Lykken on Lending

[David] Let’s get into your tech update, Allen, what you got.

[Allen] Let’s do it. So, a couple interesting things going on. One. This is like a shower thought, David, or it’s an airplane thought, there’s going to be a shout out.

[David] I’m glad you went to shower rather than just a bathroom thought because I know where I do my thinking.  All right, go ahead.

[Allen] We’ll hold on those. So on airplanes today, it feels like you have to pay for everything. You got to pay for the seat upgrade, the bag upgrade, the carry on bag. Some planes don’t even give you pretzels anymore. Why do we have to pay for WiFi? Don’t you feel like the average price of a flight, by the way, unless you get really lucky, is between 300 and 400, and by the time you’re done with the add on, you’re over 400 for  a generic flight and you have a layover. It’s not even direct in most cases. Why do we have to pay for WiFi? Don’t you think there should be a point where the airlines, it’s so crappy anyways, you pay and you wait and it doesn’t work and they’re serving drinks and you’ve got to wait for them to finish by the time you’re done, all you did was try and connect 80 times. It should just be free, we shouldn’t have to put our credit card in So if anybody wants to get a petition out there as a better version of that shower thought send a message to us let’s tell the gods of internet that we need free internet on airplanes.

[Les] Allen, there’s a song that’s famous for New Jersey people by everyone seems to like him, but he did a song called 99 channels and nothing on, it’s the same.

[Allen] That’s great. And by the way, if you can’t get internet, go pick up Marc Helm’s book. That’s what you do with your time. And Mark there’s my shout out to you.

[Les] By the way Alan in Europe WiFi is generally cheaper. I guess because of subsidies, I’m not really sure. And it is much more pervasive, you can find internet. wifi, free internet, A lot of wifi a lot of places. But I don’t actually, I don’t even know if, I’ve never used internet on airplanes. I’m not sure they have ’em on airplanes in Europe. And somebody who I’m sure will correct me. But it should be free the web on on the tube as you’re flying through the air. Absolutely. I like that.

[Allen] Yeah. It’s not what about like free ice cream, right? How does it want ice cream on an airplane? That’d be great. Like a little chocolate Sunday. So anyways and maybe one of the candidates for President was the offer of Free WiFi for all they would win by a landslide. There’s my political tip for the all right, let’s move on. So since we got into something funny, let’s talk about the good old Florida man, always in the news, especially living down here in Florida. People visit, they always want to know what did the Florida man recently do? This one’s good. So, Walmart has been doing their drone delivery. They’ve been testing it out in different places. Florida man felt like he was being followed by a drone. He wasn’t sure what was going on. It moved around. So he decided to take out his nine millimeter and he shot it down. So he’s now facing multiple charges. Authorities say he damaged the drone. He damaged the goods. There was a couple of witnesses. It was a 72  year old man. He hit it with nothing more than a nine millimeter pistol and here was his comment to the police. I fired one round at it and then they say I hit it. So I must be a good shot or it wasn’t that far away. Who knows?

[David] That’s hilarious.

[Allen] All right. Let’s move into mortgage news. So, get this David, Les, Marc, Alice and everybody else on our podcast and our listeners,  $18,118. That is not the amount of scratch off tickets that you need to buy to actually win something. It is the hidden cost of the average US homeowner and what they pay annually and did you know it’s up 26% since 2020? We’re talking four years. It’s up 26%. and this is as per bank rate, by the way, it includes property taxes, insurance, maintenance, repairs, and utilities. And it’s up because well, as bank rates said, everything is up including the price of energy and labor, et cetera, et cetera. So, everybody, the average homeowner in the U S is paying an average of an extra $18,118. Alright. David, digital mortgage conference. I thought they were done. I’m not active in every circle in the mortgage industry. And honestly, I haven’t heard about it in a while, but it turns out they are back. They’ve got an interesting lineup.  They’re back, It looks like it’s September 9th through the 10th, but it’s no longer in Las Vegas. It’s at the Manchester Grand Hyatt in San Diego, California, and I am going. So that’s right. So if somebody wants to hang out with me I’m asking for friends, feel free to join me, but I will be there September 9th to the 10th, and Les, you don’t count. You’re already a friend. All right. Let’s move on. There’s two companies that were mentioned. This was in the Chrisman Report. It is Rock Top and Liquid Fi, didn’t get enough time to research them. Just wanted to be honest with everybody. Please give them a Google. But it says. They’re making a seamless digital mortgage exchange. You heard that right. In exchange. How many times have you heard in the last 20 years, people trying to build an exchange and if you heard them, what you probably heard is that it should be on the secondary market side. That’s what they’re doing. Their efforts are focused on creating more efficient and transparent processes for trading and managing mortgage backed securities. So go check it out again, the name of the companies it’s RockTop and LiquidFi. And they’re building an interesting platform.

[David] I used to trade at Pedestal back in the late nineties, Pedestal and Ultra Price, both of those did not make it because they were ahead of the time. We didn’t have the internet.

[Allen] Yeah. A lot of things are ahead of their time. So David Kittle had to leave early, but I don’t know if I mentioned this from prior week, but figured I’d bring it up. Flowify now brings their industry leading point of sale technology to The Mortgage Collaborative as a preferred partner. For anyone that knows Flowify, they did. They had started out more on the broker side. Not that a retail lender couldn’t use them, but they’ve expanded with integrations. I recently looked at them. They’ve got a very interesting set of tools and features. It’s definitely a matured system. I was impressed. So check it out, Flowify, they’re now a Mortgage Collaborative partner. Alright, AI David, we talk about it every week. I’ve got a number of articles that I found that I really wanted to talk about. I’m just going to bring this one up and I’m going to save my second article for next week. So check this out. This is at HousingWire. It was an article and it was an opinion article. It was called an assessment of residential real estate and AI. And the person who wrote this article, they graded the different categories in real estate and mortgage experiences. So, get this. Searching. So what they said is searching for the house, the search process. Using Zillow looking for advanced search features, recommendation, capabilities, understanding what you may want, the footprint, et cetera.  They rate how that area is doing. They gave it a B. All right. a B is fair. Not bad. If you remember a couple months or two ago, we talked about some new kind of virtual AI stuff that Zillow was doing. So, they’re moving in a good path. In valuation, Home Valuations, especially at scale. So in a multi-variate, and it’s a multi-variate and complex problem, and they’re saying AI is the perfect solution with algorithmic and computing nuances that consider hundreds of variables. AI can help. They’re saying they’re giving the valuation side as far as growth with AI an A minus. I think, by the way, my list of items here is their highest score. What you’re saying is that AI truly can look at things in minutes and hours, not weeks. It can do it instantly, and it can use better levels of valuation and machine learning. I thought that was very interesting, especially in an area where we would just go get three valuations  and average them together, right? We would do it away to balance and if you’re looking at a serviced asset pool. So anyways, thought that was very interesting. Let’s look at finance. David. They gave finance. You ready? You’ll never guess. I’ll just let you guess once. What do you think they gave finance and the growth of AI, by the way, it’s Housing Finance. Okay. What do you think?  Quick guess.

[David] Down?

[Allen] Theye did gave a D, so down is right, but they gave it a D minus. And they’re saying Housing Finance has not structurally changed in decades. They said to the extent that large financial institutions have themselves undergone a sizable digital transformation and technology certainly impinged on finance, but the basics are the same untouched by AI.  And so, they did say there’s a set of companies, some established,

[David] I said, the only exception would be angel AI. It is literally re-imagining the entire process. And yes, they’re a sponsor. So, it’s not just a plug. It’s a fact

[Allen] Two more items. Two more quick items. Transactions. They gave again a D, but it was a D plus.  And they said that the transaction is a complex process. It’s opaque to the customer. And they say, while AI led companies have certainly improved parts of the transaction process, the entire beast, funny, they’re calling it a beast, by the way, not Bigfoot. The entire beast is still in remains unchanged by AI. And then finally, David, the very last one, I know you’ve all been waiting. It is post purchase and they give it an F. I’m not surprised, right? Everybody’s focused on everything else. But here you go. I’ll read this real quick. The post purchase side of the transaction. Mortgage servicing, aka read Marc Helms book. But anyways, servicing remains imperfect with scattered shooting being the order of the day and offers to refinance leverage equity and the like have improved, but rarely, almost never does AI come into play. And so there’s all kinds of prediction and data modeling and getting in front of problems before they happen, right? Maybe wave a late fee if they’ve paid 20 times, but they were late once all kinds of ways to increase retention and repeat business referrals, you name it. Remember consumers. Don’t know that you sold your mortgage to a servicer or that it’s being serviced by someone. You’re the one that originated that mortgage. You’re the relationship. You need to make sure that your servicer has great technology, which by the way is lagging and that’s why they gave it a net. It’s not just servicing, by the way there’s trailing docks, there’s all kinds of things. The other post purchase got an F. They got a big fat F for fat. So there you go, David

[Les] Allen. I have a question for you. question.

[David] From your old, old very dear friend.

[Les] So that is a fabulous report and funny. I want to know, what do you think is the core reason for the D minus the D plus and the F? I agree with all of those rankings. I have a bias on what I think the core reason is, but you’re very close to it. What’s driving those low grades? not just that they aren’t using, but why is it can’t be used or there’s impediments to it?

[Allen] One is you always ask the good questions less. This is a question that we could put an entire hour on. It’s a complex answer. So I’ll be very short. So when everyone listening, when you hear what I have to say, keep in mind, it’s a very small speck of what the total answer is. At the end of the day,  these areas. Are built on old systems. That’s part of it. They are antiquated. They have a spider web of technical debt and code. There’s not a lot of money that was invested into doing anything more with these platforms. We just finally, right? Black Knight and their servicing platform. There’s 1 or 2 technology providers only that have built solutions that can read those old systems. There are some other systems out there, but they haven’t taken a big leap into acquiring or getting a piece of the pie in our mortgage industry. Technology is a big one. The second is, you gotta be very careful. You start playing with those old systems. You start making changes. You’re impacting customer experience. And how many times in our industry, and everybody should be raising their hand, has a technology company made a change and caused harm by doing good? That harm may be one hour or maybe five days. It could be you can’t underwrite loans. It could be your customers can’t log into their portal or emails went out by mistake, right? Whatever it is, you’ve got security issues, et cetera. So there’s a lot to unpack. And I think the most important thing right now is knowing that they’re afraid they don’t know where to put that AI technology yet

because of some of those things I mentioned. There’s way more to it again. And then in response of my response, just one last thing, guys, the only thing that I was shocked, absolutely shocked that was not in this article at HousingWire was fraud. Why is fraud detection not in this article? Why are we not focused on it? We talked all last week about mortgage fraud. So anyways, that hopefully Les, they gave you a little bit of context to your question.

[Les] Wow, that was absolutely fabulous. I actually think it’s only a four letter word. And George Carlin isn’t here, so he can’t really give us a good rendition, but the four letter word is D A T A. And that when there’s a five letter word in front of it, I think it’s five letters. Yeah. Dirty data is really what I think is the underpinning of why and he, as Adam Quinones and I are good friends and  I do business with him. He says the single impediments and all those other things are correct, by the way, they’re great assessments.

[Les] Oh, he’s right. By the way, he’s like a secret agent of data.  Adam’s a secret agent of data. And for the folks listening, if you don’t know Adam Qionones, it’s not the John Quinones from 2020 and what would you do? This is a different person. Adam is smarter than your average guy and he can read data. It’s one thing to be smart, right? It’s one thing to know technology and it’s another thing to understand how to read the data and use it. And he’s got that skill

[Les] And he’s the division president at symphony AI, and they’ve just come out with, they just acquired the 10-10 database. They are now the owners of that. And they have projects that they’re working with major. Lenders across the U. S. And they’re even soliciting for people to do it to see how we can improve the ways that AI interacts with data and that is his specialty.

[Allen] That gentleman is extremely smart. Hey, I just wanted to bring 1 thing up, David I’ll make a teaser right now. I’m working on some startups.  Two of them are not in the mortgage industry, but one of them is anyways, the one in the mortgage industry is a very unique way for marketing with AI, customer retention et cetera, et cetera. For the folks listening, if anyone’s interested in being part of a pilot of something new, some new tech, something interesting. Feel free to reach out to me be more than happy to fill you in and invite you to the pilot.

[David] Yeah. Good job. Excellent. Good report, Alan. by the way, if you want to email Allen, it’s ALLEN at TMS dash advisors.com. Allen. Thanks. Great report.

---

Allen Pollack, 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.