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Black Knight’s Chazz Huston on the digital revolution

This week, HousingWire’s Editor in Chief Sarah Wheeler interviews Chazz Huston, the strategic alliances manager at Black Knight about where we currently stand in the mortgage industry’s digital revolution.

Here is a small preview of the interview, which has been lightly edited for length and clarity:

Sarah Wheeler: Although I’m really excited to talk about where we are in the digital revolution of mortgage, sometimes you have to look back to really understand how far we’ve come. A technology innovation that has made all the difference in building a mortgage tech stack today is the API. So, I’d love to know from you, what kind of difference have APIs made in the last five or six years?

Chazz Houston: The point of sale has really come a long way and a lot of this is because of APIs, which now allow consumers to seamlessly link bank accounts. They can use an API to get their tax accounts and to also verify employment for income. So, the entire process is basically automated. I was previously a loan officer and it wasn’t that long ago we were still faxing. Back then, every time a new bank statement came out, we had to email it. However, these APIs have really improved so many parts of our industry.

The Housing News podcast explores the most important topics happening in mortgage, real estate, and fintech. Each week a new mortgage or real estate executive joins the show to add perspective to the top stories crossing HousingWire’s news desk. Hosted by Sarah Wheeler and produced by Alcynna Lloyd.

Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:

Sarah Wheeler: Welcome, everyone. This is Sarah Wheeler, editor in chief at HousingWire with the latest episode of our “Housing News” podcast. I’m excited to introduce our guest today, Chazz Huston, who’s the strategic alliance manager at Black Knight. Chazz has done everything. He’s been a loan officer, a branch manager, he’s got his real estate license, and he served another strategic role. So, really excited to talk to him today. And Chazz, let’s just dive in. The first question we always like to ask is, how did you get into the industry?

Chazz Huston: Yeah. Well, thanks again for having me, thanks to Black Knight, Optimal Blue, our marketing team, HousingWire. But I got into the industry, I love real estate. I love technology, and I love finance. So, enter the mortgage world and kind of how do we use technology to create efficiencies, drive sales, so it really just kind of got pulled in. Also, I moved to Florida, right in 2004, when the real estate market was really booming. And so that’s really when I got my first mortgage license and my real estate license and I have been in the industry ever since.

Sarah Wheeler: Wow. Yeah. That’s good timing there, in Florida in 2004.

Chazz Huston: It was quite the…yeah, ’04, and then got to see all the way through ’08, ’09. And definitely, a wild time during those few years, as we know now.

Sarah Wheeler: For sure. You know, I’m really excited to talk about where we are in the digital revolution of mortgage. But sometimes you have to look back to really understand how far we’ve come. And one technology innovation that has made all the difference in building a mortgage tech stack today is the API. I tried to find the first time that HousingWire wrote about APIs. And I’m not sure it’s the very first time, but I did find an article from 2015, where we spelled out what APIs meant, like, we put application programming interface, which I don’t think we’ve done since then. So, that had to be pretty early on. So, I’d love to know from you, you know, what kind of difference have APIs made in the last five or six years?

Chazz Huston: This is really is a great question. It’s funny because your timing 2015 HousingWire, writing an article, it’s really the first time Optimal Blue launched our first API or started developing, at least the scenario pricing API. And, look, there’s always been integration methods, but really, what we needed was something modern. So, enter the API, right? Which is, let’s just talk a little bit about what an API is. It’s a modern, easy-to-use standardized integration method that simplifies program. So, what is an API? It’s a software intermediary that allows two applications to talk to each other.

So, just think of a request and a response. Some advantages are, it’s efficient, it’s customizable. You can add personalization, provide data ownership. It’s time effective, and it’s a lightweight architecture. So, kind of why is this important? I believe it’s because of the user interface and the user experience. And being able to embed multiple sources, multiple APIs, multiple data points, and really into one consolidated experience. So, instead of having to have five different software solutions, where they each do a point solution, you can now have this consolidated user experience that really does that. It improves the experience.

So, I like to use an example simple, obviously, product and pricing. But think of a standard task, just like shopping for a home or mortgage borrowers, searching for the best loan product and price. A consumer really should be able to quickly confirm what product and price is best for them. They should go to do their own research. They should be able to confirm the scenarios.

Historically, however, this is a task that only a loan officer could accomplish, right? You would have to call your loan officer to figure out what the best product and prices. Or an API can now be embedded into a consumer experience and allow the consumer to really take control and figure out what the best product options are. So, with a modern technology, and APIs, and vendor-to-vendor collaboration, you know, consumers now have this improved experience. And I like to kind of point out these two things. I like to call this POS versus POS, the point of shopping versus point of sale. So, in the last five or six years, and we’ll talk about this in more detail in a little bit.

But the point of sale has really come a long way. And a lot of that is because of the APIs. Consumers can now seamlessly link bank accounts via an API. They can use an API to get their tax accounts. They can use an API to verify employment, an API for income. So, the entire process is basically automated now. Well, kind of like you said I was a branch manager or loan officer, it wasn’t that long ago where we were still faxing and every time a new bank statement came out, we had to email it. So, these APIs have really improved so many parts of our industry. Obviously, we’ll talk a lot today about product and price. A few other things I’m excited to talk about.

The good news is technology now exists. I think most, if not all vendors in our space have APIs, it’s probably started building those APIs around your first article back in 2015. But now we have five years of what’s happened, what are those APIs do? What does it mean for mortgage lenders? What does it mean for originators? What does it mean for consumers? So, I think that’s really where the APIs have come was where we had to build them and we are seeing what that API has done in our industry, and in our market, and it’s been pretty exciting.

Sarah Wheeler: Well, that evolution has happened, you know, that’s not in a vacuum those APIs now, you know, as consumers, we’re used to that real…we don’t know, oh, that’s because of an API that I can self serve myself on this platform or whatever. But we’re used to all of the experience that APIs lead to so, you know, that’s expected now in the mortgage industry as well, right? I mean, we’ve gotten used to those.

Chazz Huston: I think, it is. Yeah. And, you know, I think when you hit on the consumer, and this will be probably my biggest talk track, will be on the consumer and the consumer experience. But I think there are expectations. I think consumers are used to an Amazon shopping experience, they’re used to an eBay experience, they’re used to…you know, now you’re used to going out and going through a Tesla car buying experience, you’re used to, you know, just having all of this information, especially information about yourself, right? Consolidated and streamlined. And the mortgage banking industry, the banking industry, the mortgage industry moves a little bit slow at times.

I think we’ve focused a lot on compliance, but now we’re really focused on innovation. We’re focused on that consumer experience. But it is. It’s kind of behind the scenes, right? Where there’s a lot of…you know, just think of Expedia, right? Where you go through this Expedia, you’re looking for a new flight. And how does that information get to Expedia? We’ve got American Airlines, they’re given Expedia an API. You’ve got United, they’re given Expedia an API. You’ve got Spirit, you’ve got all these different airlines where they’re given an API, and it’s flowing into this modern shopping experience for the borrower. The borrower, a lot of times doesn’t know what’s going on behind the scenes, but their expectations are that all these airlines should show up. And the best flight for me right now should show up at the top of the list.

Sarah Wheeler: I love that. And you know, it comes back to that, you know, borrower experience, specifically in a mortgage space, like why do I have to put my information in. You should know who I am, you should follow me, you know, from thing to thing. And I know, we talked to a lot of companies who solve that, and I’ve done that. The last time I bought a house last year, during the pandemic, and it was still a very, not modernized process, let’s say that, so.

Chazz Huston: Yeah. Well, that’s why I’m excited to talk about this is it’s because I think… So, I believe the stat is we went from a borrower or a home buyer buys a house every seven years. I think that’s up to about 11 years now. So, you don’t go through this experience very often. But the pandemic, everybody refinanced, or either thought about refinancing or bought, you know, a new home or move. So, we’ve all, even the people in this industry have gone through this experience. And I believe it’s broken, I believe you should just click a button. I don’t think I should have to call my loan officer to say, should I refinance? I think that information should be sent to me, it should be accurate, it should be real-time, it should be specific to me, and it should really say here are your best options. Again, the good news is the technology is there, we’ve made a lot of progress, but there’s still a very long way to go.

Sarah Wheeler: I would agree with that a 100%. You know, I want to get into Black Knight a little bit, you know, Black Knight, over the last year, wow, has been on an acquiring tear. I mean, really gotten some incredible companies integrated in there. One of the big moves they made last year was acquiring Optimal Blue. The Optimal Blue product and pricing engine was already really well known. So, what’s the strategy to leverage it even more in the mortgage space?

Chazz Huston: Yeah. Again, great, great question. No, the heart of the mortgage industry, right? Or really, any industry is the product and price. So, Optimal Blue flagship product is a product and pricing engine. So, a product and price should be everywhere. It should be anywhere. I think we, sometimes think of it as a mortgage, but it really is the product and price of our industry. And just like any other industry, product and price should be included and leveraged as much as possible. It should be transparent. It should be where you expect it. So, what is the strategy to leverage it even more? Great question. The strategy was to absolutely go end-to-end.

We want our customers want, our prospects want to embed product and price into any solution that should have products and price, right? So, having product and price integrated helps with sales, lead generation, conversion, back-office efficiency, secondary marketing, hedging, execution, etc. And today I just got an email update from HousingWire, and the title was ‘Real Estate and Mortgage get Married.” And I loved it because I think they’re too often, they’re two different industries, but they really should be one. So, real estate and mortgage, it’s just a few examples, right? You’ve got this concept of an end-to-end ecosystem, or really this tech stack. And that tech stack would include both real estate and mortgage. So, if we start in real estate, you know, think of the multiple listing service, the MLS. This is the primary platform that realtors use. It’s their system of record. Any property that they send to a consumer should have product and price listed into it.

So, if you’ve been looking in, you know, your train neighborhood for the last year, and a new house pops up, your realtor gets the alert in the MLS, sends you that MLS listing sheet, either via email, or however they send it, that property should have your product and price exactly to your specific qualifications included in. You shouldn’t have to call your loan officer. So, that’s one example on the real estate side, where again, there’s really two different shopping experiences, right? You’re shopping for a home or you’re shopping for a refi. But if you get now into mortgage, you’ve got your point of sale, that’s the application experience.

Think about how product and price should be included in the application. You also have the loan officer or the loan officer digital experience, what should the loan officer do? What solutions and tools and products are they using? And how should product and price be embedded in those experiences? You’ve got CRMs or specific advanced marketing, where the product and price should be embedded in the CRM or marketing campaigns. And so the product price really going with this concept should be everywhere and anywhere. You also have lead generation and lead management and obviously loan origination systems even have AI and AI layers and then data and analytics.

So, every one of those solutions should have product and price included or integrated. And that’s really the strategy to leverage it more is just to continue to take these different solutions sets, this ecosystem, if you will, or the tech stack, and just make product and price embedded deeply to make a turnkey and make it out of the box.

Sarah Wheeler: So, one of the things I’ve heard people say is like, you know, and Black Knight says, you know, they want to make the Optimal Blue product and pricing engine a utility for the industry. Is that what you’re talking about when people say, oh, this should be a utility for the industry? What does that mean?

Chazz Huston: Yeah. Yeah. So, it’s really always been Optimal Blue. Now, part of Black Knight’s goal is to kind of be the engine for the industry. We want our customers to have a full opportunity, flexibility to make their product and price available wherever they choose. We want to make that as easy as possible. So, lenders should have the opportunity to include their product and price, because that’s really what it boils down to it’s their product and price in any solution they use. So, we want to continue making that efficient for them. We want to make that effort turnkey.

Hopefully, that allows them to spend more time originating, less time figuring out what solutions work together, less time figuring out how to integrate those solutions. And really, mortgage software, especially in 2021, should be turnkey and out of the box ready to use. So, here, you know just was trying to think of a random example. When you pull your iPhone out of the box for the first time, you shouldn’t have to install the texting app or figure out if the camera app is installed, it should come ready to go, ready to use, the battery is charged. It’s really our expectation, right? And it doesn’t matter which solution you choose, we expect that our product and price should be included.

And that’s the same philosophy or approach when it comes to product and pricing. It should be integrated into all relevant software in our industry. So, you know, I think lenders have two different options, right? You can buy technology that already works together, or you can have an API that’s custom, you can use your proprietary solution, help with one-off development. So, we want to support both of those models. We want to support the ready-to-go, end-to-end, already integrated, but we also want to provide lenders the flexibility and freedom to get creative to build their own proprietary software and have this API readily available.

So, you know, we’re focused on those two goals and we’re focused on partnering with vendors and, you know, if we can work with a vendor and create kind of a one plus one equals three technology solution. It’s a win for the industry, it’s a win for our customers, it’s a win for the lenders. You know, and what’s been exciting is really has been this vendor-to-vendor collaboration where we kind of work together, what’s best for the lenders, what’s better for the consumers? And, you know, we continue to focus on that objective.

Sarah Wheeler: I appreciate that explanation. And you know, this next question you might have answered part of it already. But really, when you think about being the Optimal Blue PPE can be solution agnostic. So, just to clarify, that means that it works for a lender who doesn’t want the whole Black Knight experience, but also just wants to piece together their own tech stack? I mean, you mentioned that a little bit.

Chazz Huston: Yeah. Exactly. So, another…let’s just use an example, right? Some people want to use all of the Microsoft suite of products, I want to use Word and Excel, and I want to use PowerPoint, but some only want Word and Excel, and they don’t want PowerPoint, right? They have a different presentation tool that they use. So, as a consumer or as a lender, you should have the option to pick and choose, but you should also have the option to get a turnkey end-to-end tech stack that already has everything integrated, it’s ready to go. So, that’s really what we’re focused on is, again, I think it’s this idea that there’s a lot of different lenders, there’s a lot of different lending models, there’s a lot of different technology, innovation continues to advance.

So, how do you allow lenders to not be handcuffed or not to have true opportunity to build what’s best for them? And they can either piece together, they could use a few different solutions from one provider that could use solutions, like a Black Knight that has end-to-end. But it’s really that freedom. And I think that’s kind of what’s cool is that these lenders really have the opportunity to build what’s best for them. And not only are we focused on partnering with the leading providers and doing it in-house, but we continue to expand our APIs where, you know, some of these large lenders like to build proprietary software in-house. So, again, you know, just kind of supporting all of those different models, I think that’s the mission we’ve been on and that will continue to be our goal.

Sarah Wheeler: Great. Yeah. So, you know, now I kind of want to just like broaden our horizons here and look at the whole industry and ask you, because you’ve been, you know, a loan officer or a branch manager. So, from the beginning, what tech ability do lenders have now, that really just blows your mind? Like, what innovations are just par for the course now, that would have been so crazy to even think about five years ago?

Chazz Huston: Yeah. So, we’ve certainly come a long way, in five years, we really have, I mean, technology just in general, I think you see it in your everyday experiences, even in the mortgage space. There’s a couple different things, you know, I think data, data is readily available, it’s here, it’s accessible. And the reality is, we now live in a data-driven world. It’s been talked about for a long time in our industry, really, in every industry, but it’s definitely here, and it’s moving fast. I think you said earlier, like, you know my credit score, you know how much money I have in the bank, you know what my current mortgage is, should I refinance? Like that data is available, and the technology is available.

So, you know, one would be data. The integration methods, which is a lot of what we’re talking about, we started with API, they’re also here, right? 2015 HousingWire writes their first article, fast forward six years, most vendors have APIs, and those APIs are now being commonly used. The inclusion of real estate into mortgages is finally coming together. But if I kind of had to pick one, you know, point of sale has been a hot topic for a very long time. I think that’s a category that’s been extremely innovative. The consumer application experience has really improved. It’s come a long way. It was a headache not too long ago, and now you go through these automated applications experiences.

So, we take that for granted what we’ve done in the point of sale space. Continued advancements in SaaS, which is software as a service. So, that’s just saying, hey, there’s a service here, how do we use software to automate that? So, there’s a lot of once manual human touch services that are very labor-intensive workflows. That labor-intensive workflow is probably been automated now, especially over the last five years. So, if you’re a lender and you have underwriters and just kind of, you know, processors or all the different components of your business, a lot of those one-off manual touches have been automated by some solution or another.

And then, you know, AI and machine learning, they are no longer buzzwords. We are seeing them in practice. They will become more prevalent, and obvious to the end-user. But we’ve gone past this idea of, you know, you say AI and machine learning and just sounds like a fancy buzzword. It’s real. There are solutions out there. It’s being integrated into a lot of different software, a lot of different solutions. So, that’s exciting to see those two categories kind of advance as well.

Sarah Wheeler: I totally agree with that. I mean, in the same way, that we had to spell out APIs, you know, in 2015. I remember writing a story, gosh, maybe even before that, about artificial intelligence in mortgage, and it was just like, are we talking about robots or whatever? What does that mean? It’s just like, that’s the thing that’s helping your whole workflow get better. I mean, now we know more what that looks like. And it’s less revolutionary for that, but it is interesting how now that just seems par for the course.

Chazz Huston: Yeah. There’s standalone solutions, kind of in this machine learning, AI space. But there’s also just embedded kind of, again, you know, so now there’s large providers that have it part of their tech stack, but there’s also these standalone solutions. And we were just at a conference and I went over to a booth and I just got to see everything that’s going on. And it’s exciting. Again, it’s how can we continue to automate? How can we continue to leverage these advanced technologies, helping make it all work together? How can we, you know, improve ROI, reduce costs? And it’s exciting where we are, again, we’ve come a long way.

Sarah Wheeler: Absolutely. Well, let’s look forward now. And you know, what’s the next frontier for mortgage tech? What’s the next big problem that we need to tackle?

Chazz Huston: Yeah. I truly do love this question. I’ve kind of been hinting at it a little bit throughout this talk track, but we believe it’s really a more modern and truly digital mortgage shopping experience. So, consumers want more control, they want to know they’re receiving the best option. And I believe we’ve done an amazing job in the last five to seven years in the point of sale. But I believe we’ve really overlooked the shopping experience. And again, I think it’s broken. The shopping experience starts around 170 days before the applicants. So, that’s the point of sale category that we’ve talked about, that’s come so far in the last five, seven years is the point of sale, the application.

But what are you applying for? What is your shopping experience look like? For example, we know that at least 7 out of 10 borrowers go online looking for mortgage rates on lenders’ websites. However, when we looked at 100 mortgage websites this year, just a month ago, only 32 of those websites had their mortgage and their mortgage rates listed. So, that means if you’re one of those lenders that does not have product and price on your website, you’re not giving the consumers what they expect, what they want, again, they expect Amazon, eBay, Expedia, buying a car like a Tesla, where you can build it and have it delivered to your doorstep.

And I think maybe for the executives on the call or listening in on the webinar, another hot topic has been LO compensation, especially as margins are tightening again. One of the main reasons for high LP comp is the dependency factor on the loan originator. So, until lenders really look at what their shopping experience looks like, or until lenders look at what would the experience look like without a loan officer, the loan officer will continue to be at the heart of the transaction and be a major dependency. So, again, if you’ve gone out to refi, or you’ve gone out to purchase a home, just think of what that experience looks like and just say, what should it look like?

What is it and what could it look like? So, kind of continuing on with that, maybe I’ll end with this quote, I was reading a book as I was on the plane, I was reading it for my second time, but the book is called, “Strategically Transforming the Mortgage Banking Industry.” And on page 6, here’s the quote, it says, “The industry will be disrupted by competitors that differentiate product and help the consumer make sound choices for their circumstances, digitally.” So, to me, that really resonates. I think we’ve done a lot of amazing innovation in the mortgage space, I think we’ve overlooked what the shopping experience looks like, what it could look like. And then I think, you know, now’s the time to innovate faster than we ever have. The technology’s there, the vendor-to-vendor collaboration is there. There really are no restrictions to really…you know, the opportunity is endless.

Sarah Wheeler: Yeah. I like that. Thanks for sharing that quote. It’s great. And I think that, to your point of the whole idea of being focused on the customer, but also the fact, you know, when we had that sort of huge swing and volume last year, you know, so things went quiet for a month or so maybe even only a few weeks, and then they just came back so big. And then you know, the swing now towards purchase, like, if you’re trying to do that with humans only, you know, if you’re too dependent on humans in that situation, not really using your technology to scale up and back, to your point that LO comp is just one of many problems if you’re overly dependent on humans, I think.

Chazz Huston: Yeah. Look, I mean, there’s always a role for humans, it’s just let’s have those humans, have technology that helps them become more efficient, more productive, improves ROI, reduces cost. And that technology’s there. And I think it’s time to, as maybe still going to be a historic year, last year was obviously historic. Maybe it was a little unexpected, where maybe you weren’t focused on your purchase experience, and maybe you’ve got a strong purchase experience, but maybe you didn’t really focus on refi. So, we saw that. We saw that lenders increased margins, actually said no to certain borrowers. I spoke to my loan officer, and I kid you not, he goes, “Chazz, I’ve got 57 prop borrowers to call back.”

Sarah Wheeler: Oh my gosh.

Chazz Huston: And that was couple months into refi. And so having technology won’t necessarily replace the human, it won’t necessarily replace the loan officer, it should just empower them. And those types of tools, we focused on, I think, on compliance quite a bit, we focused on the back office. But now we really kind of need to look at the whole ecosystem, especially that consumer experience, that loan officer experience, and what kind of technology can just help all of the employees be more productive?

Sarah Wheeler: I love that. Well, thank you so much. It’s been a really interesting discussion, and I appreciate you being on “Housing News.”

Chazz Huston: Thanks for having us. And thanks again it was a pleasure. I get excited about this topic. So, thank you, Sarah, and thank you to the HousingWire team.

Housing News

Hosted by HousingWire Editors, the HW Weekly Newscast is a conversational look at the most important stories coming across HousingWire's news desk.

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