Mark McElroy is president and CEO of Pavaso, a provider of
digital collaborative technology solutions for the real estate
life cycle. He began his career in Fortune 100 application
development and technology deployment. In 2001, along
with several other investors, McElroy purchased RamQuest
Inc., a provider of solutions for the title and settlement industry. In 2011, RamQuest began to widen its focus and develop
products and services under the Pavaso brand. Reach
McElroy at email@example.com.
Tech Divide Demands
More Than a Band-Aid Fix
Comprehensive solutions and strategies are essential
to thriving in an evolving mortgage industry
By Mark McElroy
Until relatively recently, mortgage lenders and originators have had the luxury of operating with basically the same pro- cesses and consistent rules of business.
That’s allowed many mortgage industry leaders to
avoid deep, innovative process changes and enabled
them to keep the train on very well-defined tracks.
It’s almost as if the industry has been able to fly on
autopilot with very few deviations to consider or worry
about. The problem is that the rest of the world
Your clients suddenly came in contact with a plethora of new technologies (think iPhone X; ApplePay
or “smart” appliances for starters). They became very
used to these tech tools. To add to the complexity,
many people still blame mortgage originators, in part,
for sparking a financial crisis that sent the country into
an economic tailspin for years, resulting in a regulatory
clampdown on the mortgage-lending industry.
The mortgage industry today, arguably, is in the
early stages of a major disruption, sparked to no small
degree by technological advances. The decisions you
make on that front now may very well determine
whether your business survives and thrives, or dies, in
the future. The changes affecting the mortgage industry dictate nothing less than the end of most of the old
business models. Nearly everything you have known
about this business will be different in the near future.
One of the elements that technology has changed in a
major way is the nature of the competition. The internet opened the market to the world. All lenders and
originators are not created equal.
Every day brings new marketing techniques and
process improvements to the market. Meanwhile, your
technology infrastructure (like that of most others in
the industry) is probably dated. It’s missing key capabilities required to keep up. And the borrower demographics are changing. Your customer base has a
different set of expectations for how they buy your
product and interact with you.
The mortgage crisis and subsequent regulatory
blizzard virtually cut off a huge chunk of the most
profitable loans available, leaving in large measure
only the safest and least-risky consumers eligible for
loans. Regulatory changes shifted more of the risk to
the lender, making the production of a mortgage loan
more detailed and difficult. Production expenses for
mortgage lending increased.
Compliance and investor pressure on mortgage
lenders is pushing them to understand more about
the service providers they work with. More regula-
tion leads to more processes to enable compliance,
which means more for lenders to understand. Having
knowledge of title and appraisal functions is becom-
ing an absolute requirement. It’s no longer enough for
lenders to focus on just sales and products.
On top of that, interest rates are rising and will continue to do so. This is likely to reduce the market further,
minimizing the number of deals available out there.
Mortgage originators don’t have the same levels of
business they used to. There’s no guarantee that they
can just go get the business, either.
These demands are taking their toll. Mortgage pro-
fessionals have been asked to go from the equivalent
of a comfortable walking pace to a full-on Olympic-
level sprint through the mountains. Process change,
new (and different) technology and dramatically alter-
ed workflows rarely mesh seamlessly with even the best
It’s a lot to process. No matter how successful you
were, you may be starting over. The product you produce, the way you sell it, the media it’s in and how it
gets done will change. If you’re of the opinion that
mortgage lending has always been done a certain way
and will never change, you’re simply setting yourself
up to be left behind.
A path forward
Because the business processes for the mortgage
industry were stable for so long, the industry had the
luxury of choosing technology utilities to solve one-off
and individual problems, never having to address them
with global solutions and strategies.
Interestingly enough, other industries had the same
issue until the concepts of enterprise resource planning
were introduced in the early 1990s, with business software companies like SAP. These technologies enabled
other industries to view complex, multi-stage problems and solutions within one technology solution,
allowing inter- and intra-connectivity for all departments and processes.
One glaring example of a utility-choice approach
can be seen over and over again with the electronic
closing. From a distance, it appears that the digital
transformation is sweeping over the industry. Your
borrowers are likely becoming aware that this is a very
real, and a more accessible solution, to the chaos of
the traditional paper closing/settlement.
But look closer. There are many products on the
market, many of which encourage the industry to solve
an issue with one-off, utility-like tech solution. The
problem is that making the mortgage signing/closing
electronic is neither the primary problem nor the
For more articles on
View these articles and more at
“How eLending Transforms the Industry,”
“Closing in on an eMortgage Standard,”
“The eMortgage Makeover,”
Brenda B. Clem,
Continued on Page 108 >>