PERSON OF THE WEEK: Where is mortgage lending headed in 2023? With most economists forecasting low home sales due to higher rates, low inventory, high home prices and lack of affordability for the remainder of this year, it seems inevitable that the industry will experience a significant reduction in volume and a corresponding increase in layoffs and M&A activity.
Many lenders are currently reevaluating their business plans as they prepare for the housing market to rebound in 2024. That means many of them are reevaluating their technology roadmaps. In a recent interview with MortgageOrb, Shannon Johnson of TAVANT discusses where mortgage technology is headed in 2023 in response to recent market changes.
Q: Based on the past cycles you’ve seen, where do you think mortgage lending is headed in 2023?
Johnson: Mortgage lending is headed towards a prosperous digital mortgage era in the upcoming year. Digital mortgage has been discussed at length for years now and the idea is finally starting to crystalize. The technology is available. Thoughtful, true automation and real software that provides analysis and gives a user direction in terms of decision-making and crucial insights are real, attainable, and doable. With the markets having slowed down and rates higher, companies can take the time to implement a successful digital mortgage strategy.
Q: What changes do you expect to see in 2023 with regard to mortgage lending technology?
Johnson: FinTech is all about removing friction from the lending process. This evolution has been slow compared to other industries for many reasons, but is now finally taking hold. Where technology has taken us is significant, but it needs to continue to evolve.
The focal point for 2023 will be centered around scalability, efficiency and leveraging lending technology, so mortgage lenders can be nimble enough to adjust quickly, allocating their money wisely.
Spending the first 20 years of my career in operations and the following 15 years in product development, my efforts are to redefine and validate the concept of technological innovation within this industry. Recently, I have leveraged my domain expertise to help build products that advance AI-based digital lending platforms.
Now, there is a call to action to be more meticulous in looking at the entire process of mortgage lending and an organization’s business model when it comes to providing technology solutions. Considering the process and where organizations spend their time, attention, and money, as well as documenting your workflow, is critical.
If one doesn’t know where one is in the process, it can be difficult to determine where one is headed.
In 2023, mortgage lenders must be prepared to document what they’re doing, think about where they want to go, and what vehicle they will use to get there, so that it fits what they are trying to accomplish.
Q: What are your general thoughts on the mortgage technology offerings currently available in the market?
Johnson: There’s too many options and flavors which makes it difficult to determine the best fit for a company. With AI and ML, it is attainable to leverage these tools in a way that works for lenders as a whole. Many companies want to be everything to everybody.
The technology is there, the parts are available, but putting them all together in a way that will work for a particular lender is the hard part.
Q: Are there any technologies that are particularly successful?
Johnson: Although we’re still a long way from eliminating human involvement in a loan file, we have come a long way in OCR, intelligent document processing (IDP) document classification, and data extraction practices. The beauty of AI and ML is that it can continue to learn these processes.
Q: What areas could use improvements?
Johnson: Today, with the new advanced options from which to choose, there is still a disconnect. There are numerous innovative technology solutions that have relevant features and enormous potential, yet they fail to impact users in a meaningful way.
In order to have a truly pertinent product in this market, one must involve the “user” in the build. If one does not involve the day-to-day user in the design and feature set, then the organization will continue to struggle to create influential and widely-adaptable technology solutions.
I firmly believe that a lender needs a thorough understanding of its target audience to succeed in implementing future technologies. It is crucial to remember that technology is used by people, and if it is not embraced by people, it will surely fail. The mortgage industry needs to meet people where they are – as the consumer or the user – listen and take that feedback and continue to enhance. Users and consumers are the driving force behind whether technology will be widely adopted.
Even more so, there needs to be honesty and transparency, which allow for more realistic expectations for what lending solutions can deliver instead of promising the sun, moon and stars.
Q: As a female, how have you been successful in a primarily male-dominated industry?
Johnson: When I started my career in this industry more than 30 years ago, women were processors, underwriters, and closers. My goal was to do a great job every day, and I was genuine in my quest to learn about this industry and how we could work together to improve processes.
Influencing critical initiatives in product and service development while leading the way in operational and technology efficiency and effectiveness is paramount. The applied realities of my accomplishments can be further quantified by Tavant’s overwhelming success this past year.
My ability to quickly adapt to ever-changing industry trends and overcome new obstacles continues to be an asset to both my team and the company.
Q: What have you been able to do to differentiate yourself?
Johnson: Having operational experience, technical know-how, and the ability to communicate with mortgage operations and turn around and explain to developers who may be unfamiliar with the mortgage industry has been an asset and differentiates me.
Q: Can you share one achievement you feel helped move the industry in a more positive direction?
Johnson: In my career, I have always felt strongly about lifting up those on my team and encouraging and supporting them to learn more, try what has not been done, and do the impossible. An achievement for me is leading a successful team by providing compassion and realizing that with my support, I have the privilege to propel others to new heights of success – that, to me, is a win for the industry. Caring for those around you and having mutual respect for collaborative efforts is what will continue to cultivate this industry full of technological innovation.