The last several years have been volatile for the property market. However, as the market is slowing, that is freeing up space for lenders to consider their back-of-house processes and rehabilitate them to accommodate the demands of modern consumers. Largely, that means automating and digitizing processes. Think automated underwriting of the borrower and the property, think about a fully digital experience to close alone.

And this is really where the future lies for the mortgage industry.

By separating out run-of-the mill applications to accelerate their processing, lenders are freed up to address the more complex cases that may require counseling or human expertise to fulfil the requirements and close the process.

In this episode of Core Conversations, host Maiclaire Bolton Smith sits down with Praveen Chandramohan, an executive in origination solutions at CoreLogic to discuss why improving the mortgage workflow through technology is an essential next step for the industry.

In This Episode:

• 3:40 – The etymology of the word “mortgage” and why homeownership will remain the American dream.
• 6:15 – Why the mortgage industry is decades behind in technological advancements and what can be done.
• 8:15 – What are the key areas lenders can focus on to improve customer retention and acquisition?
• 12:32 – How the U.S. mortgage market is unique and what that means for both borrowers and lenders.
• 17:15 – The future of the mortgage industry lies in accelerating processing speeds.
• 
  

Links: Learn about CLIP (CoreLogic Integrated Property number)

Up Next: Modernizing Loan Origination Workflows: A Shortcut Through the Mortgage Maze

Find full episodes with all our guests in our podcast archive here: https://clgx.co/3zqhBZt

Praveen Chandramohan:

The word death pledge actually meant that you would take a pledge to repay your loan, and whenever you pay the loan, the pledge is dead.

Maiclaire Bolton Smith:

Welcome back to Core Conversations: A CoreLogic Podcast where we tour the property market to investigate how economics, climate change, governmental policies and technology affect everyday life. I am your host, Maiclaire Bolton Smith, and I'm just as curious as you are about everything that happens in our industry.

So many of us have a love-hate relationship with mortgages. It's a tool that many of us use to reach the major milestone of home ownership, but it is also a decision that comes at a cost, and usually, that cost is hundreds of thousands of dollars — plus interest. And it's a burdensome process. So how can this process become easier for everyone? That's a question whose answer has played out over generations as governments have refined home loan practices.

But today we're going to take a look at the future of the industry and the role that technology will play in its next stage of development. So to dive into this subject today, we have CoreLogic's Praveen Chandramohan, an executive in origination solutions. So Praveen, welcome to Core Conversations.

PC:

Thank you, Maiclaire. It's a pleasure to be here talking about something that I'm really passionate about.

MBS:

Awesome. Okay, well, before we get into it, why don't you tell our listeners a little bit about who you are and what you do here at CoreLogic?

PC:

I've spent about the last 20 years of my professional life at the intersection of technology and housing finance. I've been with CoreLogic for eight years now, and prior to that for about 10 years at Fannie Mae. And over the course of my career, I've spent my time across various business units — think capital markets, single-family valuation modeling, rental solutions and finally running a loan origination system. These experiences amazingly gave me a front-seat view to the housing finance value chain, all the way from rental to retail to wholesale to correspondent, all into the secondary market space. So, I'm currently responsible for running a business that's focused on providing mortgage lenders end-to-end solutions, whether it's to grow their existing business or to complete a mortgage transaction to originate a loan.

MBS:

That's great. You definitely are the right person that we need to be talking to today with that kind of background. And I'm also super excited because you and I had never encountered each other before at CoreLogic, so I'm excited to get to know what you do a little bit better. So let's just jump into it. And I guess immediately when I think mortgage, you think of if you translate it formally from French, it's a legal term that means death pledge. So that doesn't sound like something fun, but clearly people take this seriously. We make this pledge to our death that we will pay for this property.

Erika Stanley:

Before we seriously get into the discussion about mortgages, I wanted to remind our listeners that we want to help you keep pace with the property market. To make it easy, we curate the latest insight and analysis for you on our social media, where you can find us using the handle @CoreLogic on Facebook and LinkedIn or @CoreLogicInc on Twitter and Instagram. But now let's get back to Maiclaire and Praveen.

MBS:

I guess there's... I mean, it just shows too that a mortgage has been around for so long and now we're really talking about everything in our industry is just moving in the direction of tech-forward. So can you really talk about where the mortgage industry is going?

PC:

It is funny. Well, it is a serious business, no pun intended, but it's not as scary as it sounds. The word death pledge actually meant that you would take a pledge to repay your loan, and whenever you pay the loan, the pledge is dead. Or the loan-

MBS:

Oh, okay.

PC:

Yeah, the pledge is dead. That's really what it comes down to.

MBS:

You're not pledging until you die. You pledge until the loan is dead.

PC:

You're not pledging until you die. Correct.

MBS:

That's a better connotation then.

PC:

ES:

PC:

And then if you think about the size of the business, U.S. mortgages and the mortgage-backed securities are one of the largest asset classes in the world for about ... say about $10 trillion in market value.

MBS:

Wow.

PC:

MBS:

Very much so.

PC:

What that means is completing a series of defined steps to verify, qualify the borrower, verifying the property, going through the appraisal process, a series of compliance checks to meet the regulatory guidelines. And looking at the soundness of the financial transaction, rightfully so, to protect the borrower. So, if you look at all of that, it continues to be a human-driven process from the point the borrowers stopped engaging. And this is really where the future lies. So the race is on to get to a true digital mortgage. And what that really means is we're moving from a people-centric workflow to a data-enabled automated workflow. Think automated underwriting of the borrower and the property, think about a fully digital experience to close alone. These are all the areas where technologies today are playing a big part in moving our industry forward. And these are exciting times.

MBS:

Okay. This is exciting because I've mentioned a few times on this podcast that I've just gone through this process of buying a new home. And if you listen to the episode that I recorded with Molly Boesel, you'll hear that it was a debacle and a lot of things happened, and I went through the process twice because the house fell apart. The house didn't fall apart, the deal fell apart because the sellers backed out on us. So this is really interesting because... this topic of technology moving forward and things becoming digital. Because that was one thing that surprised me when we went through the process of getting our mortgage is it seemed to be still pretty cumbersome, still had to sign all of the paperwork in person, somebody came to us versus us having to go to a title office. But it still seemed like there was a long way to go with technology. So can we talk a little bit more on where is technology going and what does the future really look like?

PC:

So in the era of what I call digital mortgage, there are some key areas today that lenders tend to focus on. One, you can think about customer retention and acquisition. So that's an area where lenders are heavily investing in technology. The borrow experience from application to close. That's another area where the lenders are heavily investing in technology. In fact, traditionally, that has been the one big growth area from a technology perspective. How do I best interact with my customer on the other side? The underwriting process, automated borrower and collateral underwriting, that is an area that was started with a lot of the innovation and that's an area where technology is now taking full speed ahead.

And a lot of the lenders' back-office processes to fulfill and fund the loan. Those are some of the three or four key areas where technology does have a potential to really make an impact to the lenders. And by definition, today, the U.S. mortgage is a very transactional aspect. So think about you apply for a loan, you work with your lender and then you go away. But what's happening, especially during these down times, lenders are beginning to think about how do I retain this customer for life? And they're starting to invest in technology that gives them that customer for life. They're using a lot of the data and analytics around it to say, "Can I continue to engage with my customer, so when their next transaction happens, I would be the first one that they would call?"

ES:

It's important today to be able to reach clients where they already are. That's why CoreLogic has partnered with Snowflake and Databricks to develop apps for native integration into these cloud environments. By CLIPping portfolios to our deep archives of property data, individuals can quickly and simply run enterprise-wide analyses. Find out more at the link in the show notes.

PC:

Lead generation.

MBS:

Oh, that's interesting. Yeah.

PC:

Another huge area for technology growth. Several industries are automating ways to find ... They've perfected the art of consumer behavioral-based marketing, lead generation techniques that can drive better and effective customer acquisition for the lenders. We'll continue to see this heavy focus on a lot of the backend automation. That'll continue to be an area where we'll see a focus on exception-based processing. And then I think I'll be missing a point if I don't talk about generative AI. Generative AI is amongst one of the most emerging technologies where you'll start to see hyper-focused customer messaging that would really help lenders target consumers with really precise talking points so they can help convert that lender and help guide them through the process.

MBS:

That's really interesting. I actually was going to ask that exact question. As you know, we are in a world of ChatGPT running everything at this moment too. So how is AI driving the future of mortgages? So that's really interesting because I think from a homeowner's perspective or a homebuyer's perspective, you don't think of a mortgage company until you're looking to buy a house. You pay your mortgage every month but you could ask a ton of people, "Who's your mortgage by?" They wouldn't be able to tell you. You can ask them, "Which secondary market is behind your mortgage?" People don't know. The average homeowner just doesn't even think about this information.

So, if you think of it from the actual mortgage originator and the mortgage provider. For them being like, "I need to hold onto this customer." So how can they know what their homebuyer is thinking of doing? How can they think, "Okay, mortgage rates have gone down, these people are going to want to refi soon. I'm going to provide them a free refi," or something like that so that they can know what their homeowner is thinking so that they can be ahead of them. That's really cool. So that they can be ahead ... the industry can be ahead of the homeowner and what they're thinking so that they can try and keep the customers that they have.

PC:

That's exactly right.

MBS:

Yeah. No, really, really interesting. Okay. I want to circle back on something too. You talked about how, and this is something we've talked about also with our economists, is how it's really interesting that the U.S. is the only country in the world that provides these 30-year, fixed mortgages. And I've mentioned a few times, I'm originally from Canada. When I talk to my family about our mortgage, they don't understand.

They're like, "Well, you mean you're locked in for five years?" And I'm like, "No, we're locked in for 30 years." And they're like, "It doesn't work like that." And I'm like, "It does here." So that's something that I didn't quite realize is that it is unique to the U.S. how we have these 30-year fixed mortgages and that they are the most common because people want stability. People want to know what their payment is going to be from now until they make a change, not that the market is going to change it for them because there's a lot of uncertainty with that.

ES:

Speaking of U.S. mortgages and the importance of stability and home ownership, it's that time again. Grab a cup of coffee or your favorite beverage. We're going to do the numbers in the housing market. Here's what you need to know.

MBS:

But getting into it and getting ready for getting a mortgage and even doing a refi, it's a ton of paperwork. It's extremely nerve-wracking. I think you mentioned too, on the borrowers side of things, like what they have to do to validate that this is a secure transaction that they should be going in. Should they be giving hundreds of thousands of dollars to this particular person? How can they trust that this person is going to be reliable to pay them back? So yeah, can you talk a little bit about some of the ... from that perspective, where technology is really taking us and what the future looks like?

PC:

Yeah. So if you think about the mortgage transaction, the entire cycle is a very cyclic business. It is sensitive to interest rates and it's very dependent on the macroeconomic conditions. You touched upon something that I think is worth double-clicking on, which is really the cost and the expense associated to a loan, right? You talked about this becomes an expensive process. And to appreciate that expense, you have to think about the complexity of the transaction. From a borrower's perspective, yes, you start an application and you expect an answer. But if you peel it under the hood, there's several players involved. You have the borrower that's involved, you have the realtor that's involved. You have the lending institution that's involved. You have appraisal management companies and appraisers that are involved in this process. Title providers, settlement service providers, insurance providers, your servicer, the agency that is eventually going to say, "I'm going to package this and securitize and guarantee this loan." And then you have regulators who have a whole bunch of compliance that's driving the dos and don'ts of originating a loan.

MBS:

This is super interesting. And so something ... You're triggering all these thoughts in my head here. So I think, again, like many of our listeners who may be homebuyers who go through this process, you don't think of all this stuff that happens behind the scenes and that there's all of these different components that go into actually funding a loan.

ES:

Maiclaire and Praveen spent this episode talking about why improving the mortgage workflow through technology is an essential next step for the industry. In next week's episode, they'll dive into how making things more simple for users is not only beneficial for retaining customers but how it's also a great way to lower overall costs. As always, we'll pick back up next week. See you there.

MBS:

And thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life. Producer Jessi Devenyns; editor and sound engineer Romie Aromin; our facts guru, Erika Stanley; and social media duo, Sarah Buck and Makaila Brooks. Tune in next time for another Core Conversation.