Amy Brandt and Tammy Richards: Digitize Everything

Mortgage Media Advisor Amy Brandt had the opportunity to take a deep dive into how technology is revolutionizing the mortgage process with her long-time friend and former colleague Tammy Richards, who is currently the COO at loanDepot.

Amy Brandt: Hi, this is Amy Brandt, CEO of Docutech, interviewing today on behalf of Mortgage Media. On the line with me, I have Tammy Richards, the Chief Operating Officer of loanDepot. I encourage everyone to listen and then share on social media like Twitter and LinkedIn or whatever other social media outlets that may be and I’m just not privy to yet. So Tammy, welcome to our podcast interview today.

Tammy Richards: Thank you, Amy. I’m excited to be here.

Brandt: I’ve known you for several years now and have had the pleasure of working with you at Docutech and loanDepot as partners and seeing some of the amazing work that you’ve done over there. And I have been struck by the vision that you have for how to make the process better, not just for internal efficiencies, but really for the customer. So, I’d like to talk to you about that today and really how you’ve shaped that vision and how you’re working to achieve it there at loanDepot. So, maybe you could give everybody a little bit of background about the vision that you have for improving the process of mortgage.

Richards: Of course. It’s been a long journey and I’ve been in the business for a long time and seen all different processes. It’s so exciting right now that we’ve got the tech available to us to be able to make the process streamlined in a way that customers really are expecting and be able to serve our customers in a better way than we ever have done in the mortgage industry before. As we look at what we’ve done in the past from paper files and gathering lots of paper documentation to the online application, digital applications and even our current LOS systems,to digitally validating and then E-signing and E-closing. There’s a lot of technology out there that’s put into the right process flow will help the customers to be able to have a much more seamless process in obtaining a mortgage loan.

Brandt: Yeah, I think that’s true, there’s a lot of technology out there. I think one of the challenges for architecting a comprehensive solution is making those all work together seamlessly. How have you guys been tackling that problem? That is the issue that I always had is it would end up sort of disjointed or it didn’t work perfectly and there’s a lot of data flowing through and obviously so you want to keep that flowing accurately and consistently. So, how are you guys putting all of these different technologies together?

Richards: Really what you have to do is look at it from a microservices level and break out the process. And I know you could get to a disjointed place if you don’t have a good process flow for what you’re planning on doing and how you’re planning on utilizing those different tools. But if you take each piece of the mortgage process and look at it as a separate micro service and architect the most efficient way to handle that piece of the process and then putting that all together in the right flow to be able to get the customer the right output is really what we’re doing. Customers want surety as close as they can get at the time of application. And, so how do you use both docs and data to be able to give the customer surety at the time of application or shortly thereafter?

Some of the other big rocks to tackle are the third-party services that you order and being able to have control over those service levels and when you receive them, everybody’s really looking to get that instant data. And so, the more that you can get to a data source, the direct data source, versus having wait times or handoffs, the better you can be. But really reinventing the process from time of application all the way through closing is what’s needed in order for the customers to have a contemporary process with all of the digital tools. A lot of people think a digital loan is an online application. And it’s interesting because in the industry we have all different definitions of what a digital mortgage is and if you think about what a customer wants a digital mortgage to be, it really is that the customer is wanting to have a seamless process that they can provide data for to support the application so that they can have surety that they know that there are no other surprises that will happen and that they are approved to be able to either shop for the home of their dreams or be able to purchase the home of their dreams without the mortgage being one of those hard things that they have to get through on top of everything else that happens when you’re moving your family or moving into a new home.

Brandt: Yeah, it’s stressful. The mortgage and the financing process can be stressful and traditionally it’s been a lot of verification of information as part of the mortgage. In other words, you have to go get pay stubs, you have to go get tax returns, you have to go get all these supporting documents. And we were sort of in this world where we would take them and adjust them as either paper or a PDF and now we’re going to try to get direct data from the sources so our borrowers don’t have to go out and find those documents. 

They can hook us up to the data directly, which is really better for us in a lot of ways as well because you know that the data’s most likely accurate when you’re getting it direct from the source. Fortunately, not all third parties, vendors, and all the data areas are prepared or set up yet to go direct data to data. So, have you found very many gaps of where you can go direct and get the data? And if so, how are you solving those areas?

Richards: Yeah, we have found gaps. And also there are quite a few really great vendors out there that have APIs that can connect to your system, that can help you to be able to digitally validate and connect fairly seamlessly. So, looking for those vendors that have an API connection that can connect directly into your online application or your LOS system is really the first best way to get to that data. But it really is that we’re wanting to get to the data, but a lot of the industry is still gathering paper and data, ordering things from third parties and are all third parties willing to give us data or are we still getting PDFs versus XML? Are we still getting paper or documents versus data from our vendors? So, going down the path of, for instance, title, there are a lot of title technologies out there that allow you to go to digital title where you can type in your applications address and be able to get information in data format without having to have a preliminary title report.

And that really does streamline the process quite a bit. There’s also many places where instead of signing documents, if you could put e-sign into the document process, whether you’re disclosing or whether you’re closing, those are also streamlined ways of getting your file done. But the data can be translated off those documents through OCR and AI, if you are receiving documents. I think that one of the biggest pitfalls that’s out there is when lenders have an online application but they’re still trying to follow their normal LOS paper, simulated paper file format process. And what they do is they gather both the paper and the data and it gives them more information for the underwriters to have to sift through rather than giving them an efficiency. And until you start utilizing the data to find an efficiency in the process, you’re not really going to be turbocharging your data validations.

And it has to really start with sales and with the customer and adoption and execution. Sales really needs to buy into it and understand why they need to gather the data versus document. And it really is a cultural transformation that has to be led by sales leaders and operations leaders and executive leaders within a company in order to be able to get to that transformation. Because so many people are so used to gathering pay stubs, W2 tax returns, and bank statements and it’s the way they’ve always done it. It’s on the back of their business card to change to going to a data validation versus getting that paper. It really is a change in how they do business.

Brandt:  Oh yeah. I think that the change management aspect of this transformative process is huge. And you’re right. It starts with the LO, and of course, LOs always get the reputation that they don’t want to change or they can be resistant to it. How have you as a leader, and loanDepot as a company. sort of got buy-in from your sales team?

Richards: We really show the loan officers what’s in it for them as far as their process is concerned and what’s in it for their customers. And by showing the efficiencies and really having efficiencies on the back-end for cycle time, costs, price, and really in that cycle time, it’s the speed to clear to close or the speed to surety for the customer. All of those things are the things that help as long as you explain it to the loan officers and you show an efficiency on the back-end, that’s where you’re able to get the buy-in. And then you get some of your really great influencers to have some success with the process and share their stories about how their customers were delighted by utilizing the different tools. And that helps to be able to get more traction. But always managing it by reporting and looking at your data and looking at how much adoption you have and making sure that you have training so that everybody understands how to use the tools that are available to them, is also really key.

Brandt: Yeah, I agree. I think getting a few evangelists definitely helps as well – especially if they’re good producers and if they see any boost in their overall production volumes because they’ve been able to pick up time or they’ve been able to pick up efficiency and clearly if they’re providing a better customer service experience, then they should be able to pick up more business by word of mouth with realtors, or word of mouth from customers, because they provided a faster, better process for their customer.

Richards: Yeah it really is. It’s ops working hand-in-hand with sales. Because if you think about it, like just on digital validations, let’s say day one certainty. If a customer validates their income, employment and assets digitally, we’re already getting credit digitally through trended credit. Depending on if you get an appraisal waiver, let’s say you got the PIW, you’ve got the fully digitally validated loan. If you still send that down the same operational process flow where processors are still doing all of the functions as though it were paper. If they’re still sending it over to the underwriter as though it needs to continue to be reviewed with paper and sending it to closing for a paper closed process, then the sales team has little to no real motivation to be able to utilize the digital validation because they don’t see the efficiency on the back-end. They don’t see the cycle time improvement. They don’t see the cost savings. They don’t see a pricing differentiation. And those are all things that are important to sales and to the customer. You’ve got to look at your back-end and engineer your back-end. If you’ve got income, employment assets, credit, property, all digitally validated, that should be a different process flow than your normal process flow with all the handoffs.

Brandt: What’s amazing, and I think what kind of speaks to the magnitude of the job that you’re doing there, is that you’re engineering both directions. You’re thinking about the sales process. You’re thinking about what’s going to provide a good customer service. But you’re also looking at the back-end of the process on the capital market side and saying, “How do we deliver a higher value loan? How do we make more money on the back-end?” And then, “How do we architect everything in the middle to optimize the outcome on both sides of the equation?” It’s a really big spot to be a big influencer and then you’re sort of partnering with technology along the way. How do you have time to get to all of these different constituents, keep them all coordinated?

Richards: If you think about it in terms of capital markets, their happiness level goes up when you’ve got rep and warrant relief on the documentation that you’ve provided to the agencies and also using early check and LQA to do digital data validation. That’s a digital quality check that should be used to make sure that the data that you’re providing is data that the agencies would expect and would accept from a capital markets perspective. So, there’s lots of different digital ways that we can go in order to be able to make things seamless all the way through. But I honestly don’t know how operations can’t be thinking about these things because these are all time savers. And without it we won’t be able to keep up in the new digital age.

That’s what customers are really expecting. Much more instant gratification on all of these topics. And if they give us a digital validation, they don’t want to then have to hand us a pay stub, W2’s and tax returns and wait for somebody to review all of that on top of digital validations they’ve already given us. I think we owe it to our customers as well. Somebody asked me who should speak on this and it was a topic regarding digital validation. Should it be tech or should it be operations? And in my mind there’s no difference anymore. Tech is operations and operations is tech. We’re working hand-in-hand to improve the process and put efficiencies in place so that we can reduce our costs per loan, increase our revenue, increase our market share, improve our customer experience, and delight our associates in sales.

But it all comes from operations. Looking at the process and finding ways with those micro services to automate functions that have previously been really manual in process. And thinking about it from a process flow perspective, our process has been so hands off and linear in nature across our entire industry. And some people even go to a conveyor belt, or swim lane approach, where you’ve got more than one person working on things at a time, but often times it’s still like the passing of the baton from one person to another.

I remember back in the day when we had paper files, it would be the processor who would hand the file to the underwriter and then they’d put their hands in the air and say, “Sorry, I can’t help you anymore with underwriting right now.” And then they’d have to wait for the file to come back from underwriting to processing before they could do anything more on it. Where today, it really needs to be that we’re all simultaneously working on a file in conjunction with each other to make sure that we get everything done in a way where the customer can get an accurate answer with no surprises and surety as close to the time of application as possible.

Brandt: Yeah, it makes sense. I’ve been lucky enough to sit pretty close up to see some of the inner workings of how you guys are marrying tech and ops and sort of reconceptualizing the entire process from sequential to as simultaneous as possible. Logically there’s no other way to pull the time out unless you can do it that way. And I know that there’s a long history in the mortgage industry. I remember the file days. Remember the little stands on the desk lining up? They would get an order and people would try to switch the orders. Those things aren’t all that long ago, although I’m probably dating myself now.

Richards: Yeah, I remember those days. We’re laughing about it and I bet that there may be some people that are listening that still have those stand ups and that’s how they’re still doing it. I really think that looking at lock expiration and managing your file to that or managing your file to first in first out can’t be the way in the new digital age. It has to be when the loan’s ready to be done that you put it in for closing and close whenever the customer wants to close. And it’s a different mindset than first in first out or closing within the lock expiration period. It’s really how quickly can you get clear to close from time of application. And closing on time, that should just be a given. Everybody should be closing by contract date or closing on time according to the customer’s expectations. But when can we give the customer, how quickly can we give the customer surety at time of application or very close there to that they can move forward and that there’s no further items needed from them. So, really giving them a true clear to close at the time of application. That’s really where we’re focusing.

Brandt: That’s an amazing vision of providing that transparency and surety right at the beginning, first and foremost, the borrower, the home buyer or re-financer, but all the other parties in the transaction too, because there’s a lot of, especially in purchases time and money is spent with inspections and tying up the home and the like. So, it would make a loanDepot approval more valuable than a normal one because of that level of certainty that the deal is going to actually close. I wanted to ask you, so like laughing about the people. Let’s pretend that we are that person that we have the old taco stands of files on desks and we’re still moving around paper. If you were to walk into that situation, what would be the first thing that you would do to get started and to transform that business?

Richards: The first thing that you can do, and it’s simple steps, you need to take it one step at a time. I would look at the things that you can do manually without even going down a technology path. If you still have taco stands up, you’ve got some pretty simple things that you can do to improve your process. If it’s something that the team’s too close to, they might want to get a consultant in to look at their process and help them to put together an action plan for going digital or transforming their process. I think that that might be very helpful. Even partnering with vendors that have already done it before is a good way to go. So, talking with vendors that already are on the agencies approved list, is a very helpful first step. Docutech has been really helpful for us in automating our digital applications and our online… Really, it’s our disclosures to our customers and then our hybrid e-close in all 50 States. Docutech has been a really great partner for us in that.

Even just like partnering with one partner. CoreLogic helped us with our appraisal process and we really appreciate all they’ve done. But there’s a lot of good vendors out there that can partner with you to help you with your digital evolution. But there are some things that you’re probably going to be able to do that are manual that can save you a lot of money and give you some efficiencies and they’re simple low hanging fruit type stuff. So, use LQA, use early check, use some of the tools that are available through the agencies that you don’t even have to do any integrations with and it’ll help you to get off on that journey to the digital revolution.

Brandt: Well thank you for that. And I would say, what you’re saying makes a ton of sense because you don’t want to automate a bad process, so you’d want to start to get your process closer to what you would like it to look like in the end. You want to try to streamline the process before you get down that path of digitization. Would you say that’s accurate?

Richards: Yeah. One of the things that we think about is, if you didn’t know about the mortgage industry and you were sitting around the table and you knew what you needed the end result to be, what would the process be that you would put together? Would you think about, well, I’m going to simulate a paper file flow format in the same format that we used to fasten our files but make it electronic. Or would you reimagine the process in a way that made it easier for customers and for the sales team and operations team to work together to get to the final result?

And obviously the re-imagination would be the way, How you get started with that, depending on if you’re small or you’re big, is having good technology partners and vendors that can help you to get to that next level and making sure that you know what you want your process to be before you get started, so that you’re not building things that you don’t need and making sure you always have return on investment and a cost benefit analysis associated with what you’re putting into your process is also key to success.

Brandt: Right. Those are great ideas that have been down this journey and you can leverage that. And I think leveraging vendors in that way is not only smart, but it creates a great relationship. And I know as a vendor ourselves, it’s fun for us to be able to be a part of those exercises with our clients. We love it. It’s what gets us up every morning. I think we also always joke about the mortgage industry being like this, you’re not sure how you ended up there, but once you’re in the mortgage industry you don’t leave. And it’s probably, I think, at least for me, partially because these problems are complex and they are harder to solve and that makes them really fun.

Richards: You know, one of the big things and the reason why I’m here at loanDepot is because of Anthony Hsieh’s vision, and he really does believe in investing in technology as well. And we’ve got a big technology team. You don’t have to have a big technology team to go digital, but it definitely helps to be able to lead the way in technology. And Anthony is a Fintech leader who has a vision of serving the customers in the way they want to be served. And mello smart loan really means what’s about to be, which is what we do with our technology. We look at consumer behavior and anticipate what the customer’s needs are in the new and ever-changing world of online applications. And with Anthony being the father of the digital lead with his LendingTree background also, he really has led the way for the industry and rolling out this mello smart loan, which is a loan that knows what it needs to be completed at the time of application and reaches out for the data and thoughts with artificial intelligence to get the loan completed. It is really Anthony’s vision in practical application.

And so, it’s really fun. Like you said, it’s fun to be part of the projects, we’ve loved working with Docutech. It’s really fun to be part of Anthony Hsieh’s team bringing his vision to reality with the mello smart loan.

Brandt: Well, thank you for being a tremendous partner. It’s made my job, certainly a lot of fun and I brag constantly about the pleasure it is to work with you as a visionary leader and Anthony as a visionary leader. The whole team there has a very strong focus and drive and you can see it reflected in the output. It’s pretty astounding. 

And then, people may not know about you, you’re very strong supporter of women’s organizations. I know you’ve done a lot across those organizations, and even on an individual scale, to mentor and help women grow in this industry. And for that and for the partnership with Docutech, I thank you and certainly admire you as one of the great leaders in the mortgage space. So, thank you for taking the time with me today. This was really interesting and flows so naturally like all our conversations. I really appreciate you taking the time with us today, Tammy.

Richards: Thank you, Amy. It’s really fun. Let’s digitize everything.

Brandt: Digitize it all. Yay. All right. Well, thank you so much. You’re awesome. I think it’s going to be a great interview. Everybody should love it. So, thank you.

Richards: Thanks, Amy. Thanks for that.

Brandt: I wanted to congratulate you on the Vanguard award, but this is housing wire. I didn’t know how Mortgage Media would feel about it.

Richards: Oh yeah. Well, thank you. I appreciate that. Thank you for that. It really is kind of one of those lifetime achievement awards. It feels really great to have received it. And I also feel like I’m like representing a whole crew of people that have done cool stuff in order for our company to be recognized that way. But I’m super proud of it. Thank you.

Brandt: You deserve it and I am in great admiration. So,you go woman.

Content has been edited for length and grammar.