The mortgage
industry needs
honest voices.

Can anyone talk about the mortgage business on LinkedIn without saying the letters A.I.? Back in 2016, the dawn of the POS, we all projected this consumer-facing piece of technology was going to take thousands out of the cost per loan and eventually be the end of loan officers as we know it. A decade later, what has happened? Lenders have added an admin to their payroll, pay $60 a loan, and the industry's costs have skyrocketed almost 40%. Now this isn't to say a POS isn't necessary or impactful, but bringing to market new technologies is only half the equation.

I get calls every day from tech developers building AI Avatars and agents that will interact with consumers and help originate loans. Why? Because they want to disrupt the single largest cost in the manufacturing process with technology. I get it. I really do. But the average first-time homebuyer right now is just under 40 years old, and the average buyer overall — for the last year — is approximately 58. These buyers aren't consulting with AI robots. They want experienced, seasoned people they can trust.

There are several other immediate uses for AI in the manufacturing of loans that can have an immediate impact on CPL. But no one is working on them because it would make a "Yawn" of a press release, and they're not considered "mainstream disruptive." They would only save hundreds and hundreds of dollars. Is that so bad?

Here is a statement you have all heard before.

It's a true statement. All the tools we've integrated into our POS and LOS — Plaid, Finicity, Work Number, etc. — have a usage rate in the mid-single digits. They all connect us to source data, eliminating the need for borrower-provided documentation on most loans originated every day.

So how does the industry respond? We got to work, with the help of AI, to build technology to scrape the data we already have. We build tech to back-stop the tech we already have that no one will use. As an industry, we will pay for this tech, integrate this tech, and develop this tech because it won't require a human to change and use the technology that already sits on their laptop. Is it still a mystery on why our CPL continues to go up?

Have you ever heard the saying that water always seeks the path of least resistance? Think about it. Watch it. It's true.

I think about all the interesting products that have emerged over the last few years (not all good, but interesting) and wonder how many will be sold when rates drop and the skies are filled with vanilla refinances. Will they disappear? Will we do more of them because their rates will be better too?

Think about the skill level developed in loan originators and technology solutions to really be able to "work a deal" since they're few and far between these days. Will that rigor wane? Will the industry stay just as aggressive? Think about the laser focus we now have on building out personal referral sources and innovative ways to source consumers. Will that be just as important?

The short answer… nope.

Unless something is different this time than the last 8 cycles, the industry will seek the path of least resistance. Purchase deals will get delayed and caught up with the backlog. Realtor return calls will become slower. Working half a day on a tough loan, in an innovative product, will cease to exist. There will be a classic "tug of war" between money and strategy, and sadly, money is 8 for 8.

When I think about the challenges in the mortgage industry, I realize that in many respects, I'm the face of the problem. Stuck on old ways, resisting the reliance on technology, clinging to relationships, camaraderie, and peers I've known for decades. I also know I'm in the late autumn of my career — and smart enough to see that change is in the wind.

If you haven't been to an MBA conference lately, you need to go to one just to people-watch. Unlike other industries, the credit crisis of the early 2000s kept young people from entering this business because it was demonized as a house on fire. Slowly that has changed, but it has left a demographic gap amongst our leaders. Lots of gray hair on one side, lots of youthful energy on the other.

The average prolific loan officer — the one with a network of prolific real estate agents who control neighborhoods, third-party service providers, etc. — is just like me. Looking in the rearview mirror, hoping to pass on the lessons of the past so young leaders don't repeat the mistakes of their predecessors. But what that also means is when it changes, it will happen overnight.

Gone will be the loan officers who walked a dozen donuts and their rate sheets into a real estate office. Gone are the days you physically sat across the table from a borrower or a referral agent you'd done business with for years. The ecosystems of the past are transforming in front of our eyes. Are you prepared for a consumer-direct world where relationships begin in a virtual space without you even knowing it?

That was my father's line. What he meant was being right and being successful are mutually exclusive.

I've had the privilege over the course of my career of being exposed to several dozen new, innovative mortgage technologies in start-up mode, looking to integrate with platforms as a point of distribution. My batting average on whether I thought they would make it is close to 90%, based on two simple factors.

First, were they solving a problem that needed to be solved, or were they solving a problem that was "nice to have"? Lenders, for decades, rarely spend money on nice-to-haves. Living in a feast-or-famine world leaves little time for luxury.

Second, how deep were the mortgage resumes on the board and senior leadership teams? Start-ups without mortgage DNA approach the industry by "how it should work" rather than offering a "grounding influence" that speaks to how it actually works.

Unfortunately, I've met a lot of people over the years who were right — but burned through all their capital before they realized the industry wasn't ready for their vision.

If there are any old-timers who remember Lee Majors as the Six Million Dollar Man, you'll remember he was more machine than man — left for dead until some medical scientist made him into a superhuman. If you think about the status of the broker community after the credit crisis, you can draw the same conclusion. This model was left for dead too.

Flash forward to today. There are several large consumer fintech platforms circling the wagons on how to move deeper into the mortgage manufacturing process — to stop being a provider of interested consumers to the industry, and start being a provider of those services directly.

Sounds like a smart plan, but with one major hurdle. Fintech valuations are created by fintech revenue and activities. They aren't built for lots of people or highly regulated environments. So… the Dawn of the Six Million Dollar Mortgage Broker has begun.

How will technology deliver a great consumer experience without the need for humanity's critical thinking? Where does the process start and stop when the human needs to be in the loop? Lots of thoughts on that — around practical human behavior, compliance, and technological capabilities.

If I were King for the day, there would be a laser focus on two specific outcomes.

First. How will I spend my cash to create a low-cost institutional way of bringing consumers to my front door that is not solely reliant on the rolodex of any person?

Second. Am I managing my back office by the numbers, by KPIs and productivity? Period.

Let's face it. Over 78% of all loans closed in America end up in the same place. There are three, maybe four, predominate commercially available tech stacks manufacturing loans for the entire industry.

Unless you're a depository, there are a dozen warehouse banks that bank all IMBs. And all 4,300 lenders in the country offer 85–90% the same products and services. So how do you differentiate yourself? What's the cost to bring the customer to the closing table?

Investing dollars in automating tasks and creating efficiencies for production staff is all great, but is it moving the needle? In the last decade, the needle is going the wrong way. Visionary leaders aren't waiting for the rising tide to float all boats. They're taking charge, making hard strategic decisions, and they're winning.

I read a lot in the mortgage journals about how IMBs have taken away market share from depositories. Stats don't lie. That's what the numbers show. I'll argue it was delivered on a silver platter.

There is a trend amongst regulated depositories to look hard at their mortgage lending business and ask themselves a question: is mortgage a business or a product? Once you answer that, you make different decisions, invest in different ways, place importance on different things, and open your eyes to alternatives.

The trend, obviously, is for depositories to look at mortgage as a product — another offering to a consumer, the same as credit cards, checking accounts, and personal loans. A staple for every Bank and Credit Union. They need to be in the business, but do they want to be in the business?

That said, you can have a high-value, passive, successful platform without sacrificing customer experience and competitiveness.

I've seen 9 swings in the business over my 40-year career. In almost every case, the industry is caught off guard. No plans for when they drop, no forethought about when they go up.

For the most part, most lenders abandon all the hard work they put in to create sustainable referral sources from the real estate community to fill their capacity with vanilla, easy refis. The agent you called on three times a week can't get a returned call about the three loans you're handling that entered the pipeline a week before the rates tanked. Chasing dollars replaces the longer-term strategy of sustainable business.

In turn, when we're sitting in the middle of an avalanche of business, no one is thinking about how to mitigate the downside of when rates go up. How many people will I need to let go? Do we really need a $30K Christmas party? Am I using the same rigor to analyze investments in my business as I did when dollars were tighter?

It is said that the mortgage business has more leaders than any industry who have made millions and lost millions multiple times in their careers. But is that necessary? There are strategies you can implement, right now, that will mitigate your exposure when rates drop and keep you in an enviable position later in the cycle when they begin to rise.

There continues to be a growing opportunity in the market that's going to take the guts and determination rarely displayed by most lenders today. If you look across the pond, 36% of eligible consumers in the UK have secured a reverse mortgage to help them live more comfortably in their senior years. In the US, we're experiencing less than 1% penetration of this exact same market.

So why the difference? There are lots of theories. Here's what we know for sure.

1.  There is a general lack of distribution. There are 4–5 lenders who do the lion's share of the business. Many IMBs have jumped in the last few years, but it's still considered a "business," not a product, so it's not readily available at the fingertips of the mass majority of loan officers.

2.  There is no trusted brand. Not to say current lenders aren't trustworthy — but given the domestic history of the product and the reputational damage that went along with it, consumers are looking for that household name or gold seal of approval.

3.  Tech stacks are disparate and limiting. There is only one LOS that can handle both forward and reverse. There isn't a POS that can. If the industry embraces that reverse is a product, not a separate business, then it should be part of standard availability in all the commercially available technologies. Or let's start with one.

So how do we change this? It's going to take some pioneers in the tech community and likely a large national or regional bank to step up and bring the product to market. Banks have the unique data set on their consumers to identify a potential reverse mortgage customer just by analyzing the data they already have.

Once these doors open, let the games begin. The reverse mortgage product will likely go from 50K transactions a year to 500K. With all the talk about affordability, isn't it time we think about helping consumers keep their home, not just the ones trying to buy one?

Everyone loves a classic match-up. Rocky and Apollo Creed. David and Goliath. Godzilla versus Kong. I can make an argument for either side, realizing that their roles — although functionally the same — are very different.

Retail self-sources deals; some would call them hunters. Their ability to convert an inquiry into a closed loan is connected to a transfer of trust from a referral. CD guys convert inbound inquiries; most would call them gatherers. CD LOs, though, have less than 30 seconds to establish a connection and credibility with someone over the phone. A tall task indeed.

There are countless exceptions in each camp. Plenty of Retail LOs work inside captive environments — banks and credit unions have customer bases, real estate companies with lenders have agent referrals. I've also experienced (and encouraged) CD LOs "jumping out of the queue" because over time they've developed their own referral networks not driven by captive customers, but by word of mouth and value-add to past transactions.

If you're a leader, you'd likely say the CD LO gets paid substantially less, but you need to account for the marketing expense that makes the phone ring. So after you close the books, is it cheaper? Others might say that on their worst day, the average CD LO will close 2x what the average Retail LO does month over month.

If you ask LOs their opinion, it will likely come down to lifestyle. CD LOs work a shift; Retail work as they see fit — usually enough to maintain their personal lifestyle.

So here's the punchline: both channels have their sweet spot. Both can exist together in the same organization. Both, structured and managed appropriately, can drive scale and cost reductions. But the world is changing, and so should how we approach connecting with the consumer.

I'm reminded of that when I think about a relationship I had with a Bank decades ago who had two challenges.

First challenge — how to get the platform employees in the branch to source mortgage leads. They found that it's just human nature to avoid talking about things you don't know a lot about, so it was difficult for branch personnel to probe for mortgage opportunities from the customer traffic in the storefront.

Second challenge — they were falling behind industry standard (still the standard today) of six closed loans out of every branch in a year.

So, using the KISS method, we came up with two tactics. First, we researched and realized that 68% of certified checks printed at the bank were connected to earnest money on residential real estate. Boom. Print a check to a realtor, ask the question about mortgage.

Secondly — and this is what triggered the relevance to today — we placed 7UP cans of soda all over the branch. When customers walked up to the counter, they'd ask, "Why are there 7UP cans everywhere?" The platform people would proudly say, "If your mortgage interest rate is 7% or up, you should talk to one of our loan originators."

The result: smoked the branch goals, doubled volume year over year — with those two tactics alone.

I know a lender who has spent millions over the last 10 years automating tasks, using RPAs, integrating UW engines and advanced PPE capabilities, now diving into the deep end of AI searching for the holy grail of cost-per-loan reduction.

So far, he's tracking with the industry. His costs have risen 40% over that period — just like his peers who haven't spent a nickel. How can that be? What's going wrong? Very simply, it's Parkinson's Law.

Did he manage to improve work-life balance for his employees? Yes. Did he get productivity changes from his investments? No. Because tech enhancements alone won't drive savings. It also requires human behavior change. It requires holding your back office to a higher standard, managing by the numbers, and most of all — trusting the technology you invested in.

In most shops, this is where it all breaks down. When technology replaces human beings, the impact is palpable. But when it saves 10 minutes here and 15 minutes there, those minutes become smoke breaks, an extra cup of coffee, or a longer chat with the kids when they come home from school.

I'm not advocating that any lender stop making productivity improvements. I am advocating that adoption of those improvements, the measuring of them, and the expectations around employee performance is where the real work — and the rubber — meets the road.

Here's one that we read about repeatedly. There are hundreds of lenders across the spectrum paying outrageous commissions to loan officers, recruiting them while paying out pipelines for thousands and thousands of dollars and putting themselves — and their companies — in danger of lawsuits for poaching, etc. Along with those compensation plans usually come demands associated with their team (processors mostly), keeping their tech (favorite POS), and other associated benefits.

So as the owner of a lender, you have a very high cost of acquisition, part of your back office is being managed by your sales team (at a capacity that benefits your LOs), you're supporting yet another piece of technology… so where does the money come from?

Capital Markets is there to save the day, or are they? The job of Secondary in these shops tends to be having a home for every loan, no matter how obscure the scenario, consumer problem, or property type. I've seen product lists and investor counts higher than the number of loans that actually originated monthly.

ChatGPT calls this "optimizing the wrong variable." My mother used to call this "Penny wise and pound foolish." I call this "there has to be a better way of spending 75% of your gross revenue."

Over the years, large lenders — banks and IMBs — have had a very distinct tactic when rates drop and capacity gets strained. They seek offshore service providers who start doing non-licensable tasks to relieve the strain of files flying in the door. That eventually bleeds into the servicing platforms, handling payoffs, lien releases, etc. But is that a sure bet right now? I wouldn't put my money on it.

First — many of these organizations have gone dormant. Some dropped the product line altogether after being silent for over 2 years. Then you have the lack of domain knowledge to fire things up again, both domestically and offshore.

And if you figure out how to deal with the first two hurdles, you have our current political environment. Would you really have a 200–300-person production facility in India working your pipeline when you are one 2 a.m. tweet away from it being shut down overnight?

This time the industry needs to be smarter, more reasonable, and frankly, less greedy. Maybe — just maybe — we don't chase each other down the margin rabbit hole from day one. How about: keep your staff employed, grow and invest the parts of your business that aren't as rate sensitive, and come out the end of the fury with a business that can make money in any environment.

If I've heard it once, I've heard it a thousand times: the mortgage industry has more people in it who have made millions and lost millions than any other product or service. Hitting singles and doubles your whole career gets you in the Hall of Fame too.

I've been reading a lot of articles, opinion pieces, and narrative around the increase in credit-reporting fees. I get the consumer outrage around rising closing costs and affordability, and the need for this to become a political speaking point and a monopoly issue. I'd agree the consumer is already past the point of no return — the cost of buying a home in your lifetime is becoming an unrealistic endeavor.

Here's what I don't get. We are talking about $100–$150 in additional credit costs.

Homeowners insurance premiums are in the thousands, and depending on your home's location and age, there are zero competitive alternatives. Title insurance, closing fees, search fees, etc. are also in the multiple thousands. And let's not forget the 3–4-month escrow buffers built into your escrow account that adjust every year to keep the buffer at the same spread. All protections, for the most part, against the catastrophic event.

On average, these three items alone represent $6,500–$10,000 at closing. And what is the industry's reaction? We're building industry coalitions to fight the $100 increase in credit reports. I don't get it.

I've been in the business close to 40 years, and I don't know a single person who has ever had a title claim. I've paid my current homeowner's insurer over $80K over the last 22 years and had three claims totaling under $10,000 combined. All denied. I'm going into 2026 with $3,500 more in my escrow account than the bills they'll receive in the next 12 months.

All these items are needed, just like a credit report. Just wondering when the outrage will be pointed at the outrageous.