How Lenders Can Save Up to 80% On Costs Through Automation & Optimization

Hey, Taylor, I can't hear you. Maybe that's me. No, you're on mute.

Yeah, I'm muted.

There you go.

You know, I gotta get a better setup in my off. I need, like, a recording studio. That's what I need. I need a studio.

I'm moving my office this month, and I'm gonna put a little recording setup in it to make this stuff easier.

Yeah, two people.

Jared Stanley from National Brokerage Lenders. National Mortgage Brokers. Yeah, yeah, yeah. He's this chief marketing officer. Amazing setup. He'll teach you how to do it. Or Jeff Zimfer from Mortgage Marketing Radio. He also has an amazing setup. And we'll teach you how to do it.

That's what I need. I like it. I need, like, a setup. Like, I could just get up, leave my desk, go sit down, and it's like, nice.

Yeah.

Doesn't have to be perfect. Just like, better than.

So, Josh, we're all set. The. The poll I confirmed with Michael Hammond is set. I'll drive the deck. I think slide nine. Just tell me if you're going to add something or what.

No, I never got the slide nine. I. So just.

I'm. I'm gonna. It's all good. I'm going to kill it, and I'm going to add in place the new slide 9 I just put in there.

Am I running the poll?

Yeah, you're host, so you're going to have to run the poll.

Okay, so you have to tell me when.

Yeah, no problem. That's slide five. I'll. I'll.

I'll.

I'll tee it up.

Rich, will you circulate the final version of the deck? I like to have it up on my other screen.

You need PDF or are you cool with whatever? All right, let me do this. Host and panelists, Here we go. Boom.

That's for a black T shirt, so I'm glad I didn't do that.

Yeah, well, you know.

You would have.

Been cool with this.

Everybody loves my coffee mug.

I do like your coffee mug. I just put the link to the deck in the chat.

That's fine.

In the zoom chat, you just send.

Me an email, Rich, because last time I tried to link to the deck security settings, Google.

I'll do it right now.

Just push it in an attachment.

No problem.

I had to put a beach towel up over my window because this time of day, the sun is exactly in this spot where it shoots right through and nails me on the side of the head. So then I end up with, like, you can see Half of my face, and then half of my face is dark on camera.

Yep, I'm going through the same thing. All right, Taylor, I just sent it.

Cool, thanks.

All right, presentation mode.

I need more light.

Huh? I think you look cool. I like the Star wars incelerate logo. It's pretty awesome.

It's been here. It's been the office from the beginning.

Rich, try not to let me say anything stupid. Wouldn't be the first time.

It's all good. Hey, no matter what the turnout, let's just have a good conversation, because I'm going to promote the hell out of the content on social. So just give it your best and kill it. What do you think? Should I start with the deck shared so people know they've come to the right place on the title slide?

Yeah, yeah, I'll do that.

Boom.

All right, I think we're live. By the way.

I think you have to. Oh, my fault. I think you have to hit start.

Don't think so.

We are live. We are live, everyone. Come one, come all. Thank you for joining us. We'll get started in just a minute. You come to the right place.

While we're waiting.

While we're waiting. Taylor, I'm gonna ask you the same thing. I just. Just asked another client just a second ago. Is a hot dog a sandwich?

Ooh, wow.

That'S a tough one. Right? Is a hot dog sandwich. It always throws people off, but people are opinionated about it.

I'm gonna go, no, definitely not a sandwich. Because if it was a sandwich, then so is a burrito. Same thing.

Yeah.

And so is a hamburger.

Yeah. Anybody that calls a hamburger a beef sandwich, that's like un American.

Delicious beef sandwich.

Cool.

Where's everybody joining us from? Anybody want and feel free to drop it into the. In the chat. Oh, it looks like we were. This chat's disabled right now, but that's okay. All right, I think we get the.

Better question is, at what age is it inappropriate to put ketchup on a hot dog? There's a. There. This is an ongoing. This is like an Internet meme online debate. At what age do you stop Is.

It is inappropriate, and then mustard is only acceptable?

Yeah. I say no age. I say you eat it however you like it. That's my opinion.

I think that's Chicago rules from what I understand, maybe. All right.

And argue.

Well, everybody, look, thank you so much for coming. We're going to get started in 30 seconds. Let's give it a little bit longer. Last couple seconds for folks to join. All right.

Let's go.

Everybody. Thanks for coming. You've come to the right place. We are talking about how lenders can save up to 80% on cost through automate automation and optimization. We'll be discussing efficiency best practices today. We'll also be talking about how those can improve the customer journey. We've got some terrific content. Let's start by introducing our panelists, our esteemed panelists. I should start with Taylor Stork. He is chief operating officer at Developers Mortgage Company. He is also a very successful loan officer. So, Taylor, hi. Thanks for coming.

I would not categorize myself as a very successful loan officer, but I appreciate being here. Thank you.

Well, let's put it this way. I was never a loan officer, and so any type of loan officer is more successful than I am. And I have a lot of respect for loan officers. So thank you very much. I'll next introduce Josh Friend. He is CEO of Incelerate. He is also has a. In a past life, was a loan officer as well. So we have fantastic perspectives joining us, you know, with Taylor being an owner and the chief operating officer at a mortgage company and Josh being a CEO of a FinTech company and also being a loan officer before. Josh, thanks for joining us. Feel free to add anything you like.

No, Richard, great, thanks. And also had about 15 years running a mortgage company as well. So not just a loan officer. I, you know, got a little bit of experience all, all the way around there at the mortgage industry.

So, Josh, you're not just the president, you're a member, too. Is that right?

Clearly.

Next we have Kirill Klokoff. He is CEO and founder of Truvad. Kirill, I'm. I'm gonna try. I'm gonna do it for you. You've got a ton of experience building products and at very highly successful tech companies. Before he started True, he was a head of product at Carta. If any, any startup or even bigger company has a cap table, meaning ownership shares. Well, they probably use Carta or at some point used Carta. And Kirill built that product. And so that is a super successful company. Thank you for joining us, Kirill.

Thanks, guys. Good to be here.

And then finally, me, little old me, I'm VP of marketing at True. I'll just be moderating today, so let's jump into it. We have some fantastic content and I want to make sure we get to it. So first things first, let's set the table. We're going to talk a little bit about the industry and where we're at. I Think everybody should be fit in the audience. If you're remotely in the mortgage space, you should be fairly familiar with what you're looking at. You can see the NBA's forecast here for, for 2024 and a little bit beyond. I think the takeaways here are that, you know, NBA forecasted that by the end of, the end of 2024, rates are going to come down to 6.1%, but it's still going to be a pretty hard mortgage winner that we're heading into right now until, I would say, at least halfway through next year. And in 2025, they think that rates will hit about 5.5%. Definitely what every lender wants to hear. Not exactly what they probably, they might believe at this point because, you know, they're, they're, they're facing tough times right now, as Taylor will, will acknowledge. So I think another point to acknowledge also is that in Q1, you know, the average IMB lost $1,972 per loan, and in Q2, it was 534. And I just read today the Q3, 2023 results came out from MBA. I don't have it on the slide, but it's essentially $1,000 underwater. Not great news for Q3. And so I'm just going to take a, a pause here and say, Josh, do you have any commentary on this? Taylor, do you have any commentary on this? I'd really like to hear, Taylor, you break down the cost, the cost that lenders are facing right now.

Yeah, right now I'm just trying to catch my breath after processing those figures. I mean, look, you have to appreciate, you have to appreciate the profound nature of our business where we're losing money per deal right? Now, look, some of these numbers, you do have to also realize how these numbers are construed and arrived at. Right? So an average number means 50% of us are doing better, but an average number means 50 of us are doing worse. So remember, it's an average number one. Remember that there are a lot of factors going into it. So it's not quite as simple as, as, as those numbers. But fundamentally, I mean, it's difficult for lenders to turn a profit. And, and, and that is not, it's not the same in other industries. It's not the same impact in mortgage, particularly for IMBs, but also for depositories in the mortgage business. We're, we're quite literally not allowed to lose money. We're forbidden to lose money. So if you're a private company and you don't manage your books very well. You can, you know, you can drive yourself into the ground and go bankrupt and go through bankruptcy court and shut down. In the mortgage business, we're just not allowed to do that. We've got profitability covenants and we have net worth covenants. And those covenants are legal agreements or commitments that we've made to warehouse lenders, to HUD, to the GSEs, to the investors to whom we sell loans. There is this entire stitched together fabric of legal covenant and responsibility that basically creates a space where we're not allowed to lose money. And yet the mortgage companies left and right are struggling to, to, to not lose money, which is kind of a big reason we're having today's conversation. And, and I know Josh has lived through this himself. Josh ran a mortgage company for 15, 18 years and had to deal with facing these profitability covenants every single quarter.

Yeah, no, it, it, it, I get that is an interesting point. That is different than other industries. It means that lenders are still capitalized if they're in business. Right. Because they have to be in order to fulfill their covenants and have their warehouse lines. You know, the other thing I look at this is, you know, the cost of produce alone. You know. You know, I think, Taylor, we were talking about this before, and it was something, you know, 200 basis points of a production of a loan goes to sales and market and. Right. And so we look at, you know, the average learners losing 192 or $1900 alone. And now it's a thousand, that's 50 basis points and 200,000. What's the average loan amount these days? 350. So they're averaging. You're losing 30 basis points. So if you really think, look at it like if you can improve some of those channels, you can quickly become profitable, you know, as, you know, dim and grim as the rates have been. You know, I had a, a lender, you know, cut. Reach out to me. We're talking about something and they're kind of planning on, you know, refinancing. Listen, Josh, at the end of the day, if we're going to be at 5 1/2% by the end of 2025. Right. 2024, there's gonna be 3 trillion to $4 trillion in loans that are gonna be refinanceable. Think about all those loans that have been done over the past 24 months, right? There's gonna be a lot less competition out there in the marketplace. This is gonna be like, right, what half, I heard half the Loan officers that are relevant have left the industry. So the relevant loan officers close in one loan or more, it's down by 50% now. So there's going to be, you know, an opportunity. So if you look at this, yeah, my cost to produce, I may not be making as much as I wanted a loan right now, but if I do this right, it's really a lifetime acquisition of a customer. The average customer is going to transact 7 to 12 times in their lifetime. So maybe you got them on time, two or three or one. I don't know where you get them in their lifetime. But if you do this right and if rates are going to be dropping, you may have two or three transactions off this customer over the next two or three years and other customers that you have right now. So that's, I think, you know how lenders that are in this business, like Taylor, you guys are long in the mortgage space. You're not, you're not in this right now to, you know, make a bunch of money today. You're in this because you realize that this is a long term industry that you can make great money on. It's a good industry. And so you're long. So if you're long in the industry, you have to think about how do you get loan 2 and 3 and 4 out of your customer right now?

And just I think that's a such a critical point. And I think that ties back into my original statement that said, you have to look at how these numbers are, are created and manufactured. Right. Because the number we're looking at right now is a per loan number, not a per customer number. And I think that historically, I mean, you know, I started doing loans when I was 24 years old, which, you know, was in the previous century. No, not quite, but pretty close. And the, actually it was the previous century. Oh. So the thing is that historically in mortgage, we've never done a great job at putting a value on the lifetime relationship of a customer. We tend to look at mortgages as single transactions. I think that some companies are better than others. I'm not saying everybody's terrible at it. But what I will say is the best loan officers, the best originators that I've known in my career have been the people that cultivate their relationships and are still doing loans for the same borrowers or from the, for the family of the same borrowers repeatedly over 5, 10, 20 years. So when you look at a number that takes this quarter's revenue and divides it by this quarter's or this quarter's you know, net profit and divides it by this quarter's closed loan volume. That is a mathematical way on the books to say how, whether we've gained or lost money per loan. But it doesn't tell the entire story. And the entire story is that the loans that are being done today might not be super profitable, but the loan that's being done today, done properly, is going to lead to the loan that's done tomorrow. And that's the refinance that Josh is talking about. I mean, look, there's a, there's a simple reality in business. We've all seen this. If you, if you ever took a single business class in college, if you read it, if you've ever read a single business book, they tell you that obtaining and acquiring a new customer is 10 times more expensive than retaining an existing customer. So it's 10 times easier to keep your current customer. And yet in our business, we tend not to do a great job of it because there's often such a distance, a time, time lag between transactions for the same customer. And I think that if you can start to tackle that, then you start to think about, okay, how do I cut my cost of acquisition by 80%? It's actually pretty easy. It's make sure that you keep that customer and do the second loan without spending 10 times the cost to get the second loan.

I think that's the, that's, that is the takeaway, I think, for every lender right now in this market. What? Well, that's fantastic. I think we talked a lot about shaving costs in this market. Right. And making sure we're lean. We also talked about keeping customers over their lifetime and that's how you reduce your costs, you know, as the years go by. So let's jump into this next topic here. This is from a JD power. It came out end of 2022 in 2023. This is us mortgage origination satisfaction study. And what I thought, what was really interesting is less than one in three customers say their lenders deliver the optimal experience. So think about what you just said, Taylor. You just said that you got to retain your customers to have a successful business over time. But one in three customers are saying their lenders are delivering, are not delivering, are only one in three, excuse me, customers are saying they're delivering the optimal experience. So Josh, what is the difference between the lenders were serving those one versus the other two?

I mean, I, you know, from my experience, you know, Taylor, I've heard say the same thing, which is what we're we're selling a commodity, right? A, a 30 year fixed 6 and a half percent loan is a 30 year fixed 6 and a Half percent loan. I may be one point today, you may be one point and an eighth or 0.875 points. Maybe there's 2, 300 difference potentially in closing costs between you and I, but it's just, it's just a commodity. And when you're in a commodity like that, what you have to look at, you really have one way to differentiate yourself and that's service. Like it's given someone an experience, right? And what we see, you know, an experience is two things a customer wants. Well, let me phrase that three things. They want good advice up front and make sure you put me in the right loan up front and you tell me the right things up front. They want consistency, but then they want, they want speed of the transaction and they want to be communicated to properly, right? They want to make sure that you're communicating at the right times. Let them know what's going on, give them the right expectations. And the faster you close a transaction, the happier they're going to be. We did a study a few years ago and I think we looked at about 7,000 closed loans and we looked at days of close and pull through. And what we found was when lenders could reduce their overall days of close for every one day they could reduce the day to close, they improve their pull through by 1%. So when we saw lenders improve their days of close by three, three days went from say 35 to 32, they pull through from 67 to 70. It's pretty interesting because now customers are happier, right? You don't miss rate locks. So speed of transactions, I think is one of the big things. And that's, you know, I think one of the things we'll talk about here is how do you do that? Right? It's, you know, how do you make transactions move faster and how do you make customers happier and how do you communicate, you know, better with them?

Sorry, go ahead.

No, I said what do you think when you think that, when you see that stat?

So my mind kind of works in fundamentally different ways, I think, than other, other people. Always. I see this, I, I love this, I love this information. And the reason I love this information is because what this tells me, we work in a highly competitive environment. This tells me two out of three customers need a great loan officer to find them, right? Two thirds, 60% of the people that have done loans in the last 10, 20 years would rather work with somebody new than who they've worked with in the past. That, that disappoints me for the people they worked with. But that's a huge opportunity for those of us that are aiming to compete in this business and bring in new customers. It means that the playing field has been level. And, and Josh made a comment earlier that I think matters. You know, we know that 100,000 loan officers have already exited the business prior to. Right this second. We know that mortgage companies have exited. We know that the largest bank that participated in the mortgage business exited the business. Fundamentally, we know that there continues to be further consolidation. And we know that right now for licensed loan officers, it is renewal season. And we know that left and right loan officers are deciding not to bother taking this class or that class or pay for this renewal because, you know, it's, it's not worth it for them. So the, the field of competitors is shrinking, and it's shrinking rapidly. And that's great news for those of us that are left. Right. And when you look at that shrinking field of competitors and you look at this J.D. power result, that tells me that for those of us that are going to be here competing in January of 2024 and January of 2025 and January of 2026, that there is tremendous opportunity to go out and differentiate yourself from whoever screwed up the transaction last time.

Yeah.

One of the things that Josh said early on, and I think you did too, Taylor, and I'm going to ask this question to Kirill, is that it's really important that you get accurate information early on in the process because that reduces the days to close. And so I think my question would be to Kirill, in what you're seeing from talking to different clients, how important is that to them?

I haven't seen this data for mortgage, but I can tell you for consumer loans, there's a lot of research that whoever gives what's considered a reasonable interest rate on the loan, just the first company that gets considered like reasonable interest rate wins the deal. So as long as you can win, like, as long as you can give something upfront and collect all the information and not change the gears later on this borrower, you're going to win the deal. And that's. I'm sure it applies to all lending. So probably in mortgage, it's roughly the same. Collecting the information upfront, enough information that also will hopefully get you reps and warrants later is very important. That's how you win deals. Not by making five phone calls and asking for information over Like a period of a week. And that was my experience when I was getting a mortgage. Just, just a couple of years ago, I got inundated by phone calls. Just like we forgot something and then this information is not good. While some of our customers, what they see with our tech that we provide to them, they can collect all the information up front and run like 30% of the cases. And when you do that, then your interaction becomes like, you give me the data, I give you the rate. Now we're in business and then later on you have to obviously do well on this key moments and see key hit six touch points. But getting the information upfront will win you more deals than anybody can think.

Excellent. So this is interesting. This, this next section we're going to jump into is a poll. So we just talked about the customer experience and one of the things that lenders are trying to do are try, are trying to increase efficiency, lower cost. Automation has been the savior. Right. As everybody's been talking about the savior. There's really three main use cases that automation has been applied to and that's document processing, underwriting and closing. And or from from where this, where this poll is coming from is I heard from a lender basically say that even though we've been able to automate a lot of these processes, it actually hasn't reduced FTEs that much. In fact, it actually has maybe created opportunity for another FTE to go and manage the automation and someone still has to put eyes on it. So while people are answering this question, so I, I see in the poll, by the way, it's a yes or no question. So choice one can be yes and choice two can be no. Go ahead and put your answers in. And while that's happening, Taylor, why don't you give a little bit of your own commentary about what you think about this. Do you agree with that statement? Do you think automation has actually resulted in shorter days to close or lower costs for your organization?

Yeah. You know, this is such a weird answer and such a difficult question to answer because we've been, we keep on moving the goalp backwards on everybody. And what I would love to say is what people in car manufacturing can say or what people in, in soda bottling can say or what people in software development can say, which is that it's, which is that the, the automation itself is speeding up the process and that we're doing things better and faster and more accurately. And I think that's true in a lot of manufacturing. I think it's true in a lot of Software and a lot of tech is that automation and technical tools are speeding things up and making them more consistent, which is great. And it's definitely speeding things up for us. The challenge for us is that we keep moving those goalposts further and further out and, and adding new requirements that automation is trying to keep up with. So I kind of feel like, probably not the greatest example, but sometimes I kind of feel like automation is the pump trying to pump the water out of the boat, but we keep putting more holes in the hull and we're overwhelming the pump. If you take a look at, if you take a look at the. The number of loans closed per FTE for processors, underwriters and closers, there was a great Friday graph. The NBA does this Friday graph, every Friday a new piece of information. And there was this great graph maybe six months ago or a year ago. And they showed that from 2000 until today, the number of loans closed per processor, per underwriter and per closer from 2000 to today has steadily gone, has steadily gone down in almost a straight linear line. And we are closing fewer loans today than we had. Now remember in 2000, there wasn't a lot of technology. I mean, in 2000 we were still a lot of us, me, we were still taking 1003s with a pen on a piece of paper, and people were faxing us their documents and we were unrolling the facts from the old fax mile paper that was in the old facsimile, you know, machines. And yet we're doing less now with 10 times more technology than we had. So it begs the question why? And I argue that even though we have so many more tools today, our requirements have doubled and tripled and quadrupled in terms of adherence to regulations and rules and different guidelines. And the very tools themselves have created a need for more people to manage the tools and double check the tools. So we're caught in this weird vicious circle where technology is awesome, but it's struggling to keep up with the new requirements. And on top of that, you know, we need somebody to manage the tech and tech begets tech. I know that's a mouthful. So I think that at the end of the day, technology is a great thing and we need to get smarter and use processes that best take our technology of today, but apply it to what I believe are kind of old school practices in how we treat customers. Because to your point, rich customers still want a couple of simple things. They want to know early on what they're doing, and they want to have a lot of great communication.

I love that answer. Go ahead, Josh. Sorry.

I say, Taylor, what you said at the beginning, which keep moving the goalpost. So I think that, I think that's an accurate statement. If what was required to close a loan in 2000 was the same as it was required to close loan today, it would not cost as much money to close loans. The compliance cost, I remember. So People's bank was a part of a bank that I owned and I helped run the Moore's group there. And our compliance group went from like a group of two to like 25 in house and a consultant firm outhouse with, you know, 10 to 20 people working full. All of a sudden we went from like 2 to like 40, 50 people in this compliance department doing all types of compliance things. And that wasn't even the mortgage side of compliance. That was the bank side of compliance that now has happened to come out like. So then the mortgage side of compliance had its entire new, you know, you know, the HUD and the TILLA and all these things that we now have to do. And, you know, it's changed, it's definitely changed the game. So I, I, Automation. People haven't seen automation save them money only because, as you said, they've moved the goalposts. We're not, we're no longer, the marathon's no longer 23 miles. The marathon's now, you know, 100 miles. And we're trying to get people to run it just as fast. And you know that I think that's what we're seeing right now is it's just, we're just not there yet.

Yeah, yeah. We wouldn't have closed loans in 2000 if the rules were in place that are into. In place today because technology couldn't have supported it.

Yeah, there's no way we would. You're right. Absolutely right.

Do you have results for us for that poll?

Yeah, let me show, Let me.

There we go. So it looks like we're leaning towards. No. Does that surprise, surprise anybody here at all?

No.

No, no. All right, well, let's jump on. Thanks, everybody, for playing. Let's move on. This next slide is I, I love this next slide. I think this topic is really the heart and meat and potatoes of this, of this event. If you look on the left side of what the left side of what you're looking at, you're looking at the lender's loan origination process from customer acquisition all the way down to post closing. On the right side, you're looking at the borrower experience. And so What I want to know is, Taylor, can you give some examples of some efficiency strategies on the left? And Josh and Carol, feel free to chime in, but we'll start with Taylor. Some efficiency strategies that, that you have, that you have seen work for you on the left that actually positively affect the borrower experience on the right.

So I am going to deviate from like what everybody else thinks and says. I see a lot of tech solutions that are supposed to shorten one component of the, the mortgage process or another. Right? Faster underwriting, if we use this automated underwriting solution, faster, you know, faster disclosures, if we use this automated disclosure system. And those are all great. And I think it's great to shave down as much time as possible in the manufacturing process whenever we're doing manufacturing. So. So fundamentally, we should try to become more efficient at our jobs and at the manufacturing process. I take nothing away from that. But what I will tell you is most of the lag that I see in an origination of a loan, origination, processing, underwriting, closing, most of the time lag isn't because one person worked 20% slower than we'd like them to on the loan when they were working on it. Most of the lag I see is the dead space between work. Right? So it's the time that we're waiting between the initial application versus somebody to issue disclosures or disclosures versus somebody to then package and process the loan, or we're waiting for VO's to come back or for appraisals to come back, or we're waiting for the borrower to give us all the documents that we second and third attempt requested that we didn't maybe ask for on the first time around. So, you know, in, in my, in my, in my opinion, if you take all of the time that we spend actually with a file open and actually working on that file and extract and eliminate all the dead space and just shrink that time down. It doesn't take that long to process, underwrite and close alone. I mean, it's not that many hours. It's really not most of the time in that 20 or 30 or 50 or 60 days that customers get frustrated with are wait times, not slow work times. And Josh, you told a story about how you used to originate loans when you were actively originating. That I think was profound and feeds right into what I'm about to say. So I'm going to ask you if you could repeat that story and how you originated as a. Yeah, well, I.

Was sharing it like to the point of how do you improve the customer experience and reduce close times. When I was a loan officer, 1999, I. I was averaging 40 loans a month in a call center, which was. The average loan officer was doing 13. So I was doing many more loans than the average loan officer. Processing times took 60 to 80 days. We'd have people who would fund loans with the HUDs would be wrong. It was just back then, it was very busy, very chaotic. And what I figured out up front was, hey, instead of turning a loan file in that's like 80% complete and waiting for the processor to tell me I need this and this, and then give them that, then wait until the underwriter tell me I need that and that, and then. Then I'm at 50. Then. To your point, Taylor, the time to work on the file, it really isn't. It's like 10 hours, maybe, tops. It's like not. It's not. Yeah, it's. You can get right through it. So I decided I'm just going to be upfront. I'm not going to turn that loan into process until I have all the W2, every single one of them, all the pay stubs, all the bank statements of all the pages, everything, all verified and everything accurate. I'm going to make sure that I calculate the income correctly. I make sure if they say they make $75,000 a year, they really make $74,352.10. That's what goes in the system. Everything is accurate. So that way, when it goes in to your point, if I'm a processor and everything's there and done, that's 30 minutes that goes to the next person, the underwriter looks at it.

They're. They're.

A couple hours, they're done. And then, you know, I close loans quickly, you know, faster than other people, just because it was, you know, the better, the better the information going in. Then I didn't have to get new disclosures signed. I mean, think about how many times you have to go to borrow and say, oh, man, I didn't realize you had a middle initial. I need to get you to sign this disclosure because I need to get your IRS 4506T. So now sign this again. You got to wait another, you know, certain amount of days for that to come back. And guess what? You know, it's a. It's Veterans Day, and so they're closed, so you can't get it till Monday. And then the rate. I mean, all this data, the better you can get up front with your data. And the cleaner you can be upfront through data, the easier the transaction, customer's going to be happy, you're going to save money, you're going to repeat customers and referrals. That's, that's really what I, you know.

That'S how I found, and that's why I wanted you to tell a story because you and I are totally in agreement on this. That the, in my experience, and trust me, I've looked at a lot of loans, I've managed a lot of loan officers, I've had lots of pipelines, I've done lots of different things in the space. And in my experience, the happiest, most efficient process is when we get all the information upfront that we can possibly get instead of kind of doing drips and drops. And most of the challenge that I run into or that I see people run into is when they kind of piecemeal the information and, and the, the processor or the underwriter is chasing the next piece of paper or the next answer to a question. If, if, if you could get everything up front on day one, day two, day three, and when I say everything, you know, I know that not everything's possible, but certainly 70 or 80% is probably pretty possible. If you could get the vast majority of questions and documents that you know you're going to need upfront, you skip, right? You eliminate a lot of the waiting periods, you eliminating a lot of the times spent waiting for somebody to update. And that's where I think that you can create the most efficiency. And here's the great news. That is something that is highly, highly, highly under the direct control of the actual loan officer in the process, right? That's where, you know, as a loan officer, we all feel like we have no control over what's going on, right? Because we gotta, we gotta work with our processor and an underwriter and a closer and somebody else controls our livelihoods and our paychecks. And, and, but we have direct impact on how quickly we are able to obtain documents and obtain answers and on whether or not we can get most of those things up front and eliminate a lot of the waiting times down the street. Now, here's where it gets really tech, really interesting. The technology that's emerging today is giving us new creative tools, novel tools to get a lot of that information upfront, upfront, instead of waiting two weeks, three weeks, however long we wait.

Well, that's awesome. So I think there's one point that I want to piggyback on both that we talked about in prep for this, and it also Tees up a little bit about true, which is the only part that we'll mention is that if you can reduce costs on the left side, it actually is the same advantage for the lender that it is for the borrower, which is an ICE. There's an ICE survey that just came out in 2023. 56% of the consumers that were interviewed said lower lender fees was one of their top two important options. Flexible loan options, including rates was the first, but 56% said lower lender fees was the second. So if you can pull fees out of your the cost of originating a loan out of the left side, you are making a big impact for the borrower. So that's where true of comes in. And I'm going to give a second for, for Kirill, our CEO to give a quick overview on Troove and then I'm going to actually ask Taylor to just explain what, you know, his perspective on what true is bringing to to the market. Go ahead. Go ahead, Kirill.

Sure. Thanks, Richard. Going back to the actually previous slide and the points that we're discussing about how to automate and reduce the cost, all of this sort of comes together. If you can get a reasonably like very good data at a reasonable cost, then that accelerates everything. You have higher win rates, you have shorter time to close and as a result your loan officer becomes more productive so they can win more business. And as a result your business needs less loan officers. That's the idea. Right. And if you go Richard, to the next slide, the truth essentially is a way to circumvent the middleman. Everybody probably on this call have heard of use the work number very expensive. And the reason why they're so expensive is they have to go to payroll providers, buy the data and a lot of times they buy my data. When I closed my mortgage loan last time, I got charged for by the work number 350 for getting my own data from my payroll provider that my company pays for. I find that quite surprising and really I don't think that's very borrow centric. So the way we approach it is we completely eliminate requirement to go to payroll providers. We use what's called DOT Franklin 33 Act. We access the data on behalf of the consumer and in partnership with the consumer. You can see here where the user imagine you're working or borrower imagine you're working for meta. You would enter your login and password would log in. As you into your meta work account we'll extract the data. It could be ADP. It could be one of the 13,000 integrations that we have. We'll get the data and I would send data back to you. It's accurate data. It's like say three years of pay stubs, three years of W2, so you don't need to collect it directly from the borrower. The best thing, because we eliminated middleman, we can save you 80% of the cost of the work number at least. And that if you want to use. Still want to use the work number, you can use true before or after. Overall, you will increase the automation and you will reduce the time to close overall because you'll be able to collect more data up front. Richard, I don't want to make this too promotional, so I'm going to stop. Let's keep moving.

No, I love it. But I did want to hear Taylor say, you know, he said in the practice session, there was one really interesting comment Taylor made where he was talking about what works for us is when consumers have access to their own data.

As opposed to flattered that you think something I said was interesting. Thank you for. Thank you for giving me that look. You know, the thing. Okay, so let's talk about verifications. Once upon a time, we would verify a customer's income by asking them to give us copies of their employment payment stubs. Right? And then we said, well, we better double check that. And we kind of don't really like the idea that the document is passing through the consumer's hands to us because that opens up an opportunity for, for, you know, malfeasance to take place along the way. And we don't want opportunities for, for malfeasance. So let's do a verification. Let's verify it. How do we verify it? Okay, let's get this piece of paper, send it over to the HR department. And you know, nobody's allowed to touch the newspaper except for the HR department and the processor. It's not supposed to go through the, the loan officer's hands, not supposed to go through the, the customer's hands, I suppose to go to the realtor's hands. And that way it's kind of a clean piece of paper, right. So we send over a piece of paper and we send it over by fax and they fill it out and there's smudges and they tell us what the numbers are supposed to be. And then we line up that piece of paper and we look at the pay stubs and the W2s and we say, yeah, those. Those things look like they're the same. So we're good to go, we're good to close a loan. And then that became unwieldy. And at some point we said there was a company that said, hey, we can make this process even better, we can automate it for you and we'll do it electronically and we'll go get the stuff for you. And that way you're not having to go through human hands. And that was terrific because, you know, it created an efficiency and it automated some stuff. And then. And so we love that. And, and more and more payroll providers and employers also liked it because it meant that they didn't have their HR administrative staff fielding phone calls and faxes and emails and all those things. Pretty soon that process itself started to become more complicated. And that started to become a little bit more complicated shortly after or maybe around the same time that the day one certainty was created, wrapped around that process. And then, since then, we've seen costs escalate to an unreasonable manner. So much so that many lenders are now passing through that third party expense to the borrower. And so, Kirill, that's what you experienced. What you experienced was a third party was a lender passing through the cost to you. Where fundamentally you're now paying for your company to give your information back to your lender. Right? So ultimately you pay. What, what we do, what we try to do wherever we can, is we try to do things the old fashioned way because it saves money for our customers. Right? So our processor will literally call the HR department and say, hey, you know, we, we really need you to do a, a voe for us. Please fill this out and send it back. And wherever we can do that, although we don't have reps and warrants on it, wherever we can do that, it's a cost savings. It takes us extra time and it takes extra effort, but it is absolutely a cost savings for the borrower. I think that where the customer's information is under their own control, there are challenges. But if you can create a scenario where they control access to the information, but they don't control the information itself, I think that's kind of the best of both worlds, right? Because now the customer gives me permission to get all their information. They acknowledge it, but they're not the one hand handing me the information. So we don't have to worry about malfeasance in the process. And through that, you know, we can get a lot of that information upfront and we can do exactly what Josh described. We can get that information on day one, day two, day three, and we can do loans the old fashioned way, which is put together a complete deal and, and close it fast instead of going back and forth 15 different times. And I will, I'll brag to you a little bit. We routinely close loans in days instead of weeks or weeks instead of months. And we have on, I personally on more than one occasion had a loan underwritten, approved, cleared to close before we can even legally close it due to the trip timeframes because we got to wait around for everything to meet the trade timing requirements, even though we, we're ready to go in in less than a week. We do it on a regular basis or at least we have done it many times. But that works best and can only happen when you have extraordinarily robust and complete information on day one and day two, not, you know, trying to catch up on it on day 30.

Well, I'm going to say that, that, that teases up perfectly into our next question, which is what are some great examples to cut time out of the loan origination process. I'm going to give this to Josh first because Josh, you've got a really good points to make on over communication. Your experience and Incelerate is a fantastic vehicle for communication to the borrower. And why don't you just piggyback a little bit on what Taylor was saying in terms of getting all the information up front and communicating effectively with the borrower to make sure you can do what Taylor just described, being able to close within a matter of days.

Yeah, I think, I mean that, you know, one is two, a couple ways to, to do this. One is, is just train your people the importance of getting the complete application up front. Right. You think, you know, I, I manage a lot of loan officers and I would explain to them, listen, I know you think you're saving some time by not getting all this information right now, but at the end of the day you're going to have to sell this conversation with the customer and get all this information. So you're not ever going to be able to get away from doing the work. So you might as well just do it now and save yourself a lot of headaches. Right? So just up front, take good, you know, take a good application. Then it's communication. You know, we do routinely, we do surveys in the marketplace to sell lenders, communicate with their borrowers. And it's really, it's poor. Most borrowers are waiting around for someone to call them back. They don't know what's going on, they don't understand the process. And when they don't understand the process, you're not communicating with them. They're not getting you the stuff you need in a timely manner either. So I think, you know, using automations, using systems like Incelerate, that are going to keep them informed and engaged and exactly where they're at in the process is going to help them be able to work with you, the loan officer and the lender to actually close the transaction sooner. But just communicate better. Right. Automate more communications and just really work on, take a better upfront application.

Right.

Get better information up front and you know, spend the time up front.

I love it. Taylor, do you want to speak to getting to the work faster? I mean, you did cover that a little bit earlier before, but that. It was a really good point.

Yeah. I would say two things I want to piggyback off of Josh, piggybacking run 1. First, the concept of communicating, you know, as an originator, sometimes when I hesitate to communicate is because I don't think I have the answer or because I think they might ask me a question that I'm not prepared for. And so that lack of communication, more often than not, it's my own anxiety, it's my own fear. Right. It's my own unsure ness about what's going on or where it stands. And I don't want to be wrong. In my, in my, in my experience with customers and with the realtors, they would rather have over communication and get wrong or not complete communication than, than silence. And that's something that I think we all struggle with. I think that for loan officers, it's better to pick up the phone and answer the question and give 3/4 of an answer than to not pick up the phone call in the first place. And it's better to have a system that reaches out and says, hey, we're still here, we're working on your loan. Even if the loan isn't approved yet and you don't have the final perfect answer for them, give them a partial answer. Just communicate, communicate, communicate. Sometimes it's better, you know, sometimes it's better just pick up the phone and say, hey, I don't have an answer for you, but I'm checking in so that you know that I'm working on your file. They would rather hear that than not have their phone ring and wonder if, you know, we're off in Tahiti drinking my ties. So I agree with Josh. And systems are so important. You have to have systems because, you know, communicating with your customers is easy to do by default when you have one customer or two customers. But once you've got more than two, which hopefully every single one of, one of us. One of us has, you forget, right? Because life's busy. You got to have systems, you got to have, you got to have processes in terms of cost savings, which is, you know, why people are on here and taking time out of the origination process. I'll tell you how when I was a loan officer, what they taught me to do, and I know that I'm, you know, a walking dinosaur maybe, and things have changed and you know, okay, boomer. But I, I was taught to get all the documents up front, fill out my 1003 based on the documents, and then go to the borrower and basically say, okay, here's everything I got. What did I miss? Or I didn't fill in the blanks. And that is, that was always, for me, the best way to produce a robust and mostly complete and mostly accurate loan application, which leads to fast processing, fast underwriting, fast, fast closing. I think that it's important to eliminate all those waiting spaces, all those gaps between milestones or between, between work activities and get as many answers as you can up front. And I think that that is really the key to reducing the time, to reducing the cost to originate for organizations and to increasing customer satisfaction. I think that, look, at the end of the day, Josh is 100% right. We manufacture a homogeneous product. Right. We have commoditized mortgage to the point that we're even putting all the loans into a single security. Right? So, so, but, but every single customer is different. Every single property is different. Every single mixture of FICOs and, and savings and credit scores and all the different things that we mix together. So every transaction is kind of like a custom built. We set with, we start off with a custom set of materials that are all unique, and then we try to homogenize them into a consistent commodity of a transaction. And so, and that's hard to do. The more we can communicate with the customers along the way and the faster and the more time gaps we can eliminate in the process, the less expensive it's going to be to, to manufacture this loan, the faster it's going to happen and the happier the customers are going to be.

Yep. So to recap, we've covered the meat and potatoes we've got. I have one more slide I want to go through because it's really interesting. It's got some good information on it. But to recap, most of the takeaways have been great. Communication with the customer, with the Borrower, make sure you capture as much information as you can up front, eliminating as much time and cost out of the process as you can for both the lender and the borrower is mutually beneficial. Those are the main takeaways that I'm hearing right now, and I really, really hope everybody's working towards that. Who's. Who's on this webinar right now? So this final slide right here, ICE puts this, these survey results out. They're about high costs and long cycle times, right? Look at some of these stats. 7 to $9,000 cost per loan, right? You just saw from the NBA, they were publishing. Then in Q3, the average IMB was $1,000 or a little bit over $1,000 underwater per loan, right. 7. In these. This is getting worse, right? These costs are going up by like two and a half percent roughly year over year. 45 days. Over 45 days, you know, from required to obtain initial or refinance a mortgage. And then four to five, four to five touches per underwriter. Taylor, how, when you see these, how do you interpret this?

I see a tremendous opportunity for us to make this business better. That's what I see. I see a tremendous opportunity for technology to support processes, for individuals to do a better job front, for competitors to outperform the, the, the. Their competition. And I see a wide open space. You know, there's a lot of people that are very bearish on 20, 24. You know, I keep hearing, I keep hearing statements like survive to thrive, survive 25, all that kind of. I'm, I'm, I'm bullish on 24. What I see when you talk about these numbers is tremendous opportunity for us to improve the process and go in deals.

I love that. Josh, you want to give any parting thoughts based on the preamble that I just gave and what Taylor just said?

Well, I mean, I like is this thought of not just survive, but thrive. I mean, I think that's because if other people aren't doing this well, and that's what we've seen, and people are actually in the market, if you can, you know, those people who are really people ask me, I've been in this industry for 25 years, right? And people are, you know, said, isn't that a tough industry to be in for 25 years? I said, yeah, for a lot of people, but not for the ones that are professionals at it. I've, I've seen a lot of people in this industry for a long time. And they're the ones that in markets like this, they're figuring out how do I lower produce, you know, cost of produce, how do I bring a new technology, how do I, you know, improve my process? So I think that's what Leonard should be looking at right now is how do I make, you know, for easiest way, communicate better, get better information up front. That's going to be like 80% of, you know, the battle right there. I think you'll, you'll improve those costs. Produce and, you know, customer experience.

Yeah, yeah. I would only add that this is a great time to agree tool. When it's like the volumes are down, you can have an opportunity to rethink your process and when the volume is going to start picking up, you're going to go back to the spree, hiring spree and bring in more people. So this is a good way to look at like what the tech use, what's the tech stack, where can you save, save the money, automate, increase productivity. So when you go up, you actually will win market share, grab market share and make more money per loan without adding too many people. And as we know, 100,000 people left, hundred thousand loan officers left. Who knows, maybe they're not coming back. It would be you. Training takes time and it's very expensive. So the opportunity to automate and be more productive is still here. And I think this is, this time couldn't be any better.

I love it. That's a great takeaway and any thought, everybody. I want to thank everybody for joining us and if you want to reach out, Josh friend is on LinkedIn. I would just look him up. Josh Friend, CEO of Incelerate. You've got chief operating officer, developers, mortgage. Taylor Stork can look him up on LinkedIn. Kirill Klokov, he is CEO of Truv. And I am Richard Greaser, VP of marketing at True. Thanks so much, everybody. Have a great day.

Thank you.