March 2021 Issue

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G ELLIN A DIGIT OP A L PR R

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HOUSINGWIRE MAGAZINE ❱ MARCH 2021

GAGE COM T R PA MO NI D E AN

100 REAL ES TA TE

March 2021

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EDITOR-IN-CHIEF Sarah Wheeler

NEWSROOM MANAGING EDITOR James Kleimann REAL ESTATE EDITOR Matthew Blake SENIOR FINANCIAL REPORTER Kelsey Ramírez MORTGAGE REPORTER Alex Roha ASSIGNMENTS REPORTER Tim Glaze LEAD ANALYST Logan Mohtashami CONTRIBUTORS Charles Myslinsky, Josh Friend, Sar Haribhakti, Todd Teta PREMIUM CONTENT/HW+ HW+ MANAGING EDITOR Brena Nath DIGITAL MEDIA MANAGER Alcynna Lloyd JUNIOR DIGITAL PRODUCER Victoria Wickham COLUMNISTS Robyn Friedman CONTENT SOLUTIONS MANAGING EDITOR Maleesa Smith CONTENT EDITOR Jessica Davis ASSISTANT CONTENT EDITOR Jordan White CREATIVE GRAPHIC DESIGNER Emily Carpenter SALES VICE PRESIDENT, SALES AND REVENUE OPERATIONS Jennifer Watson Laws DIRECTOR OF REAL ESTATE Mark Adams CALIFORNIA Christi Humphries CENTRAL Chris Anderson SOUTHEAST Tamara Wren GREAT LAKES Michael Orme NORTHEAST Vernesa Merdanovic BUSINESS DEVELOPMENT Lindsley Harris BUSINESS DEVELOPMENT, REAL ESTATE Amanda Luzsicza DEMAND GEN COORDINATOR Brooke Combs ADVERTISING SALES ASSISTANT Amina Jahic

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HW MEDIA CORPORATE CEO Clayton Collins CHIEF OPERATING OFFICER Diego Sanchez WEB DIRECTOR Brent Driggers PRODUCT MANAGER Matthew Stafford CONTROLLER Andrew Key MARKETING DIRECTOR Caren Karris MARKETING COORDINATOR Katie Galbraith CLIENT SUCCESS DIRECTOR Haley Hess CLIENT SUCCESS SPECIALIST Talia Quigley CLIENT SUCCESS COORDINATOR Kambrie Laurent AUDIENCE DEVELOPMENT MANAGER Alyssa Stringer HOW TO REACH US LETTERS TO THE EDITOR: feedback@housingwire.com TIPS AND STORIES: editorial@housingwire.com CURRENT MEMBERSHIP / SUBSCRIPTION: hwplusmember@housingwire.com NEW MEMBERSHIP / SUBSCRIPTION: housingwire.com/membership MARKETING & ADVERTISING: jlaws@housingwire.com or (469) 893-1486 ADVERTISING CLIENT SUCCESS: clientsuccess@housingwire.com

MARCH 2021

LETTER FROM THE EDITOR

Unpacking a digital revolution AT THIS POINT, you’re probably used to seeing

get on board, as states and counties implement-

Kelsey Ramírez’s name in this spot. As magazine

ed stay-at-home orders. And for the companies

editor, she not only profiled and covered the top

that were already operating in the digital space,

leaders and stories in the housing industry, but

they were able to stay ahead of the curve as

she also spearheaded the redesign of this maga-

home-buyer demand reached unheard-of levels.

zine, taking the content and creative to a whole

Behind much of this tech adoption are the 100

new level. For that, she deserves all the kudos,

real estate and mortgage companies featured

and I have some big shoes to fill.

in our TECH100 list, which led the great fintech

It seems fitting that my first issue overseeing the magazine would be the TECH100 issue. Dig-

acceleration. See the full story and check out the list starting on page 24.

ital innovation and disruption were just as much a theme in the industry when I started at HousingWire back in 2013 as they are now. However, over the last 8 years, the industry has constantly pushed the limits of what it means to be a digital disruptor, with 2020 propelling the industry into COVID-19 forced companies that had been reluctant to adapt to the new digital world to finally

Brena Nath HW+ Managing Editor @BrenaNath

Tweets From The Streets Many of my tweets have explored what it takes to design, build & finance a better home. I’m testing the hypothesis that a better built environment has a positive impact on family, happiness & health. When I reach 7000 followers I’ll go all in on this. RT & follow if you can. #8 #39 #98 by @jkostecki_rei

MARCH 2021

The information contained within should not be construed as a recommendation for any course of action regarding legal, financial or accounting matters. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. HW Media does not guarantee the accuracy of information provided, and is not liable for any damages, losses or other detriment that may result from the use of these materials. © 2021 by HW Media, LLC • All rights reserved

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a full digital revolution.

Find out the why behind the daily news cycle.

HW+ members get exclusive access to: Premium Digital Content Deeper dives into the why behind the housing industry’s most impactful stories

Virtual Events ire .c om /m

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Complimentary seat saved at HousingWire’s virtual events

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Jo in

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in

A direct line to HW Editors in an exclusive member-only experience

The indelible mark of Stan Kurland

Some make an impression that will last a moment. Others make an impression that will last a lifetime. Leaving this world way too early, Stanford L. Kurland was one of those people who left an indelible mark on all he touched.

Stan believed in doing the right thing. “Across the organization, living the values and treating people right was woven into the fabric of the company and into Stan’s life,” said Jim Hunt, Lead Director, PennyMac Financial Services, Inc. (NYSE: PFSI) “Stan was the founder, yet he raised the company like he raised his family—with love, care,

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and integrity,” said Preston DuFauchard, Lead Trustee, PennyMac Mortgage Investment Trust (NYSE: PMT).

While Stan will be remembered as the dynamic Chairman and founder of PennyMac, his family, friends, thousands

A deeply principled man from humble beginnings, Stan

of PennyMac’ers, former employees, business partners,

approached life with great presence and passion. From the

industry leaders and peers will remember him as so

boardroom to his surfboard, “Stan always said when you

much more.

meet with someone, leave that meeting as if you’ll never see that person again. Ask yourself ‘How will they remember

Stan’s drive to create PennyMac was motivated by

you?’” recalls Stan’s wife, Sheila Kurland.

purpose. “Stan was one of the most highly respected leaders in our industry,” said PennyMac President and CEO

He will be remembered for his many passions: Swimming.

David Spector. “He viewed the creation of PennyMac as

Tennis. Golf. Harmonica. Painting. Cooking. But his greatest

more than a business. During one of the most difficult times

passion was family—at home and at work. “He wanted to

in the history of housing, Stan saw a need for PennyMac

raise good citizens of this world – good people who do

to better serve homeowners and our country.”

good deeds every day,” said daughter Tracey Engelson.

Larry Fink, Chairman and CEO of BlackRock, an original

There’s no shortage of ways Stan will be remembered.

sponsor of PennyMac, remembers “We were childhood

However, if you asked him, knowing Stan, his answer would

friends,” he said. “I am proud to say our friendship

simply be, “Husband. Daddy. Papa. Papa Baby. Pops.

deepened through our adult years. Stan was a wonderful

Popsicle. Stanimal.”

partner in business.” Jon Jacobson, founder and CEO of Highfields Capital Management, also an original sponsor,

He is survived by his loving wife, three daughters, four

echoed the sentiment. “Notwithstanding Stan’s success

grandchildren, and his twin sister.

as a businessman and leader, he was an even better person. I will miss him greatly.”

Stanford Lee Kurland June 11, 1952 – January 23, 2021

NMLS #35953

March 2021

People Movers

Fintech

10 PropertySync named David Floyd CEO, making him the first person to ever hold the position at the company.

Launches

11 Citadel Servicing Corporation, one of the country’s largest non-QM lenders, rebranded as Acra Lending.

Startup Profile

12 Is FlashHouse disrupting the home-selling process in the Midwest and Mid-Atlantic?

Take Five

13 Entrepreneur Kyle Kamrooz answers five questions, sharing how he used to speak seven languages.

Event Calendar

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14 HousingWire is hosting a virtual Spring Summit focused on The Year-Round Purchase Market.

Inside Agent

15 JoAnne Kao is credited with selling the third most expensive apartment in New York.

Local Intel

16 A record number of businesses have chosen to relocate to or expand in the Austin, Texas, region.

Trade Desk

50 Trade associations look at the year ahead, listing out their top priorities and goals for the future.

Mortgage

54 How high will mortgage rates climb and how will the modest rise play out in 2021?

Title

58 The title insurance arms race is heating up. So why is merger and acquisition activity surging?

MARCH 2021

62 Fintech companies are on the cusp of unprecedented innovation, capturing the attention of investors.

Politics & Money

66 Janet Yellen takes the helm as Treasury Secretary, making her the first woman to lead the department.

CFPB Watch

70 Prepare for a return to Cordray-era CFPB, as Biden pick puts the teeth back into the bureau.

Kudos

76 Purple Heart retiree receives a home from the Wells Fargo Military Warriors Support Foundation.

Parting Shot

78 It’s been eight months since Rocket Companies made its public debut on the NYSE.

The great fintech acceleration

features

f

24 Here are the 2021 Mortgage and Real Estate Tech100 winners and hundreds of more examples of outsized growth driven by innovation and impact.

38

The mortgage workforce is back

32

Tens of thousands of workers are hired when margins and profits are fat, and just as many are fired when revenue and margins slim down. What will 2021 bring?

Commoditization or innovation

Fintech companies tap into the different ways they can harness technology to disrupt areas that serve the non-traditional consumer.

Lead Gen & Conversion Solutions Special Report

44

The disruptive impact of big data on housing

Pandemic ushers in a new era of digital lending

Are you ready to be the Amazon of real estate?

By: Todd Teta

By: Josh Friend

By: Charles Myslinsky

pg 18

pg 20

pg 22

MARCH 2021

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These companies offer innovative capabilities to generate leads to actually close deals.

PEOPLE MOVERS

David Floyd

| PropertySync | CEO

PropertySync, a cloud-based SaaS title plant platform, announced its first CEO, naming David Floyd to the position. Floyd brings more than 20 years of experience in the real estate industry to the role. His past roles include serving as chief operating officer for NextAce Corp. and as president of SKLD Title Services. Floyd said he intends to use his new role to help further the adoption of new technology in the title industry.

Jemma Pachiano |

Mid America Mortgage | Chief Operating Officer

Mid America Mortgage promoted Jemma Pachiano to chief operating officer. Pachiano joined the company in 2011 as national support and training director where she led communication between the company’s executive team, operations team and branches. In her new position, she is responsible for implementing more efficient processes, products and systems in order to fuel Mid America’s growth. Pachiano has been a successful loan originator for almost 20 years, and brings insights gained during that time to develop ideas.

Lisa Schneider |

Framework Homeownership | Chief Growth Officer

Framework Homeownership named Lisa Schneider to its newly created chief growth officer role after she served as the top digital executive at Merriam-Webster. In her new role, she will lead the revenue-generation process for the social enterprise and help support its goal to build strong communities through the democratization of homeownership. In her new role, Schneider will ramp up the organization’s efforts in optimizing Framework’s social impact on the mortgage industry.

Rich Swerbinsky |

The Mortgage Collaborative | President and Chief Operating Officer

The Mortgage Collaborative announced it named Rich Swerbinsky as its new president and chief operating officer. In his expanded role, Swerbinsky will be focused on running the day-to-day operations of TMC and helping support its members and partners. Swerbinsky will also continue to maintain oversight of the cooperative’s national sales efforts and strategic alliances. Before joining The Mortgage Collaborative, Swerbinsky served as vice president of residential lending at First Federal Lakewood.

Rick Seehausen |

Cherry Creek Holdings | President and Chief Operating Officer

Cherry Creek Mortgage changed its structure and ownership, introducing a new parent company of Cherry Creek Mortgage and other affiliated businesses, Cherry Creek Holdings. Rick Seehausen was named president and chief operating officer of Cherry Creek Holdings, where he will oversee all company operations.

Most recently, Seehausen was the founder and CEO of LenderLive, which provides outsourced fulfillment services.

Miki Adams |

CBC Mortgage Agency | President

CBC Mortgage Agency promoted Miki Adams to president, where she takes on the role of leading a team of more than 70 employees in the effort to increase homeownership for low- and moderate-income families.

Previously serving as executive vice president of CBCMA, she has 30 years of mortgage lending experience.

Her background includes credit and collateral underwriting, secondary marketing and portfolio asset management, regulatory compliance and regulatory audit and examination management.

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Mary Dickerson |

Radian Group | EVP, Chief People Officer

Radian Group appointed Mary Dickerson executive vice president, chief people officer. Bringing more than two decades of experience in human resources at organizations like XL Catlin and Accolade, she is responsible for all aspects of human resources at Radian. In her most recent role, she served as executive vice president, human resources at DLL Group, a subsidiary of Rabobank Group. In that role, she was responsible for overseeing the company’s global human resources function.

MARCH 2021

LAUNCHES

Seller Digital The New American Dream Showcase of New Homes

Data analytics giant Black Knight unveiled a new self-service style platform aimed at correspondent lending that will allow lenders to manage conditions and validate pricing locks on Best Effort loans. Coined as Seller Digital, the platform will also allow secondary market lenders to track and validate any mandatory commitments they are working on in the pipeline. The new mortgage tech is also fully integrated with Black Knight’s Empower platform – a loan origination system (LOS) that will update correspondent lenders as decisions are made on the loans themselves. Depending on the conditions of the loans, secondary lenders can personalize what information needs to be addressed as a result of Black Knight’s AI program, AIVA. The tech will assess the completeness of the loan package when sellers upload required documents and set conditions when information is missing.

Residential real estate online marketplace House X has announced the launch of its smart home marketplace and pilot program called The New American Dream Showcase of New Homes.

House X showcases over 30,000 new energy-efficient smart homes with over 10,000 available for quick move-in as well as comprehensive neighborhood reports with over 250 data points. The company will also provide free renewable energy for two to five years for its clients. House X only represents the buyer and aims to decrease the cost to own, operate, protect and maintain a home over time. House X negotiates the home purchase contract and enables its customers to make more informed decisions through its proprietary House X Report. The program is available in California, Florida, Georgia and Texas with additional states launching in this year.

CoHome Real estate technology company CoHome has launched a new platform that allows users to invest in real estate by matching qualified buyers through co-buying, a process where two or more people purchase a property and agree to share ownership.

The San Francisco-based company said it enables more people to build home equity by providing a new path to homeownership for people of all income levels – it connects prescreened, qualified buyers and sellers with each other.

Acra Lending Citadel Servicing Corp., one of the country’s largest non-QM lenders, rebranded as Acra Lending. Then known as Citadel Servicing, the company was acquired by HPS Investment Partners in February 2020 for an undisclosed price. Looking back at last year, when COVID-19 hit, the non-QM market disappeared, with Citadel pressing pause on new originations. However, the pause didn’t last long, as the lender resumed non-QM lending by summer. Acra now has a greater balance sheet and origination capacity with over $700 million of new term and non-mark-to-market warehouse facilities.

As more seniors have been able to adopt and use technology over the last few years, the reverse mortgage division of Mutual of Omaha launched a new app to serve reverse mortgage borrowers seeking either a Home Equity Conversion Mortgage (HECM) or a HECM for Purchase (H4P) transaction. Featured tools for potential borrowers include initial application access, a mechanism for documents to be captured and uploaded, and notifications of “loan milestones” for borrowers and/or real estate agents. The reverse mortgage space witnessed an uptick in activity amid the pandemic as older homeowners tapped into their equity to fill the financial gaps brought on by the coronavirus pandemic. HECM originations stood at $13.1 billion as of Sept. 30.

MARCH 2021

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Mutual of Omaha

STARTUP PROFILE

FlashHouse is attempting to transform the home-selling process in the Midwest and Mid-Atlantic by adding more technology into the process. Operating as an iBuyer in the Cleveland and Columbus metro areas, FlashHouse offers an online platform that takes sellers from the home offer to closing. The Midwest is not home to a lot of iBuyers, offering a unique situation for disruption, according to Stephen London, co-founder at FlashHouse, given the older housing stock in the region and the opportunity to build a valuation platform that can better price those homes. FlashHouse’s goal is to build tools and software to better equip agencies and brokerages rather than wipe them out of business.

Things To Know Attempting to Disrupt: The home-selling process Launch Date: 2018 Funding: Self-funded Location: Cleveland and Columbus metro areas www.flashhouse.com

Expanding into 3+ markets by the end of 2021

3000+ offers requested

Offers suite of software solutions for home sellers and agents

The disruptor score, unique score and launch size were determined through interviews with and editorial research on the company.

5

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4

UNIQUE SCORE: LAUNCH SIZE:

1

FUNDING:

UNKNOWN Pre-Seed

HIGH

LOW

DISRUPTOR SCORE:

A

Seed MARCH 2021

B

C

TAKE 5

Kyle Kamrooz

Cloudvirga Co-founder Kyle Kamrooz is a serial entrepreneur and innovator.

Over the course of his career, he has started a successful direct-to-consumer mortgage company, been a key factor in the growth of Skyline Mortgage (now Finance of America) and developed the technology platform behind Cloudvirga. Kamrooz launched Cloudvirga as a stand-alone company in 2016 and has since guided and grown it into one of the industry’s top fintech players.

Below, Kamrooz answers five questions that give an inside look at his life:

1. Relaxation means...

going to the crossfit gym five times a week. People always think being busy and working more than 10-hour days is a good thing. I’ve learned that it is actually the opposite. You need to take time to take care of yourself regularly and stay healthy. Block out an hour a day to take care of your body and mind.

2. People would be surprised to know I...

was a really good basketball player and got recruited for college, but realized my dream of being in the NBA was highly unlikely. Also, I used to speak seven languages. I try to do 250 pushups a day and never sit in my chair longer than 30 minutes.

3. My workout playlist includes...

mainly EDM and House music.

4. The book I can’t stop recommending is...

How to Win Friends and Influence People, an old one but super valuable.

it’s not about titles, schools you went to or who you know. It’s all about creating something that solves a big problem and makes the world better. Always put the customers’ needs first, second and third and no matter what you will win.

MARCH 2021

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5. After I am finished with my career, I hope people remember...

EVENT CALENDAR

LISTEN NOW

HW Spring Summit 2021 March 4, 2021 Cost to attend: $295 Presented by HousingWire Speakers: Mat Ishbia, Mike Cagney, Lisa Haynes, Nima Ghamsari, Xio Sandoval LOCATION: VIRTUAL THE VOLUME OF HOMES SOLD or refinanced in 2020 was incredible, with total origination volume expected to top $4 trillion for the year once all the numbers are in. Wanting to take advantage of record low mortgage rates to gain more space in a pandemic, consumers didn’t follow traditional seasonal buying patterns, fueling a non-stop race to find and buy a house. That dynamic is driving home sales this year too, which is why HousingWire is hosting its virtual Spring Summit focused on The Year-Round Purchase Market. The lingering pandemic, uncertainty about rates and a demographic tsunami of buyers means those in real estate and mortgage have to be as smart and agile as ever. HousingWire is bringing together experts who can speak to the topics that are critical to your success at this year’s Spring Summit.

ALTA SPRINGBOARD March 16 – 18, 2021 Cost to attend: Varies upon membership Presented by The American Land Title Association LOCATION: VIRTUAL DESIGNED SPECIFICALLY TO HELP title professionals take their businesses to the next level, ALTA SPRINGBOARD has transitioned to a virtual format this year. The online format offers a forum for fresh thinking and new insights, helping attendees accelerate their career and differentiate their business from the pack. The annual event is focused on providing proven strategies, practical education and networking opportunities that will accelerate business success for anyone who attends. ALTA states that the format allows each attendee to customize his or her experience at the conference through unique connections and conversations on the most important issues affecting the industry.

“HousingWire Daily” REALTOR.COM’S GEORGE RATIU ON THE NATION’S STUDENT DEBT CRISIS While mortgage debt is traditionally the largest debt Americans hold, student loans are steadily climbing higher on the list. In 2020, student loan borrowers owed $1.67 trillion in federal and private student loan debt, eclipsing the nation’s total auto loan or credit card debt, according to the Federal Reserve. This tremendous amount of debt, which has now been recognized as a crisis, is so large that many fear the repercussions it may have on the future of America’s economy. In an effort to combat the financial woes introduced by both the crisis and the deadly COVID-19 pandemic, President Joe Biden has pledged to ask Congress for $10,000 in loan forgiveness for all federal borrowers. This amount is arguably comparable to a down payment on a house and has the potential to create more economic freedom for millions of Americans, many of whom may have dreams of becoming homeowners.

In order to determine how student loans are impacting homeownership, this HousingWire Daily podcast episode features Realtor.com’s Senior Economist George Ratiu. In this episode, Ratiu not only discusses how student loan debt is impacting the nation’s financially strained borrowers, but he also explains what Biden’s proposed plan could mean for the housing market. According to Ratiu, while making some sort of solution to the issue is absolutely necessary, it’s important to note that any debt forgiveness will impact taxes.

“If Biden does enact some form of student debt forgiveness, the impact on American households will depend on how the regulation is written. Because without changing the law to address the impact from taxation, the overall economic impact may not be as big as we hope,” Ratiu says in the episode.

Listen to this engaging episode to learn more about how the student debt crisis is plaguing the largest cohort of potential homeowners – Millennials.

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Event TIP “Wherever you are, be all there. Show up and be present. Make sure that you are fully prepared. Know who you want to connect with, hear speak and what value you will contribute. Spend your time wisely, it is too valuable to waste.”

- Annmarie Edwards, originating branch manager at CrossCountry Mortgage

MARCH 2021

INSIDE AGENT

JoAnne Kao Listed by Craig Dix, Assoc. Real Estate Broker with BHHSNYP joannekao@bhhsnyp.com

Upper East Side's Historical District 15 East 69th St., Apt 4B New York, NY 10021 $4,650,000 3 bed 3 bath | 1,800 sqft

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NOW IN HER FIFTH YEAR as a real estate salesperson, New York City-based JoAnne Kao is credited with selling the third-most-expensive apartment in New York.

That particular apartment closed at $63.1 million and is located in one of the most exclusive apartment buildings in the world. Her pursuit to connect with people is what led her to join Berkshire Hathaway HomeServices NY Properties, part of Berkshire Hathaway Inc., which is ranked No. 5 in Fortune's 2020 Most Admired Companies in the World. To Kao, every day is different when you’re an agent, and even on the worst days, she knows there’s nothing else she’d rather do. Kao is a member of the Fordham Mentoring Program, DWEN (Dell Women's Entrepreneur Network), the Harvard Business Review Advisory Council, an opt-in research community of business professionals, and the Residential Brokerage Membership Committee with the Real Estate Board of New York.

MARCH 2021

LOCAL INTEL

By: Brena Nath

Tampa Bay, Florida

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Des Moines, Iowa

The Des Moines housing market witnessed a record-setting year for home sales last year, which local Realtors credit to low mortgage rates, the work-from-home phenomenon and Des Moines’ affordable lifestyle. Not only are homebuyers leaving big cities for more space, but Alisha Stewart said that she’s helped lots of locals, too. “I have three or four clients that just bought their current houses with me in the last year or two and they originally planned to stay there for maybe five to seven years,” Stewart, broker at Goldfinch Realty Group in West Des Moines, said.

“Now they’re already listing and making the move just because they can afford more now with interest rates so low. So, it’s been absolutely nuts.” Stewart also said her clients want acreage and bigger yards because everyone is inside at home, working or schooling. “[There is] a lot of upsizing right now,” Stewart said. “I haven’t had anybody so far downsize.

MARCH 2021

Phoenix,

The Tampa Bay market is one of the hottest in the country right now. “While we are seeing a record number of first- and second-time homebuyers, move-up buyers and empty nesters downsizing, we are most noticeably seeing a huge increase in relocation buyers moving to the area from all over the country,” said Jason Hunter, senior vice president, regional manager at Guaranteed Rate Affinity. “More and more people are finding us online wanting a quick pre-approval, and they go under contract fast. This situation is a win-win for our market,” he said. Hunter added that while locals enjoy the quickly rising home values, many relocation buyers feel real estate is affordable in the market as compared to others. He also said that they are seeing more closings with a mortgage than cash as compared to previous years, which is a great sign for the mortgage industry.

Austin, Texas

If the iBuying industry had a home base, it would be Phoenix, Arizona. Many of the major iBuyers operate in the market, including Zillow, Opendoor and Keller Offers, along with bridge solutions like Knock Home Swap. And starting this year, RedfinNow is adding its name to that list. Phoenix was the first market RedfinNow launched in 2021, following the launch of San Francisco and Seattle at the end of last year. Redfin isn’t new to town though – it has had agents based in Phoenix to help clients buy and sell homes since 2010 with a listing fee as low as 1%. Now, homeowners can request a cash offer on their home via its iBuying arm.

Los Angeles, California

After last year, Americans really started to value the importance of having a comfortable and safe space to call home.

“Across generations, Los Angeles, in particular, became a popular place to live,” said Beatrice de Jong, consumer trends expert at Opendoor. She predicts LA will continue to be a popular place to live this year, especially as Millennials embrace homeownership for the first time. She also said that Los Angeles County offers homebuyers more space with suburban communities, while also having a city-feel with urban downtowns, catering to growing families and younger generations alike. Other trends that she is noticing include less emphasis on the walkability of a neighborhood, and more value on the interior of the home, along with a growth in demand for Accessory Dwelling Units.

MARCH 2021

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Arizona

“Austin’s rank as one of the best places to live, work, and thrive in the country is evident by not only the growth of our housing market, but also by the growth of our local economy,” Laura Huffman, president and CEO of the Austin Chamber of Commerce, said in a report from the Austin Board of Realtors. “Our region has a lower year-over-year job loss than any other major metro, and despite the pandemic, a record number of businesses have chosen to relocate to or expand in the region this year,” Huffman said. "We expect this growth — attributed to Texas’ business-friendly environment paired with Austin’s deep talent pool — will continue through 2021," she added. Despite this, in 2021 the region needs to address housing affordability to keep people from being priced out of the market, even as salary and job growth continues.

COMMENTARY

T

he disruptive impact of big data on housing Understanding data and risk evaluation

By Todd Teta

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Determining the value of a home depends on both art and science. With the increasing availability of massive amounts of data and the ability to analyze that information. Analysis of millions of pieces of disparate data informs nearly every decision made involving residential real estate.

Consumers, real estate agents, investors, mortgage lenders, insurance companies and other financial institutions need accurate valuations to inform their immediate decisions about investing in real estate and underwriting property. But big data has a deeper value than just estimating today’s property values.

Data can be used to evaluate ongoing risks that could impact not only future property values but also the cost of maintaining and perhaps repairing properties.

Data is available to predict risk to properties from climate change, natural disasters, typical storms and environmental hazards such as exposure to chemicals from nearby industries or previous industrial use.

Crime data can be used for predictive evaluation of property values, data on development plans and even school district data can be factored in to estimate whether a property will increase in value over time. For real estate investors, homebuyers, appraisers, insurance companies, mortgage lenders and other financial institutions, a deep understanding of the risks associated with a property and a community is essential.

Natural disasters destroy and damage homes and can impact long-term property values. Wildfires in California, Colorado, Oregon and Washington caused insured property losses that were estimated to range between $7 and $13 billion in 2020.

According to the Insurance Information Institute, insurance losses due to a natural catastrophe rose to $137 billion in 2017, then dipped in 2019 to $39.6 billion. A natural catastrophe, defined as an event that causes at least $25 million or more in insured

“According to the Insurance Information Institute, insurance losses due to a natural catastrophe rose to $137 billion in 2017, then dipped in 2019 to $39.6 billion.”

property losses, 10 deaths, 50 injuries or 2,000 filed claims or damaged properties, includes a variety of potential incidents.

Among the natural disasters that hit property owners in 2020 and earlier years were wildfires, earthquakes, winter storms, floods, hurricanes and tornadoes.

PAST INFORMATION TO PREDICT FUTURE RISK Climate change, particularly rising global temperatures, is likely to increase the frequency and intensity of storms and droughts, according to the U.S. Geological Survey (USGS). In addition, USGS reports that the rising temperatures in the air and in the ocean can lead to increased wind speeds in tropical storms.

Rising sea levels cause greater risk to coastal properties.

A recent report from the Urban Land Institute that focused on climate change and real estate investment explains the connection between external factors and real estate. While it may be easy to recognize the potential for physical damage to property from a hurricane, flood or fire and the associated costs in terms of repairs and possibly lower value, even smaller climate changes can incur costs.

For example, more frequent rain or wind or drought conditions can increase wear and tear on properties, cause insurance rates to go up and may require expensive adaptation such as flood mitigation or new materials that resist wind damage.

Accurate analysis of data is just as important as gathering information. For example, it may seem counterintuitive, but home prices in areas with high exposure to natural disasters sometimes appreciate faster than the overall market.

However, areas with specific exposure to wildfires, storm surge and floods are more likely to appreciate more slowly than homes without those risks.

Increased insurance or maintenance costs and reduced property values can be tied to environmental hazards, such as a community developed adjacent to a hazardous waste processing plant. Worse, the Environmental Protection Agency and other agencies have documented the toll on human health of living in a polluted area.

Crime reports influence home values, too, with property prices naturally higher in neighborhoods with a low crime rate compared to similar homes in a community with more crime. While safety is a priority for homebuyers, it is also an important factor for

MARCH 2021

TYPES OF DATA TO SUPPORT DECISIONS For insurance companies, a thorough analysis of data on everything from the performance of various roof materials in a storm or fire to local crime reports can influence whether a property insurance policy is offered as well as the premiums.

Analyzing data on rising sea levels, propensity for earthquakes, hailstorms, floods, tornadoes and hurricanes make an enormous difference to the bottom line for any insurance company. In addition, these companies need up-to-date information about trends that impact repairs and replacement of property such as labor and material expenses.

Similarly, mortgage underwriters and institutional investors must rely on data about physical threats to a home from natural and manmade disasters that could devalue a property or a neighborhood. But for these financial decisions, a deeper analysis of homeownership trends is important.

For example, understanding the risk of foreclosures in a neighborhood, which could negatively impact an individual property, requires broad analysis of home equity levels and mortgage repayment trends. Financial institutions typically rely

“Analyzing data on rising sea levels, propensity for earthquakes, hailstorms, floods, tornadoes and hurricanes make an enormous difference to the bottom line for any insurance company.”

on appraisers, who in turn need data to support their evaluation of neighborhood values based on community amenities, a desirable school district, proximity to public transit and safety issues.

Consumers and real estate agents rely on an abundance of data about housing market trends on a national, regional, local and neighborhood level. Reports that individuals can access such as data about the previous use of their home, crime reports, school performance and more can be supplemented with the knowledge imparted to their insurance companies and lenders.

Big data, of course, is only as good as the information collected and the analysis done on those facts. Reliable, consistent and accurate collection of information and analysis are important elements to help every participant in the housing market make smarter decisions.

MARCH 2021

Todd Teta serves as ATTOM Data Solutions’ chief product and technology officer. Prior to joining ATTOM Data Solutions, Teta led the product development and technology organization at Meyers Research.

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insurance underwriters concerned about the prevalence of theft, which could mean increased claims depending on a home’s location.

School districts are an important factor in homebuyer decisions, cited by 26% of buyers in the 2020 National Association of Realtors Home Buyer and Seller Generational Trends Report. For buyers age 30 to 39, that percentage rises to 36%. Research by the Brookings Institute found that in the largest 100 metropolitan areas, housing values were an average of 2.4 times higher near a high-scoring public school than near a low-scoring public school.

An often-cited report from the National Bureau of Economic Research found that for every $1 increase in school spending, housing values rose by $20 in that school’s district.

Even community amenities as basic as proximity to a grocery store – and whether that store is a Whole Foods, a Trader Joe’s or an Aldi - can impact future home values.

COMMENTARY

P

andemic ushers in a new era of digital lending Accelerates the convergence of consumer direct and retail lending

By Josh Friend

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Amid this global pandemic, mortgage rates have been at historically low levels, borrower demand has increased, refis have broken records and lenders have had to shift in many instances to a remote workforce. In addition to moving to a remote workforce, most faceto-face interaction with borrowers has either not been allowed to occur, or the borrower’s willingness to meet has declined dramatically.

That has caused a remarkable shift to a digital lending model that has significantly impacted a lender’s ability to do business during these challenging times.

Record-low interest rates have driven home sales to a 14-year high and spurred a 200% annual increase in refinancing. While this boom in volume has generally been positive for primary mortgage originators, it has also exposed underlying weaknesses in their digital strategies that could create challenges

“...mortgage originators’ shortcomings in self-service tools for application and approvals, frequent communication, and extended loan processing times could negatively affect customer satisfaction over time.”

down the road. According to the J.D. Power 2020 U.S. Primary Mortgage Origination Satisfaction Study, mortgage originators’ shortcomings in self-service tools for application and approvals, frequent communication, and extended loan processing times could negatively affect customer satisfaction over time.

“It’s been a complicated year for the mortgage industry,” said Jim Houston, managing director of consumer lending and automotive finance intelligence at J.D. Power. “Between surging customer volumes on the origination side, an influx of customer inquiries on the servicing side, and a workforce that has been completely displaced by the pandemic, resources have been stretched to their limits.”

Digital and online banking have already been on the rise in recent years, but the pandemic forced large-scale uptake.

According to an analysis by Fidelity National Information Services, an international financial services firm, there was a 200% jump in new mobile banking registrations in April of 2020.

That jump accompanied a 50% drop in branch bank traffic in the same month, according to U.S. banking data firm Novantas.

“This is a sign for how this generation is digitizing in the current situation,” a Venmo spokesperson said.

The shift has been palpable. “Everything they did in person they’re now doing online or even on mobile,” says Allie Fleder, COO of SimplyWise, a retirement and Social Security resource.

According to a new survey commissioned by Plaid, 80% of Americans now say they can manage their finances without a physical bank branch. Fintech is viewed as the “new normal” by 73% of Americans, according to the report, and 67% plan to continue managing most of their finances digitally after COVID. These elevated levels of origination during a global pandemic have forced lenders to embrace technologies that allow them to operate remotely while finding ways to engage borrowers.

What has begun to emerge is a hybrid digital lending model that converges principles of consumer direct and retail lending.

Let’s start with what these traditional models look like.

Retail lenders originate loans through their in-person retail branches. Typically, they rely on branch traffic, referral partners, and in-branch loan officers interacting with potential borrowers

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managers.

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face-to-face to originate loans.

Consumer direct lending is a method for lenders to originate loans through an online experience for completing the entire loan process digitally. Typically, these loan The cautionary tale here is: let’s not do what we’ve done so originators rely on lead sources, call centers, poorly in the industry for so many years. That is, when volumes go and other marketing activity to drive inbound up, lenders provide poor customer service and demonstrate poor leads to their consumer direct loan officers. follow-up in a failed effort to build relationships with borrowers.

We’ve seen an influx of lenders asking us When the average customer goes back to the current lender, about our consumer-direct experience and the which happens only 19% of the time, we know we’re not doing digital lending solutions needed to compete. a great job delivering superior customer service while building People are moving relationships with our borrower. more and more to a Take the time now — when we have this consumer-direct model mass influx of more customers — to build due to the pandemic service levels that create customers for life and the inability of retail instead of one-and-done lending. You’re “COVID-19 has not loan officers to meet with going to get more customers this year than only accelerated this their customers in the you’d get most years, and more chances adoption, but it has same manner that they to build those into customers for life. So, forced retail lenders used to. whether it’s consumer direct, whether it’s to rethink how they COVID-19 has not retail or this new hybrid model, it’s all going are going to engage only accelerated this to be the same thing. It’s how you are dealing customers in this adoption, but it has with that consumer and how you continue to digital world. That's forced retail lenders manage that relationship. to rethink how they Lenders who embrace this hybrid model where this hybrid are going to engage with an emphasis on delivering superior digital lending model customers in this digital customer service will gain a significant has emerged.” world. That’s where this competitive advantage, close more loans, hybrid digital lending better handle capacity issues, enhance model has emerged. borrower engagement, and improve the For the lenders who borrower experience considerably. embrace this new hybrid model, it is a way for them to increase capacity more than they ever have before. The key for this new hybrid model to be successful lies in a lender’s ability to provide superior customer service by developing the right culture of service — implementing innovative technology that allows lenders to engage borrowers during Josh Friend is the CEO and founder at InSellerate. Over each step of the borrower’s journey where the the past 21 years, he has grown to manage and train borrower is at. thousands of loan officers, processors, and marketing

COMMENTARY

A

re you ready to be the Amazon of real estate?

Other industries remind us it’s the small things that matter

By Charles Myslinsky

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Imagine requesting an Uber and not being able to see a map view of where the driver is located in real time; ordering food from DoorDash without up-to-date digital menus from an endless number of restaurants; or buying an item with Amazon Prime and having to pay close attention to the delivery estimates.

When we look at industries that have undergone significant change, it is easy to take for granted the success stories of market leaders and miss the seemingly small inventions that radically changed consumer expectations and behaviors. Each of these companies – Uber, Doordash, and Amazon – have completely transformed their respective industries.

But those changes didn’t happen overnight. In fact, each company started by mastering something small and built upon it to deliver unprecedented value for consumers.

Consumer expectations are formed by their last best experience. In real estate, however, the majority of transactions still happen the exact same way that they did in the 90s. The industry has made strides to increase access to listings, share pricing insights, and streamline offers, but has yet to offer the highbar experience that consumers expect.

What disruptive companies in other industries have demonstrated is that it’s the seemingly small things that most often turn into massive opportunities for change. As we continue the path toward a more automated future, we should draw lessons from other industries to pinpoint the small things that could drive significant positive impact for consumers.

“What Amazon and Robinhood have in common is their ability to give consumers easy access to products or services that were previously more challenging to get.”

DOUBLE DOWN ON ACCESSIBILITY Amazon, “The Everything Store,” pioneered consumer e-commerce, placing almost any product one-click away from your doorstep in two days. More recently, Robinhood reimagined stock investing by removing commissions and leading with partial share ownership, making investing accessible to an entirely new generation of consumers. Can’t afford Berkshire Hathaway or Tesla stock? No problem, you can buy as many partial shares as you can afford. If you are a Charles Schawb or TD Ameritrade customer, you’ve benefited from changes catalyzed by Robinhood as commission rates have been cut to zero. What Amazon and Robinhood have in common is their ability to give consumers easy access to products or services that were previously more challenging to get. Now, all companies are forced to step up and serve consumers similarly or risk becoming obsolete.

While the real estate industry has brought a great deal of information online, we have a long way to go to realize accessibility at the level consumers have come to expect. Take inventory, for example. Homes are often off the market long before they’re removed from a search site. There’s no “out of stock” icon, leaving consumers disappointed or frustrated when they discover that a property has already been sold. At the same time, important information about the home-buying process is often only available through financial institutions. Ultimately, this lack of on-demand accessibility to inventory and information impedes trust in brokerages, agents, and the industry at large. We must look toward solutions that will provide homebuyers and sellers with the information they need to make confident decisions.

MAKE HOME SHOPPING AS INTUITIVE AS EXPLORING NEW MEDIA CONTENT In recent years, and especially in recent months, we’ve all succumbed to Netflix bingeing. From an abundance of options to personalized recommendations, Netflix has met every possible consumer need. Gone are the days of driving to the video store for a 24-hour rental period. Same goes for Spotify. The company democratized music in a way that mimicked what people loved most about owning music: a personal playlist. Spotify modernized

MARCH 2021

BUILD TRANSPARENCY INTO YOUR BUSINESS MODEL Companies that stand out in a crowded landscape provide visibility into every step of their respective processes and serve up information consumers don’t even know they need—whether in buying something as simple as a pizza or as significant as a car. Consider Domino’s Pizza Tracker, which provides consumers with every detail about their order, from prep, to time in the oven, to delivery.

By offering this transparency into a commodity that doesn’t even need it, Domino’s has raised the bar for every other company. Similarly, Carvana, the pioneer of digital car buying, brings forward information about every car option so consumers have insight into details that are often hidden within a dealership, Carfax report, or through brand-specific inspection programs. Each company has created a trust-centered experience by equipping consumers with comprehensive information, democratizing knowledge, and unlocking better decision-making.

Buying or selling a home is one of the most highstakes decisions we make in a lifetime. Consumers need visibility into how the process works and

where their money is going. They may want to know how other properties are priced in the area, information about a given neighborhood, or how their asset will appreciate value over time — easily digestible information that indicates why the investment is the right choice for them.

Some critical information is available on current platforms, “We need to bring but the industry can do better. information that is We need to bring information traditionally hard to that is traditionally hard to access – financing access – financing options, credit options, credit requirements, and property requirements, and details — to the forefront of the property details — to consumer experience, making the forefront of the information easy to action, and consumer experience, build this practice into business from the ground up. making information We hear a lot of talk about digital easy to action, and disruption these days, sweeping build this practice across industries in leaps and into business from bounds. It’s no secret that digital the ground up.” advances have quickly become a competitive differentiator—and it’s become abundantly clear that real estate is reaching an inflection point, where those that embrace change will surge ahead, while those that remain ingrained in legacy systems will fall far behind.

Access, convenience, transparency, and extension are the small things that will give consumers the control and trust they’ve come to expect from other industries, while building towards massive change for real estate at large.

As chief product officer at OJO Labs, Charles Myslinsky brings a deep understanding of digital transformation and consumer experience to real estate. He also built the first end-to-end platform for homebuying and selling at scale.

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the playlist by enabling consumers to control their music from any device, at any time, and paved the way for organic discovery, serving up new music based on consumer behaviors and preferences. Both of these powerhouse companies have mastered the art of convenience, giving consumers exactly what they want—when they want it and where they want it.

With true convenience, products and services come to you. This can be hard to do in real estate when buying a home requires far more nuanced preferences. At the same time, it is imperative that we strive to understand individual homebuyer and seller preferences in the same way that streaming platforms understand us. Right now, the onus is on consumers as they sift through mountains of information and navigate much of the home journey on their own. We need to take on that burden for consumers, serving up information at just the right time and enabling serendipitous discovery.

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TECH 100 REAL ESTATE AND MORTGAGE COMPANIES PROPELLING A DIGITAL REVOLUTION

MARCH 2021

MARCH 2021

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The Great Fintech Acceleration

By Clayton Collins

And the housing industry did the exact same thing.

Mortgage lenders developed new processes. They quickly implemented new technologies and trained team members.

Real estate agents masked-up and reinvented open houses. Title agents mastered drive-by closings and reluctantly adopted online notary solutions. Appraisers implemented socially distanced and COVID-friendly inspection processes. Processors and underwriters figured out how to manage record-shattering origination volume while also juggling Zoom-school and other life pressures.

And the work didn’t stop there. Mortgage and real estate executives hired like mad. They pushed forward M&A deals.

Implemented enterprise tech solutions to meet market demands. Technology executives raised massive amounts of capital. They acquired competitors and partners to gain scale and extend capabilities. And they did all of this while operating with the cloud of uncertainty brought on by a pandemic, recessionary fears and a presidential election.

As we observe, digest and analyze all of this activity, we can’t help but surmise that all progress in 2020 was influenced or enabled in some way by technology.

For better or worse, this tech-enabled progress may force all lenders, real estate brokerages and technology companies to choose between two very distinct paths – massive scale or niche focus. The players that refuse to choose will get killed in the middle. Let’s explore how this trend is beginning to play out.

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We all have our own prominent COVID-19 memory from 2020.

Mine was on Sunday, March 15. I sat at home that morning typing out an employee memo that effective immediately all team members would be expected to work from home and that the office would be closed to outside visitors until further notice. At the time, I thought this was a two-week precaution.

We’d probably see everyone back in the office by April 1. Well, we all know how that one played out.

Fortunately for the team at HW Media, we’re a digital-first organization. All work is done in the cloud. Everyone is on laptops. Very little work must be done in office. Our team didn’t flinch and has been running full-steam for a year. With readers and clients distributed coast to coast, we’ve always relied on digital means to communicate. But that doesn’t mean we haven’t had our challenges. We had to find new ways to collaborate, build comradery, help each other stay sane, and onboard new team members. I can’t say we’ve perfected the last one yet. I’ve yet to meet 15% of our team members in-person, and I don’t know when I will. That drives me crazy.

But with these challenges came progress. We accelerated decisions that were further out on the roadmap. We hired team members we likely would not have hired because of geographic location. We launched new products. We developed new skills. We adopted and built new technologies and solutions. We even launched a new brand called FinLedger which is entirely dedicated to fintech and financial services innovation.

MARCH 2021

“

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“As we observe, digest and analyze all of this activity, we can’t help but surmise that all progress in 2020 was influenced or enabled in some way by technology.” - Clayton Collins

MARCH 2021

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TECHNOLOGY ACQUISITIONS

MERGERS

&

M&A took a brief hiatus in Q2’20 as the industry digested uncertainty and M&A bankers struggled to get their VPNs to work from their country houses. But the second the housing industry demonstrated resilience through insane purchase demand and life-saving refi volume, the dealmakers were off to the races.

CoStar kicked off the acquisition races in May with the purchase of Ten-X Commercial with the goal of moving commercial real estate deals online.

Then Black Knight swooped in to acquire Optimal Blue from Chicagobased private equity firm GTCR in July. The $1.8 billion acquisition was certainly motivated by Optimal Blue’s cloud-based capabilities, which help over 1,000 mortgage lenders by facilitating secondary market interactions. This is a mission-critical step in any digital mortgage process, and clearly a building block toward Black Knight’s end-to-end ambitions.

And just over a week later — when most of the country was still trying to figure out if their kids would be going back to school in August — the big kahuna of 2020 mortgage tech M&A deals was announced. NYSE-owner Intercontinental Exchange announced that they would be acquiring Ellie Mae from Thoma Bravo for $11 billion – a staggering 3x what Thoma Bravo acquired the company for 15 months prior. This deal isn’t just notable because of the size, but also the strategy. Prior to the Ellie deal, ICE acquired Simplifile and MERS. Adding Ellie Mae to the mix positions ICE Mortgage Technology to “...realize the true digital mortgage,” said Jonathan Corr, president and CEO of Ellie Mae. Corr retired a month later, and Joe Tyrrell stepped up as president of ICE Mortgage Technology.

Not happy staying on the sideline long, Black Knight was right back at the deal table in August with the acquisition of electronic signature company DocVerify. DocVerify, like other remote online notarization players, was a huge beneficiary of a 2020 tailwind. The pandemic massively accelerated efforts in the mortgage industry to adopt RON, in the pursuit of creating a lending process that is completely digital and COVID-safe for all parties.

At this point, private and public market investors began to see mortgage and real estate as a bright spot in the economy. And the deals only accelerated from there.

RE/MAX acquired a location intelligence data company called Gadberry Group. Stewart Title acquired RON pioneer NotaryCam. Private equity firm Thoma Bravo acquired RealPage for $10.2 billion. Qualia officially achieved unicorn status in their series D and immediately used some of the proceeds to acquire Adeptive Software. First American announced its planned acquisition of subservicer ServiceMac. SitusAMC entered the wholesale tech channel by acquiring ReadyPrice. A360inc acquired Express Notary Services in the race to RON. This is just a sampling.

Then, if the start of 2021 is any indication for the rest of the year, after months of uncertainty, CoreLogic announced in February that it entered into a definitive agreement to be acquired by Stone Point Capital and Insight Partners for $80 per share in cash, or an equity value of about $6 billion.

The company had been fighting a public battle since last July with activist investors pushing for change and value creation.

MARCH 2021

Let’s check in on how his two strongest predictions are holding up:

1.

The winners in the race to get to the customer first will establish considerable competitive advantages.

2.

The cost stack in residential real estate transactions will be substantially reduced at virtually every milestone.

Status Check: Certainly tracking toward accurate. Increased lender and real estate agent focus on owning the customer relationship is playing out across the industry as lenders fight for refi volume and real estate agents muscle through an insanely competitive purchase market. Lenders are fighting to get to the consumer first with recently launched tools like Rocket’s mortgage broker search portal, UWM’s FindAMortgageBroker.com, Fairway’s pending Home.com launch, and Better.com’s massive valuation and march toward IPO.

Status Check: Tracking toward accurate, but still a lot of cards to fall on this one. While costs have traditionally been going down with volume, the drastic increase in volume last year caused an increase in costs for personnel. Looking at his 10-year prediction, the industry is headed this way, but go to page 32 to learn more.

One could argue that Dietch anticipated the very near future, or that he’s just an astute student of history, but a specific chapter titled “Can Disruption Be Planned or Orchestrated?” essentially wrote the script for how 2020 would play out.

ADOPTION AND GROWTH Dealmaking wasn’t the only avenue housing tech players pursued to achieve scale in 2020 – good old-fashioned organic growth was quite in vogue. It’s amazing what a pandemic-induced Great Acceleration can do for technology adoption and revenue growth.

Cloudvirga co-founder Kyle Kamroo shared that, “2020 was a year of phenomenal growth for Cloudvirga and our clients. Our retail digital point of sale (POS) platform enabled our clients to work remotely and, at the same time, set new records.” This growth equated to revenue doubling in 2020 – and the company expects similar growth in 2021.

StreamLoan, a digital mortgage loan software company, reported similar results. The company shared, “StreamLoan grew more than 600% in 2020, year-over-year, attributed to the recognized value StreamLoan delivers to the market, accelerated digital adoption driven by the pandemic...”

MAXEX, a digital exchange for buying and selling residential loans, experienced a record year in 2020 despite the severe shortfall in liquidity in the non-agency market that resulted from COVID-19. The company achieved more lock volume in the first 11 months of 2020 than it did in the prior three years. The company shared that “MAXEX has now reached $13 billion in non-agency lock volume and its marketplace has grown to 19 institutional investors and more than 150 bank and non-bank lenders.”

RON leader Notarize gave all business operators reason for envy in 2020. Notarize as a business saw 600% growth in 2020. In the category of real estate, the company saw volume from title and lender clients increase 825% from 2019 to 2020. Notarize processed $100B in real estate closings in 2020.

These are just a handful of anecdotal examples of incredible outsized, organic growth achievements clearly influenced by the Great Acceleration. The following pages include the 2021 Mortgage and Real Estate Tech100 winners – all examples of outsized growth driven by innovation and impact. For more in-depth profiles of each company, go to HousingWire.com.

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In 2020 and before COVID-19 was a reality, James Dietch of Teraverde published a book called Disruptive Fintech where he explored cases and examples of how certain companies and CEOs are driving a coming wave of innovation in financial services. Dietch extensively explores the “disruptive path forward” and goes as far as making predictions about how the next 10 years will play out. A savvy author and businessman, he does note that “These scenarios won’t play out exactly as described.

They never do.”

MARCH 2021

TOP100 ACES Quality Management

Floify

OpenClose

Agents National Title

FormFree

OptiFunder

Arch Mortgage Insurance

Gateless

PennyMac Loan Services

Aspen Grove Solutions

Homebot

PollyEx

Asurity

HomeLight

Promontory MortgagePath

BeSmartee

HPA, A Cognizant Company

ReadyPrice

Better.com

ICE Mortgage Technology

Reggora

Black Knight

International Document Services (IDS)

Richey May & Co

Blend

Blue Sage Solutions Calyx Software Candor

Capacity

Insellerate LBA Ware Lender Price

RiskSpan Rocket Pro TPO Sagent Sales Boomerang

LenderClose

SigniaDocuments, an Evolve Mortgage Services company

LendingPad Corp

SimpleNexus

LendWize

Snapdocs

LoanLogics

SoftWorks AI

LoanNEX

Sourcepoint

LoanScorecard

States Title

LodeStar Software Solutions

Stavvy

ComplianceTech

Matic Insurance

StreamLoan

CoreLogic

MAXEX

Tavant

Covius

Maxwell

The Money Source

Credible

MeridianLink

Top of Mind Networks

Credit Karma

MISMO

Total Expert

DocMagic

Mortgage Cadence

Truework

dv01

Mortgage Capital Trading

United Wholesale Mortgage

eOriginal

Mortgage Coach

Usherpa

EXOS Technologies

MortgageHippo

ValueLink Software

FICS (Financial Industry Computer Systems)

Mr. Cooper

Veros Real Estate Solutions

Nationwide Title Clearing

Volly

NewRez

wemlo

Nexsys Technologies

WFG Enterprise Solutions

First American Docutech

Nomis Solutions

Xome

FirstClose

Ocrolus

Clarifire

Clear Capital ClosingCorp Cloudvirga

Cogent QC Systems

Common Securitization Solutions

Finicity

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Indecomm Global Services

First American Data & Analytics

MARCH 2021

Adeptive Software Corporation

FundingShield

Amrock

Home Captain

Asteroom

HomeLight

Atmos

Homesnap

ATTOM Data Solutions

Hometap

Auction.com

Hommati

Avenue 8

Hubzu

Back At You

IDX

Big Purple Dot

Inside Real Estate

Black Knight

JetClosing

Bomb Bomb

Knox Financial

BoomTown

LemonBrew

Breakthrough Broker

LendingHome

Brivity

London Computer Systems

Brokermint

Lone Wolf Technologies

Buffini & Company

Luxury Presence

Buyside

Mav

Cape Analytics

Modus

Chime Technologies

NestReady

CINC

Noah

ComeHome by HouseCanary

Notarize

RateMyAgent Real Geeks RealScout

Realtor.com Redfin

ReferralExchange Remine

Roosted

Pavaso

Dotloop

Paymints.io

Earnnest

Propertybase

Endpoint

PropStream

Equator

Propy

Evocalize

Proxio

ShowingTime SkySlope

SmartRent Snapdocs SOA Labs Spruce

Structurely Tavant

TopHap

TRIBUS UpNest

Opcity

Docusign

Revaluate

Roofstock

OJO Labs Orchard

RentSpree Roof

NotaryCam

Disclosures.io

Qualia

Radian

Hellosign

DataTrace Information Services

Qazzoo

Quantarium

Glide

Adwerx

CoreLogic

TOP 10

ActivePipe

First American Data & Analytics

Usherpa yaza Ylopo Young Alfred Zigzy Zillow

MARCH 2021

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3D City Scapes

THE MORTGAGE WORKFORCE IS BACK

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BUT FOR HOW LONG?

By James Kleimann MARCH 2021

y late spring of 2020, the loan pipeline at Princeton Mortgage was full. And CEO Rich Weidel’s staff was absolutely slammed. He needed to scale up ­— and quickly ­— to manage record origination volume.

Like most other lenders, Princeton, which operates in retail, wholesale and correspondent channels, fell back on the familiar strategy of hiring industry veterans to plug the gaps. Some took

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B

to the task immediately and thrived, but others didn’t work out. The attrition rate was higher than he liked, so he decided on a new approach.

“At the beginning, we hired for skills and experience,” Weidel said in an interview with HousingWire in late December. “Now, we hire for attitude and ability.”

For Weidel, this frenzied period — in which trillions in mortgages have been originated and lender capacity has stretched like never before — created an opportunity to not only to capture market share, but to create a more stable and sustainable workforce that could grow with the business. And one that doesn’t require mass layoffs when revenues inevitably fall.

Such a strategy stands in stark contrast to the industry’s historic modus operandi, where tens of thousands of workers are hired when margins and profits are fat, and just as many are fired when revenue and margins slim down.

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LIVE BY THE SWORD, DIE BY THE SWORD It wasn’t so long ago that mortgage lenders were on top of the world. In 2006, loan officers were collecting record paydays by issuing mortgages to anyone with a pulse and a dream, underwriters were in high demand, and an army of processors were hired to help make it all happen.

By the height of the bubble, the industry’s ranks had swelled to about 500,000 workers, according to the Mortgage Bankers Association.

With the fall of Lehman Brothers, the real bloodletting began. Jobs in the industry vanished as banks frantically tried to shore up their balance sheets.

Not that many Americans were looking for mortgages between 2008 and 2009 anyway.

But as interest rates shrank and the broader economy gradually recovered, so too would the mortgage industry, whose fortunes are inextricably linked to the 10-year Treasury.

In 2012, margins reached over 100 basis points and profits were soaring, according to data from the MBA. Some jobs returned, but many did not.

By 2018, rates had ticked up to around 5%. Refinancings dried up and the pink slips had returned. JPMorgan Cha s e, Well s F a r go, F reedom Mortgage, Movement Mortgage, loanDepot, Guaranteed Rate and a slew of other lenders laid off workers.

Revenues were again improving in late 2019, moving into early 2020.

Then the coronavirus pandemic hit.

Lenders braced for the worst, hoarding cash and drawing up contingency plans in the event the American economy completely tailspinned. The questions in March were about survival, not about bonuses or going public.

Paradoxically, the virus that had decimated so many American industries had actually created the perfect conditions for the mortgage business to thrive. Interest rates had been pushed to unfathomably low levels, and millions of Americans, needing space and no longer tethered to the office, decided to buy a home.

There was one major problem: virtually no one in the industry was pre-

pared for the tidal wave of mortgage origination volume that was to come.

RECREATING THE MACHINE By the time Weidel had changed tack and reconfigured his company’s hiring and development structure, an arms race for experienced mortgage professionals was already underway, especially for underwriters.

Underwriters who had been making $80,000 in 2019 suddenly were commanding six-figure salaries and five-figure bonuses on top of that.

With margins now checking in at 250-plus basis points and annual profit projections in the hundreds of millions to billions, many mortgage executives were willing to pay what was necessary to handle as much volume as possible.

By summer of 2020, some of the country’s biggest lenders had been hiring hundreds of people per month.

Rocket Companies has grown to over 22,000 employees, while United Wholesale Mortgage, Guaranteed Rate and loanDepot had all approached the 10,000-employee mark by the close of 2020. Traditional depository banks, credit unions, specialty lenders and independent mortgage banks were all scrambling to fill chairs, reduce turn times and stuff their pockets with cash. In many cases, they opted for experience.

Wary of the boom-and-bust cycle of mortgage, New Jersey-based Weidel decided to opt for a more organic approach. His plan involved identifying less experienced talent that had the aptitude to learn the trade, grow into a role, and quickly advance.

"We have found that the beneficial match is the growth trajectory of the company with the growth trajectory of the individual," said Weidel. "We've hired trainers, formalized training and onboarding, and we've switched completely to hiring for attitude and ability over skillset. And we've designated several jobs within our company as two-year jobs, that's it. Either you're up or you're out within those jobs.

Historically, people would look out to 10 years, 20 years, but no, we can't have that anymore. We need those to

MARCH 2021

“We’ve hired trainers, formalized training and onboarding, and we’ve switched completely to hiring for attitude and ability over skillset.”

-Rich Weidel

“One of the reasons the mortgage industry wasn’t prepared to handle all the volume that came in 2020 is because that industry-wide hireand-fire mentality created systemic workforce problems for companies over time.”

-Rich Weidel

this — is really bifurcating down the positions to smaller responsibilities so that you can have junior underwriters and junior processors and loan officers and things like that," Weidel said.

"That the skillset needed to do a job is actually smaller. And you can have more people doing smaller pieces of the puzzle, and decrease the need for having a huge breadth, and share the skillset. Then you could move more people through the machine that way.

I think the recruiting challenges of 2020 have forced us to think much more creatively around, how do we onboard people more quickly, and how do we move them around the machine?"

That trend toward specialization really began about four years ago, according to Cesar Hernandez, the co-founder and CEO of mortgage recruiting firm Agility360. “We see models that have as many as 12 positions when typically there would have been three,” he said.

“The idea of creating a highly specialized workforce that provides a very efficient conveyor belt type of environment has worked” for lenders like Rocket, Hernandez said. But there are limitations. “They [Rocket] realized that they bifurcated too small, and you had people who were literally just following up with other people.

Their entire job is to take an email, a call and send it to somebody else...I think they've reached the natural limit of what that system can achieve.”

BUILDING A PIPELINE Like most of its workforce, Hernandez just kind of fell into the mortgage industry.

He spent the majority of his career in the tech space, where he grew accustomed to constant assessments of his technical skills, but also how often tech executives hired talent specifically because they felt they were good cultural fits.

“Getting a good cultural fit in tech is a huge deal,” he said. “You can get a great network engineer, but if they hate their manager, they’re not goingto do a good job.”

So when he co-founded his mortgage

MARCH 2021

35 ❱ HOUSINGWIRE

be jobs that are entry level feeder programs, we can keep bringing talent into the organization, including more technically challenging positions.”

The play is not without risk. It takes time for his team to identify the right candidate, and a lot of finesse to put them in the right position to succeed and develop. It means potentially leaving money on the table today to strengthen the overall company for tomorrow.

At Princeton, the task of hiring typically starts with the marketing team, which has built a large database of prospective candidates that have certain attributes, many modeled after the current staff. What follows is an outbound marketing campaign that targets candidates who appear to be a good fit at Princeton. After that, a rigorous interview process that includes a personality test, including an Enneagram test.

"The [tools] certainly aren't perfect, but we’ve found hiring without assessments yields a 50% success in hiring rate whereas hiring with assessments yields a 70-90% success rate,” Weidel said.

One of the reasons the mortgage industry wasn’t prepared to handle all the volume that came in 2020 is because that industry-wide hire-and-fire mentality created systemic workforce problems for companies over time, he said.

“We’re missing a whole generation of people… because we didn’t really have people getting into the industry between 2008 and 2016, when it was relatively stable,” Weidel said. “I think middle management is really compressed. There’s a lot of people in their 20s and a bunch of people in their late 40s and 50s, but you’re missing the middle. And we see that day-to-day, they just don’t seem to be there. I’m 34 and I don’t run into 34-year-olds.”

As part of his reimagination of the workforce, Weidel implemented some workflow processes that have gained traction at the country’s two biggest lenders.

“What we've learned from Quicken and UWM — who do a nice job with

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recruiting and staffing firm Agility360 in 2014, Hernandez was surprised by some of the responses from old hands in the mortgage industry.

Cesar set up candidate profiles, assuming that a candidate with all the basic and necessary skills to work at Lender A would be able to do the same job at Lender B. After all, underwriters generally do 95% or more conventional or government loans. What made it a good value proposition, he reasoned, was that cultural fit. They took the model to big and small lenders alike.

“They were like, 'Look, we hire underwriters when we need them and fire them when we don't.' So there's a real mismatch between the nature of the industry and the nature of hiring and retaining excellent talent,” Hernandez said. “And I think we're seeing that now – it's coming to the forefront with this huge boom. Companies are struggling to hire and retain good talent. But now the chickens are coming home to roost because...for their whole history the industry hasn't paid attention to things that are important to the average employee.”

These days, Hernandez says retention rates at lenders both big and small are uneven, often due to poor cultural fits. But some of it is inevitable.

“You cannot have industry grow by whatever percentage, 30-40%, and bring in all this fresh blood without causing a lot of friction,” he said. “One of the things we talk about with candidates when we first place them is that we try to prepare them for the amount of angst that they will experience those first 30 days. Especially, you know, if they're used to a certain method, or they come from a larger company, when there is a lot of structure, to a smaller company, it’s going to be very uncomfortable.”

Per Hernandez, about 50% of people his company placed last year moved because the pay was too good to pass up. The others moved for all kinds of reasons – they didn’t like their boss, they moved locations, etc.

“What we've found is the same people who are coming back to us again and again – 10-20% of the population

might need somebody that’s going to be up to speed very quickly. It’s the long-haul.”

“...there's a real mismatch between the nature of the industry and the nature of hiring and retaining excellent talent.”

-Cesar Hernandez is moving very frequently, but the other 70% or so stay where they are," Hernandez said.

The best way for the industry to start creating better organizational structures is to develop stronger pipelines and improve training programs, Hernandez said.

“One is by recruiting new people into the industry on the front-end.

The other is by finding people that we think have the requisite underlying skills. And that’s kind of our specialty – we always start with what are your underlying skills, your cognitive skills, your basic skills. In the case of an underwriter or LO or processor, are you good at math? Can you interact well with people? If you have those basic skills, it can be trained. The second prong of our business is convincing our clients to give somebody an entry-level position even though they

MARCH 2021

PARTY IN THE FRONT, BUSINESS AS USUAL IN THE BACK The mortgage industry has historically not garnered a reputation for being the most tech-forward. The image of the loan processor hovering over a fax machine still lingers in the minds of many.

But the conditions of the pandemic, namely social distancing, have forced lenders to up their tech games. Well, to an extent. In recent years, lenders have cumulatively spent billions on technology.

It has undoubtedly led to better experiences for borrowers on the frontend. With the click of a button, they can upload documents, sign forms.

Automation has arrived, and it’s made that bifurcation of the back office possible.

If anything, it’s been a big factor in the increased number of jobs, the majority of which are now remote.

Lori Brewer, the founder and CEO of LBA Ware, a provider of incentive compensation management software for the mortgage industry, found that the number of processor jobs increased by 51% in 2020, while loan officer jobs increased by 27%. At the same time, volume increased by 100%.

“All of this spending on technology – why did we have to hire so many bodies still?” Brewer said. “Why didn't technology pick up the slack and do a better job? Or maybe it did. Maybe I had to hire 50% more processors, but maybe I would have had to have hired 100% more.”

Integrating the technology also becomes something of a dou ble-edged sword for lenders, said Tim Armbruster, the CEO of Grind Analytics, which provides granular data on employee performance to mortgage companies. It requires a lot of management.

“It's not like you can create an underwriting engine and let it sit,” he said. “It's constantly being updated.

You have different underwriting rules for different investors. It's very fluid

MEASURING EMPLOYEES, THE NEW FRONTIER To date, it’s hard to argue that technology advancements in the mortgage industry led to better pricing for consumers.

In fact, the cost of producing a loan in the pen-and-pad days of 2009 is actually far cheaper than it is today. In 2009, the cost to originate and close a loan was $2,345, according to the MBA. In 2017, it had rocketed up to $8,807. In the third quarter of 2020, it had dropped slightly to $7,452. The reason for those rising costs, according to Armbruster, is simple.

“How do you gain efficiency in mortgage? Sixty-eight percent of the mortgage process cost in the third quarter of 2020 was in employee compensation,” he said.

What can bring down the cost of the loan, aside from fewer workers, Armbruster said is creating better processes and quickly being able to assess the strengths and weaknesses of the company’s workforce.

“Everyone is looking at the latest technology, completely reengineering their mortgage process. And that is hugely expensive,” he said. “Hugely expensive in terms of capital management, huge change management within their organization. But they have this big chunk of the pie – 68% in front of them that is the cost to close, is just employees.”

His company tracks key performance indicators and allows company leaders to assess workers within two months of implementing the software.

Brewer’s company operates in a sim-

ilar space. LBA Ware recently rolled out a new product called Limegear, which gives mortgage firms a look at employees in the top quadrant and the bottom quadrant. “If you had to slash-and-burn, you could literally look at a graph, chart your KPIs...and I think that’s coming.”

“Everyone we’ve talked to says they’re going to continue to grow this year, which I have found a little bit surprising. You just grew 70% – that’s not sustainable. But I guess that’s classic mortgage, right?”

-Lori Brewer

MARCH 2021

WHAT HAPPENS WHEN RATES FALL? The MBA and most economists foresee a slowdown in originations in 2021, primarily because of an expected slowdown in refi business. Purchase mortgage applications are expected to rise, and overall originations are forecasted to clear $1 trillion in 2021.

But what happens when rates tick up again and the lender suddenly no longer needs seven processors, LOs, assistant LOs, and a few underwriters?

“Everyone we’ve talked to says they’re going to continue to grow this year, which I have found a little bit surprising,” said Brewer. “You just grew 70% – that’s not sustainable.

But I guess that’s classic mortgage, right? Everybody is always optimistic and growing. But I think at least by the end of next year, there’s going to have to be some trimming because what we have now is not sustainable.”

In Weidel’s view, there will likely be workforce volatility in the industry once rates start to rise again.

"We went to go play the game that everyone else is playing, which is recruit experienced mortgage people, and it creates a merry-go-round. That does not seem like a long-term winning strategy," said Weidel. "We want to play a different game. And I think if you look at places like Freedom, UWM, and Quicken, they come to mind first, they're not playing that game. They're growing their talent. But I think in total, everyone is just still trying to steal each other's people, and I think it's really short-sighted."

He added that, overall, he didn’t see a lot of radical thinking in how to create a more sustainable industry even with record profits for most lenders.

"I don't see a ton of innovation in general around this because it's hard," said Weidel. "It's really hard, and you have to have a multi-year strategy. You have to be confident that you're going to have the volume in order to need these people two, three, four, and five years from now. Since we're betting on ourselves to grow really rapidly, it's worth investing in people today even though we might not get the big benefits for three years from now."

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and difficult to create and maintain.”

A top retail lender, Armbruster said, is actually operating off a mainframe system, taking paper applications.

“And they're crushing it. So that's a good example of why automation I don't think is necessarily the silver bullet.”

Long term, he said tech innovation is going to happen because Fannie Mae, Freddie Mac and the agencies drive the change. In effect, the efficiencies mortgage lenders can realize on the back-end is out of their control.

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m i t o i C od n m tio a z MARCH 2021

OR

Innovation

By Brena Nath

MARCH 2021

39 ❱ HOUSINGWIRE

What is the end goal of fintech disruption?

INNOVATORS

have made self-driving cars a reality, and yet finding a tech solution that prioritizes anyone beyond the perfect borrower is hard to find?

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This striking contrast between what is possible with innovation and what is actually happening is something Catalina Kaiyoorawongs, co-founder and CEO of LoanSense, brings up several times, as she describes the state of innovation in the housing industry.

“We're creating systems that are ignoring the outliers and that's the implication of automating things,” said Kaiyoorawongs. “There has to be a way to account for those outlier cases so that “We’re creating systems that we can be more inclusive because the reality are ignoring the outliers and is the trends are moving that’s the implication of au- towards more and more debt and more and more tomating things.” complexity.”

Kaiyoorawongs, who -Catalina Kaiyoorawongs is based out of the Detroit Metropolitan area – the car capital of America – created LoanSense to provide an actionable and data-based roadmap for consumers saddled with debt on how they can buy a home. As a student loan digital advisor, LoanSense matches borrowers to the best federal loan repayment plan and gets payments counted towards loan forgiveness, saving them thousands of dollars.

“We're just going to make lending and the availability of housing more and more exclusive if we don't account for the harder cases,” Kaiyoorawongs said, adding that the industry can’t just go after the perfect credit worthy, MBA, M.D. type of person.

THINKING OUTSIDE THE BOX Kaiyoorawongs, who operates in the tech space and was also a Bill and Melinda Gates education fellow through her research on education policy, said that she thinks what's happening in the technology industry is technology is much more robustly used for those that are earning above the median.

“I think people who will easily say, ‘yeah, I'll pay $12 a month to subscribe,’ that's who the tech is built for. It's not built for the person earning the median wage and below,” she said. “As a result, there is racial implications to that.”

Just looking at lender websites highlights the divide in helping people who don’t qualify for a home right now. ¬¬When a consumer goes to apple for a mortgage or refinance, they’re typically met with one of two options, they’re rejected or accepted. Kaiyoorawongs argues that this “binary decision has to removed.”

It could be a yes or no, she said, but it also needs to have a maybe. And to take it a step further, she stated that the system needs to explain what that maybe is dependent on and offer services that can meet that maybe.

“Everyone's trying to go after the apples and the first branches, and everyone is forgetting about all the apples up the entire tree” Kaiyoorawongs said, emphasizing that the industry needs to move beyond the small percentage of mortgage ready borrowers.

Kaiyoorawongs’ own company, LoanSense, is one of the companies out there that is trying to bridge this gap. LoanSense partners with lenders

to ensure that no mortgage applicant is denied without a plan.

LoanSense isn’t alone in the fight to bring more inclusivity to the financial industry. While she is attacking the problem by looking at consumer debt, other tech companies are challenging the status quo by looking at housing supply or the mortgage process.

Here are different ways companies are harnessing technology to disrupt areas that serve the non-traditional consumer.

THE OUTLIERS Looking at Fannie Mae and Freddie Mac as an example, the enterprises offer mortgage products that require as little as 3% down. Without even going into the specific requirements, the products state that borrowers have to have a credit score. That alone is a barrier to millions of people.

And then, once you dive deeper and add in the amount of debt a person has or how much money they make, many more people are taken out of the homeownership equation.

Any person who falls out of these standard methods is an outlier.

The companies innovating in this area aren’t trying to fit square consumers into a round hole. Instead, they’re creating more and more pathways – or shapes to stick with the analogy – for how people can build sustainable wealth. They’re questioning the definition of innovation itself.

Matt Holden founded his Denver-based company Black Opal to address one of these outlier groups – expatriates. Each year 14 million people come to the U.S. on various visas, arriving in a country that’s based on credit history, which they have none of.

“Moving to America is an honor, it's a privilege. But you get here and the systems are so broken, that it is actually a hardship for anybody who has come here as an immigrant, or on a nonimmigrant Visa,” “Moving to America is an said Holden, who moved honor, it’s a privilege. But to the U.S. from Australia in 2013. you get here and the systems After wiring hundreds are so broken, that it is actuof thousands of dollars to the U.S., Holden was ally a hardship for anybody shocked to be rejected who has come here as an imfor a credit card when he first moved to America. “I migrant, or on a nonimmihad to put down another grant Visa.” $1,000 for what they call a secured credit card,” -Matt Holden said Holden. “How do you run a business on $1,000?”

Holden explained Black Opal has a card that is so “fundamentally different.” For credit history, the company uses the credit rating of the consumer’s home country. So, in Holden’s case, as an Australian, Black Opal uses his Australian credit rating, makes it an American credit score and uses that to underwrite and issue a credit card. They also give the consumer the credit card 90 days before they come to America, so they

MARCH 2021

5 studio apartments developed by Blokable for Valley Cities in Auburn, Wash.

THE HOME-BUYING PROCESS America is famous for its 30-year mortgage. Home shoppers buy a house, and unless you opt to pay it off early, you have 360 months to slowly pay down your debt. But what about those people who don’t want to be stuck with a mortgage for 30 years?

Companies like Haus are cropping up to disrupt the standard way to buy a home. According to Haus’ website, it offers a co-investing model instead of a typical bank loan.

“The Haus partnership was designed to create a flexible approach to homeownership,” Haus CEO Jonathan McNulty said. “Each homeowner

has their own priorities and goals, and we felt like a solution that created flexibility and affordability, combined with removing the leveraged risk for consumers was missing.”

Unlike a traditional lender, consumers aren’t borrowing money or taking on debt when they partner with Haus. While the consumer’s name is still the only one on the title, Haus shares in the cost of owning a home, as well as its appreciation and depreciation if they sell.

One of the most notable parts of this model is the flexible equity option.

Homeowners can buy more equity in the house anytime and sell their equity back to Haus to get cash when they need it.

“Traditional mortgages have not changed much since originally created,” McNulty said. “While for many people, traditional mortgages can work very well, there are those who struggle with the rigidity of the structure, and the additional risk associated with it. That is why new options, like the Haus partnership, can create a much more manageable

“Traditional mortgages have not changed much since originally created. While for many people, traditional mortgages can work very well, there are those who struggle with the rigidity of the structure, and the additional risk associated with it.”

-Jonathan McNulty

MARCH 2021

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can build their credit score much faster.

Focusing on the 750,000 professionals who are in America on a visa, Holden is trying to upend the “good ole American story” that says you have to go through an arduous and laborious journey in order to make it in America.

He recalls attending a conference in Colorado for bankers and listening to the speaker talk about her journey as an immigrant, coming to America with only $500 in her pocket. While he isn’t discrediting her struggle, he is pushing back on the reason her journey had to be so hard in the first place.

“I don't know why she had to go through so much pain. They've come to the greatest country in the world, but they still are not welcome in the banking institutions,” he said.

This is why Black Opal focuses on professionals with visas and tries to help them get started in America.

While COVID did pump the brakes on Black Opal for about six months, the card is launching mid 2021, and so far, the company has raised over $2 million from private investors.

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7 single-bedroom apartments developed by Blokable for Valley Cities in Auburn, Wash.

MARCH 2021

THE ROLE OF INNOVATION Seattle-based Blokable takes the past examples of tech disruption to the next level by disrupting multiple levels of the entire housing supply ecosystem. Adding a physical element back into the tech discussion, Blokable not only taps into the power of technology, but it also is disrupting the process by focusing on one of the most important commodities in the real estate industry – dirt.

Blokable made history at the end of last year, announcing the first-ever Vertically Integrated Modular (VIM) housing development, Phoenix Rising.

When looking solely at the development, Phoenix Rising is a community of five studio and seven 1-bedroom apartments, which are reserved for individuals earning 30% of the Area Median Income. Blokable then goes a step beyond simply getting an affordable home and strives for sustainability.

According to Blokable, the facility will cost 60% less for heating and cooling, and 30% less for overall utilities, and meets strict energy and environmental metrics that are becoming the standard for new construction in many states and municipalities.

“As an owner, if you're thinking about how to create the maximum amount of value, the operations of something are very important. So, the cost of operations, the cost of maintenance, the cost of insurance, all those things are factored into the owner’s perspective. It all comes together in terms of the overall finances of something,” Aaron Holm, who with Nelson Del Rio, is co-founder and co-CEO of Blokable.

Blokable delivers on these metrics by developing a prefabricated building system that is standardized and repeatable while offering endless site variation.

But the finished development is only one part of the whole process in what Holm calls correctly positioning incentives to create a real role for innovation.

For both Holm and Del Rio, while they come from different backgrounds professionally, they found common ground over their personal

“When we started Blokable, it was very much to go after the core problem and to really rethink how the housing market was working because it had obviously hit a point where some of the fundamental components of it weren’t working.”

-Aaron Holm

upbringings. Coming from a low income, single-mother household, Holm said he learned the importance of housing and the importance of housing as a baseline for education, health and ultimately, opportunity.

Holm added that they both saw that “to really get underneath the problems in the housing market, it was going to take a completely vertically integrated approach.

“When we started Blokable, it was very much to go after the core problem and to really rethink how the housing market was working because it had obviously hit a point where some of the fundamental components of it weren’t working,” Holm said.

Those fundamentals in this situation are the factors and/or people who are most incentivized in the housing supply chain and repositioning that incentive to prioritize innovation instead of commoditization. The way Holm put it is they wanted to create a company that by the way that it's structured and by the activities that it does, it cannot be disintermediated and cannot be commodified.

But what does this mean when it comes to affordable housing?

To Holm, the purpose of innovation in housing is to drive down costs, and by driving down costs, you create equity, and equity in real estate is the ultimate currency.

Blokable upends the traditional housing supply chain by acting as the builder and developer.

This, according to Blokable, allows them to own and streamlines the entire development process, eliminates unnecessary costs, and de-risks every project, offering both market rate and not-for-profit landowners a turnkey, design-build service for a set price and guaranteed delivery.

From design, planning, financing, and permitting, to almost-complete manufacturing, delivery, on-site construction, and ongoing operational support, Blokable oversees it all, which all adds up to be the first vertically integrated development platform.

“Because we are vertically integrated, we have a different perspective on the value created by the buildings we develop and own,” Holm said when Blokable unveiled Phoenix Rising in December.

“We believe affordability and energy efficiency go hand in hand, so part of expanding housing access is pushing the industry toward a performance basis for environmental regulations. We envision our building system as a platform for future energy innovations that could decarbonize the built environment and enhance climate resilience,” he said.

WHY SO INNOVATIVE? There is a growing number of companies who are taking the data and research learned in the technology space and applying it to disrupt the issues that have long plagued the financial industry.

They’re looking at topics like affordable housing, supply constraints, access to credit, student debt and more and finding real solutions that address the problem at its core to create change.

Disruption isn’t without its critics though. And in many ways, Holm’s thoughts on the pushback they face at Blokable could apply to any company going against the grain.

For a company like Blokable, which is disrupting multiple levels, “there's pushback across the board because you're threatening the status quo,” said Holm. “It just works in a different way.

“We don't go through the traditional structure, and so there's a lot of folks who don't benefit from that and so they'll fight against it,” said Holm.

“But then, there's also a lot of folks who were really supportive and see where we're going and want to partner with it. Both sides are there, but we know what we're in for, so we're not too naive as to what we're doing.”

MARCH 2021

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experience for people.”

As much as people may wish, life rarely goes as planned. So when there is a job change, a sick relative or better school district that requires a move, it’s unlikely that it will coincide with housing market behaviour.

This model changes that.

“The Haus partnership allows homeowners to maintain their flexibility through an unlevered and affordable arrangement, while attaining the long-term stability of ownership.” McNulty said.

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CHARLES WILLIAMS, FOUNDER & CEO A third-generation real estate professional, Charles Williams is the visionary behind Buyside, a real estate analytics and marketing company that provides aggregated consumer activity to brokerages, lenders and other services businesses.

Buyside helps real estate brokers stand out from the competition by providing them with real-time buyer data

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espite low inventory, the housing market is expected to remain strong in 2021 due to low mortgage rates. And with this housing boom will come even more questions from homeowners who want to know their housing options. Real estate brokers need to be able to target these clients effectively, so they can close deals quickly.

Many real estate professionals discount the seller lead. But real estate seller leads are important because they represent commodities for brokers. After all, they’re the first step to potentially acquiring a deal.

opportunities, and also help capture and optimize those consumer opportunities for real estate agents,” Charles Williams, founder and CEO, said.

With this real estate marketing software, brokers are given a list of buyers actively working with their brokerage, which they can show to potential homeowners.

By providing real estate brokers with real-time buyer data, they’re able to stand out against the competition.

One of the biggest mistakes housing professionals make is not keeping in touch with past clients. Buyside works to remedy this problem by sending automated month-

“Buyside sees an average of 25% of every valuation run resulting in a lead form filled out, and an average 6% close rate. Our lead conversions and usage rates are high, and we provide that by keeping it simple and going above and beyond in our support and training resources.” -Charles Williams ASHLEY TERRELL, EVP, PARTNERSHIPS

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Ashley Terrell oversees Buyside’s business operations and industry relationships, and has an extensive track record of working with the largest real estate franchises, brokerages and lenders on their technology and growth strategy.

Buyside is a marketing and data analytics company that provides consumer-facing tools aimed to give homebuyers complete transparency. The company integrates with an existing brokerage website to provide homeowners with three valuations along with insight into the number of real estate buyer leads actively searching for a property just like theirs. By using this data, Buyside helps brokers generate and capture seller leads.

Buyside leverages technology by offering a search experience for potential homeowners that provides valuations, buyer demand data, and their home equity accompanied by refi options, which leads to high quality leads for real estate brokers.

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MARCH 2021

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Due to COVID-19, many real estate professionals saw their portfolios take a hit.

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o be successful, lenders have to rely on mortgage lead generation to find potential borrowers. But generating leads isn’t an easy process, especially if businesses depend on older methods to produce results.

Home Lending Pal (HLP) has an anonymous marketplace that uses conversational intelligence, machine learning and blockchain to help first-time homebuyers through the home research and lending process. HLP helps banks, credit unions and non-bank lenders lead with transparency by automating and digitizing the process.

“Our AI captures data at scale, reduces human capital, and improves efficiency and effectiveness to signal high-quality leads that will close fast,” Steven Better, COO and co-founder, said.

tomers even on third party marketplaces.

Home Lending Pal’s marketplace leverages artificial intelligence, data science and machine learning to automate manual tasks and to create a better experience.

By integrating digital platforms, borrowers can get personalized insight with little to no human interaction.

“With our solution, potential borrowers gain deeper insight into the possible outcome of a mortgage application on a home without a negative impact, a significant time commitment, sales pressure or potential embarrassment,” Bryan Young, CEO and cofounder, said.

Home Lending Pal’s AI-powered mortgage advisor simulates underwriting to determine mortgage approval odds, makes affordability recommendations, and solves borrowers’ and lenders’ problems. The

“With our solution, potential borrowers gain deeper insight into the possible outcome of a mortgage application on a home without a negative impact, a significant time commitment, sales pressure or potential embarrassment.” -Bryan Young It’s no secret the housing market is hot right now. Even though home prices are on the rise, low interest rates make purchasing a home an attractive option. And while this is great news for borrowers, lenders have to work hard to stand out among the competition and produce leads that will end in closings.

Some mortgage professionals are generating leads that are only being paired based on cost-per-lead budget instead of how well they fit into mortgage overlays.

On top of this, most vetting of the lead is being done by the lender, which often requires the borrower to submit the same information multiple times.

Mortgage businesses need to lead with a digital-first experience that delights cus-

pairs are based on mortgage overlays and allow potential borrowers to select which lenders they would like to work with based on service quality and approval likelihood, not just marketing spend.

“Unlike other solutions, HLP ’s direct-to-consumer focus allows it to build, validate and attest consumer financial and credit information before connecting them to mortgage lenders. Borrowers can research privately before submitting all documents needed for underwriting electronically through the HLP platform,” Joey Barrow, chief knowledge officer, said.

Home Lending Pal removes human biases to provide transparent and objective information that advocates for the borrower in the lending process.

MARCH 2021

HOME LENDING PAL Homelendingpal.com

THE EXECUTIVES:

BRYAN YOUNG , CEO & CO-FOUNDER For over 15 years, Bryan Young has led global strategies and tactical solutions for the likes of the 2012 DNC and former President Barack Obama, Microsoft, Zillow and other companies across the B2B and B2C sector.

STEVEN BETTER , COO & CO-FOUNDER Steven Better oversees the day to day operations of the company and the development of AI models.

JOEY BARROW, CHIEF KNOWLEDGE OFFICER Joey Barrow is a President’s Club level mortgage broker with more than 20 years of industry experience.

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Home Lending Pal leverages AI and machine learning to efficiently solve lenders’ and borrowers’ problems

- SPECIAL REPORT -

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SALES BOOMERANG salesboomerang.com

THE EXECUTIVES:

ALEX KUTSISHIN, CEO AND CO-FOUNDER A serial entrepreneur, Alex Kutsishin is a HousingWire Tech Trendsetter whose firstof-its-kind borrower intelligence software has helped lenders turn overlooked opportunities into billions of dollars in additional loan revenue.

Sales Boomerang’s automated borrow intelligence system works to boosts its clients’ customer retention

T

he lending industry is notorious for its poor customer retention – in fact, only one in five borrowers return to their original lender for a subsequent loan.

Without the right tools to beat these odds, lenders have had little choice but to pour dollars and resources into new customer acquisition instead. Sales Boomerang solves this problem by helping banks, credit unions and independent mortgage lenders build lasting, profitable relationships with their borrowers.

“Our clients retain as high as 65% or more of their past customers. The result is that for every $1 our clients pay us, we return $20 of profit to them,” said Kutsishin.

sonal debt load, home value, home equity and FICO score to accurately determine when a contact becomes a viable candidate for a cash-out refi or home equity loan.

Similarly, Sales Boomerang alerts lenders the instant a past client starts shopping for a new mortgage. The system can even tell if a previously unqualified customer improved their credit and now qualifies.

“Our solution is to create a monumental barrier between lenders and their competitors - making it hard for their customers to leave them,” explained Kutsishin.

In all, Sales Boomerang offers a suite of borrower intelligence products to help

“Our solution is to create a monumental barrier between lenders and their competitors - making it hard for their customers to leave them.” -Alex Kutsishin

MARK CUNNINGHAM, CCO AND CO-FOUNDER Mark Cunningham is an entrepreneurial business strategy executive with 20 years of experience growing companies and innovating tech products in the mortgage industry.

AREND DE JONG,

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CFO Arend de Jong is a strategy and financial expert with 20 years’ experience growing startups, launching new business lines and fast-tracking organizational growth.

Last year, lenders originated over $3.7 trillion in mortgage loans, making 2020 the industry’s biggest year since 2003.

With fewer refinances in the forecast for 2021, competition is certain to be fierce.

Lenders need to figure out now how they will retain borrowers in this increasingly competitive market.

Sales Boomerang is the industry’s first automated borrower intelligence system.

The system is designed to make lenders invaluable to their customers by leveraging existing database information to present timely, actionable opportunities.

Gone are the days of calling up a past client in the vague hope they might be ready for a new loan. Instead, the Sales Boomerang system notifies mortgage lenders the moment someone in their database is actually ready for a loan — whether it’s a home equity loan, a refi or a new purchase.

For instance, Sales Boomerang intelligently assesses current interest rates alongside factors like a consumer’s per-

MARCH 2021

lenders connect borrowers to the right loan at the right time. And to make responding to opportunities easy, Sales Boomerang integrates with the industry’s leading CRMs, enabling automatic deployment of context-specific marketing campaigns.

To succeed in 2021, lenders will need to protect market share. Users of Sales Boomerang spend an average of $240 per loan — much less than the average $1,500-$3,000 cost to acquire a new customer — while gaining an average of 20 to 40% lift in volume.

The numbers speak for themselves: by connecting lenders with customers at the right time – when they’re ready for a loan – Sales Boomerang has helped lenders capture billions of dollars in loan volume that would otherwise have walked out the door.

“There is no other borrower intelligence solution like Sales Boomerang in the market. There is a reason our average ROI is over 20X, and that is because of the value received by our clients,” said Kutsishin.

HOUSINGWIRE Daily A deeper look into the HousingWire newsroom's most captivating stories.

Listen here: housingwire.com/podcast

TRADE DESK

Trade associations from across the housing industry are on the front lines of issues that lenders, real estate agents and everyone in between face every day. In these letters, they give their members an inside look at what they are working on, and the most important issues facing each industry today.

AIME......................................51 ALTA....................................51 MBA ......................................52 NAHB ....................................52

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NAR.......................................53

MARCH 2021

TRADE DESK

Katie Sweeney

CEO Association of Independent Mortgage Experts

AIME members, T h i s mont h t he A s socia t ion of Independent Mortgage Experts is proud to highlight the accomplishments of female leaders within the wholesale channel as we celebrate International Women’s Day. As the industry has continued to transition through a period of change and innovation thanks to advances in technology, women have been at the forefront of advocating for the processes and procedures that ensure our community remains the best option in the home buying market.

With female homebuyers making up one of the largest demographics of borrowers, brokers of all backgrounds are championing the cause of enhanced customer service to strengthen the wholesale channel’s brand in an increasingly competitive industry. This could not be done without AIME’s exclusive resources and partnerships which allow brokers to hone their communication strategies to

consumers and develop proficiency on a number of emerging digital tools that bring value to their business.

For brokers to continue in their pursuit of an increasing market share on behalf of the wholesale channel we must continue to strive to be on the cutting edge of innovation. This includes a strong focus on bringing awareness of the broker channel to consumers, optimizing client relationships, improving processing efficiency, streamlining workflows, and providing the flexibility that homebuyers demand in today’s digital landscape.

The independent mortgage broker community, AIME, and our industry partners are more than ready for this challenge.

This period of rapid growth and digital transformation underscores the importance of customer service and local expertise, all of which are continually fostered and developed within the wholesale channel.

Association of Independent Mortgage Experts the past two years, the Housing Financial Services Committee chaired by U.S. Rep. Maxine Waters has made affordability a cornerstone of the committee’s focus, and it is expected that incoming Senate Banking Committee Chairman Sherrod Brown will do the same.

Tax policy. During his campaign, Biden unveiled a $775 billion plan to make childcare more affordable, while adding support for the early education industry.

As a revenue source to help cover some of the plan’s costs, certain policies associated with real estate investments may change.

This could include changes to the treatment of 1031 exchanges in the commercial market. ALTA, alongside its real estate industry partners, plans to educate the administration and policymakers on how current policy in this area greatly benefits the economy and jobs.

While not a comprehensive report, this overview provides a few areas of interest for ALTA on the advocacy front in 2021.

Diane Tomb

American Land Title Association

CEO American Land Title Association

MARCH 2021

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ALTA members, Once the dust settled in January, Democrats controlled both the House of Representatives and the Senate in addition to the White House. A record number of women were called to serve in the 117th Congress: 131, up from 127.

Although the strong housing market is expected to continue into the spring, businesses in the title and settlement industry are bracing for change in policies and legislative direction. Following is a little insight about where our industry stands on several important advocacy topics: Digital closings. While, as of this writing, Congress hasn’t voted on the SECURE Notarization Act, it continues to have strong bipartisan support. In 2020, in addition to its sponsors, the bill had five co-sponsors in the Senate and 82 in the House. ALTA continues to lead a coalition of trade associations and corporations lobbying in support of the SECURE Act and pushing for passage of the legislation.

Housing opportunity and affordability. Congress and the Biden administration will focus strongly on addressing housing opportunity and affordability, including through Fannie Mae and Freddie Mac. Over

Robert Broeksmit President & CEO Mortgage Bankers Association

Mortgage Bankers Association

TRADE DESK

MBA members, Underlying racial inequalities and systemic racism have shaped our nation’s conversation over the past year.

Exposing these unfortunate realities and recognizing that, yes, the mortgage industry can play a helpful role, is a top priority of the Mortgage Bankers Association.

There is much progress to be made, and we are leading the way. Our Diversity & Inclusion (D&I) initiative, and a D&I advisory committee both continue to focus on industry recruitment, retention, and training. We also recently hired a new Director of Diversity and Inclusion, Charmaine Brown, who is already creating programs and developing best practices that will help us have a more diverse and inclusive workforce.

I am a firm believer that we all grow when we learn from others.

This year MBA launched VOICES – Courageous Conversations with Women of Color. This riveting series

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NAHB members, While the home building industry is poised for another strong year in 2021, some supply-side pressures could slow momentum and limit growth. Economists at the National Association of Home Builders note that several challenges, including resurgent lumber prices, limited lot supplies and a persistent skilled labor shortage will lead to higher costs and longer build times.

The biggest supply-side cloud on the horizon for single-family home construction is the price of lumber.

U.S. lumber prices rose an unprecedented 170% last year, after decreased production and labor shortages amid early pandemic lockdowns led to supply shortages. The price increases added as much as $16,000 to the cost of an average new home. While prices retreated briefly, they have begun to rise again.

The cost and availability of lots has also been high on the list of builders’ concerns for several years. Finished lot prices contribute almost 20% of the average sale price of a home, the second largest share after construction costs. A shortage of buildable lots, especially in the most desirable locations, tends to increase lot prices and reduce lot sizes, in turn contributing to the

unveils the stories and experiences of minority women in the real estate finance industry.

We have hosted three conversations so far, and the personal accounts shared by attendees were raw, emotional, and inspiring. They also proved to me the tremendous value and insight one can gather when taking a step back and listening.

Our staff is “all in” on listening. We have hosted discussion sessions on racial inequality within our industry and the country. These opportunities to share truths and experiences have brought us closer together at a time when it is still not safe to be physically close to each other.

We all play a part in creating effective change, and I encourage you to get involved with the array of programs MBA offers, as well as make a commitment within your own organization to recognize – and act upon – the challenges and opportunities needed to propel the industry forward.

ongoing affordability crisis.

Serious challenges also remain regarding a shortage of skilled labor. NAHB works with state and local home builder associations, the Home Builders Institute, and other partners to provide training and job placement assistance to help supply the industry with the next generation of skilled labor.

On the demand side, limited inventories of single-family homes have generated strong price gains, and the deployment of COVID-19 vaccines – while good news for the overall economy – will likely put upward pressure on interest rates as the recovery takes hold. The combination of the two will price out additional buyers from the 2021 market, according to NAHB Chief Economist Robert Dietz.

While some headwinds linger, residential construction - a bright spot for the economy during a very bleak year - should remain a leading driver of the broader recovery.

National Association of Home Builders

MARCH 2021

Chuck Fowke

Chairman National Association of Home Builders

TRADE DESK

NAR members, Additional help could be on the way for first-time homebuyers. As a candidate, President Joe Biden proposed The First Down Payment Homebuyer Tax Credit, which could be significant in aiding potential first-time homebuyers.

The credit could be used to cover all or a considerable share of a buyer’s down payment. With home prices rising ever higher, any down payment assistance is welcomed when a family is looking to buy. For years, aspiring minority and Millennial homebuyers have struggled unsuccessfully to save enough for a down payment.

Down payment assistance – in this case, up to $15,000 – could make all the difference in helping hopeful buyers get a foot in the door. And making the credit advanceable would mean buyers could access the funds upon closing rather than having to wait until next year when their tax return is filed and the refund arrives.

That said, policies to increase the supply of homes are equally important. As we take a look at the current housing market and mortgage data, we see an upward trend.

For instance, existing-homes sales totaled 5.64 million in 2020 – their highest level since 2006, before the Great Recession – with mortgage rates at all-time lows. But while demand is high, supply is registering at a 50-year low. This means home prices will continue to soar unless more residential units can be created.

Tax and other incentives that increase supply are equally important in order to keep home prices affordable. NAR will continue to advocate for the building of more affordable housing, because in addition to increasing the housing supply, it will provide a boon for our struggling economy.

As NAR president, I am proud to help lead efforts that encourage policies and ideas that level the playing field and help all President our neighbors achieve National Association of Realtors the American dream of homeownership.

Charlie Oppler

National Association of Realtors

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MARCH 2021

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MORTGAGE

MARCH 2021

MORTGAGE

Prepare for the rise in mortgage rates HOW A MODEST RISE IN RATES WILL PLAY OUT IN 2021

BY ALEX ROHA

"Economists across the housing industry believe the era of extreme low rates could be coming to a close, but the transition might be a slow burn."

MARCH 2021

the housing industry to get their take on how high mortgage rates will climb in 2021, how lenders will respond, and what impact this will have on the housing market.

A

As the coronavirus pandemic began to ravage the economy, Federal Reserve Chairman Jerome Powell announced this time last year the central bank would make “unlimited” mortgage backed securities purchases, pushing the average 30-year fixed mortgage rate down to 3.5% by the end of the month. It was the best option to prevent a credit crunch and jolt the economy by making borrowing cheaper, Powell reasoned.

Now, at an average of $120 billion a month — split between $80 billion in Treasuries and $40 billion in MBS — Fed holdings have surpassed $7 trillion,

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A

s the calendar flipped to 2021, it didn’t take long for mor tgage rates to rise.

Just two weeks into the new year, Fre ddie Mac repor ted that mortgage rates climbed 14 basis points to 2.79%, a dramatic contrast to 2020, a year in which mortgage rates set record lows 16 times.

Economists across the housing industry believe the era of extreme low rates could be coming to a close, but the transition might be a slow burn.

Freddie Mac’s quarterly forecast estimates that the average 30-year fixed-rate mortgage will be 2.9% in 2021 and 3.2% in 2022. However, the factors that will drive mortgage rate movements are still up for debate.

HousingWire spoke to several economists in

56 ❱ HOUSINGWIRE

MORTGAGE

and Fed Vice Chairman Richard Clarida doesn’t see a pullback anytime this year.

To Mike Fratantoni, chief economist at the Mortgage Bankers Association, the current fiscal situation harkens back to the days of 2013’s “Taper Tantrum.”

Back then, former Fed Chairman, Ben Bernanke, announced that the Fed would be reducing the pace of its purchases of Treasury bonds to reduce the amount of money it was feeding into the economy.

Bond yields immediately jumped, giving birth to the phrase, “Taper Tantrum.”

Despite the Fed’s vow to keep interest rates low until 2022, Fratantoni said recent Fed speeches revealed they are less committed to asset purchases, and wouldn’t be surprised if said purchases were reduced by the end of year.

“Chairman Bernanke at the time just began hinting that they might slow down asset purchases at some point, and longer term rates jumped a point and a half in a couple of weeks. So, it was certainly a tantrum,” Fratantoni said.

“I think we’re set up for the possibility of something like that again. They’re just having a challenge to communicate how they would be able to smoothly exit from that program. The worry is not that they immediately stop purchases but that they begin talking about it more seriously.”

The Treasury is now expected to auction close to $3 trillion worth of bonds this year, and with that amount of supply hitting the market, a historically inverse relationship will see bond prices dropping and yields on the rise.

“While for some time people thought that mortgage rates might be less impacted than Treasury rates, the spread between mortgage rates and Treasury rates has narrowed substantially. Going forward, any increases in Treasury rates are really going to be matched by increases in mortgage rates,” Fratantoni said.

But this incredible buying spree was only ever pushed as a temporary fix to a

“Any rational mortgage banker should realize that when the Fed starts backing away, which they will, especially as we get the vaccine distributed and the economy starts growing, that’s going to remove the biggest buyer of mortgage backed securities and that’ll be upward pressure on interest rates.”

- David Stevens

MARCH 2021

pandemic-driven problem. The Fed will eventually back off, especially when they hit their fiscal goals, economists said.

“Any rational mortgage banker should realize that when the Fed starts backing away, which they will, especially as we get the vaccine distributed and the economy starts growing, that’s going to remove the biggest buyer of mortgage backed securities and that’ll be upward pressure on interest rates,” said David Stevens, former president and CEO of the Mortgage Bankers Association. “That’s significant.”

I

In September, data and analytics firm Black Knight estimated there were over 19 million high-quality refinance candidates in America, representing 43% of all 30year mortgage holders. Even with an estimated $4 trillion in origination volume in 2020 – about two-thirds of which was refi’s – there’s a lot still left in the cup.

Though borrowers flooded the market to take advantage of unprecedented mortgage rates in 2020, the circumstances look less rosy in 2021. For starters, the 50 basis point adverse market fee from the the Federal Housing Finance Agency finally landed in December, and lenders have to weigh whether to eat the loss or increase the price.

That will present some interesting challenges for many of the leading independent mortgage banks, which have been feasting on refis since the pandemic began. About a dozen of them have gone public or plan to do so in 2021 on the strength of historic refi volumes.

“It’ll be interesting to see how they’re able to meet their shareholders objectives,” Stevens said. “Because shareholders aren’t used to the volatility in the mortgage business. I mean banks,

MORTGAGE

banks can offset the volatility because they have other investments that they do.

But mortgage companies are monoline and some of the ones that went public are very high refinance,” Stevens said.

The two leaders, Rocket Companies and United Wholesale Mortgage, have both generated far more refi business than purchase since the pandemic started. Their smaller rivals show similar trends.

Homepoint, the third largest wholesale firm, revealed in its S-1 on Jan. 8, that 68% of their origination volume in the first nine months of 2020 was in refinance activity.

Compared to 51% in 2019, low mortgage rates had borrowers scrambling to lower mortgage payments throughout the better part of the year. Multichannel lender loanDepot, who filed plans to go public on Jan. 11, also reported 61% refi activity within the same time period.

mortgage rates report hit economists’ inboxes.

W

While extraordinarily low mortgage rates brought new borrowers to the market, inventory in the housing market has struggled to keep up with demand for months.

Data from the National Association of Realtors and U.S. Census Bureau revealed that the national supply of homes for sale in September fell to the lowest level ever recorded. After months of severe shortages, upward pressure on home price appreciation had consumers battling it out for the limited supply.

But Andy Walden, director of market research at Black Knight, said this rise in

Don Layton, former CEO of Freddie Mac, noted higher home prices mean higher down payments, so would-be homeowners need more cash to enable a first-time home purchase.

“In other words, housing has become so much a ‘tradeable asset,’ with prices moving up and down to reflect supply and demand, that expansive monetary policy is turning into asset inflation, which hurts first-time homebuyers, and thus reduces at least somewhat the hoped-for impact of rate reductions to help the economy,” Layton said.

“This rise in mortgage rates may be just what a hot housing market needs to catch up."

Investors want to see mortgage companies that can generate profits in all kinds of different environments, and few have proven over the long term that they’re capable of doing that. Several of the companies looking to go public actually lost money in a few quarters in 2019.

At the start of this year, the refinance index increased 20% from the previous week and was 93% higher than the same week one year ago. Both conventional and government refinance applications increased , with applications for government loans having their strongest week since June 2012.

Unfortunately, news of this refi flurry arrived just one day before the rising

mortgage rates may be just what a hot housing market needs to catch up.

“So typically, a 1% movement in rate equates to roughly a 10 to 12% movement in buying power,” Walden said. “So this recent increase in mortgage rates, decreased buying power by in the range of one to one and a half percent. So it did pull that buying power a little bit, a very slight headwind to the purchase market which may be welcome given how hot that purchase market has become” If bidding wars do decline as a result of heightened housing stock, first-time homebuyers who had been pushed to the wayside from upwards pressure on home-prices may finally get some skin in the game.

MARCH 2021

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- Andy Walden

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TITLE

MARCH 2021

TITLE

The title insurance arms race heats up WHY M&A ACTIVITY IS SURGING

T

he first time Law yers Title of Arizona Sales E xecutive Sarah Pe r k in s walke d through an acquisition was 2006. The market was growing; it was exciting; companies were fighting to increase market share; hope for the future was high.

But that wasn’t the only acquisition Perkins had seen during her 17-year career. During her second acquisition in 2008, the story was much different.

“The sky was falling,” Perkins said, describing the environment of fear as companies were acquired, layoffs were rampant and bankruptcies were common. “There was a lot more fear involved than excitement,” she said.

But today, the market has come full circle as mergers and acquisitions once again begin to pick

“The title industry is made up of many different companies, but four stand above the rest. ”

MARCH 2021

up. Perkins said the environment is reminiscent of 2006, when spirits were high and the market was in growth mode. In fact, the feeding frenzy for title companies is just getting started.

In the past year alone, many smaller title companies began stepping up and increasing their footprint. Foundation Title & Escrow expanded its footprint in Alabama through its merger with Paulus Title. Knight Barry Title purchased Title One as it expanded its operations in Minnesota. Then there was National Title and Escrow, based in Dexter, Missouri, which acquired Mississippi County Abstract and Loan, based in Charleston, Missouri.

But smaller title companies aren’t the only ones upping their game this year. The title industry is made up of many different companies, but four stand above the rest. “The big four” of title include Fidelity National Financial, First American Finance Corp., Old Republic National Title and Stewart Title.

Together, these giants make up more than 80% of the market share for the title industry.

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BY KELSEY RAMÍREZ

TITLE

And they’re not getting left behind when it comes to acquisitions. Stewart Title strengthened its presence in Alaska this year with the acquisition of Yukon Title Team.

To understand what is driving this disruption and surge in M&A activity, HousingWire spoke to industry veterans and observers. What we discovered is a perfect storm of new technology and market conditions. These factors are driving dozens of industry veterans to hang up their hats, “the big four” to consolidate power and expand market share, and ambitious regional upstarts to push forward into new territories.

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T

The COVID-19 virus has exacerbated already growing economic inequality in America, and no place is it more pronounced than in the housing market.

Though millions of Americans are struggling to put food on the table and 2.8 million homeowners are in forbearance, millions of others have seized the golden opportunity presented by historically low interest rates and the ability to work from anywhere.

Roughly $4 trillion in mortgages were originated in 2020, and though economists expect an overall slowdown, purchase volume is forecasted to rise in 2021. Because the title insurance business expands and contracts based on mortgage rates, the past 12 months has magnified the industry’s strengths and weaknesses and led to an arms race.

“If you’re a title agent and you’re supporting a mortgage origination client, you’ve had a great year. And you may try to leverage that great year into some sort of expansion,” said Tom Huddleston, senior vice president and managing director, head of Vylla Title Services.

“But the other side of the coin is if you’re a small title agent in a very limited geography – maybe you’re an attorney as well – and you made a majority of your revenue off of default, this is the worst of times because of the pandemic and the CARES Act, we were in a foreclosure moratorium. So therefore, if that was your primary business, you’re not getting a lot of orders, and you’ve had a tough year,” Huddleston said.

In this scenario, many title companies are looking to expand after a triumphant year, while others are looking to hang their hats up.

Mortgage title insurance premiums surged by 17.6% year-over-year in the third quarter of 2020 to $5.1 billion, according to the latest market share analysis from the American Land Title Association.

“Low interest rates, which just set the 14th record low of the year, continue to create high demand among consumers

“If you’re a title agent and you’re supporting a mortgage origination client, you’ve had a great year. And you may try to leverage that great year into some sort of expansion.”

-Tom Huddleston

MARCH 2021

looking to buy as well as refinance,” ALTA CEO Diane Tomb said at the time. “As title insurance premium volume depends on mortgage origination volume, the result of these record low interest rates is a third quarter with even higher volume than an already positive second quarter.”

I

In 2019, Fidelity, by far the largest title insurance provider in the U.S. with 33.4% of market share, tried to merge with Stewart Title, which holds 9.1% of the market share. The merger was valued at $1.2 billion.

But the Federal Trade Commission shot that down due to antitrust concerns, saying that turning the big four into the big three and giving one company an estimated 43% of the market share would “substantially reduce competition” and be harmful to consumers.

Despite this blow, Fidelity has not given up its plans for growth, and hired a new regional leader as it expanded its presence into the state of Georgia.

But one of the biggest challengers to the market share held by the big four could come from outside the title industry entirely.

Rocket Companies, which went public in August and currently sports a market cap of $39.8 billion, disclosed to investors that it retains servicing rights on the vast majority of mortgages it originates in the U.S. Many companies in the housing space are realizing that in order to ensure their consumers are receiving the best possible experience, and boost their own market share, they must control more aspects of the mortgage process, thus leading to an increase in M&A, and an existential threat to the current power

TITLE

yielded by the big four.

Rocket, the biggest mortgage lender in America by a good distance, was able to utilize its subsidiary Amrock, a title and escrow company, to help it close 90% of all digital closings in the first three quarters of 2020.

In just the first nine months of 2020, Rocket Mortgage and Amrock more than doubled the number of digital closings they completed in all of 2019.

“As we talk to some of these originators, where they haven’t been in the title business before, they haven’t had a subsidiary or an affiliate that can handle

I

It is impossible to talk about disruption without addressing how dramatically technology has contributed to the M&A environment.

What’s been a small trickle of tweaks and small tech stack additions gave way to wholesale transformation over the past year.

It happened practically overnight.

Adoption of remote online notarization soared 547% in 2020, according to a recent survey by ALTA of major vendors

“Title insurance has long been kind of a very different process based on state, based on even county,” Potter said.

“There [are] local customs, there [are] local ways of getting title evidence that really varies, so for the for the longest time, the local title agent has been kind of the one-stop-shop for purchase transactions, which can be a little more complicated as well.

"The national title companies have handled refinance transactions. And closings were done locally, they were done in person," he said.

“I think that there’s a movement afoot

their title production,” said Jim Potter, Vylla Title senior vice president of title and escrow.

“I think a few of them now, just given the sheer volume, are looking at the potential of maybe adding that title company to their corporate kind of array of services to capture the revenue and the income associated with that.”

There has been rising interest from CEOs in the origination space that are now looking to add title and escrow to their portfolios, he explained.

“We’ll probably have another year of some strong activity and refinance market, and you may see some of those companies kind of wanting to also participate in the title revenue,” Potter said.

working in the RON space.

“Absolutely, technology continues to be a driving force behind acquisitions,” Huddleston said.

“And quite frankly, the smaller shops... they don’t have the benefit of making those investments, so therefore, they come under pressure. The cost of producing that final product, getting that loan close filed and distributing funds becomes more costly if you don’t have technology. And so therefore, I would say, that is one of the major factors that folks are acquiring other firms who might have technology,” he said.

And as technology continues to develop, this has allowed more national title companies to move in on localized territories.

MARCH 2021

where the national title companies become well versed on local customs,” he continued. “And our technology helps us manage and track all the different nuances that need to occur to close and manage transactions in different parts of the country.”

Eventually, this trend could kill off local title companies and lead to increased levels of consolidation.

“You may see long-term a movement away from the local title rep,” Potter said.

“They’re very important, but I do think in the future, you’ll have these services, all services, effectively, being able to be managed by the larger multi-state, national companies who maybe are embracing technology a little bit faster than the small guys.”

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“You may see long-term a movement away from the local title rep.

They’re very important, but I do think in the future, you’ll have these services, all services, effectively, being able to be managed by the larger multi-state, national companies who maybe are embracing technology a little bit faster than the small guys.” - Jim Potter

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FINTECH

MARCH 2021

FINTECH

Fintech captures the imagination of builders and investors FINANCIAL SERVICES ARE AT THE CUSP OF UNPRECEDENTED INNOVATION

BY SAR HARIBHAKTI

"Why should we limit what is possible to what fits within the constraints of established business models, historical norms and familiar interaction paradigms?"

creating wealth be luxuries? Why is it so confusing for employers that care about the holistic health of their employees to offer customized services? Why is it so difficult for those who can imagine a better world of financial services to realize their vision?

Why should the delivery of basic financial services be confined to the traditional incumbents? Why should we limit what is possible to what fits within the constraints of established business models, historical norms and familiar interaction paradigms?

There is no shortage of things that don’t make sense and they persist nonetheless.

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Getting timely paid for the work you do matters.

Accepting and making payments matters. Sending money anytime, anywhere, to anyone matters.

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inancial health is a core tenet of our lives. It matters for individuals just as much as for institutions and society.

It is one of the highest impact levers in our lives . Incremental improvements in financial wellness and fintech can have cascading effects.

We have let path dependence and inertia define our financial lives for way too long. Why should people get paid on bimonthly cycles for the work they do every day? Why should people have to pay fees for simply not having the cash today to meet an unexpected expense when they know they will have the cash tomorrow? Why should immigrants have to struggle in getting basic access to credit?

Why can’t we systematically reach some segments of the population with better banking services?

Why should easily managing your money and

FINTECH

Building wealth matters. Saving and investing matters. Managing finances and planning for the future matters.

Having banking products matters.

Having access to credit matters. Being able to buy whatever you want whenever you want however you want matters.

Getting insured matters. Managing debt and bills well matters. Having the capital to start & grow ventures matters.

Being able to share finances with others matters. Being able to use information locked up in archaic systems to provide better & more financial services matters.

There is absolutely no reason why hundreds of millions of people should suffer through the burden of not being able to do a combination of the above.

If technology can help unlock even incremental improvements across price, speed, usability, access, quality, transparency, personalization and reliability in any of the above mentioned categories, it is a worthwhile pursuit. If we can demystify and simplify the process of creating, managing and growing new products, more people will have more options and incumbents will be forced to adapt or become irrelevant.

The story of Robinhood is not just about Robinhood but about them forcing all the incumbents to adapt! We should want

more upstarts across all areas to have a similar impact. We should want more building blocks to enable more & faster innovation.

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Throughout the 90s, 2000s and early 2010s, fintech has been a vertical. It has been a collection of companies that used technology, product-first thinking and digital marketing to challenge norms, reimagine financial services, expand access, and make interactions with basic financial services simpler, better, cheaper, faster. They started out as financial services firms and forced incumbents to change. Even today, there are countless such players taking off all over the world. Consumer expectations are rapidly shifting.

There is still so much room for innovation across problems ranging from how to broaden access to wealth accumulation to how to change the underlying plumbing of how money moves domestically and internationally.

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"Unlike pure software plays like social or enterprise software, financial services are not global from day one and are beholden to domestic regulations."

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Unlike pure software plays like social or enterprise software, financial services are not global from day one and are beholden to domestic regulations. That reduces winner-take-all dynamics and creates room for lots of companies going after the same problems over similar timelines across regions. This is expected to continue and we are nowhere close to being done even in seemingly saturated categories.

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In the past five years, a series of successes and failures captured the imagination of a generation of builders and investors in fintech in the possibility of traditional software companies launching financial services for their customers. Square launched Square Capital in 2014. Shopify launched Shopify Capital in 2016. Lyft and Uber launched banking products in 2016. Flexport, Stripe and Toast launched Capital in 2019. Patreon, Gusto, Stem, Doordash launched lending and banking products in 2020. Goldman Sachs has partnered with Stripe on banking as a service, Apple on credit cards and Amazon on working capital loans. Google is getting aggressive with consumer finance products.

These high profile launches by beloved companies popularized the idea of what is now called embedded fintech. The very definition of fintech has started evolving.

It is no longer just a vertical and can be thought of as a horizontal layer across traditional software categories. This expanded the scope of fintech radically.

Now, companies that didn’t start out as fintech companies can have fintech products. This is possible because there’s a growing wave of companies offering the building blocks to do so

FINTECH

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An imperfect but illustrative analogy is internet native creators and influencers launching everything from cosmetics and apparel to podcasts and restaurants!

Hotels, retail brands and airlines have long worked with financial institutions to have special credit cards and reward programs.

Now, an entire generation of companies are cropping up to put that trend on steroids, widen the scope of what financial products can be launched and include software companies in this movement. On the flip side, an entire generation of software companies is now looking to launch financial services!

More and more banks are looking to partner with the fintech infrastructure companies to stay relevant and find new revenue streams. There’s also a generation of founders, management

teams and functional leaders getting up to speed on helping software companies design, launch, manage and grow financial products as quickly as possible.

All of this matters not because it is a good story that can fetch high valuation multiples, press coverage and twitter memes. It matters because we are using technology to improve across a combination of price, speed, access, quality, usability, transparency, personalization and reliability of financial services.

This is why some of us care about fintech. No matter how cringey we get, all of us want to play a role in improving the financial health of people.

“The very definition of fintech has started evolving. It is no longer just a vertical and can be thought of as a horizontal layer across traditional software categories."

Sar Haribhakti is a program director for embedded fintech at On Deck. He has previously worked in partnerships at Clearbanc, as a GM of financial services at Slice and in investing at Science.

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across everything from banking, lending and payments to risk, fraud, compliance, identity, data, licensing and so much more. Furthermore, the same building blocks are enabling a new generation of fintechs to productize new behaviours, reach new audiences and focus on user experience.

We have seen over the past two decades how impactful it is when something that’s a vertical becomes a horizontal layer. We saw this with software and cloud broadly.

We have also seen how much innovation gets unlocked when something that’s available to a few is made accessible to many. We are now seeing those same dynamics play out with fintech. If history is any guide, we are on the cusp of an explosion of financial services innovation across markets, regions, companies, demographics.

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POLITICS & MONEY

MARCH 2021

POLITICS & MONEY

Janet Yellen becomes Treasury Secretary HOUSING INDUSTRY REACTS TO THE HISTORIC VOTE

BY TIM GLAZE

“Economists don’t always agree, but I think there is a consensus now – without further action, we risk a longer, more painful recession now and longterm scarring of the economy later” -Janet Yellen

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Treasury Secretary.

“I think this is a great way to start the new year, with a unanimous vote on behalf of someone who I believe may in fact be the most competent, qualified secretary of the treasury we have ever had,” said committee member Senator Debbie Stabenow.

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Ensuring Americans have a “competitive economy” will be Yellen’s primary focus, she told lawmakers last week. Her appointment comes at a pivotal time in the forthcoming presidential administration, as President Joe Biden unveiled his $1.9 trillion COVID19 relief package at the start of the year.

The plan has received both praise and scrutiny, as the national debt under former President Trump already exceeded the annual output of the country’s

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he U. S . S enate officially appointed Janet Yellen as Treasury Secretary at the start of this year, ensuring the 74-year-old will be the first woman to lead the department in its more than 230-year history.

As part of Yellen’s team, the Treasury also named Natalie Wyeth Earnest as counselor to the Treasury secretary for strategic communications. Mark Mazur was named as deputy assistant secretary for tax policy in Treasury’s Office of Legislative Affairs.

Aruna Kalyanam was named deputy assistant secretary for tax and budget in the Office of Legislative Affairs.

Yellen was unanimously approved by the Senate Finance Committee, a 26-0 vote that left little doubt she would pass through the Senate to become

POLITICS & MONEY

economy, around $21.6 trillion.

In addition to overseeing and aiding in the logistics of the relief package, Yellen said she will play a key role in pushing the Biden administration’s economic agenda on Capitol Hill. It’s vital, she said, that lawmakers are aggressive in distributing aid to avoid an even longer recession.

“Economists don’t always agree, but I think there is a consensus now – without further action, we risk a longer, more painful recession now and long-term scarring of the economy later,” Yellen said prior to her Senate Finance Committee hearing.

Biden said in November that he planned to choose a candidate that would appeal to all camps within the Democratic party.

As Federal Reserve Chair, Yellen worked to bring stability to the economic market in the wake of the housing crisis of 2008. Yellen oversaw a program to sell Treasury and mortgage bonds that the Fed had purchased to stimulate the economy.

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Jerome Powell, to whom Yellen handed the reigns as Federal Reserve chief three years ago, has pledged to keep rates low while Yellen oversees government spending to lower joblessness and prevent a widening in wealth inequality.

Though Yellen doesn’t have a reputation as an aggressive sheriff, she has flexed regulatory muscle in the past. In her last act as head of the Federal Reserve in 2018, Yellen slapped Wells Fargo with a $400 million penalty, punishing the bank for opening accounts in customers’ names without their knowledge. Yellen also delivered sanctions to the bank’s executives.

“I think we still have a system that has systemic risk, that government funding remains critical to the mortgage sector, and I think to get the housing market back on its feet.

It’s important for Congress to put in place a new system and to explicitly decide what the role of the government should be in helping the housing sector.”

- Janet Yellen

MARCH 2021

Yellen as Treasury Secretary is unlikely to prioritize removing the GSEs from conservatorship, though that possibility was already fading. Yellen made headlines in 2014 by delivering a oneminute speech to the House Financial Services committee outlining the risks associated with the GSEs and her plan for reform.

“I think we still have a system that has systemic risk, that government funding remains critical to the mortgage sector, and I think to get the housing market back on its feet,” she said. “It’s important for Congress to put in place a new system and to explicitly decide what the role of the government should be in helping the housing sector.”

In that presentation, she pleaded with the HFS to “deal with a reform of the GSEs.” “There are a variety of ways to do it,” she said. “But I think the government should make its intended role more explicit and make sure that whatever entities are set up to deal with housing finance. Don’t create systemic risks to the financial system.”

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Industry officials were quick to signal their support for historic confirmation. A number of senators congratulated Yellen on Twitter following the confirmation, and Senate Minority Leader Mitch McConnell said on the floor that he was “looking forward to working together on progrowth policies that can help rebuild the thriving economy for American workers that was in place just one year ago.”

For the housing industry, Yellen as Treasury Secretary represents a steady hand at the wheel in a deeply uncertain period. Several industry experts voiced

POLITICS & MONEY

support for the former head of the Federal Reserve, referencing her understanding of the key role the housing market plays in America’s economic growth. “[She] recognizes the societal benefits and wealth building opportunities that homeownership can bring, especially among minority households,” said Lawrence Yun, National Association of Realtors chief economist.

Bob Broeksmit, Mortgage Bankers Association president and chief economic advisor, said he was “heartened” by Yellen’s confirmation.

“Our members are focused on several key issues she will have the opportunity to address that will have a significant impact on our nation’s real estate finance market,” Broeksmit said.

“Specifically, these include working with key stakeholders to support the implementation of effective rent and mortgage payment assistance and the expansion of minority homeownership.”

Jesse Van Tol, CEO of the National Community Reinvestment Coalition,

“[She] recognizes the societal benefits and wealth building opportunities that homeownership can bring, especially among minority households.”

said Yellen is “an ally and friend who understands that America’s enduring socio-economic disparities in wealth and opportunity need to be addressed

“It will be refreshing to have an administration and a Treasury secretary committed to working to create a more just economy.” - Jesse Van Tol

through shifts in public policy and private sector practices.

“It will be refreshing to have an administration and a Treasury secretary committed to working to create a more just economy,” Van Tol added. “With millions out of work, small businesses struggling to stay afloat, and a mortgage market that does not work for black and brown Americans, Yellen’s experience and expertise should help the Biden administration move quickly to put the country on track towards a just recovery.”

The National Association of FederallyInsured Credit Unions President Dan Berger said the NAFCU has a strong relationship with Yellen, dating back to a meeting they had at the Federal Reserve Board headquarters.

“The Treasury Department plays a key role in ensuring the American people get the economic relief they need to emerge from the pandemic better, stronger and financially sound,” Berger said. “We look forward to continuing our successful relationship with [Yellen] as credit unions remain critical to helping our nation overcome this disastrous pandemic.”

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- Lawrence Yun

MARCH 2021

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CFPB WATCH

MARCH 2021

CFPB WATCH

Prepare for a return to Cordray-era CFPB BIDEN PICK PREPARES TO PUT THE TEETH BACK INTO THE BUREAU

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“sick, sad joke.”

That ’s the phrase a former Trump administration appointee for the Consumer Financial Protection Bureau, Acting Director Mick Mulvaney, used to describe the government agency he was later selected to lead.

President Donald Trump kept Mulvaney in his role for as long as possible, only nominating Kathy Kraninger at the end of the legally allowed 120-day period. Though Kraninger proved to be far less of a firebrand than Mulvaney, her stint as director was characterized by a far more business-friendly approach than had been seen under the Obama administration.

Under former CFPB Director Richard Cordray,

"A sick, sad joke."

-Mick Mulvaney

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regulation by enforcement, or the act of defining where the line was after a company had already crossed it, was the name of the game. Cordray believed that if you never defined the line, lenders would be much less likely to cross it.

With President Joe Biden now seated in the Oval Office, the CFPB is poised to turn back the clock.

Cordray believes the next four years could look a lot like his time in office, when he was sheriff of one of America’s most powerful regulators.

Following the resignation of Kraninger in January, President Joe Biden tapped Rohit Chopra to lead the bureau.

Chopra, a protege of CFPB architect and Massachusetts Senator Elizabeth Warren, is a known quantity at the agency. People familiar with his career tell HousingWire that he’ll move quickly to reestablish the bureau’s reputation as a tough consumer watchdog.

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BY KELSEY RAMÍREZ

CFPB WATCH

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In 2011, the Secretary of the Treasury appointed Chopra to serve as the CFPB’s student loan ombudsman, a new position established in the financial reform law. As one of Warren’s first hires in the newly constructed CFPB, Chopra was instrumental in setting the agency’s agenda.

Cordray told HousingWire that Chopra’s appointment will “reinvigorate” the CFPB, returning the watchdog to its original mission. In other words, the teeth are back.

“He led the work that we were doing to protect consumers in the area of student loans, how they’re treated and how student loans are serviced,” Cordray said. “So Rohit is somebody who knows the Consumer Bureau from the inside. He was involved in many of the leadership decisions that were made under my tenure.”

Chopra’s time as a commissioner at the Federal Trade Commission is a good indicator that he will be “vigorous” in punishing bad actors, Cordray said.

“I believe that you will see greater consistent enforcement of the law to protect consumers,” he said. “And I think you will see any number of measures taken that differ from the direction that the Consumer Bureau took during the Trump administration and resemble more closely how the CFPB was before that.

“And I think where obviously there are new issues that have arisen in the meantime, Rohit will be creative in dealing with those. But I think you’re going to see a reinvigorated CFPB that returns to the original intent of the mission of the agency,” Cordray said.

Given his background, some experts believe Chopra will focus his attention on the student loan sector.

Over 42 million Americans are saddled with student debt, and the average

borrower owes over $32,000.

“Student loans are a high priority for the Biden administration, and Rohit’s extensive work in that area reinforces the expectation that student loans would top the CFPB’s agenda,” said Quyen Truong, partner at Stroock & Stroock & Lavan and former assistant director of the CFPB. Biden extended the student loan payment forbearance to Sept. 30, 2021 on his first day in office. He’s told Congress that he wants to forgive up to $10,000 in debt per student as part of the latest stimulus plan.

Some observers don’t believe it’s a coincidence that Chopra was tapped to lead the CFPB, given his background and the Biden administration’s policy goals.

“There clearly is a crisis in the collection efforts for student loans, particularly for for-profit institutions,” Dorsey & Whitney Partner Joseph Lynyak said.

“There are extra collection ef forts which are being filed by servicers. The

“Rohit is somebody who knows the Consumer Bureau from the inside."

- Richard Cordray

MARCH 2021

“But I think you’re going to see a reinvigorated CFPB that returns to the original intent of the mission of the agency."

- Richard Cordray

Biden administration is going to put a moratorium on collecting under federal debt, and the man is one of the noted experts in student loans.

“And how that translates out in terms of default issues in the COVID crisis and the way of properly proceeding, I think remains to be seen. But there are many advocates for debt relief for student loans and for amending the bankruptcy codes to allow someone to be able to declare bankruptcy for student debt, so I think this could be a very high profile issue,” Lynyak said.

Cordray disagrees.

“I don’t think it necessarily says that,” he told HousingWire. “It says that they see Rohit as a strong, dynamic new leader for the CFPB. They know that he will go in the direction of being an aggressive advocate for consumers across the country, and particularly those now hard hit by the COVID economic crisis.

CFPB WATCH

“But it is notable that Rohit is probably the leading expert in the nation on how to protect consumers in the student loan space,” he continued. “So that certainly

examples of the CFPB teaming up with states, but such partnerships were not uncommon under Cordray. If Chopra takes over, these fed-state regulatory

Lynyak pointed out that the higher levels of funding from a better-funded CFPB could ease the burden of states with limited resources.

“You will probably see a movement back to the CFPB becoming more aggressive and the states being able to retreat a little bit and move on to other things of more concern to them.” - Joseph Lynyak

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On April 20, 2017, Ocwen Financial nearly received the fatal blow.

Earlier that week, a group of state banking regulators had issued a series of cease-and-desist orders to Ocwen that prohibited the acquisition of new mortgage servicing rights and the origination of mortgage loans by its subsidiary Ocwen Loan Servicing until the company was “able to prove it can appropriately manage its consumer mortgage escrow accounts.”

Then, the CFPB announced that it was suing Ocwen for “failing borrowers at every stage of the mortgage servicing process.”

Ocwen then spent the ensuing months settling lawsuits with each of the 31 states that took action against it. The cascade of lawsuits by the states and the CFPB nearly put Ocwen out of business.

This represents one of the most extreme

team-ups could once again become commonplace.

“In reality, there’s room for a good solid partnership between the federal government being effective on these issues, and state governments being effective on these issues,” Cordray said.

“People in California shouldn’t have to wait on Washington [D.C.] or worry about the whims of Washington in terms of whether they can protect Californians in the financial marketplace. But if they’re getting support and reinforcement from Washington, they can work together on a lot of things and be more effective.

“There’s never really enough oversight of these markets,” he said. “There’s always lots of nooks and crannies where people are doing things and people are cheating, being cheated by companies.

And so reinforcing one another and creating a strong partnership between the federal government and states is the best approach.

“When we didn’t have that from the Trump administration CFPB, the states had to kind of go more on their own. But I think we’re going to return to the days of the kind of partnership we built when I was director of the CFPB, between the CFPB on the one hand, and state attorneys general and state financial regulators on the other hand, where they’re both trying to work together to look out for the citizens of every one of the 50 states.”

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“The ability for them to be able to utilize federal funds is much larger than any one state can take on, so a state has got to really carefully ration enforcement actions,” Lynyak said. “So you will probably see a movement back to the CFPB becoming more aggressive and the states being able to retreat a little bit and move on to other things of more concern to them.”

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will get a lot of attention from the CFPB. But there’s lots of work to do in the area of mortgages, in the area of credit cards, in the area of auto loans, payday loans, really across the board for the CFPB. And Rohit will hit the ground running, I believe, on all of those fronts.”

with Phil Treadwell Thrive Mortgage National Director of Sales Innovation and Strategy

The future of IMBs in 2021 Here are the biggest trends to watch Taking on the new role of national director of sales innovation and strategy, Phil Treadwell recently joined the team at Thrive Mortgage. Treadwell comes to Thrive after a year that brought about a tremendous amount of refinance business, changing the original narrative at the start of 2020. What started as a year where lenders would need to quickly pivot and focus on building their purchase pipeline instead shifted to a year with more refinance business than they could’ve ever imagined.

But what happens when the refinance business starts to dissipate? Will lenders be ready?

According to Treadwell, Thrive is ready for whatever direction the origination market decides to go. HousingWire spoke with Treadwell to get his thoughts on the year ahead and the biggest trends that he is watching.

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HousingWire: Tell us a little about your new role and what your goals are for the new position?

Phil Treadwell: My new role is national director of sales innovation and strategy, where I will lead our talent attraction and career team, coordinate between multiple Thrive divisions to advance on strategic growth initiatives, as well as develop and expand our internal coaching programs.

My initial goal for this position is to simply immerse myself in the Thrive culture and find initiatives where I’m able to increase proficiencies and help further company goals for 2021 and beyond.

HW: What are the big trends that you’ll be closely following in 2021?

PT: Three things in particular stand out to me the most.

First, eClosings are going to get a lot more mainstream as they already have in nearly every other industry. Thrive was one of the first lenders in multiple states to conduct a full RON eClose, including the note, dating back to 2018.

The technology and end consumer experience has only gotten better since then.

Secondly, I think 2021 will be a year of the purchase market. Like many others in the industry, Thrive shattered record origination volume in 2020 with purchases comprising about 60% of total business. We expect 2021 to be more of the same for lenders who prepared properly. I see a lot of second homes or investment properties being purchased. Additionally, I see Baby Boomers taking ad-

vantage of lower rates through downsizing their homes as Gen X moves up.

Lastly, a very big deal was made in 2020 regarding the “tech stack” conversation. A forward-thinking lender has to go beyond that to create a tech ecosystem that is all about interconnectivity. You must have all systems synchronized together to create the most efficient and cohesiveness process. It’s not enough to have great third party or proprietary software platforms for each specific function of your daily operations. Now, it’s about how they all work together to drive more production and profitability, creating time for production teams. Most importantly, it is about enhancing the consumer’s experience.

HW: As more lenders file IPOs and announce acquisitions, how are IMBs, like Thrive, going to stay competitive in 2021?

PT: Despite the attention that comes from eye-popping headlines, the more lenders there are that file for an IPO, the more the competitive advantage increases for IMB’s like Thrive Mortgage who can remain flexible, agile and independent.

When a company becomes publicly owned with shareholders and boards of directors, they add layer upon layer of policies, management, corporate governance, and especially oversight. It changes the cultural mindset of who they are serving. That makes them slower to respond to market conditions, adopting new technology, and supporting their local production teams in an effective manner.

To be sure, many will benefit from those events… particularly, those executives at the top and their shareholders.

That’s all fine and good, but will it really have a positive impact on the consumer experience?

Companies like Thrive will be able to capitalize on that and become more firmly established in the local markets they serve.

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with Daryl Fairweather Redfin Chief economist

Will 2021 bring more balance to home sales?

Expect real estate technology to play a key role To help provide as much guidance as possible on what to expect this year, HousingWire interviewed top economists to learn more about their forecast for the year.

HousingWire: To kick us off, you said home sales will reach their highest level since 2008, why is that? And more specifically, why do you think we will see more sales next year than we saw in 2020?

Daryl Fairweather: Life has changed drastically for all Americans, and for many, that means they’re going to move into homes that fit their new lifestyles. We already saw a lot of that movement this year, but I do think that there are a number of sellers who were nervous to list during the pandemic and will be ready to sell in the coming months. That new inventory combined with increasing demand from buyers is going to result in a lot of home sales.

HW: How is technology impacting the home search process? Do you see the move toward technology continuing or do you think we will get back to the “traditional” way of buying and selling a home once the pandemic subsides?

DF: As somebody who made a cross-country move in the middle of the pandemic, I’d say we’re never going back to how things were. I moved from Seattle to Wisconsin, and it was surprisingly easy compared to what it was like buying and selling a home five years ago. I did 99% of my search for a home online, and only viewed in person the home I ultimately bought. I filled out all of my mortgage paperwork online too, and the online portal I used was extremely user friendly. I wasn’t nervous at all about closing

on time – the whole process only took a couple of weeks.

HW: Technology has changed not only how we buy and sell homes, but also how many home sales we have seen. How can tech help increase home sales?

DF: Technology removes many of the barriers people have to purchasing a home. First-time buyers have all the information they need at their fingertips. You no longer have to have a day off to go on tours when you can do 3D walkthroughs between meetings, and you can sign paperwork on your smartphone. When you make it easier to buy and sell homes, you buy and sell more homes.

HW: What is the greatest opportunity for real estate agents in the year ahead?

DF: All of this movement is going to give agents the opportunity to meet new clients from all over the country and establish some great relationships with them. I think the most successful agents will be the ones who are savvy with the technology available to them and leverage it to create even more trust and that “wow factor”.

HW: Do you have any other closing thoughts?

DF: It’s been an unpredictable year in the housing market.

I think we learned that the fundamentals of the housing market truly are strong, so 2021 should see more home sales and continued price growth. People want to become homeowners, and I don’t see that changing any time soon. The problem the country will face is how do we make it so more people have a chance at achieving that goal? There simply aren’t enough homes right now for everyone who wants to become a homeowner. Building more affordable homes is going to be a challenge, but at least now people are interested in moving to parts of the country where homes can be built more affordably than in expensive cities.

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In this deeper dive, Daryl Fairweather, chief economist at Redfin, discusses the impact technology has had on the home-buying market and the rapid pace of adoption that came in 2020. After a year defined by social distancing and stay-at-home orders, companies were forced to find ways to include more technology into their process. Fairweather also shares what she predicts will happen to homes sales this year.

KUDOS

Home for the holidays Purple Heart retiree, family of eight gifted new home By Tim Glaze

ku

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After serving 13 years in the military, retired U.S. Marine Corps Staff Sergeant Clint Myatt was surprised to receive a new home just in time for the holidays.

The joy Myatt felt when he heard he was getting a house — free of charge and completely built — from Wells Fargo was mirrored by the feeling he got when he saw the look on his wife, Jacki, and his six children’s faces.

“I have not seen the happiness and joy they were displaying in a long time,” he said. “I know they have been longing for a place to settle down and call home, and now they have it. I plan on making a lot of memories here with my wife and kids.”

The home, in Tarboro, N.C., was also filled with holiday gifts for Myatt and his family as the retired military man unlocked and opened the front door to a place he hopes will provide a million memories.

Myatt and his family were recipients of the Wells Fargo Military Warriors Support Foundation’s Home4WoundedHeroes program, which provides mortgage-free homes for combat-wounded veterans and their families as well as financial mentorship to help ease the transition from military to civilian life.

“We hope this is just the beginning of wonderful

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memories this family will create in their home,” said Eileen Fitzgerald, head of housing affordability philanthropy at Wells Fargo.

The Wells Fargo vetting team reviews each applicant for a home, conducts interviews and collects support documentation, and final round applicants are submitted to a selection committee who reviews each applicant and makes the final selection on who is the best fit for that particular home.

Since 2012, Wells Fargo has donated more than 400 homes, valued at over $60 million, to veterans in all 50 states. In the case of Myatt’s family, Wells Fargo will also provide a three-year financial counseling mentorship to aid the family going forward.

Myatt, who retired from the military in 2018, was first deployed to Iraq in 2007, and then to Afghanistan in 2010. He was injured during his second deployment in December of 2010 when his vehicle struck an improvised explosive device.

He was presented with the Purple Heart after recovering from his injuries. Myatt said his time in the military was “bittersweet,” and he’s looking

the years was being recognized and awarded with such an amazing blessing.

“The kindness of the people at Wells Fargo and Military Warriors Support Foundation has affected me in such a positive way. I am forever indebted.

They are such an amazing group of people,” he said

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forward to life at home with his family.

“I would be lying if I said I loved every second of my time on active duty,” he said. “There were good times, and there were bad. There were highs and lows. I will say that I cherished every good moment, and that’s what I try to hold onto today to help me move forward. It was an honor to serve my great country and I would do it again in a second.”

Myatt specifically mentioned the family-sized table already inside when he and his family walked through the doors - the first table they’ve ever had, he said, that could fit each member of the family at the same time.There was also a fully stocked pantry, a bathroom with brand new fixtures, and presents under a giant Christmas tree for the children.

“The house is just perfect,” he said. “It’s going to take a huge burden off mine and my wife’s shoulders. We have so many kids, and it just takes a huge weight off our shoulders and our mental health, knowing we don’t have a mortgage payment every month.”

The fact that Myatt and his family received the home — and right before Christmas, at that — made it that much more special.

“For those organizations to even think of us, to even have us in mind, it’s just wonderful,” he said. “It was a special feeling knowing that all of the hard work me and my family had put in over

Photo credit: Alex Boerner Wells Fargo 2021

udos

KUDOS

MARCH 2021

78 ❱ HOUSINGWIRE

❱ THE IPO CRAZE It’s already been eight months since Rocket Companies made its public debut on the NYSE and with its launch, the ushering of a new IPO craze for nonbank lenders. Though, this surge in companies opting to go public didn’t exactly come as a surprise. Last year, lenders across the nation were flush with cash thanks to over $4 trillion in originations that opened the S-1 door for United Wholesale Mortgage, AmeriHome, loanDepot, HomePoint and many others. Amid the exploding business opportunities came acquisitions, updated tech and a whole lot of refi volume that flourished in 2020’s climate. Keep an eye on the horizon though, as investors have yet to cast all their nets and more companies choose to move that direction.

MARCH 2021

PHOTO CREDIT: REUTERS / MIKE SEGAR - stock.adobe.com

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