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Wednesday, January 23, 2019

Q/A with Joe Langner of Blue Sage

By MBA Insights Staff
May 29, 2018

Topics:
Joe Langner
Blue Sage

Joe Langner is CEO of Blue Sage, Laguna Beach, Calif., developers of a browser-based, end-to-end digital lending platform. He is a mortgage technology veteran with more than 25 years of executive experience in the financial services and software industries, and former chief operations officer at Ellie Mae. He can be reached at joe@bluesageusa.com.

MBA INSIGHTS: You came to Blue Sage from Ellie Mae, where you played a role in growing its Encompass loan origination system. What opportunities do you see at Blue Sage?

JoeLangnerJOE LANGNER, BLUE SAGE: I really enjoyed my time at Ellie Mae and I am very proud to have helped introduce a brand-new product in the marketplace, Encompass, and scale it to the level of success it has today. With Blue Sage, we are working hard to achieve similar success, but there are some key differences.

With Ellie Mae, we had the benefit of leveraging our other product offerings, Contour and Genesis, to help increase our speed to market with Encompass. At Blue Sage, our advantage is being able to leverage the more than 30 years of our team's expertise building loan origination systems for five of the 10 top U.S. mortgage lenders. However, we built Blue Sage from the ground up this time, using our past experiences to include the best features for an LOS and re-thinking ones that should be designed better with newer, modern technology. We also built the solution to be 100% browser based, allowing our customers to realize our features on both desktops and mobile devices. When it comes to functionality, scalability, performance and security, Blue Sage is far superior to other systems--plus it was designed from the ground up to support retail, correspondent, and wholesale lending, including consumer direct all in one platform.

Another major difference is that Blue Sage is delivered with and designed to leverage Amazon's services environment, so our clients benefit from a multitude of Web Services on a platform that is always innovating. Our consumer direct application is just one example. Borrowers can discover, price and apply for a loan and our system will automatically order credit, calculate fees, assign conditions, run compliance, run automated underwriting and create and deliver initial disclosures ready to e-sign. All of this occurs automatically and is completed in about two minutes from the time the borrower submits their information.

Loan officers achieve enormous benefits, too. Once a loan officer logs into their Loan Officer Portal, which is basically a POS/CRM view designed specifically for their needs, all the data, documents, consent details and other information are already completed through this workflow automation. Instead of wasting time gathering and typing in the borrower's information, they can focus their energy on assisting the borrower and consulting them on the best loan for their needs.

From a personal standpoint, there's nothing better than working with a great team and having a game-changing solution like we have here at Blue Sage.

INSIGHTS: What are some unique challenges you see with the LOS system? Has the mortgage industry overcome these challenges and what challenges does the industry still need to overcome?

LANGNER: One major challenge all lenders have is the cost of originating a loan, which continues to climb. While a lot of technology has been developed over the years, most lenders still haven't seen the type of cycle-time improvements it takes to lower origination costs.

According to MBA, the average underwriter approves about 33-35 loans per month (https://www.mba.org/mba-newslinks/2017/august/mba-newslink-monday-8-7-17/residential/mba-chart-of-the-week-monthly-underwriter-productivity-for-retail-production-channel). This is about the same productivity that we had back in 2013. So, while there has been significant advancement in technology, lenders really are not seeing the improvements they are looking for. At Blue Sage, we are hoping to make a serious dent in that statistic through our use of process automation, process control, and workflow management where the "system becomes the expert."

Slow progress in our industry is also due to complexity, and the fact that lenders must work with multiple companies to support their needs simply to acquire customers and fund loans. Providers of older legacy systems have been slow to adopt new technology or promote an open architecture through APIs (Application Programming Interfaces) to help different systems talk to each other.

Going forward, lenders will need the ability to integrate with other fintech providers and internal systems, which means that every component must have a corresponding API. By using a platform with these capabilities and tools, lenders can even build other applications unique to them. For example, one of our customers created an entire loan officer-facing mobile app that was built 100% by using our APIs.

INSIGHTS: Larger lenders who have multiple channels must have unique challenges vs. single channel lenders. What are some of the capabilities Blue Sage has for these more complex lenders?

LANGNER: Larger lenders typically leverage a multi-channel marketing approach, but many have separate systems or multiple instances of the same system set up so they can manage the different processes, procedures and workflows involved with different channels. While this strategy can work, it's typically costly, more complex, and limits a lender's ability to measure their business in real time or in aggregate. For example, most would need to leverage a separate reporting system outside of their core lending platform to create aggregate views. In addition, due to multiple systems, or instances, a lender can potentially create multiple copies of the same system data fields, which may or may not be in sync thus opening them up for inaccuracies or possibly compliance risks.

At Blue Sage, we built our entire platform with multi-channel lenders in mind. We have one system design leveraging a single robust unified database supporting all lending channels, wholesale, correspondent, retail, and consumer direct. This enables our customers to not only see performance and operational reporting in aggregate or by any subset of views they need, but since it is an entire digital lending platform, data or service orders via one access point is instantly available to all other authorized users thus greatly improving time efficiencies.

INSIGHTS: How can mortgage lenders balance ‘a need for speed' from origination to closing while, at the same time, improve the borrower experience and remain compliant? How do you envision the LOS to improve speed and the borrower's experience in the future?

LANGNER: With the shift in how borrowers are shopping and applying for loans, many lenders have flocked to the current "shiny object" in fintech known as "the digital mortgage." While digital mortgage bolt-on tools and websites have extended workflow and data entry to the consumer and achieve key cycle time improvements, they also introduce added complexity. For instance, most of these tools have been developed by companies who are not also offering the total LOS solutions. This becomes a challenge to make sure regulatory checks and balances are in sync with the digital loan application, the lender's CRM and LOS systems.

That's why lenders need all-in-one systems--ones that provide support for all channels and the roles within the lender's organization as well as digital origination tools for consumers, such as borrower portals and robust CRM/POS tools for loan officers. Using one system that leverage the same lending components and system automation enables lenders to automate many lending processes that are done manually today. The result is faster fulfillment speed and a consistent, compliant approach to each loan, whether it's one or more channels in a mortgage operation.

INSIGHTS: Looking at the bottom line, how can an end-to-end LOS become a cost benefit for mortgage lenders and how is it beneficial for both the large and the mid-size lender?

LANGNER: Mid-sized and larger lenders see the most benefit from process automation because they typically have greater complexity and volume in their pipelines. One complete, comprehensive solution with one price per closed loan can save these lenders the significant cost and hassle of bolting together multiple systems, each of which have a separate cost and make integration and maintenance more complex. The best value stems from lower total cost of ownership in the form of hardware, support and compliance risk savings, in addition to eliminating multiple manual processes.

INSIGHTS: You say that the Blue Sage digital platform is like combining Amazon and Oracle for the mortgage lending industry. Why is that?

LANGNER: I like saying that because I value and respect both of those companies. Amazon has built an amazing customer journey and automated process that enables it to sell an enormous array of products to consumers. No one needs to teach you how to use it, and it is fast, intuitive, and dependable. Oracle is also an amazing company that is best known for its remarkable financial services software and enterprise solutions.

I think of the Blue Sage Digital Lending Platform as the offspring of Amazon and Oracle because it shares the qualities of both companies. It's also fast, easy to use and intuitive. It's built on solid, proven, scalable technology specifically for the lending industry. In my opinion, Blue Sage represents the next generation of mortgage technology. Who wouldn't be excited to be a part of that?

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)

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