The 22nd Annual Western States Loan Servicing & Technology Conference in San Diego brings together some of the veterans of the residential mortgage sector to talk about the business of technology. 

Sponsored by the California Mortgage Bankers Association, this year’s event, held August 6-8, promises to be an important resource for industry professionals trying to navigate one of the toughest market environments in years.

Excessive regulation by state and local regulators is generally top-of-mind in our industry when we think of technology.  The cost of regulation is seen in the expense required to make or service a home loan. 

According to the Mortgage Bankers Association, the average cost of servicing a performing loan rose to $181 in 2015, three times higher than in 2008 when the cost per loan was $59.

The average cost of servicing a non-performing loan grew to $2,386 in 2015, almost five times higher than in 2008 when the cost per loan was $482.  This increase in cost was driven by one public policy priority enshrined in Dodd-Frank, namely protecting American consumers from abuse of process when they failed to repay their home mortgages. 

But this year, more than heavy handed regulation, the wild gyrations of the US bond market are also causing considerable operational headaches in the mortgage sector. 

Falling volumes, from $2 trillion in new originations last year to maybe $1.6 trillion this year, has caused secondary markets for loans and mortgage servicing rights (MSRs) alike to tighten. 

Can technology help lenders and servicers keep costs under control or even cut costs as lenders see one of the worst periods of profitability in years?

How can smaller seller/servicers use technology to defend their correspondent relationships from the predations to the larger bank aggregators, who are bidding aggressively for collateral in the secondary market?  Suffice to say that residential lending is unlikely to be a positive factor as second quarter earnings begin this week.

I will be moderating a servicer panel promisingly entitled “Utilization of Technology in Mortgage Servicing” that will allow some of the experts in the industry to talk about the current industry environment and how technology helps them manage their business.  Our panel will include:

Daniel Perl, Chairman & CEO, Citadel Servicing Corp

Greg Drakos, SVP, Special Situations Group, Carrington Mortgage Holdings

Alex McGillis, Servicing Product Manager Team Leader, Quicken Loans

John Dixon, Managing Director, Business Development, Amerihome Mortgage Company

Roger D. Stotts, CMB, Senior Vice President - Loan Administration, New American Funding

Each panelist will start with a brief introduction about them and their firm. We will then delve into some of the most pressing issues facing the mortgage industry when it comes to operations and technology.  For example:

  1. How technology supports your business process in terms of guiding and documenting your actions. Is technology the most important piece of the puzzle in terms of avoiding errors in the lending or servicing process? 
  2. According to the MBA, the cost of servicing has gone up three-fold since 2008. But the industry has made big strides in terms of reducing the time to a close from 70+ days down to 20. How has your firm dealt with cost increases in terms of both lending and servicing?
  3. Back in 2015, one of our colleagues said that "Managing costs is managing compliance. In the past, we always served three masters — investors, shareholders and customers. Now we also have compliance." Is this still the case? How has technology addressed the compliance issue?
  4. How much of your technology spend is useful for generating revenue and/or controlling costs vs. merely supporting compliance goals? 
  5. From a business perspective, what do you see as a) the most positive and b) the most negative trends when it comes to technology in the mortgage industry?  Is technology a reactive part of your business or does it support you in growing your business? 
  6. We hear a lot of happy talk from Washington about how mortgage professionals need to cut cost out of the manufacturing process for mortgages.  Does automation or innovation really help to address the issue of cost?  Or is the question more about controlling the business process and training to avoid errors? 
  7. A number of lenders have simplified their businesses since 2008 to reduce operational complexity and achieve compliance.  Does technology allow you to offer more products to your customers while keeping control over compliance?

We will also ask the panelists and attendees to ask questions of their own and contribute to a general discussion of industry issues.  If you have any questions you’d like to see included in the discussion, please feel free to contact me at chris@rcwhalen.com