It wasn’t long ago that scribes were writing the obituary of the mortgage underwriter.
And yet, during the COVID-19 pandemic, the underwriter has become the most sought-after professional in the mortgage industry. Some underwriters were commanding five-figure bonuses on top of six-figure salaries. The problem is, there just aren’t enough of them.
That didn’t change the fact that mortgage lenders had hundreds or thousands of loans to process a day, and an underwriter can only move so quickly. It was apparent that the origination volume – even at a record high – was being artificially constrained because lenders couldn’t keep up. Many lenders took 60 days or more to underwrite and deliver a loan.
Thomas Showalter, the CEO and founder of mortgage AI firm Candor, says he has a solution – automating a significant part of the underwriting process, freeing them up to tackle more loans.
According to Showalter, Candor has reduced the cycle time by an average of 18.7 days, processor productivity improved 20% or more, and the underwriter touches reduced from 2.7 to 1 per file. The 6% pull through lift added $4 million in volume for every 100 loans closed, the company claims.
Showalter says he doesn’t want to put underwriters out of a job. Quite the opposite. He says he merely wants to help them become more productive.
His self- and angel-funded mortgage tech company passed its 50,000 loan stress test in the fall. They’ve already got a top five originator as a client, and a few others in the top 25.
HousingWire caught up with Showalter to talk about existing mortgage tech, the future of the underwriter, the complexities inherent in automating mortgages, and much more.
This interview has been lightly edited for length and clarity.
HousingWire: Could you walk us through how the product works? Is it like a crawler? How much of the loan application can Candor automate?
Thomas Showalter: So the way we distribute Candor is the product is through your lender’s loan origination system. Let’s say they’re an Encompass user. That’s about 40% of the users out there right now, and we’re affiliated with Encompass. So they would go into the Encompass, they would click on Candor, it will pull up their loan and then they would go within Candor.