This piece originally appeared in the June 2024 edition of MortgagePoint magazine, online now.
Few factors dictate the housing market more than mortgage rates. And when rates are high, many borrowers put their home financing decisions on hold, and most lenders and servicers struggle to find new business—usually after they lay off staff, which doesn’t make the challenge any easier.
These factors are impacting the industry right now, yet some organizations are bucking this trend and are doing quite well. They are not focused on things they cannot control, like rates, yet focus on the things they can control, like using technology to identify and maximize opportunities that might be hiding right under their noses.
MortgagePoint had the opportunity to discuss market trends with Nate Den Herder, MBA, Founder and CEO of Ardley Technologies and find out what advances in tech can contribute to new business avenues. Ardley Technologies is a provider of mortgage technology solutions that help lenders and servicers mine their portfolios for new deal opportunities, and improve retention rates. Over the past year, the company’s Actionable Data Intelligence (ADI) platform has generated more than $1 billion in loan volume, while enabling companies to automate up to 85% of their sales activities. Den Herder spent 15-plus years with Fannie Mae, where he was the GSE’s lead developer of Collateral Underwriter (CU) and played a key role in the development of Day 1 Certainty (D1C).
Q: How can technology and automation help to find new business, even when borrower activity is low?
Nate Den Herder: Many people are still buying homes, and many homeowners are still taking equity out of their homes to make other purchases or pay down debt. So, there is always business to be had somewhere. Of course, when volume is low, it is imperative for organizations to be as efficient as possible while still remaining competitive. That is more true than ever today, and it is why strategic technology investments are key.
No one can control the housing market, but any company can maximize their efficiency and revenue opportunities, regardless of where rates are headed. Automated technologies can help organizations leverage their existing resources more productively, while reducing the cost it would take to complete the same tasks manually. Some of those technologies can also help lenders identify sales opportunities hiding right inside their own portfolios and create hyper-personalized loan offers, without any human assistance.
By blending technology and automation in this way, lenders and servicers can get the most out of the many financing opportunities that still exist.
Q: Why are lender and servicer databases so often overlooked or underutilized when it comes to finding new business opportunities?
Den Herder: Most lenders and servicers are sitting on a tremendous amount of opportunities within their contact databases or portfolios, but lack the time and resources to identify them. Some of that is a function of a lender or servicer’s ability—or lack thereof—to mine the data they already have in a meaningful and actionable way. Our own research found that roughly 1% of loans inside the average servicing portfolio involve properties that are currently listed for sale. Most servicers have no way of knowing this information—they are completely blind to it.
However, technology is available that automatically monitors a servicer’s portfolio and property listings nationwide and sends a trigger when a borrower’s property is listed for sale. New tools can also leverage loan-level borrower data and live rate sheets to determine when a borrower in a servicer’s portfolio is eligible for a cash-out refinance, and even reach out to the borrower with a personalized loan offer. In fact, we are seeing data really come into focus for forward-thinking mortgage organizations.
Q: How does data analytics contribute to accurately and efficiently identifying new opportunities?
Den Herder: Data and analytics enable organizations to understand their data at scale and make faster decisions that generate revenue. This is notably different than the type of data mining tools you find on most legacy loan platforms, which are basically only useful for reporting purposes. Data and analytics allow servicers to continually analyze loan level-data in their portfolio as well as live rate sheets, fees, and property information, and instantly determine when a borrower is eligible for a particular loan product. Such tools are also able to structure these results in an easily consumable way, so that a lender’s team is able to make better and faster decisions with it.
Assuming you have the right technology, you can use it to create hyper-personalized loan offers that are automatically sent out to your borrowers. You can even complete most of the borrower’s loan application, because you already have the data. If an organization wants to leverage the data it already has and the data they collect on an ongoing basis, putting data and analytics to work is mission critical.
Q: Is this really the time for lenders to invest in modern technology? Why not reduce costs and wait for conditions to improve?
Den Herder: Invariably, the organizations that do the best in a down market and increase market share when conditions improve are those that never let off the gas pedal when it comes to making strategic technology investments. We have seen this play out in multiple cycles now, and the current cycle is no different.
Every player in the industry is focused on reducing costs, and many have gone through the painful experience of laying off staff. We have seen this happen in previous cycles too. But there are technologies available right now that enable lenders and servicers to operate more efficiently and empower their existing staff to be more productive. So, when there is an uptick in application volume, they don’t have to hire as many people to remain competitive.
Q: In what ways might technology reshape the mortgage landscape this year? What about five years from now?
Den Herder: Today’s mortgage organizations are having to take a close look at where they are investing their capital to ensure they are putting it to work in the right places. Right now, the smart companies are investing in many innovative technologies that we feel will become table stakes in the next three to five years. So why wait?
