ICE Mortgage Technology’s Parvesh Sahi on the need for correspondent lending digitization
Today’s HousingWire Daily features an interview with Parvesh Sahi, head of business and customer relations at ICE Mortgage Technology. In this episode, Sahi discusses the emerging need for correspondent lending digitization in the mortgage industry, especially as the market shifts in volume.
Here is a small preview of the interview, which has been lightly edited for length and clarity:
Alcynna Lloyd: In the recent past, we’ve spoken with Joe Tyrrell and Nancy Alley about how ICE Mortgage Technology’s technology can improve the entire mortgage workflow, and before we went live, you were mentioning to me the importance of including correspondent lending as part of this idea. Can you tell me a little bit about correspondent lending?
Parvesh Sahi: Yes, I’d be happy to because it’s a topic that I’m passionate about, and it’s near and dear to some of the stuff I’ve been working on the past several years at ICE Mortgage Technology. I think what’s interesting about the correspondent lending space, is that I view it very similar to what we have seen in the consumer engagement space. Probably about five years ago, the industry identified the loan application experience and engagement with consumers as very much an analog engagement. This was because through a loan officer, you would reach out to a borrower via phone and you would either listen to them verbally and then take down their information, or they’d pass you some documentation that you’d then need to convert into data so you could underwrite and process the loan essentially. I think that process was a lot of technology and a lot of investment has gone into converting that analog environment into a digital environment, leveraging, the piping where we can take advantage of getting things into a data format, so that we can more quickly underwrite the loan, or whatever it might be. The same goes for the correspondent purchasing process, really, for sellers and investors right now. Investors and sellers are largely exchanging documentation and information in a very analog environment; they log into a portal, and they either retype something in, or they upload documentation that the investor has to take and convert back into data so they can process it. There’s just a ton of duplicative tasks on top of this that are happening, and it just begs the question we have been asking at ICE Mortgage Technology, why are we doing it this way?
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Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:
Alcynna Lloyd: Hey, “HousingWire” listeners. Today I’m joined with Parvesh Sahi, head of business and customer relations at ICE Mortgage Technology. And today, we’ll be discussing the emerging need for correspondent lending digitization in the mortgage industry, especially as the market shifts in volume. Thank you for joining us today.
Parvesh Sahi: Thanks, Alcynna. Great to be here and excited about our conversation.
Alcynna Lloyd: Well, I’m glad to hear that. Before we dive into today’s conversation, can you let our audience know more about you?
Parvesh Sahi: Yeah, I’d be happy to. I guess, I don’t know exactly where to start. But, you know, I’ve been in the industry for a number of years. And I think I’ve always been, essentially, a real estate lover across the board. But as I got into really the real estate finance side of the business, it really broadened my understanding of the industry and even what it means to sit behind real estate. And so I started working with what was formerly Ellie Mae, which is now ICE Mortgage Technology. About 10 of those 15 years, I’ve held various roles within ICE Mortgage Technology.
Alcynna Lloyd: Great. So you have an extensive background in this industry, which makes you perfect for today’s questions and today’s conversation. You’re here today to discuss the emerging need for correspondent lending digitization in the mortgage industry. To start off today’s conversation, I’d like to focus on the COVID-19 pandemic. Although it’s been more than a year since the COVID-19 pandemic started, effects of the virus can be felt in almost every U.S. industry. This is especially so for the housing market, as many companies were forced to transform their business models to either meet demand or safety regulations, as well as deal with record volume. Now, a year later, it seems we are starting to see a shift back to a new normal. Parvesh, in your opinion, as we begin to enter a post-COVID world, what will lenders need to do and what do they need to focus on?
Parvesh Sahi: Yes, it’s a good question and I think it’s one that keeps getting asked over and over again, for good reason, because I think it introduced a number of various paradigm changes in the industry. And I think we all know that, you know, in 2020, there was just incredible record volume that the industry had to undertake. Which was good, but it also exposed, I think, a lot of things in the industry as well, including the need to move forward on using technology. It also really forced us at ICE Mortgage Technology to think about how we work differently in these virtual environments. And I think, you know, there’s a lot of conversation, a lot of data around that now. And, you know, businesses are contemplating, when they come back out of the post-COVID world, what they’re going to keep as a result, and what they’re going to throw out the proverbial, you know, don’t throw the baby out with the bathwater kind of thing, because I think there’s a lot of benefits that we have from there.
And so, you know, I think what was really interesting was, you know, the loan volumes increased, people started working remotely. And technology was enlisted to help with those virtual workplaces. And, you know, it was really tested not only from understanding of the technology could support the new workflow and see if there were either deficiencies or efficiency gains. But it also really tested to see if the technology can be used at scale, whether that was a Zoom conference call, a loan origination system, you know, your eClosing that you’re instituting or whatever it may be. It wasn’t just about, you know, can the technology work and provide those workflow gains and efficiency gains, but can it also handle the volume that we had to endure, whether it was, you know, people or processes from the scale and outside. So I think with all those things being introduced, it kind of changed the paradigm.
I think the other thing that was interesting was that despite all the technology that was enlisted, there was just a ton of employees that actually had to get hired specifically in the mortgage industry to handle the massive amount of volumes that were happening due to the interest rates being so low. And so while a lot of technology was enlisted, there were a lot of people enlisted as well. And so as we start to think about the market conditions post COVID, there’s gonna be a lot of questions. And we’re already seeing it with how are lenders gonna think about market fluctuations in the future, whether it goes up or down, and how are they going to enlist technology to survive. You know, what will happen again one day, which is a decrease in volume…or dramatic decrease in volume or dramatic increase in volume.
Alcynna Lloyd: That’s so true. I think if COVID taught us anything, it’s that the market can really behave any way it wants to. And I’m also glad you brought up technology, which takes us to our next question. In the recent past, we’ve spoken with Joe Tyrrell and Nancy Alley how ICE Mortgage’s technology can improve the entire mortgage workflow. Before we went live, you were mentioning to me the importance of including correspondent lending as a part of this idea. Can you tell me a little bit more about correspondent lending?
Parvesh Sahi: Yes, I’d be happy to because it’s, I think, as most people at ICE Mortgage Technology know, it’s a topic that I’m passionate about, and it’s near and dear to some of the stuff I’ve been working on the past several years. But I think, you know, what’s interesting about the correspondent lending space is that I view it very similarly to what we have seen in the consumer engagement space probably about five years ago, where the industry identified that, you know, the loan application and the engagement with the consumer was very much an analog engagement. You would reach out to a borrower via phone through a loan officer. You would either listen to them verbally and take down their information, or they’d pass you some documentation that you’d then need to convert into data so that you could actually start to get it into a format that you can underwrite and process the loan essentially.
And so I think that process was…a lot of technology and a lot of investment has gone into converting that analog environment into very much a digital environment, leveraging the piping where ICE Mortgage Technology could take advantage of getting things into a data format so that we can more quickly underwrite the loan or whatever it might be. The same goes for the correspondent purchasing process really for sellers and investors.
Right now, it’s, you know, investors and sellers are largely exchanging documentation and information in a very analog environment. They log into a portal and they either, you know, type, retype something in, or they upload documentation that then the investor has to take down and they have to convert it back to data so that they can process it. And there’s just a ton of duplicative tasks on top of this that are happening that you just…it begs the question, why are we doing it this way? Why are we having the seller underwrite the loan, login, provide, you know, all these manual steps and then have the, you know, corresponding investor do all the same things over again, and after we extract information and convert it into data?
And so I think the question then becomes is, you know, do you have the ability to remove those duplicative tasks by, you know, instituting technology? And call it what you will, I mean, people will refer to things as blockchain and things like that. But I think ultimately, what sellers and investors want is they want the ability to eradicate some of this through the exchange of data, and really trusted data. And so to the extent that ICE Mortgage Technology can enable folks to get their hands on technology, and then also have the network around that technology to enable that data transfer, that’s really where the opportunity is to take things, you know, to the next level, so to speak with corresponding digitization.
Alcynna Lloyd: Well, as we talk about taking things to the next level, I want to continue focusing on technology and discuss the correspondent market. There are many in the housing space that believe the correspondent market has been riddled with manual processes for years. How should lenders be thinking about this moving forward?
Parvesh Sahi: Yeah, so I’ve mentioned it a little bit before, but I think it, you know, probably boils down to maybe three main things. One is, you know, how do you convert documents into data, and namely, into trusted data? So to the extent that a customer or I should say a seller to the investor can take, you know, what they’ve taken for their data in terms of ability to repay the value of the collateral, you know, anything else in terms of calculations around debt to income or whatever it might be, and then transfer that trusted data over to the corresponding investor from the corresponding seller.
That starts to eradicate a lot of the manual steps that need to happen throughout the process, not only from packaging up the loan and delivering it to the investor, but then ultimately the investor being able to take a look at that, you know, the documentation or, you know, if it is converted into data, then the data to then fire off a bunch of automated tasks. And that’s kind of the second part is getting it into data, and then automation. And so, once you have it in that data format, you can automatically start to identify have I received the complete package? Are there things that are missing in the package? And then once I have the package, I can start to automate all the things that I need to do on the corresponding purchasing side associated with, you know, making sure that this meets the guidelines and the qualifications that that particular investor wants with that loan.
And then I think the third one is really a system-to-system communication. I think a lot of lenders are constantly struggling with having to hop in and out of different systems and different portals and acclimating themselves. You know, specifically on the correspondent side, if they’re selling to, you know, five, six, seven different correspondent investors, they have to learn five, six, seven different correspondent portals. And I think the sellers are growing tired of that, and there must be…they want to be much more efficient and reside in their system of record and interact with their corresponding investors in a different way.
And then, ultimately, if the data format can flow system to system, that allows much more seamless transaction where you don’t have to convert the data, you know, from one naming convention to another. I think, you know, UCD, ULDD and all the data formats have helped with that. But there’s still some additional fields that sellers and investors have to exchange that are not contemplated in those data formats. So that still does make it, you know, riddled with, you know, inefficiencies and back and forth on that side.
And I think on that one, the way that I look at that is very much along the lines of what Apple has done and some of the other technology platforms have done within their ecosystems. And I think I shared this with Sarah Holtz, who’s on our PR side, but, you know, if anyone has had the experience of having an Apple phone but then receiving a video from someone that sent it from an Android phone, the video comes over in not the way that the Android sender wanted to send it to the Apple receiver. And so, ultimately, you know, the video is smaller, it’s more granulated, it’s not as clean.
And so it’s very similar kind of world and it’s very analogous in the world that we live in when one system is viewing data one way and another system’s viewing data another way. And that conversion doesn’t come over, you know, one for one. And so I think as we look to the future and we look to how we’re going to get to a true digital mortgage and true automation, you can’t necessarily have one system doing one thing and another system doing another, we’re going to have to have that continuity and that interoperability. So that system assistant communication is going to be key in terms of those benefits long term.
Alcynna Lloyd: I see your point. It’s all about efficiency and streamlining the experience so it benefits the consumer overall. Well, let’s switch gears now and discuss intercontinental exchange, otherwise known as ICE. Back in September 2020, ICE acquired Ellie Mae for $11 billion. Now today, ICE Mortgage Technology combines Ellie Mae, Simplifile, and MERS. Is there a real benefit for customers or industry with this change?
Parvesh Sahi: Yeah, I think there’s several. On different fronts, there’s different benefits ultimately to the industry and to, I think, ultimately the consumer. One, I think most people know that we took a quick pitstop, you know, with a private equity company that we’re gonna buy for about 18 months. And, you know, that mindset is a very different mindset than being acquired by someone like ICE who is in it to win it long term. A private equity company, my analogy that I always give the people is, you know, they’re a little bit of real estate flippers. Real estate flippers, they buy, you know, an asset. They basically fix it up. They do the minimal things you need to do to turn around and sell it on the market and get the game that they wanted out of the asset.
I think the great thing with ICE is that not only, you know, are they a strategic acquire that really understands the industry, they bring a ton of assets to the table. So the assets to the table that they bring are not only financially, you know, in terms of the dollar amounts that they put behind the investment from the product standpoint, but it’s also the domain expertise that they have across the financial services industry, and that they’re looking at things from a much longer investment perspective as well.
And I would say, finally, some of that domain on that side is really…that domain expertise is really wraps around their global exchange business and their data services business. We as formerly Ellie Mae, but ICE Mortgage Technology have a ton of data between the three groups, Ellie Mae, Simplifile, and MERS. And I think all three of those assets, you know, lend to more data, a better network that we get to operate within and exchange, you know, assets among that ecosystem, and really start to eradicate some of the cost that is associated with having to jump from one platform to another in the mortgage industry.
So I think, you know, those are all things that we bring to bear. And I think, you know, culturally, ICE and what was formerly Ellie Mae was very aligned in terms of, you know, how we view the world. And I think the things that we do, from a employee perspective, where we very much look to gain insights and strategies from our employees to raise that up, and then start to work on a number of different initiatives, very much like some of the stuff that, you know, we’re talking about here with correspondent lending that I embarked on four or five years ago, ICE sees it very much the same way. They don’t have a top-down approach. They have a bottoms-up approach where they want their employees to be raising opportunities and then bringing them to the table. And then we make, you know, the decisions to invest in those opportunities or not.
Alcynna Lloyd: All right. Well, thank you for answering that. And before we wrap today, is there anything else you think our listeners need to know about you or ICE Mortgage Technology?
Parvesh Sahi: You know, I think I’m excited about where we’re at from an industry perspective. And I’m excited because we’re really at a what I think a true inflection point. I think a lot of people have been talking about eClosing for a long, long time, probably 20 years. I think all the different pieces are in place. There’s a few more regulatory adjustments that need to be made to be able to, you know, fire on all cylinders. But I was just on with our correspondent investor advisory board this morning, that makes up, you know, I think 9 of the top 10, or it’s 8 of the top 10 corresponding investors. And they’re ready to go from an eClose perspective. They’re just kind of chomping at the bit to start receiving eClose loans, because I think there’s some efficiency gains there.
So I think we’re truly at a tipping point there. I think, you know, as soon as eClose happens, then you have a lot of the origination happening in a very digital format, which will afford us a number of downstream effects to create more and more efficiencies and automation. So I really do feel like we’re at this tipping point. So that’s exciting. And then I think, you know, the fact that we have ICE Mortgage Technology and ICE as a whole really making a lot of investment in the industry, we’re pretty excited about where we can go to help lenders and consumers, you know, benefit from cost reduction and a better experience. So pretty exciting stuff to come as a whole.
Alcynna Lloyd: That is exciting. Well, I’d like to say thank you for joining “HousingWire Daily” today.
Parvesh Sahi: Yeah, thank you. I really appreciate your time.
Alcynna Lloyd: Thank you.