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Beyond the "Innovation Thing.” It’s time to deliver.

As we celebrate Jimmy Carter’s life, thoughts turn to another underappreciated one-termer, George H.W. Bush and infamous “vision” gaffe. In response to criticism about lacking Reagan’s grand sweep, Bush retorted that he wasn't good at "the vision thing." Much pilloried at the time, history has been kinder, remembering his pragmatic leadership in ending the Cold War and laying the foundation for our world order of the past three decades. Showing not telling, Bush got things done.


The mortgage industry today finds itself at a similar crossroads. For the past eight years, we've been captivated by the fintech "innovation thing." Buzzwords like "disruption" and "digital" have dominated both conversation and spending, promising to revolutionize the industry. By our estimates, the industry has spent upwards of $300B towards this goal. Yet, established players have often relegated these initiatives to the sidelines, treating them as (unnecessarily) risky and experimental. Human behavior shows what’s optional tends to get disregarded, as the sketchy adoption and unsatisfying outcomes amply shown.


But just as the elder Bush inherited a world in need of action, mortgage is facing a market in desperate need of solutions. Housing affordability is at a crisis point. Interest rates remain stubbornly high, especially when compared to existing homeowners’ fixed rate advantage. The traditional mortgage process remains cumbersome, frustrating for many, and expensive to all. The time for “visionary” promises is over. It's time to deliver.


We need to move beyond proof-of-concepts and pilot programs and focus on tangible results.


First, let’s not worry about the exogenous matters, those myriad issues this industry faces that we have little control over (e.g., rates, AUS, GSE de-conservatorship, etc.), and focus on what makes us stronger and agile, regardless of industry climate.


We fundamentally need to do our job more cost-effectively and efficiently in an environment. We must be better at serving our customers up and down the food chain. On the borrower side, we need to maximize their lifetime value when the periodic refinances are no longer given. On the investor side, we need to deliver on an expanding span of requirements as loan variation increases.


What steps to take?


Step 1: Acknowledge that the GSE AUS controls the future of any innovation whether the GSEs are under conservatorship or not.


Step 2: Integrate the promise of fintech solutions into core lending operations in better ways.


Step 3: Determine how to deliver the customer a new (and better) financial journey despite the AUS control


Step 4: Building out the full product capabilities that provide solutions at-scale (all channels, all journeys) and within decreasing costs


Where to begin?


Fortunately, the nascent innovators from eight years back have also matured, not only in service delivery but also in appreciation of the distinct challenges of the mortgage use case.


Point of Sale (PoS)


The ability to import bank data drove fundamental change in how we engaged borrowers. AccountChek enabled the first version of Rocket Mortgage to become a reality.  Plaid and Finicity scaled the point of sale capability to fuel a digital mortgage application. 


The next step must be more than improved data collection. These days, engagement is hygiene, as evidenced by the bloodbath amongst the incumbent PoS products.


The “point” of a PoS necessarily needs to be the orchestration of intelligence. Analytics. Insights. Proactive. Ongoing.


An example of one platform moving the industry toward more of an up-funnel, ongoing analysis strategy is Finlocker. Finlocker must be distributed by the lender or partner-brand but it provides borrowers a real-time view of creditworthiness. We expect larger players like Corelogic and Experian to get into the up-funnel PoS game in a bigger way in the near future.  


One area that most people do not think of when thinking of point of sale is servicing.  Yet, Ardley is providing real-time portfolio pricing for all customers with a mortgage offer that can be turned into a loan application within the marketing call to action.  Point of sale takes on a whole new meaning when large servicers and banks are using proactive offers to generate refinances. Any company looking to win refinance business in 2025 needs to account for early mortgage offers from the existing servicer, if the company-servicer is not already one in the same.


Consumer data verification


There’s a common mis-perception that income and employment verification (VOIE) should progress in a manner similar to asset verification (VOA). The reality is that bank consolidation has greatly simplified asset verification while income and employment trends are moving the opposite direction, towards more complexity and variability.


In response, there is a race among platforms to be the go-to data verification tool for lenders. VOA players leverage their expertise in bank data to promote direct deposit driven VOIE. Customer-credentialed innovators like Truv and Argyle have received Day 1 Certainty approval for their tech-driven approach.  And, uniquely, Truework has developed a multi-technology strategy wrapped inside an intelligence platform that seeks to provide the truth regardless of the approach. 


From point-type to full platform solutions, there are two massive incentives.  Create consumer ease-of-use by eliminating obstacles to unlocking data access. Second, provide lenders the consumer consent capability and single vendor to solve this critical underwriting need.


Digital closing


Digital closing is a prime example of visionary promises giving way to lack of adoption. Faster loan delivery. Better consumer experience. Clean audit trail. None of those were, in and of themselves, strong enough benefits to overcome the human resistance.


Opportunities abound in areas like closing and post-closing for what the industry might otherwise call “innovation” and what we’re calling tangible progress.


The catch here is that there have been many attempts at solving the fully digital mortgage process.  Whether it’s digital closing platforms or digital mortgage with closing platforms, the adoption around fully digital remains elusive. The brand names are familiar - Notarize, SnapDocs, Stavvy, nCino and ICE - and the demand did not follow. As competition increases and differentiation matters more, digital experience is likely to finally find an audience.


What’s Next


The time is now for someone to coordinate disparate improvements into a coherent process that puts the competition on notice.


In the rhyming stanzas of history, eight years ago, our own professional journeys took us into innovation leadership roles at Rocket Mortgage and Caliber Home Loans. We saw the promise of innovation, yet our failure to realize the opportunity at the core of each company’s operations led us to other efforts - startups, advising and academia.


The "innovation thing" has laid the groundwork for a better future. Now, it's time to channel the spirit of those who respect “the vision thing” and also know how to get to work. Let's move beyond the hype and focus on delivering real value to customers, lenders, and the housing market as a whole.

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