Mortgage – HousingWire

The mission behind Movement Mortgage’s ‘Grab the Key’

Posted: 13 May 2022 02:28 PM PDT

Movement Mortgage was founded in 2008 with a mission to create a "movement of change" in the mortgage industry after one of the hardest financial episodes in American history. This mindset is still present today, as they continue to move forward to tackle some of the biggest problems in the industry today. Montell Watson, director of diversity lending at Movement Mortgage, sat down with HousingWire to talk about one of their newest programs, Grab the Key, explaining the history and goals of the program.

HousingWire: Can you share the history behind Grab the Key and how it got started?

Montell Watson: Grab the Key started as an educational and awareness video for the industry to share at large. Movement Mortgage wanted to bring awareness to the history of racial inequities within our industry while highlighting the many people who risked their life for equality in housing to ensure all people have the chance of grabbing the keys of homeownership. Grab the Key is now a program at Movement designed to make homeownership a reality for more Black Americans.

HW: What are some of the specific goals within Movement Mortgage to help close that gap in homeownership and how does this relate to Grab the Key?

MW: Movement Mortgage wants to make homeownership attainable for everyone. We have a goal of increasing our market share within diverse communities along with bringing more diverse loan officers into the industry.

HW: What moment stood out to you about the Grab the Key event?

MW: One thing that stood out was how the community rallied around the event. It showed there is a need to get into the actual communities at large to breakdown the misconceptions and build trust.

HW: What do you hope future Grab the Key events accomplish?

MW: We hope Grab the Key helps thousands of people to take their next step towards homeownership. This may look different for each person, but we want everyone to know that no matter the pathway, Movement will be walking beside them to shepherd the way.

HW: If you were sitting in a room full of LOs and agents, what is one thing you would want them to understand when it comes to minority homeownership?

MW: Treat each person that you encounter on their homeownership journey as if they are your mother, father, or close family member. Approaching with a loving mentality first can change the life of one person who we might overlook in a normal scenario. Giving them some extra guidance on what to do to prepare can be a game changer.

HW: Is there anything else you would like to add?

MW: In the next few decades, minorities within our country will be the majority. As lenders we need to start now in meeting diverse markets where they are and ensuring we are doing everything possible to make homeownership available for all people. Homeownership changes lives.

The post The mission behind Movement Mortgage’s ‘Grab the Key’ appeared first on HousingWire.

Opinion: Use data to scale your mortgage servicing business

Posted: 13 May 2022 11:40 AM PDT

Mortgage servicing is a scale business, meaning the economics of scale can be achieved with larger servicing portfolio by spreading the fixed costs among more loans being serviced. Such scaling; however, hasn’t achieved the expected results as indicated by both the increase of servicing cost on a per-loan basis and on loans serviced on a per-employee, basis according to the research for the past decades by the Mortgage Bankers Association.

This trend is more distinct for the non-performing loans whose servicing costs quadruple from below $500 before the housing crisis in 2008 to more than $2,000 in the past few years. Apparently, such an increase is largely due to the compliance requirements posed by the regulators. The servicing industry should reform by adopting new technologies and data-driven approach to automate the compliance process cost-effectively.

Track the right metrics

When you use your data to track the right metrics, you are empowered by such insights to focus on the most important things for your business and provide smart scaling. Quickly profiling at-risk borrowers in different situations can be a very useful technology in servicing. Using forbearance plan under the CARES Act, for example, a wave of borrowers come to forbearance exit that significantly stretch a servicer’s operation capacity limit.

Servicers can use aggregated monthly servicing data to narrow down the borrowers in every stage of forbearance and prioritize resources for those that need help the most. By doing so, you can cut down wasteful expense and maximize your employee capacity.

Profiling these at-risk borrowers involves charactering them using social, economic, geographic and monthly loan-performing information benchmarked against the national and regional statistics. For instance, a combination of a borrower’s credit score, loan payment history, employment, loan-to-value ratio, location, local income level, and many other characteristics can be used to infer the borrower’s ability to repay.

When you use machine learning and artificial intelligence on top of this profiling, you can make — at scale — personalized recommendations of remediation options. Your borrower outreach can be more targeted and hence more effective. And, you can avoid the mistake such as offering a 40-year modification to a forborne loan with a 5-year remaining term.

Data on top of machine learning and AI gives you the advantage

Servicing rules change fast and they have short implementation timelines. You can pinpoint the faulty areas by running rule-based exception monitoring functions. Since servicing is all about timing – when things start and when things end – constant monitoring and tracking loan performances and regulatory change is critical in compliance management. You can only become more proactive in mitigating compliance risk as well as other risks quickly and effectively with speedy information processing and quick to action on the information.

Similarly in financial portfolio management, such profiling techniques are used for adequately and timely evaluating borrower’s default and prepayment propensity under changing market dynamics. This can have a tremendous impact on a servicer’s bottom line and MSR valuations. With the data at your side, you can actively manage your risks and boost your profitability with corresponding hedging actions and customer outreach.

Diagnose the health of internal processes

Data can also be used to diagnose the health of your internal process. Every borrower touchpoint, from payment collection to customer complaints represents a data point in servicing process. By tracking each stage in this process, you can gain a better view of the inefficiencies and bottlenecks of the servicing operation, such as employee productivity, client service performance and others.

These analyses can build operation optimization and identify ways to grow smarter without incurring huge outlays of hiring and capital investments. For example, a customer call history may show a few common topics that could have been answered more easily by making that information available online or through written communication. This can free up time and resource for customer calls on more important issues.

Data won’t replace humans; it will make them smarter

At the core of this digital success is data technology. Technology is not to replace human but to make human smarter. It can free up human to do what they are good at by automating part of work that machine can do best. Instead of spending 99% of the time working on getting the data right and 1% of the time understanding the information from these data and make human intelligent decision, it should work the other way around by using machine to automate and reduce the data processing time from 99% to 1%. So you can get the best of both worlds. At the end, it will be human to discover all the whys and tell a good story.

This will require the data management system to be capable of analyzing big data. Big data means not only the sheer volume of the data, but also the variety and velocity of the data. The system should be able to pull in data of all different formats from all different sources and generate results on an almost real-time basis.

Technology can now be scaled for small companies

The good news is that this has been a reality in modern SaaS solutions thanks to the scalable cloud native infrastructure. Cloud technology evolves in a way that smaller companies can access large datasets and the same level of technology infrastructure that was used to be exclusive to only large companies. The technology access to scale has been democratized.

Billions of data points can be processed in matter of minutes or even seconds. Data can be segmented and analyzed at very fine granularity in multi-dimensions and quickly rolled up into different hierarchical levels. Scanning of the loan performance data can walk back and forth in time in terms of selecting historical look-back and projecting future forecast.

More importantly, elastic pricing schemes in cloud computing minimizes fixed cost and allows variable cost cutting of computing resources on a per-minute basis which is certainly more palatable than that on human resources. Therefore, the industry can become more stabilized without seeing large personnel turnover due to the cyclical nature of this business.

Going forward, servicers will likely face more regulatory scrutiny as they have learned from the last housing crisis. Staying compliant is more costly than ever. Investment in data technology to put the effective risk and control in place can help scale the business better in light of these challenges. Servicers should keep this in mind when growing the business – not only to grow faster, but also grow smarter.

Howard Lin is president of mortgage risk analytics company Cielway.

This column does not necessarily reflect the opinion of RealTrends' editorial department and its owners.

To contact the author of this story:
Howard Lin at howard.lin@cielway.com

To contact the editor responsible for this story:
Sarah Wheeler at sarah@hwmedia.com

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Loans And Mortgage

Friday, May 13, 2022