Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Brian Fitzpatrick, president and CEO of LoanLogics, to talk about the challenges facing lenders and the ability of flexible technology to meet those challenges.

Q. Our industry is undergoing tremendous change. What are some of the biggest challenges we are facing?

Brian FitzpatrickA. We are dealing with two very specific dynamics we have not dealt with in the past. The first is that the Millennials are starting to infiltrate the housing market and these are kids that have grown up with computers in their hands — literally. They are not going to accept the status quo or the same old way of doing things. They will demand a much different experience — that’s one uber trend – and it is already taking place and will be accelerating over the next three to five years in particular.

The second is this: We are in the most difficult regulatory and compliance environment that has been experienced in this industry ever. Not just in a long time — ever. With respect to Know Before You Owe, or TRID, this has really uprooted and disrupted many different organizations relative to their workflow. We have seen lenders exit the business because of this. They have loans they can’t sell because of compliance risks associated with TRID, and we’re not done yet as far as regulation. I don’t care whether it’s a republican or democrat who wins the White House, the regulatory environment is here and here to stay and so is the loan quality imperative.

Q. Considering those factors, where do you see the future of loan origination?

A. It’s about nimbleness — the ability to react quickly to very significant changing dynamics. The problem with monolithic systems is that they are not flexible in terms of a workflow environment or from a rules perspective. It’s very difficult for lenders to modify on the fly how a loan is originated in their organization. It requires them to go back to their origination system and wait for customization, or have someone in their own IT department make changes if they can be configured. The future demands a flexible workflow and flexible rules. It demands that certain things that are critical to the mortgage asset are accessible via an API, or application programming interface. This is a different mentality than we’ve seen in the past, with lenders using brittle, inflexible monolithic-type systems.

Q. How can LoanLogics help lenders reduce the cost of compliance?

A. Lenders have to disclose every detail associated with a mortgage loan, which requires a lot of information from a borrower, but as we just talked about, Millennials have little patience for those things. LoanLogics has the ability to capture all of that data from the source, taking documents in electronically and pulling data off of those documents.

We can let borrowers know very quickly if the information is complete. And this happens behind the scenes in a matter of minutes and doesn’t require somebody sitting there with a checklist going through and comparing data and documents.

Our Intelligent Data Extraction and Automation (IDEA) works across all origination channels: retail, wholesale and correspondent. Our data and document hub gets data from other sources instead of only from a document — through a connection with banks or from the IRS directly. This is the future of where things are going: the capability to process data intelligently.

The tasks that a human has to do today are what drive the cost of compliance up very significantly. With the strict underwriting of today, an average production underwriter can do about 1 to 2 loans per person per day. With our technology we are able to move that upwards of 4 per person per day. In correspondent lending due diligence, the production is doubled and possibly tripled over legacy systems. These are all significant increases.

Q. What role should business intelligence play in this environment?

A. Business intelligence is extremely important because if used properly, BI can use data collected throughout the loan manufacturing process to detect trends and patterns in manufacturing defects. BI can tell us not only what mistakes were made, but it can also identify the actors in the process who are creating the issue, which makes the data actionable.

For example, our system pulls signatures out of documents and compares them side by side, which enables auditors to quickly detect signature fraud. In one instance our audit identified that there were a number of loans that had signature anomalies, which all came from one loan officer at one branch. It was discovered that the loan officer was forging signatures on disclosure documents. Most origination systems are not designed to detect the granularity of that kind of error.

If you had nine or 10 human auditors looking at different files, they would never be able to connect those dots and see a trend. Business intelligence is the great equalizer.