Stephen Butler, founder and president, expects that volume to get bigger.

"All of our customers are having record days and record weeks for new applications and for closings. We're getting quite a bit of pleas to come in and help right away," he said. "They've got quite a pipeline, double and sometimes triple where they were a year ago in terms of a loan volume."

However, the exponential growth comes as a double-edge sword for lenders trying to keep their heads above water. Current processes and workforces can't keep up and they need to make sure nothing falls through the cracks.

For lenders to meet demand in the meantime, they need to focus on three things, according to Barry May, Blend's head of customer success: removing all the unqualified or low intent borrowers from the pipeline prior to submittal; triage those leads that are most likely to close based on borrower intent; and reduce all the processing work by eliminating any unnecessary tasks.

The crisis created an all hands on deck environment where industry parties cooperatively work toward the same end.

Prior to the outbreak, a substantial amount of lenders saw digital tools as operational efficiencies or boosters to consumer experience. Those may have been on their 2021 roadmap and suddenly, it's the first or second thing they need to deal with at the moment, explained Aaron King, cofounder and CEO of Snapdocs.

Offerings like artificial intelligence and machine learning provide avenues to cut through mountains of paperwork and automate mundane tasks. But unless they can be applied or return the investment quickly, they can be viewed as too disruptive and moved to the backburner.

Just as plummeting rates rushed lenders with loan demand, the demand for these out-of-the-box answers rushed vendors. To get on the same page, vendors provided streamlined and turnkey iterations of their offerings.

Ellie Mae revamped Velocify into a basic version called Lead Manager Essential. Black Knight rolled out a preconfigured approach, allowing its customers to add features after it gets the standard technology up and running.

AI Foundry repackaged its cognitive bot into a plug-and-play variety for document indexing and filing post-closing packages — saving the loan processors hundreds of pages of manual work. It’s a solution that brings elastic capability, easily scaled to match influxes of business.

It normally takes up to a year to implement artificial intelligence and train employees, but AI Foundry's new bots only take a few days to deploy. Blend announced the pilot version of its digital end-to-end closing product in early February, but mobilized internally and accelerated having it ready for market ahead of schedule. Ellie Mae's revamp took six weeks.

Lenders run complicated businesses. Many have multiple branches, in multiple regions, with multiple loan products. The move from a paper-based system to fully electronic comes with growing pains over months, but this sea change revealed readiness and alignment make it easier.

"We saw onboardings taking two or three months to get a lender from their first transaction to all of their closings going through our platform," King said. "What we've seen is the willingness of the lender to streamline things on their side, to do their part of that process a hell of a lot faster. Most lenders we've brought on in the past month have been ramping up in a matter of weeks."

Tech companies providing open lines of communication help to smooth the learning curve.

During this time, Black Knight hosted multiple webinars a week, released white papers, had an all-client conference call for questions, demonstrated their products, and issued procedural step-by-step instructions on how to accommodate new requirements like the CARES Act, according to Shelley Leonard chief product and digital officer.

Many of the software developers regularly perform stress tests on their own systems, which has allowed them to easily switch gears to working remotely.

At Black Knight, employees ran through an emergency scenario as recently as January. Employees practiced all daily tasks in remote settings, the executive team tested all lines of communication and they made sure all clients could still support the systems, according to Chief Risk Officer Peter Hill.

"We had our pandemic testing in January, it involved our employees going through scenarios and what we need to do," he said. "Recognizing [the outbreak] was getting significant, we stopped all travel in February. Ongoing communication is really critical. In March we worked on work-from-home models and crisis management team meetings."

Lending platform Roostify runs simulated zombie apocalypses — effectively replicating a pandemic disruption in which everybody works from home — on a regular basis. The last test was completed in January. The pandemic has proven the value of the cloud and the ability to scale up and down on demand, said Rajesh Bhat, CEO and cofounder.