The Changing Mortgage Tech Landscape with Dan Smith of LendingPad
[David] Listeners. I'm really excited to have Dan Smith joining us. He's with LendingPad. He is the Vice President of Sales and Strategy. LendingPad is the next generation of LOS serving brokers, lenders, credit unions, and banks. Dan previously spent 15 years at ComplianceEase. That's where I met him and we formed our great friendship. He's just a wonderful human being and it's someone that I am really excited to again, have on the podcast. We've had it on the podcast in the past, but I'm really looking forward to having him here, especially in his new role, it's not so new, he's been there for a while at lending pad. How long have you been at LendingPad now, Dan?
[Dan] About three and a half years.
[David] Man. It's amazing. They're fortunate to have you because you are passionate about helping others, which is at the core of success for anybody, no matter what anybody's doing. And you're passionate about this business and helping your clients reduce costs and compete more effectively. So, let's get into it for those that don't know you, Dan, let's share a little bit about your background real quickly.
[Dan] Yeah thank you, David. And again, I just want to say, it's an honor to be back on the show with you. You do so much for this industry and you're so well respected. It's just a privilege for me to be here. I fell into this industry like a lot of people do, by accident, and in my case it was right out of college. So, my kids have grown up hearing things like MSR, LOS, LLPA, CRM, FHA and the whole alphabet soup. But yeah, so it's been a whole career. I did work at a lender for a couple of years. Like you said ComplainceEase was a long stint for me. But I have a full schedule always. And I'm also I'm a family guy. I'm very involved with my kids.
[David] I have I love that part about your life.
[Dan] 17 year old, 14 year old and 11 year old.
[David] And yeah, you're busy. Yeah. Those ages you're busy.
[Dan] I'll give you one quick vignette just to share a little bit about how life is. So, my 14 year old is a ballet dancer. She's been dancing since she was three and she takes these evening classes and for one of the nights per week, my wife says, they're looking for dads on this one night and one night per and so I'm like, Sure we'll give it a go and so I'm participating in this class called padada, which is French and translates to embarrassed dad, But I'm thinking, I'm like it's gonna be no big deal. I show up the dads look normal and I'm feeling okay the first time, and that guy's wearing a Star Wars shirt over there and it's it can't be that bad. Next thing I know, David they're putting on like special shoes and doing this like special warmup routine and right then and there I knew I was in trouble.
[David] That's hilarious. It's crazy what we'll do for our kids, having two daughters, can't imagine the amount of lipstick and makeup that's been applied to my face when they were growing up. It's just, come on dad, and then get your nails done. And now we have grandkids. We're at that stage of life and it's wonderful. But Dan, it's so excited to have you here and I encourage people to get to know you and what you're about because I think has driven your success and each one of the places you've been and I am interested in learning more about your perspective. You've been in the industry for 25 years and in light of what we're seeing go on in the industry, what are your thoughts? How do you, how, what's your perspective?
[Dan] Yeah. Trying to predict, what's next in mortgages, a little bit like trying to predict the weather here in Arkansas, I've got a great colleague here at LendingPad. Her name's Helene Amaro and she sent out a message recently to the whole company about the “is the glass half full or is it half empty” that whole debate and her point was, It's not about, half empty, half full. It's that the glass is refillable and that's how I think about the mortgage industry. It's a rollercoaster.
[David] I've never heard that one. It's refillable. Yeah. That's a great perspective. That's the best takeaway out of the whole meeting.
[Dan] That's right. That's right. We all went through the 5% rise in rates in 16 months and now it's been, pretty steady for a year or so, but I feel there's more optimism now. If you're listening to the show and you should be, you're a survivor and you're positioning yourself to thrive. Fundamentals are what they are, right? It's still stubbornly high to, and cost to originate a loan and something like $13,000 or whatever it is, rates are still high, inventory still low, home prices are still high. Volume over time, just through natural reasons is bound to rise and while we've been in this period, I think those companies that have survived are really positioning themselves. They're remaking themselves. They're getting leaner. They're taking advantage of this time in retooling, reorganizing, in some cases, reevaluating their tech stack.
[David] I'm really interested in getting your perspective on the tech stack because the cost originating has just gone out of sight. The $13,000 or just under $13,000, depending on where our volume's at we're dealing with a fixed cost and the number one leader out there is not making it easier. Number one LOS in the market is locking people up in long term contracts and increasing fees. It's just unsustainable in my opinion. So I think we're at a inflection point and then along comes new companies like LendingPad. Give us a little background in history on LendingPad, what's the reason for them coming into existence? Who started it? Give us a little insights.
[Dan] Yeah, absolutely. So thank you, LendingPad. It's generating a lot of excitement and buzz now, but we actually launched in 2015. It was just a kind of a slow roll organic growth. Our founder is a gentleman named Wes Euwan. I think of him, he's really a unicorn and he truly does have both mortgage and tech experience. He owned and sold a mortgage company, owned and sold a bank and he's got a developer background. And so we've got the tech experience there. So really hands on from the top down. So culturally, we really are deeply in meshed in mortgage from the get go. But, it's one of these things wheretech stack changes it's not an easy choice. And it's highly circumstantial.
[David] It's like a marriage once you get in and you feel like you married for life, doesn't have to be, but there's enough changes happening out there, but it is painful to make a change and it takes an extraordinary effort.
[Dan] I think it's highly circumstantial too. There's not one right answer for everyone. The younger generations, I think it was just reported that I think for the first time in history, millennials are now buying more homes than baby boomers and as borrowers are interacting differently with lenders, the tech stack has to change, as well, or at least adapt and a couple of points, David, 1, there's a stat from CIO magazine at 60%. I think it's on average, 60% of tech stack is being utilized at any given organization. So sometimes the right answer is to optimize what you presently have and not make the change, but when it is time to make a change, you want to work with a the right partner. Yes. But also, do some introspection on is the environment conducive to a change. We have a partner that says something like 50% of all implementations industry wide fail on some level, even if there's some material level or any catastrophic.
[David] That’s true. I've seen that myself as a consultant.
[Dan] Yeah. So vendors, obviously own some of this. But I think lenders need to do some introspection as well and say, were we ready from a change management perspective? Did we have, do we have the right bandwidth at that time? Because a lot of them fall into the mortgage bandwidth catch 22, where when times are good, it's all hands on deck. You can't stop and think, you're just doing everything you can to capture loans. And when times are, bad or rougher sometimes you have reduced human capital, you've got a reduced organization. And so it's very difficult to get the timing, make sure the environment is right.
[David] So how do you guys differentiate yourself for some of the others that are in the market place? We've got wonderful relationships with a number of the companies, one of our advertisers which were real pleased with has a competing product, but how do you differentiate yourself in the market?
[Dan] There's a lot of good tech out there and good companies out there and so competition is a good thing. The world is becoming very interconnected. I think LOS is need to have either deeply embedded solutions or very tight seamless embedded solutions.
[David] When you say deeply embedded solutions, expound on that a little bit. What do you mean by deeply embedded solutions?
[Dan] So traditionally I think there was more of a siloed approach and it would be, let's take this data and move it over to this other system and begin working there. But now, for example, I think most lenders just generally expect that their LOS is going to have a very serviceable POS, for example. Another example is I come from a compliance background and so you'd have compliant solutions that, but how do you either access those third party providers, or is the LOS itself going to say, Hey, we're also going to take this on internally and have this enmeshed in the workflow for users.
[David] Yeah, that's very good. So when lenders are considering making a change. What are some of the things that you'd say you need to keep in mind? What are the top items? Yeah, I think that first of all, they need to think about, are they moving to a partner who is going to navigate the boom times with them and the bus times with them?
[David] How would someone do that? I'm assuming you're talking about flexibility on the seats that you have, and some which can affect the cost and is that what you're talking about?
[Dan] That's part of it. So I think there's an aspect with which contracts are certainly a part of it. For example, we've all seen people in the historic boom time that has come and gone get caught up in a contract situation where they felt that they had to commit to certain levels that were not sustainable again in this roller coaster industry that we're in. Absolutely, that's a part of it, but I think it's a little bit more nuanced simply than than the paper. I think it's also tech is changing so fast is what's behind the scenes from a coding standpoint. So let me give you an example. You've got the RFI concept where does your system do X, Y, and Z? Everyone just says, says yes. And that's that. But I think that truly, and you alluded to how sticky it is once you select a system, how difficult it is to switch. So that just to me, you have to be that much more thoughtful on the onset. Maybe the system meets your needs now, but is the infrastructure built in such a way that it's going to be adaptable? So we know new technology is coming into play. Let's say it's an AI function here or an AI function there. How is the system set up in such a way to be able to absorb that in a way that makes sense.
[David] That's right. Yeah, that's good. Just for those that may not know what RFI is.
[Dan] Yeah it's a Request For Information, in a lot of times, I think historically when lender shops are looking to see if they are making the right tech solution selection. They will have a huge list of questions about functionality, but to me, it's got to be more of a partnership. And again, contracts, it's almost a symptom of it. It's certainly a part of it. But are you working with someone that understands, firstly, that things change, your organization may change. You may go from broker to banker, single channel to multi-channel or regional to national. What does that look like? And I know there's obviously there's commonalities, like everyone wants to improve communication and service levels to borrowers and meanwhile, they want to improve quality of life and efficiency for staff. But how that bears itself out depends. And you asked David about what should lenders be thinking about when they consider the tech stack change. I think they also need to consider who they are and what their goals are because quite frankly, what's working well, because sometimes people take two steps forward, but then they take one step back. So you want to ensure you're not going backwards as well.
[David] I think it's really defining where the market is going, which is really gets into the next question that I have is when you are looking at how you're going to be developing and continue to grow your technology or your companies, what are you taking into consideration moving forward in this new mortgage world that we find ourselves? Are you seeing the AI is in everything. We hear AI are you gonna be LendingPad AI soon or are you going add that to it? Or how does that integrate into? There's so much power. We look at ChatGPT, my gosh, what we can do with it. It's amazing.
[Dan] I was talking to a friend of mine last year, who's not in the industry and he's a developer friend of mine. And he was just talking about his company and they were running parallel teams for development where they had one team. It was a developer plus the traditional QC analysts and then other teams where it'd be really a developer enabled by AI. And they were comparing them for efficacy and accuracy. And yeah, I think we have not even really begun to conceptualize how the technology is going to change or for that matter, what the consumer expectations are going to change. So that's why I think, what's LendingPad doing? First of all, we have a strategic roadmap that we've been following and I would say undergirded. The recipe has always been the same and that's pairing, modern technology with first class support. And so that's never going to change. What is going to change is these questions that you're asking. And it would be marketing sheen. If I were to just say, yes, we're going to be LendingPad AI. And we've got this fancy thing. To me it's more about the philosophy behind it and the tech infrastructure behind it. I'll give you another example. LOSs have historically struggled with data and being a true system of record in some cases. And if I change this over here, do I need to remember to go back and change that over there? what if it's a conflict, but it's the same information? I think that. What's important about, a company like LendingPad and what we have to offer is it's a true system of record approach. And so we may have different, areas in the system or places in which you can make changes to something, but it's just the same underlying database where there's only one source of truth behind it and that to me, when you unpack it. Moves us. Historically contracts have been burdensome. Support's been spotty, in the industry legacy systems, data has been siloed. Like we've been talking about, makes updates slow. Onboarding is nightmare-ish and LendingPad is changing all of that.
[David] That's pretty exciting. that's a great point. What is new and exciting at LendingPad?
[Dan] Thank you, David. Yeah. First of all because we have built our client base organically, we have a very happy, growing word of mouth presence and because of that, we can also build in accordance to what they're looking for. We've tripled our business in the last couple of years. And it's really accelerated. Got endorsed by ACUMA and so we're really growing in the Credit Union space now, Banks, IMBs. I think there's really a couple of things that I would highlight, for your listeners right now. One is not only the business rules and the power behind them and they are powerful. You can build custom fields in different sections. You can build triggered business rules off of that to really automate the workflow process. You can build automated reporting associated with all of that. And so it's the heavy, the kind of the high muscularity that you'd expect from a high-end LOS but it's a lighter touch. And so there's a lot of indirect cost savings in that it's far easier to administer from a functionality standpoint. By far the biggest thing that we've done, and this has been years of investment is we're just now rolling out our own automated compliance engine. And we're still going to have a choice.
[David] Not surprising having been with ComplianceEase. That's good.
[Dan] Yeah, it is, we still offer an integration to the aforementioned system and we'd like to offer choice. And that's philosophically, we're not telling people how to operate, but what we are offering is really exciting. So we call it comply or CIO for short, and it's the real deal. So it is systems historically have presented a tremendous amount of findings, which is wonderful, but then LendingPad solution goes beyond and points towards resolutions. It's not going to say, not tested. It's going to tell you exactly why it's not germane or what data was missing. And so it's just goes one level deeper. And if I may, I want to give a, just a quick shout out to the team because it's a powerhouse team. It's been led by Dominique Wiest. She came from the CFPB where she's trained many field examiners. We have leaders from ComplianceEase and the founders of Mavens are now LendingPad employees, all working on things.
[David] So you're keeping the family together and inviting in some new impressive people, having someone from CFPB there. That's extraordinary. It's good. It's so much about having the right team in place. It's one of the things about how you manage and promote Dan is you're always about making sure you're lifting up others and that's outstanding. What advice do you have for the next generation? Entering into the mortgage space, into the workforce, we are hopefully getting more for fresh, new blood. I think we see evidence of that, but what's your advice?
[Dan] Yeah. Great. Great question. First of all, life is short and this is a weird example, but again, I was talking to my 17 year old the other day and I was saying, you know what, Paula Abdul is coming into town for a concert. And he says to me who, who's that? And I was like, are you kidding me? Like it's just how fleeting life and fleeting fame is and how fast things go. And so I would just say, yeah, I'd say, the mortgage career. It's a great career because the cause is noble. What we're doing here really is meaningful. And the people that we work with are really great in this industry and we're doing interesting things. And one thing I would tell also, that the fresh blood, as you put it coming into the mortgage space, as you work here for a little while, when you run into people that you haven't met, you sit down and talk with them. You probably know 5, 10 people in common. And so it really is an interconnected industry and yes, buckle up for the rollercoaster that we talked about, tech changes and sometimes unexpectedly. So I would say, develop and keep your core principles as a person and then be flexible with change. Last year was just been a kind of a crazy year and this year we've been waiting for things to change, but there's still opportunities. I think if you're going to work hard and be willing to learn and make connections. There's lots of resources. Your show is one, there's many resources out there. The MBA has trainings and certifications. I would say, invest in yourself. Yes and then, from a work standpoint it's important, but don't let that also, shuttle aside faith, family, friends, service, health, all those things. And above all treat people with respect, kindness, honesty, and whether they're competitors, colleagues, partners, Uber drivers. That's just the way to operate in this industry and in life.
[David] It's a way to operate in life. And it's certainly, if you do that in this industry, you'll succeed. Dan, I just, I enjoy you. I celebrate you as a human being, as a person in this industry. Again, listeners, if you do not know Dan Smith, get to know him for a number of reasons, it's just a great guy and also get to know LendingPad. It's a new product on the market. That's doing really well. Grew a threefold increase. That's amazing. That's extraordinary amount of success. And that's under your leadership in sales. So congratulations, Dan. Appreciate it.
[Dan] Oh, thank you so much, David.
[David] You bet. It's good to have you on the podcast. We'll share this with others. Listeners go share this out. Especially if you're looking at a new company and you're, that someone's out starting a new company give Dan a call, compare what they have because some of the other solutions that are out there, you'll won't be disappointed that you did monitor that. You're going to meet a great human being that you'll enjoy and make a friend for life. Thanks, Dan, for being here. Appreciate it.
[Dan] Thank you for the kind words. Always a pleasure to talk with you, David. Thank you so much.
[David] You bet. I will look forward to having you back. Keep us posted on your progress.
[Dan] Will do.
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Dan is a 25 year mortgage industry professional, and for the last 3 years has served as LendingPad's VP of Sales and Strategy. LendingPad is a next generation LOS serving brokers, lenders, credit unions and banks. Dan previously spent 15 years at ComplianceEase where he led the integration team, sales, and government relations, and chaired an annual industry compliance conference. He was also honored to have previously been a guest on the Lykken on Lending show. Before that, Dan spent 5 years at a division of Fiserv where he led a consultative team that valued MSR portfolios and supported software. Dan earned his MBA from Duke, where he was a Fuqua scholar, and earned his CMT and AMP from the Mortgage Bankers Association.