November 17, 2022

MBA Annual Conference 2022 Recap: It’s Time to Do the Work

BY Jeremy Potter - VP, Product Strategy

Stavvy recently had the pleasure of joining industry innovators and experts at the annual Mortgage Bankers Association’s Convention & Expo 2022 (MBA Annual Conference 2022) at Music City Center in Nashville, Tennessee.

During the event, one thing was clear. 

The industry is gradually embracing technology to streamline the end-to-end process of getting a mortgage, but as many experienced mortgage leaders put it throughout the conference, “It’s time to do the work.” 

With a change in the market cycle and no digital mortgage technology company establishing itself as the true market leader, how does the mortgage industry prioritize digital transformation, and what can we expect from digital mortgage tech in 2023? 

Additional themes emerged during MBA Annual Conference 2022 including digital expansion, data, mergers and acquisitions, and mortgage servicing. 

Let’s dive in and take a closer look.

1. Mergers and acquisitions (M&A)

Mortgage companies are searching for acquisition targets to fill the revenue gap left by a contracting market. In addition, some companies are looking for a buyer to avoid winding down altogether. One unanswered question that will likely play out over the next 90-120 days is whether recruiting high-performing mortgage producers is worth the investment.  

A year ago, lenders were spending money on signing bonuses and guarantees to attract production. The desire is still there, but lenders are less willing to spend right now, so the next few months will be active in M&A and market movement within the industry.

2. Digital mortgage software integrations

Lenders looking ahead to new channels, products, or capabilities have explored integrations with partners and platforms. Examples of integrations that add new customers include: 

Market leaders are looking at 2023 as an opportunity to increase functionality, speed, and efficiency through software integrations and capabilities because it will lower costs, lower risks, and increase certainty. 

3. Digital data

There were three areas where data became a frequent topic in Nashville.  

a. Lenders are exploring ways to ingest data directly from the source 

Increasingly, data sources around tax filings (Halcyon), rent payments (Trigo and FormFree), and consumer behavior (Revaluate and Percy) mean adding speed and certainty to underwriting decisions. In some cases, like positive rent payments, direct source data can also add loans to your pipeline that previously were denials. 

b. Fannie Mae and Freddie Mac will be accepting new data models for credit scoring and evaluating access to mortgage credit

Where FICO 4.0 and FICO 5.0 have been the industry standard, lenders can now look for product opportunities and new customer segments that benefit from updated credit scoring around medical debt, student debt, and positive utility and rent payments included. 

c. Optical character recognition (OCR) is a stand-out

While OCR became the buzzword of the 2022 conference season, it remains an elusive solution for lenders and service providers because of its vague capabilities, speed, and accuracy within the industry. Pulling data from documents is more than 5+ years into its journey, yet progress still needs to be improved. 

4. Mortgage servicing

A market shift naturally brings more attention to mortgage servicing. At MBA Annual 2022, thought leader conversations focused on two main areas:

  1. Some lenders sell servicing rights to generate cash or add more value to the business
  2. Economic pressure on American home buyers raises questions about whether delinquencies will increase

Since mortgage servicing is counter-cyclical to mortgage origination, servicing companies and departments can only get resources once the need is clear. The projected increase in delinquencies and foreclosure is normal for a cycle, but it does mean servicers are thinking about efficiency, scale, and digital tools.

This is where Stavvy can support servicers with digital loan modification and foreclosure solutions. We’re finding that consumers appreciate the convenience and visibility of executing loan modifications through a RON session, avoiding the back-and-forth delays and inconvenience of the traditional paper process.

A look ahead to 2023: The impact on your mortgage-based business

The outlook for loan volume will make it a challenging year for mortgage originators and could pressure some lenders to delay digital mortgage technology investments to extend operating capital. Two areas of focus that would alleviate these concerns include:

a. Efficiency

One broad theme that continues to come up is why there are so many different service providers. To “go digital,” lenders commonly need many software integrations that they believe will end up defeating the value of any efficiency.   

b. Cost savings

Cost savings may win out over consumer experience as a selling point. The ability to address meaningful savings will be even more critical in the sales and implementation process. A seamless implementation for lender clients will also be crucial to success in the coming years.  

Some lenders might look for an incremental step toward digital modernization, like hybrid closings. However, I vote that you go fully digital. Don’t water down digital mortgage solutions by adopting part of your digital goal. This usually undermines the value of the solution.

If necessity is the mother of invention, getting creative on partnerships, integrations, and implementation strategies will be crucial to success. 

Heading into 2023, lenders and digital mortgage technology companies will need to lower the cost to originate, and show how technology will locate, process, and share data in a digital way that saves real money. 

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Jeremy Potter - VP, Product Strategy

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