The servicing side of the mortgage business has gotten more attention since higher rates arrived and a forecasted recession has made a rise in distressed loans more likely in 2023.
"The data is already showing delinquencies [by some measures] are rising, and inflation is compounding that," Todd Mobraten, co-founder and CEO of technology vendor OrangeGrid, said in an interview. "Servicing groups are gearing up to place new technology and to handle a new wave of delinquencies, and the number one concern is how to manage the exceptions and the staff to do so."
Mobraten's company and other technology providers have started to bring new servicing products to market, with three introduced just in the course of the past week.
OrangeGrid's new software aims to help with vendor management in the default space, Black Knight's new offering is designed to make it easier to customize technology that interacts with consumers, and another technology product available from ZestyAI helps size up collateral risk, with the eventual aim of helping servicers assess the probability a property could be affected by various natural disasters.
Below we dive into the details on each product.
New APIs aim to help customize user experience
Black Knight is launching new application programming interfaces through its new Developer Portal, and the first of them have been made available for its consumer-facing Servicing Digital software.
"We have over 27 million borrowers interacting with Servicing Digital on a regular basis, but we know our customers want to customize that exchange of information with their own client base. What these APIs do from a servicing perspective is allow a servicer to create their own experience in their own mobile app," said Sandra Madigan, executive vice president at chief digital officer Black Knight, in an interview.
The technology also makes it easier for mortgage lenders starting to shift their attention toward servicing.
"If you have focused all your digital dollars on the origination experience, and you're not quite ready to launch Servicing Digital but you want to have a few key elements that you want to append, if you make your app your experience with these APIs, you can do that now," she said.
Eventually, Black Knight plans to roll out the API across the full breadth of the mortgage cycle.
"Next will come some APIs specific to servicers that have to deal with loss mitigation. You'll see customer service APIs come out. This is really the beginning of us moving our industry forward by creating that open ecosystem where that interchange of data can be easier for everybody to accomplish through APIs," Madigan said.
Creating an environment for collaborative work with vendors
OrangeGrid has released automation that connects third-party providers to its default suite of technology products.
"We created an architecture for whatever type of vendor you're working with. The only rule is it has to be a business," Todd Mobraten, OrangeGrid's co-founder and CEO, said in an interview.
The new vendor-management technology, which is called GridSource, adds to a broader set of business-to-business automation the company offers aimed at helping mortgage companies manage their workflow, starting with servicing.
GridSource was designed to address the challenges involved in making secure and efficient connections with third parties servicers work with, said Mobraten.
"We built a specific environment we call an org that we could parse out, and we can bring in third parties to share this environment," he said "We create a security between that org and the users in our customer's org and their user cases, allowing them to come in and receive tasks."
The move is part of OrangeGrid's ongoing efforts to more efficiently manage a piecemeal mortgage process using business-intelligence driven automation to supplement or replace existing platforms.
"We do intend to eventually build out an origination and refi suite as well because [lenders] have the same problem around a fragmented ecosystem, and our customers have asked us to do that, but we've gone in order of what we've thought was going to be a priority," said Mobraten. "At this moment, we have a demand for default loan servicing, but once we kind of get our wheels spinning, we will start to generate the suite for origination and refi."
Bringing insurance-industry proptech to mortgage companies
Zesty.AI, a provider of artificial intelligence-driven property risk analytics used by the insurance industry, has partnered with Black Knight to make its automation available to mortgage servicers for the first time.
"We are proving that the models that we have built for the property and casualty insurance use case are widely applicable for the $12 trillion U.S. mortgage servicing market as well," said Attila Toth, founder and CEO of ZestyAI, in an interview.
The technology aims to help servicers size up risks to the collateral securing loans in their portfolios using various data sources, including information gathered about properties remotely through images.
"If they have an aerial image, or if they have a building permit, they cannot use that as an input. It's an unstructured data source. So we are using machine learning to tease out structured data,' said Toth.
Eventually, Zesty.AI plans to offer mortgage companies the analytics that allow insurers to size up risks to properties from natural disasters like Hurricane Ian or wildfires.
The analytics will, for example, calculate the annualized probability that a property will be in a wildfire perimeter based on location. It can assess the likelihood it might burn if so, based on the characteristics of the structure involved, including the pitch of the roof, the materials it's made of and whether the home has overhanging vegetation.
"The first step is providing [mortgage companies] with property valuation and property characteristics, and then we will take it to the next step when we are going to also provide climate risk metrics," said Toth.
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