Mortgage Vendor News & Views
By Scott Roller
May 13, 2019
Scott Roller founded 3W Partners LLC and is Co-Founder of Vendor Surf LLC (www.VendorSurv.com), each dedicated to revolutionizing sourcing of vendors in the mortgage and credit union ecosystems. The companies monitor and report on the service provider market to provide participants what they need to excel in today's market. Mortgage Vendor News & Views is a new monthly feature in MBA Insights.
Making sense of the service provider market across the end-to-end mortgage ecosystem is a full-time job. There are at least 80 different kinds of vendor categories and thousands upon thousands of vendors within. Plus, they come and go, have affiliates, form joint ventures, merge, re-brand themselves and make other moves, making it as if some hungry beast was eating the bread crumb trail we continually plot out. It is easy to lose your bearings if not relentlessly paying attention.
In this inaugural edition of ‘News & Views,' we identify significant happenings and trends and we provide our own commentary--a view from the chair we sit in. Monitoring and reporting on the vendor marketplace has been our focus for nearly a decade. Let's get started.
Altisource--Divesting, Yet Innovating
Altisource is an integrated service provider and marketplace for the real estate and mortgage industries with segments including mortgage services, financial services and technology services. Its services cover Servicer Solutions, Origination Solutions, Real Estate Investor Solutions and Consumer Real Estate Solutions.
Within the past 60 days it announced sale of two separate business units. The first included its Financial Services business, including Nationwide Credit Inc., a provider of collections, customer relationship management and call center outsourcing for financial, retail credit, mortgage servicing, insurance, utility and hospitality industries, with nearly 2,300 employees. Second, Altisource sold its loan origination software business, Mortgage Builder, which it had purchased about 4.5 years earlier.
In other news, Altisource's Title and Appraisal business units, Premium Title and Springhouse Appraisal, just last week announced a combined platform for HELOC lenders, called HomeVal. The new hybrid product offers combined title and valuation data for lenders, minimizing closing costs due to market demands on small balance transactions. Lenders can complete title and valuation requirements at a lower price than traditional title insurance policies and property appraisal reports. It looks like there are three separate tiers of report robustness--and price.
Bill Shepro (CEO) and team have an enviable set of brands across the spectrum, in services and technology. They also have some of the industry's top talent running those businesses. We know many of them quite well. Altisource will remain a formidable player, despite this reshuffling. Continuing the journey to be less dependent upon Ocwen revenue is key, where is seems major strides have already been made.
Trending Towards Captive Vendors
We continue to see increased interest and activity in the captive vendor arena, whereby lenders either buy vendors outright, or form joint ventures with them. This is, and always has been, most prevalent in title insurance, although in play for other services too. A recent such example is Churchill Mortgage's announcement last month to enter into a JV with Jack Goisse and team at American Home Title, Charlotte, N.C., to form a new title company, Churchill Title Solutions. We are aware of a handful of others considering similar moves.
The two primary drivers in title insurance are the lucrative margins, and equally as important, the ability to control the borrower experience throughout the settlement and closing process. It is often said the closing table experience is what the borrowers remember the most. Therefore, lenders with superior ability to deliver that WOW borrower experience often think they can raise the bar on the closing process when they have more control themselves.
We generally like captives, given our past experience managing a Top-5 lender captive appraisal, title and technology JV, including serving on the Board. Captive vendors are not for everyone, but they can be exceptional for those lenders with the right objectives, commitment and due diligence.
Our advice is to first consider the upside to the borrower experience and your brand, because the insurance margins will always be there, provided you perform the requisite operational and financial due diligence on your potential partner. Furthermore, title insurance underwriters are fierce competitors, and we have seen instances where some of them will either consider helping fund certain M&A deals and maybe even take an ownership stake in the JV. Of course, your title agency volume will have to go to that underwriter in such cases. The other advantage to this possible underwriter tie-up--who better to spot a Gem or a Junker? There are few better ways to mitigate your risk here, especially if your in-house title expertise is limited.
More Products in Home Equity (and in General)
Similar to Altisource's HomeVal, another vendor, FirstClose, Austin, Texas, has its own product bundle to optimize the home equity and refi market. The FirstClose web app and LOS plugin combines everything needed to close a loan (e.g. valuation, title, flood) in a simplified platform. It says its full suite of solutions and processes can deliver 40% reductions in turn-times, among other savings.
Separately, just last week we learned about Lenderful Solutions, Pontiac, Mich. It has a one-stop home equity solutions platform with rates, application, MLO appointments and learning opportunities. Plus, it can be white-labeled. This auto-pre-qual tool instantly captures leads, will integrate them into drip campaigns and can deploy the platform across the enterprise, including website, in branches, with realtors and beyond. You can see Lenderful's other products on its website, as they are not limited to home equity.
Our Take--Home Equity
With a widely reported value of nearly $6B in untapped U.S. home equity, lenders will aggressively keep their ‘eyes on that prize.' In turn, vendors across the ecosystem are in innovation mode, much like a few mentioned herein. Necessity is the mother of all invention...and the home equity market opportunity continues to build. Lenders don't just need to originate loans, it must be done profitably, aided by innovation. Start looking around now at the solutions hitting the marketplace, continually keeping the pulse. Don't wait to start the moment your senior executive gives you the task, because you can bet he/she will expect it ‘tomorrow' (or yesterday!).
There are myriad tools and solutions out there that help referral partners, identify leads, increase pull-through and conversion rates, streamline process and drive out costs. Many of them also improve file visibility and communication among all stakeholders in the process, borrowers included. Loan officers often have unmanageable pipelines and cannot (or won't) adequately communicate--let innovative solutions help solve it.
(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 firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)