The Intercontinental Exchange (ICE) owns and operates some of the largest exchanges in the world including the New York Stock Exchange and the London Exchange. The company’s strong history of transforming illiquid markets into liquid and exchangeable markets continues with its recent acquisition of Ellie Mae, bringing the company together with MERSCORP Holdings and Simplifile. Through these acquisitions, ICE formed ICE Mortgage Technology which aims to make the process of originating a mortgage streamlined and standardized so that mortgages can be more easily bought and sold on the secondary market.
At the Future of Real Estate Summit, Qualia CEO, Nate Baker, sat down with ICE Mortgage Technology President (and former COO of Ellie Mae), Joe Tyrrell, to discuss the path toward a fully-digital mortgage process.
Technology is no longer the roadblock to digitizing the mortgage process
The process of buying a home can take upwards of two months, yet the process of purchasing a luxury car that could be of similar value can take just a few moments. “It’s not the technology that’s holding us back,” Tyrrell said. He pointed to two areas that are holding the industry back from a more efficient and transparent process.
- The secondary mortgage market, which is highly regulated, has not accounted for technology advancements of the past decade.
- Change has been slow due to the perceived risks of automating processes that carry a great amount of risk and responsibility for a lender.
“The ability to trust automation is a pretty big leap. One thing that I think will help to move the needle is the incremental adoption of technology,” Tyrrell said. He added that ICE Mortgage Technology is focused on delivering a spectrum of capabilities. “Some lenders will be comfortable with [fully-automated processes]. Others will be less inclined to trust the technology until they can get a better sense that it’s not automating a bad process,” he said. “This will be far more of an evolution than a revolution from a lender perspective.”
Transforming back-office processes to improve front-end consumer experiences
The conversation around digitizing the mortgage process often assumes digitization starts and ends with the consumer experience. In reality, what will truly drive forward the ultimate consumer experience is back-end digitization that enables consumer choice and high-touch experiences.
“I think [consumer preference] will be different for different people,” Tyrrell said. He pointed to a recent survey by his team that found that even millennials who grew up in a digital age still expect human touchpoints and face-to-face conversation at certain points in the mortgage process.
Instead of focusing solely on digital front-end touchpoints, ICE Mortgage Technology is focused on evolving away from legacy forms and document-based processes. “We’ll become less reliant on documents and more reliant on data within those documents,” he said. This will enable things like real-time origination and other back-end processes that ultimately improve the consumer experience. “As a customer is entering their information, that loan [will be] fully-underwritten in real-time,” Tyrrell said. “This will not only allow us to get to Amazon-type of experience for the consumer but also to create greater confidence in the quality of the origination for the lender as well.”
Technology that automates the “messy middle” will be the greatest opportunity for lenders
This year, due to the need for social distancing during the pandemic, eClosings exploded in growth. “To get to a true eClose you have to do a lot of collaborating,” Tyrrell said. He said that this “messy middle” is where many lenders will see opportunities to automate for a true return on investment.
Automating the middle processes is where Tyrrell believes there will be real value for lenders. This starts with breaking down the manufacturing process to be more task-oriented. He pointed to artificial intelligence-based tools that can perform many of the underwriting functions. “Underwriters are hot commodities,” Tyrrell said, adding that enabling mortgage underwriters to move away from mundane and rudimentary tasks with automation can open them up to more value-add tasks. “Lenders still have the safety of an exception-based process to kick things into the queue for review,” he said.
By automating the middle-point tasks, Tyrrell said that lenders will have more flexibility in their margin and more opportunity to decide how to leverage that margin to lower their rates and capture more business.
To watch the fireside chat with Nate Baker and Joe Tyrrell in-full, click below to stream a recording of their conversation.