[David] Allen, you got the stage. Give us a tech update.
[Allen] Oh, me again? Okay. I can do it.
[David] Yeah, you sounding good right now, so you know, why not just continue with that.
[Allen] Yeah, I don’t have a lot of details on this one, but if everyone was wondering, Jerry recently quit Ben and Jerry’s, so I don’t know if they’re gonna change the name to just Ben’s or Ben and Jay’s or Ben used to be Jerry’s, but it’s now just Ben without the Jerry, so I don’t know why. I’ll have to look at that. But Jerry quit. So just moving on. Penny Mac, they picked Vesta. For their LOS platform and they also took a minority investment, so that’s interesting. GPT, said, Hey, Penny Mac announced a strategic partnership stake in Vesta Innovations adopting their modern open architecture. LOS and GPT says, why does it matter? A big mortgage lender betting on a newer LOS player signals a shift where capital and integrations go, but they, which GPT is right. Now we know the industry better than GPT. And I’ll fight that one, but and Marc I’ll need you as backup but when you think about it, the, there’s other topics that some, one or two I have in here, and some I didn’t include in my report today, where GPT has suggested that traditional lenders should be shaken in their boots. They better be implementing AI and getting off of old modern, old dusty tech stacks. Not that we know what the LOS are and what they need and what integrations are like in our industry penny Mac obviously wanted, they got something out of that, which probably was a lot of customization and ownership in something new. So anyways, hats off to them. Dave, new topic, non-bank originators in lending, tech and automation. Through A NMN, which is National Mortgage News Survey. It released part of its emerging tech and AI research, and what they’re saying is non-banks are ahead in adopting newer tech, which, I think we knew that because when you consider non-banks, the big banks that are many billions of dollars a year and more, you can’t really consider them a competitor. They’re their own. When you look at a non-bank. You have to think of maybe what a billion dollar in asset as, as far as a depository unless, so yeah, of course the non-banks are gonna be leading the pack in, in adopting new innovation. 76%. This is what NMN said, 76% say integration ability is critical. AI is already delivering workflow gains. And before I get into other news, let me tell you more about that. The survey also found in June to July of 25, it was 123 mortgage professionals, banks, credit unions, and non-bank originators. This is who was surveyed, 64% said their organizations audited their tech stack in the past six months. That’s pretty impressive. So 64, it needs to be more, by the way, it shouldn’t be only 64%, but I thought it would’ve been worse, is my point. And another 24% said that they did it in the past year. Now, I don’t know what that means. Audited their tech stack. Did they just renew one contract of the 20 vendors They have, but that’s, it’s positive. By the way, also said the top strategic tech goals, based on the 123 mortgage professionals. Regulatory compliance guidance was the top priority. 73%. Faster underwriting, 71%. And fraud detection and prevention. 70%. And when it came to vetting new tech. ROI and data security are must haves. 96% and 95% say each is highly important or critical and integration compatibility, which is a no-brainer, is also a top concern. 76%, call it critical non-bank originators, especially aggressive on APIs. 68% of non-bank mortgage companies said they are building APIs in-house. You heard that right? 68% of non-bank mortgage companies said they’re building APIs in-house. That’s crazy. That means a lot of you folks listening are building your own tech and you’re dealing with the build versus buy. You may be just building integration pieces, so you have some control. You may be personalizing some of it, integrating your own CRM, whatever it is, of the 123 people that were surveyed, 68% of the non-banks are building their own APIs in-house. Now, the survey said one more thing, David, that I think is really important for everybody. Mortgage lenders, particularly non-banks, are showing more maturity and tech adoption versus banks and credit unions. I think we know that, right? In the survey, greater than 40% of mortgage lenders characterize themselves as strategic tech users. Meaning tech adoption is part of their business strategy, not just part of their tools. I love that, by the way, part of their business strategy. So that’s encouraging and in capital markets and pricing tech, 95% of non-banks are reported to already be using product, pricing and eligibility. Get this. Meanwhile, for all institution types, so banks, credit unions, and non-bank, the rate is lower. That means that not everyone’s using PPEs. Now, I don’t know what the question was and was it surfaced around, maybe certain, for example, in depository institutions sometimes only have a certain amount of rates. They only offer certain things, so there’s no reason for a PPE, but they still may use a PPE on the backend. Anyways, that was an interesting number. Last one on this. The survey said none of these institutions are perfect. Fraud and security tech non-banks actually lag by 13% when talking about advanced fraud protection tools, so banks, depositories actually are doing more fraud detection and protection than non-bank lenders. So that was very interesting. And before I go on one or two quick little things in the industry, David, I just wanted to pause there because that was a lot of content.
[David] Yeah, that’s good stuff all the way around. For the sake of time, keep going.
[Allen] Okay, let’s do it. So there’s a company called Trained. It’s actually AI is in the middle of the name because naturally trained, T-R-A-I-N-E-D. And the AI is ai, yeah, of course. AI in the building. Yep. Yep. It’s a mortgage AI automation firm. They’re branding themselves as the mortgage manufacturing platform. And what they say is, they’ve secured a strategic investment with Innovation works. They’re scaling their platform. Their flagship product is called MORI Mortgage Origination Responsible Intelligence. So MORI. Sounds like a dog. Claims to use actionable large language models. Okay, so folks just take all the acronyms out. It just means it’s like a GPT kind of interface that learns and to automate tasks like document indexing, income analysis and loan monitoring. And what they’re saying is, MORI is a plug in style tool, meaning you can put it into your existing LOS systems with Ready. They quoted zero disruption. So check it out. We’re gonna see, by the way, by the time National MBA’s over, everyone’s gonna be talking about all their AI stuff. The document and indexing vendor, if you remember last year and the year prior, if you walked around the vendor expo. There was stuff everywhere having to do with document indexing. Everyone’s doing OCR now when it was hard. You’re gonna see all kinds of AI around that, around reading transcripts, around understanding income analysis. This is gonna be a very interesting year. Two more quick updates David, ACEs. So this is the first time I’ve reported on something about quality Control ACEs, and this is their quote, the industry’s first and only AI powered. Features for quality control, help them customize and improve quality’s feed and influence. What they’re basically saying is they’re enhancing loan reviews, selection and compliance, and they’re empowering users to write exceptions, build loan selection queries in plain English and summarize audits in seconds, dramatically cutting exception in writing time. So check that out. And then the very last thing is a company called Friday Harbor. It’s an AI powered originator assistant. They just announced an integration with Encompass. And unlike any other AI underwriting tool that’s out there, they put real-time underwriting intelligence directly in the hands of loan officers right at the point of file assembly. That means as you’re entering the data about the file folks built using ICE’s, latest developer connect API. So that just means if for fancy words, they’re integrated to Encompass. They basically are another company focused on, bringing underwriting to the forefront. So as you have more data about the characteristics of the borrower and the loan, it can start to tell you if you are a fit or not a fit and what’s needed. So more to come on those. We’re gonna see a lot more.
[David] A lot more stuff. Are you seeing more in the decisioning than anything else?
[Allen] I’m seeing everybody’s taking a stab and wanting to be first at everything. I didn’t, I could have listed 20 vendors today that are implementing AI, like Blue Sage just launched an AI sales agent. Everybody’s dipping their feet into AI. The big thing is I think everybody wants to tackle underwriting. They wanna move calls faster.
[David] I would encourage everyone to go listen to the podcast. Pavan and I recorded last week about another example about Gemini being one of the large language models that just made a mistake. It’s just really spec. We talked about it a little bit last week, but FH FA ruling versus FH FHAs ruling and the LLM could not tell the difference and gave it an erroneous response. We gave several examples, so we’ll put a link of this podcast to go listen to that one. Urge you to do if you’re relying on LLMs, like you said, Chat GPT can do some amazing things. You’re really impressed. I’m impressed with it. Looking at what it’s doing, it’s good. But when it comes to really specific answers, which are highly determinative, that have a ab a yes no answer, a binary answer it gets dangerous. So be very careful out there listeners with this good stuff, and if you want a good consultant to sort it all out, Allen is the man. He can tell you all about it. Thanks, Allen, appreciate it.
Allen Pollack
, Chief Operating Officer, Tech Consultant
Allen Pollack, a Mortgage & Financial Services Technology Advisor, is a subject matter expert in the mortgage origination process along with software product management and software development.
In today’s financial services push to all things Digital, Allen has been helping lenders and financial services solution providers align their digital transformation and technology strategies by removing the human element of risk, and automating processes that drive efficiencies and margins into profits.
Over the course of his career, Allen has co-created and developed technology business models that have birthed highly successful, innovative solutions and companies.
Allen co-founded and served as CTO of New York Loan Exchange (NYLX), a loan product eligibility and pricing engine (PPE) that made an immediate impact on the industry, scaling the company quickly and forming partnerships with multiple mortgage and financial lending companies. In 2012, Allen was a co-founder of a merger between NYLX and Aklero Risk Analytics that created LoanLogics, A Mortgage Loan Quality and Performance Analytics company. Allen served as CTO where he continued to bring new and innovative product solutions to the market that made a significant impact to mortgage lenders that reduced risk, scaled business channels, and grew profits in a very competitive and highly regulated market.
Allen is also is mortgage and finance technology contributor on a weekly live industry podcast, Lykken on Lending, and is launching a new podcast soon to be released, TechStack Radio, dedicated to technology and innovation in Financial Services.