PERSON OF THE WEEK: As the fall conference season wraps up and the mortgage industry moves into the holiday season, event attendees will no doubt be anticipating where the industry is headed in 2023. MortgageOrb recently interviewed Joe Camerieri, executive vice president and client account management executive at Mortgage Cadence, to learn more about what he heard from mortgage lenders about their technology needs during the recent industry conferences.
Q: What can you tell us generally about the conversations you’ve been having with lenders?
Camerieri: Despite the doom and gloom narrative the industry is currently hearing so much about due to the inevitable focus on industry right-sizing in the face of lower overall loan volumes, people in the industry are now focused on the right things. Specifically, we’ve been having many good conversations about back-office efficiency.
This is a significant change from the conversations we’ve had with lenders during the events of the past few years. Throughout the COVID crisis, and even before that, the industry was focused almost exclusively on the borrower experience. That was important, as borrower satisfaction had been ignored for far too long. But that conversation has shifted.
Q: How exactly has the conversation shifted now?
Camerieri: The borrower’s experience is still very important, but now the industry is focused on how to get more loans through their pipelines faster and cheaper. And that’s exactly what they should be focused on right now. Costs are still much too high, and lenders need the ability to do more with smaller teams.
Overcapacity is a problem, of course, but it’s really a symptom of the mad rush to keep up with COVID-era loan volumes. Having too many people is the most obvious symptom, but it’s not the only one. Others include unwieldy loan processes, a reliance on manual effort where automation should be employed and the underutilization of technology the lender has already invested in.
Q: Are you saying there are tools lenders already own that they aren’t using?
Camerieri: In many cases, that’s exactly right. Someone inside the lender’s shop saw a pressing need when volumes were high and capital was available, so investments were made in tools that the lender either didn’t have time to implement or that their legacy technology providers didn’t integrate.
In other cases, executives set out to create better tech stacks to streamline their processes and only then learned that their current LOS either wasn’t already or couldn’t be easily and affordably integrated with those tools.
We’ve had a number of very good conversations with lenders who are ready to take control of their lending business and expect their technology partners to enable them to do so.
Q: Does this suggest that you saw a lot of good new technology at the fall shows?
Camerieri: Actually, we did not see any monumental technological advances showcased at the fall conferences we attended this year, but that stands to reason. The next generation core systems, including the LOS, have now been architected to be flexible and extensible. Going forward, it won’t be about reinventing the core as much as it will be about choosing the right LOS that can connect to exactly what the lender wants to use to craft their own distinctive borrower, agent, and loan officer experiences.
And the other factor was the significant consolidation we’re already seeing in the business, which we expect to continue on into next year. This has set many of the smaller technology developers back on their heels because they can’t be certain that there will be a large enough market next year to justify their outlay on new technology development.
Q: What do you anticipate for next year, given your industry conversations this fall?
Camerieri: I believe that, based on the conversations that we’ve had this fall, there are some really smart lenders out there who have saved money during the pandemic and are looking at technology as a way to compete in 2023.
In the past, we’ve said that technology, in and of itself, was not a differentiator. Back then, when lenders were all using basically the same technology stack as mandated by their technology partners, that was largely true. Our own data in our past performance surveys backs that up.
About half of the industry is still locked into outdated technology that limits how lenders can operate their own businesses. But today, powerful new LOS technology empowers lenders to work with the partners they want, integrate the tools they want, market the loan products they want and create workflows that will truly differentiate them in the business.
So, while we do expect to see lower volumes next year and fewer lenders competing for that business, we’ll see some technology-enabled lenders who have found ways to be very competitive and they will do very well in 2023.