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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 44 June 2024 F E A T U R E S T O R Y BRINGING THE MORTGAGE JOURNEY FULL CIRCLE WITH DIGITAL TECHNOLOGY As mortgage technology continues to evolve, Joey McDuffee of Blue Sage Solutions details how the end result is not just the ability to perform operations quicker, but to achieve optimal cohesion across a mortgage lender's entire operation. B y J O E Y M C D U F F E E J oseph M. Marshall, a Native Ameri- can historian and author, once observed, "Life is a circle. The end of one journey is the beginning of the next." Every homeowner can identify with this idea, as buying or refinancing their home signifies a new chapter in life. And of course, mortgage bankers and credit unions play a pivotal role in facilitating this journey. But that work is not easy. For lenders, navigating the transition from selling loans to servicing them involves juggling diverse functions, expertise, and systems, often creating a disjointed experience for the consumer. However, the advent of new digital technologies is creating change by seamlessly connecting these disparate elements, offering a smoother, more integrated experience for both lenders and homeowners. Dissecting the Problem I ndependent mortgage banks (IMBs) and credit unions that both originate and service loans face a difficult and rapidly shifting environment in which both loan production costs and servicing costs are rising. According to the most recent data from the Mortgage Bankers Association (MBA), IMBs saw a pre-tax net loss of $1,015 on every new loan origination in the third quarter of 2023, nearly double the $534 average loss per loan in the second quarter of last year. Meanwhile, servicing net financial income fell from $94 per loan to $90 between the second and third quarter of 2023. This decline in servicing income is particularly concerning since many institutions have relied on servicing profits to counteract fewer originations. With interest rates set to drop, however, the future looks even more uncertain. Lower rates will mean more homeowners will be inclined to refinance, leading to early payoffs. Meanwhile, the recent uptick in early-stage loan delinquencies adds another layer of complexity, as assisting distressed borrowers can be costly as well. Compounding matters even further is the traditional divide that exists between a lender's origination and servicing opera- tions. One of the major reasons for this is that most banks and credit unions rely on legacy technologies, and both processes operate independently of each other. And because these products were built before the emergence of cloud-based technol- ogy, they are also poorly integrated with third-party service providers—if they are integrated at all. While it is true that some LOS provid- ers have added servicing functionality to their products and some legacy servicing platforms have migrated to the cloud, inconsistencies still reign supreme. Tran- sitioning decades-old, on-premises-based software into a more flexible cloud envi- ronment takes an extraordinary amount of time and resources. More critically, these technologies have been inadequate in controlling loan production or servicing costs, nor have they effectively improved borrower retention rates. With the housing market shifting once again, these challenges underscore the need for a more modern approach to J O E Y M C D U F F E E , VP for Blue Sage Solutions, has been dedicated to the development, support, and sales of mortgage origination technologies for more than 25 years. His successful sales, implementation, and problem-solving skills blend a combination of business knowledge and technical acumen to provide the most ideal approach to issues facing lenders daily. McDuffee has worked with a variety of the largest banks and mortgage companies across the country, including Wells Fargo, Citicorp, and JP Morgan Chase, designing, and implementing mortgage origination technology solutions and assisting with transformational process reengineering. Prior to leading sales at Blue Sage Solutions, Joey worked in the U.S. and abroad, as Head of Sales at Wipro Gallagher Solutions, and holding numerous management, technical services, and training roles. Joey has published a number of industry articles, participated in expert roundtables, and has been a speaker and panelist at industry conferences.