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Saturday, August 18, 2018

The MBA Interview: Camillo Melchiorre, President of IndiSoft

By MBA Insights Staff
January 30, 2018

Topics:
Cam Melchiorre
IndiSoft
Technology and Compliance

IndiSoft, Columbia, Md., a technology development firm that specializes in systems for the financial services industry, named Camillo Melchiorre president this past August.  

CamMelchiorreMelchiorre joined IndiSoft from HLP, where he was president and CEO. Before HLP, he was senior vice president of loss management at Radian Group Inc., where he led efforts to manage losses during the financial crisis with new systems, operations and loss mitigation strategy.  

Melchiorre has more than 30 years of experience in many areas of the mortgage industry, a featured speaker during several industry events and author of numerous articles that have appeared in leading industry publications.  

MBA INSIGHTS: How do you anticipate the new administration could affect the regulatory scheme for the financial services industry?   

CAM MELCHIORRE, INDISOFT: The new administration will make marginal changes in some of the more onerous provisions of Dodd-Frank and possibly the Consumer Financial Protection Bureau, but the major provisions that add layers of requirements will remain especially those related to anything touching the consumer. And in addition to that, I also do not see capital requirements being relieved, not at least this year.  

INSIGHTS: Lenders are aggressively competing for new mortgage loans. How can technology give them an edge?  

MELCHIORRE: Any technology that removes process steps; makes eligibility decisions quickly and communicates with consumers clearly and effectively will reduce origination costs and shorten processing times. Such technology will also result in a competitive advantage. But the true game-changer will be a platform that unifies the entire origination process and integrates with supporting systems to provide ultimate collaboration among the continually more disparate parties in the transaction.  

INSIGHTS: What are some factors affecting lenders' decision to adopt new technology solutions?  

MELCHIORRE: I've seen the need to consolidate regulatory compliance including pre-funding quality assurance and vendor management into a unified system. Even some of the bigger originators are still using end-user programs which are bogging them down and draining resources.  

INSIGHTS: How is technology assisting the mortgage industry and consumers affected by the hurricanes to recover?  

MELCHIORRE: DIMONT is one of the companies being proactive in helping consumers. It has created a consumer portal for servicers to assist affected borrowers in the insurance claims process. Especially the complex process of property restoration which, operationally, mimics the administration of a construction loan and is rife with regulatory and reputation risk. Also, many servicers are looking for outsourcing solutions which include collaborative technology models.   

INSIGHTS: What role will technology play in ensuring compliance?  

MELCHIORRE: Technology will take an increased role in ensuring regulatory compliance as various collaborative platforms expand connectivity to supporting systems, add content and incorporate artificial intelligence. The stakes are getting higher as indicated by some recent security breaches and as investigations move forward companies' audit and compliance regimens will be highly scrutinized.  

INSIGHTS: Where will the next big technology breakthrough come from for the mortgage industry? Where should the next breakthrough take place?  

MELCHIORRE: There are many companies trying to leverage technology to focus on transforming residential servicing. This seems to be a recurring pursuit with several attempts in the late 1990s and early 2000s...then the crisis hit.  

With delinquencies and loss severity at pre-crisis levels many people are rethinking the servicing paradigm including supporting technology. It is definitely an area where there is great opportunity since many of the tasks and activities are repetitive and the customer interaction is conducive to self-service by customers. However, one of the hurdles is that getting away from the dominant service bureau model must provide a compelling and quantifiable value proposition that will take some real fortitude and incredible change-management capabilities to deploy.  

INSIGHTS: How will ongoing mergers and acquisitions affect the use of technology in the industry?   

MELCHIORRE: This is always a solid method to get exponential improvements when these jointures provide broad based improvements. In some instances a merger may be driven by a target company's proprietary technology that a suitor may better leverage.  

INSIGHTS: Will companies such as Quicken/Rocket Mortgage and Roostify continue to drive change in the industry?  

MELCHIORRE: I think so, because that is their vision and they have plenty of capital to be aggressive. They also are forward thinking in how to market to consumers. They also realize that the human interface for mortgage lending must continue to improve while lessen the paper burden on applicants.  

Plus, they are adept at taking emerging and innovative smaller technology companies dealing with specific components of the process and folding them into their platforms. A case in point is what Rocket Mortgage has done to integrate paperless asset and employment validation technology into its lending platform.  

INSIGHTS: What can we do now to ensure that we never repeat the economic downturn of 2008?  

MELCHIORRE: Stop lending. Just kidding. I think the Basel III capital rules will go a long way in mitigating that possibility in the future. Moreover if we can maintain discipline in lending that encourages home ownership but does not set unrealistic goals like "70 percent homeownership rates in the USA," delinquency rates may rise but never to the crisis level. Also, some of the more egregious underwriting practices like the NINJA and negative equity loans may never return and they were major contributors to the mortgage disaster.  

INSIGHTS: With vendor management, what changes has the industry truly experienced and what has been the role of technology in that?  

MELCHIORRE: Vendor management has really become "risk management" with legal liability and regulatory penalties driving the need for better controls; executive awareness and transparency. Technology that delivers data and analytics in real time regarding vendor performance will rise to the top. Being able to assess and grade a vendor's risk profile will also be critical and a key to technology choices.  

(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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