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Fintech

Driving innovation

Companies capitalize on data to transform mortgage and real estate

Eight years ago, HousingWire recognized its first Tech100 winners in a world that was just beginning to realize the possibilities technology could offer the mortgage industry. 

Click here to see the 2020 Tech100 Mortgage and Tech100 Real Estate winners.

Five to 10 years ago, fintech was nothing more than a buzzword being floated around as a distant goal. Fintech companies were nearly unheard of. We never imagined artificial intelligence could drive lending, or that data would propel the housing and mortgage industries to new possibilities.

Less regulation

For years as other industries progressed in their technological approaches, the housing industry struggled under the thumb of the newly imposed Dodd-Frank Wall Street Reform Act, the newly created Consumer Financial Protection Bureau and an overall increased presence of financial regulations. 

And while regulations can be good for consumer protection and preventing bad actors from creating the chaos we saw during the housing crash in 2008, they also put a burden on all companies across the housing industry. This took focus off of innovation, and put it on the struggle to simply meet the new rules and stay out of trouble. Even updates within technology were for the purpose of aligning with TRID, not to innovate and grow companies.

Now, not only have most companies aligned their systems to comply with today’s regulation standards, but the current administration has also stepped back from creating new regulations. Since taking office, President Donald Trump has called for cutting all regulations by 75%, and signed an executive order that stated for every new regulation added, two older regulations must be cut. During his transition into presidency, Trump even declared he planned to dismantle Dodd-Frank, saying overregulation is a “big problem.”

Money drives more

Once one fintech company began exploring the real estate and mortgage worlds, it paved the way for many more to enter. Companies realized there was an untapped market waiting to be fed innovation, and the profit potential called more companies to the forefront. The supply of third-party technology companies went from a drip, to a trickle, to a sudden flood of new entrants. 

And big money called out even bigger players. Facebook noticed the housing market was “the place to be,” and partnered with Zumper and Apartment List to add rental listings to Facebook Marketplace. Then it expanded its presence there with Rental Beast, a software-as-a-service rental listing platform that provides millions of rental listings. Amazon partnered with Realogy, the largest U.S. residential brokerage, to match homebuyers with real estate agents through a program called TurnKey.

But it’s not just the big companies that have people talking. HousingWire recognized Blend as a Tech100 winner in 2015, when it was just a small startup. In 2019, the company raised $130 million in a series E funding round, and is attracting top talent such as HousingWire 2018 Rising Star Grace Qi and former Fannie Mae CEO Tim Mayopoulos.

Success drives further success, and when companies began realizing the untapped tech regions of the housing industry, more were bound to follow.

Understanding data

A deeper understanding of data fueled this year’s list of Tech100 winners. Companies which have been collecting data for a number of years, many since the turn of the century, are beginning to activate it for new uses. 

Servicers are utilizing technology to recognize when a borrower’s life circumstance changes, and are reaching out before the loan falls into default, when the options for mitigagtion become much more limited. 

Lenders are using data in their premarketing campaigns to see when Americans are more likely to begin looking for a home, and are marketing to that segment. Did their w2 income change? Was another dependent added? New access to data provides much more information than the typical credit report, allowing lenders to get a panoramic view of the potential borrower, and know when to market loans. 

Valuation tech continues to grow more efficient and precise as more properties are added to various databases. In 2016, First American announced its property ownership database now covers 100% of the U.S. It has since used that data to cut appraisal turn times by more than 20% and increase its valuation offerings as well as property report offerings giving lenders and servicers unprecedented views into individual properties. 

No longer optional

As we move into this new era, mortgage and real estate technology is no longer optional. Baby Boomers and even Generation X is impressed with new technology – they like the efficiencies it provides. But Millennials and now even Generation Z, which is already taking up 2% of the market share of originations, are not impressed with technology. They expect technology. They demand it. They are confused when it’s not there. 

Millennials are now the largest living generation. They take up 48% of the market share of originations and their mortgage debt growth is continuously outpacing all other generations. Millennials took out a median loan amount of $242,100 in December 2019, an 8.4% increase from the year before. 

What’s more, they’re watching commercials during the Superbowl that say they should be able to, “push button, get mortgage.” With so many tech solutions, lenders and real estate agents have been forced to increase their tech offerings to meet consumer needs. And where there is rising demand, supply will follow. 

AI and machine learning

AI and machine learning are pushing the limits of possible, opening more doors than ever before. Combining the rise in AI with the surge in data activates a new world of possibilities. Not only do lenders have the data they need to act, they also have AI that will act for them, creating a well-oiled machine of efficiency. 

As the possibilities increase, more startups try their hand at innovative changes and solutions. Some take root, some serve a niche market and others shine brightly only to then fade away, but the innovation continues. 

In 2014, our editors considered giving out the brand new Tech100 award to the industry’s top 25 companies. Now, six years later, we struggled to narrow the selection down to 100 – for each category. That means nearly 200 companies won awards for their technology in the real estate and mortgage industries.

Click through to find out who won the 2020 Tech100 Mortgage and Tech100 Real Estate categories.

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