Lykken on Lending

In our Hot Topic this week we have Shane Westra, Chief Product Officer @ SimpleNexus & Jay Arneja, Group/Growth Product Management @ SimpleNexus to discuss how SimpleNexus approaches product development, as well as recent successes lenders, have had with eClose technology.

 

Want to know more about Shane Westra?

Shane Westra brings twenty years of product development leadership experience to his role as Chief Product Officer for SimpleNexus. His past roles in Silicon Valley and Utah’s local tech scene have helped companies such as Shutterstock, Workfront (Adobe), Pearson, and LexisNexis grow revenue and establish mature and scalable product development lifecycles. Westra holds a Master of Business Administration from Brigham Young University.

 

Want to know more about Jay Arneja?

Jay Arneja has spent her entire career digitizing and redesigning the mortgage closing and post-closing processes. Early on, she worked in correspondent and wholesale lending, where she specialized in Mortgage Electronic Registration System (MERS) administration for several organizations and ran the closing department of GreenPoint Mortgage’s highest-producing branch before the lender was purchased by Capital One. She later joined MERSCORP, where she spent more than a decade leading product teams, then went on to consult for Freddie Mac. Today, at SimpleNexus, Arneja is helping to usher in a new age of digital closings that scale back paperwork, get loans to funding faster, and emphasize borrower single sign-on convenience.

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Hot Topic: eClose Innovation With Shane Westra And Jay Arneja

We’ve got another great episode. This show is created by mortgage professionals, and we do that for mortgage professionals. We’re grateful to have you as our reader. Our commitment is to bring you timely information that can be read anytime and anywhere. Jack and I are going to do a special episode and talk about the economy, where things are at, what’s going on, and leadership. I’m very excited to be doing that. It’s great content. This hot topic segment is with Shane Westra and Jay Arneja. They are with SimpleNexus, and we’re so excited to have them as guests. I enjoyed doing this interview with them.

What I love about our sponsors, they’re more interested in sharing best practices and thought leadership rather than pushing out their products. That’s one of the things we value about having them as special guests. We got into some excellent stuff. You’re going to enjoy this interview in the Hot Topic segment.

I want to say a special thank you to our sponsors, Finastra. It’s your Mortgagebot solution that personalizes a loan application, and path based on borrower-specific information in a workflow and a type that works. John Weinkowitz was on the show, so check out that. Also, FormFree patented account check and passport products and opened doors to more exclusive credit by revealing each customer’s true empirical Ability To Pay, ATP. We had Christy Moss, along with Freddie Mac. It was a fun interview. Be sure to check that one out.

Also, Lender Toolkit with Brett Brumley. We’re working on getting back on a show. They do a great job with their technology. Snapdocs with over three million mortgage closings this 2022 for lenders and title companies, and that’s eClosing. They do a great job. It’s with Briana Ings. Also, Total Expert. We had the Accelerate Conference up in Nashville, and it was outstanding. They’ve built the best CRM for lenders that have the intelligence to understand their unique needs. Josh Lehr and I presented at the conference, and then had him on the show. Check that out.

SimpleNexus is what we’re going to be talking about in this episode. Also, other sponsors are Mortgage Bankers Association of America, Lenders One, The Mortgage Collaborative, SuccessKit, The Knowledge Coop, Mobility MI, and Modex. I love all our sponsors’ products. We use them all. We also have Mortgage Advisor Tools and DW Consulting. Debbie Wemyss does a great job helping you with your LinkedIn profile. Also, a special thank you goes out to Adam, Les, Matt, Alice, Allen, and my co-host, Jack Nunnery.

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Folks, I’m excited to have not only a sponsor but a leader in the marketplace. Joining us on our show we have Jay and Shane. Welcome to the show, Jay and Shane.

Thank you.

We’re happy to be here.

Being the gentleman we are down here in Texas, Jay, let’s start with you. Give our audience a little bit about your background, where you worked, and how you got to where you’re at.

I’ve been a champion of removing risks, increasing security and efficiency, and reducing costs in the mortgage space. I am very passionate about end consumers like you, me, and the next generation and realizing generational wealth from home ownership. I love building products. I’ve been building products in the industry since before people thought they could be product managers. They would ask me, “Do you build loan products?” “No, we build automation.”

That’s where the passion has been for a very long time. I’m structured within the closing space. I did a lot of lender work, correspondent lending, and closing departments, and then moved over to MERS, which was phenomenal. I spent several years there and then did some consulting with organizations like Freddie Mac and others. Now, I’m at SimpleNexus trying to remove the paper as fast as we can in the process.

That’s pretty exciting. Shane, you’re the one who’s responsible for bringing her in. Kudos to you for doing that.

Thank you. Probably one of the best things I’ve done for SimpleNexus is convincing Jay somehow to join our team.

You have many outstanding people there, so adding one more is great. That’s why so many companies are great. It’s because of the people they recruit in. Shane, tell us a little bit about yourself.

Unlike Jay or you, David, I’m not a multi-decade veteran of the mortgage industry. My passion is creating amazing experiences in niche market segments. I’ve done that for many years. I was attracted to the mortgage space because of the enormous potential for innovation and disruption. It amazed me. There are so many consumer products and services that are extremely polished. Examples might be ordering a $15 item on Amazon to get it the next day and Uber and Lyft for booking a flight so easily. Conducting the biggest financial transaction of our lives, a mortgage is still largely a horrendous experience. My goal here at SimpleNexus is to fix that and make homebuying and homeowning a wonderful, even joyous experience.

The mortgage space has enormous potential for innovation and disruption. Share on X

Technology can do that well, yet so much of our technology has failed to do that. That’s why we’re so excited about what SimpleNexus is bringing to the market. We’re honored to have both of you on the show. Let’s get into some of the things that SimpleNexus is doing. Shane, I want to start with you. Can you take a moment to explain how SimpleNexus approaches product development? In other words, what is your goal in creating new solutions?

Our product development approach leverages the innovative mentality and speed of a startup but is matched with the security maturity of an industry powerhouse. The way we’ve organized things is that our development teams are based on user personas. For example, a team for the borrower, another team for the real estate agent, and several teams for the loan officer. This way, we never forget who we are serving. We’re constantly striving to find the fastest methods to help those users accomplish their goals.

 

Overall, the goals that we have as a company usually revolve around efficiency. All parties involved in a loan want it done quickly with the least amount of effort. Nearly everything we do is a means to that end. What we measure with our KPIs is how long things take and how we can reduce those cycle times, especially for the lenders. This efficiency translates directly to cost savings, which now is extremely important with margin compression. It also helps the lenders recruit quality LOS because we focus on handling the menial tasks, which lets the loan officers focus on building relationships and finding new borrowers who think they’re good.

That’s a great point. Jay, you have worked extensively within the eClosing arena for a number of years. Can you tell us why the technology should matter to lenders, both now and going forward?

For now, going forward, or even a little bit in the past, it’s essential to get to the point of a fully digital mortgage if we want to leverage all the data that is collected. It’s very difficult to collect data on paper. You have to wonder sometimes if some of the issues we’ve had, “Is it been because it’s all been on paper? Who can collect the data? Who’s doing the data entry? Is it correct?” all of these things. To get to data, modeling, or any AI to be successful, we have to have a fully digital mortgage.

Digital closings are the last piece remaining because we don’t see any W-2s paper or pay stubs. Those paper credit reports that most people might remember or those fax machines they sent to order an appraisal, everything has been automated. This is the last piece. We are sitting right at the end of, “Let’s make this a digital process.” It matters to lenders because that’s where everything is moving towards. You have to start now and adopt. It’s going to matter to you for success if you want to have anything to do with creating loops for borrowers to come back, establishing data, and your model. You have to make a start now, as most of their peers have already done that.

What you’re starting to go towards is efficiencies. Jay, I’d like to have you talk a little bit about what back-office efficiencies you anticipate lenders and aggregators to benefit from with the digital mortgage, particularly digital closings.

The efficiencies will come from reducing expenses. You improve the experience for everybody, not just your loan officer or borrower but it could also be your closers and post-closers. With that experience, you’re going to reduce some of your other expenses, but then you also increase your speed, security, and scalability. That means liquidity in the market. There’s this range that you see operationally or you see as a CEO or CFO is looking at things. You’re going to see all kinds of efficiencies there.

We have built an ROI calculator that’s going to go on our website pretty soon, where lenders will be able to see as you scale on your volumes how much you can gain financially on it. If anybody is looking for experience and efficiency on per-unit loans, you’re going to see that with eClosing as being the last piece. Notarize has done a study with MarketWise, and it boiled down to about $400 per loan when you have a full eClose.

If anybody is looking for experience and efficiency on per-unit loans, you will see that with eClosing. Share on X

On a per-loan basis, you start adding that up. That gets to be a significant amount of financial savings, and everyone reading this is looking at a way to cut costs, and that’s outstanding. You are touching on efficiencies, and that talks about cost savings and so many benefits in a time where everyone is looking for these exact benefits, but there are barriers. I’d like to get, Jay, your perspective and your years of experience at this. What are some of the top barriers that many lending organizations are finding as they try to make the shift toward digital closings?

First is what we all know of. It is a change. You’re changing your medium. You’re going from paper to electronic. You don’t have this tangible thing in your hand that you can hold that everything is complete on a closing. That medium shift holds some people back. Years ago, it was investor adoption, but that has changed, which is what is most exciting. We are seeing more investors, servicers, and warehouse banks come into the sandbox. That barrier is disappearing faster at this point in time than it was over the years.

You could see the medium barrier or the trading partner barriers that are holding some folks back, but we are seeing those barriers drop. The other biggest one is folks trying to make the change, but it’s not new in the sense. I want to remind folks a little bit. Remember when DU first came out? Everybody thought, “This is a huge change. I can’t take it,” when we first got rid of fax machines and those traditional credit report machines. It takes some time. They’re not unbreakable, but there are some barriers to it.

It does take time, and a lot of it is adoption on that, but we are seeing a pretty significant shift, are we not?

Yes, a very significant shift.

Let’s get over to you, Shane. Even though you don’t have decades of mortgage banking experience like Jay and I do, this is a blessing because when you find someone who has been passionate about the things you’ve been passionate about, that you talked about as you were introducing yourself to our audience, you talked about where this industry needs to go. We need a fresh new perspective. As you see how our industry has now swung back to a purchase market, what are some of the differences in which eClosing should be evaluated, implemented, or utilized?

There are some big differences that need to be accounted for, which is very timely. The last time I saw mortgages now stood at about 82% purchase, which is a huge swing than we’ve seen a few years ago. Some of the differences come from the approach and how we built it. Luckily, when we built eClose, we designed it from the ground up to support both equally well, purchase and refinance.

With purchase transactions, the agent has a larger role to play in helping choose the lender, supports eClose, and has a lot of education with the borrower about why eClose is preferable and what options and advantages they have. Also, the agent plays a big part in selecting or at least recommending the title company that will be used. You want to make sure that the agent is aware of which title companies are equals ready and how that process works.

The amount of documentation for purchase is greater. There’s a lot more involved there. Down at the LOS level, there are a lot of configurations that need to be done upfront to identify those things as eSigned versus what signed, and make sure that that’s all set up for the process. As Jay mentioned, with a lot of those barriers now being reduced with the warehouse lines and new investors, it never hurts to do your due diligence on making sure that those documents are recognized appropriately for your investors down the line. As Jay mentioned, we’ve seen people adopt that so quickly. It’s usually not an issue, but it’s always good to double-check.

A lot of those revolve around the implementation process. The closing experience being done virtually is different. We provide tools to schedule the closing. That’s whether it’s eClose or traditional. Also, to allow any participants, including the real estate agent, if appropriate, to join in a secure manner. Those are some of the things that we’ve noticed. It’s a great opportunity to take the closing experience, which historically has been one of the more nerve-wracking elements, and make it something a little bit more natural and easier for all parties to do.

With your background from where you were outside the industry, you bring some unique perspectives and ways to go about that.

A lot of times in the mortgage industry, people do things because that’s the way they’ve always been done. Instead of saying, “Does it need to be done that way?” it’s a good way to approach it with fresh eyes but also leverage stakeholders and those like Jay and you that have been around for a long time that can guide us on the times that regulating other means dictate a certain way to approach things.

The regulation thing does come up at times, inhibiting some of the innovation that needs to take place, but it is there, and we have to deal with it. That’s a great point. Jay, I want to get over to you get some success stories that lenders have had with eClosing technology. You must have some great stories.

There are lots. One, in particular, we have the First Colony Mortgage has adopted RON and eNote. In one of their RON closings, the borrower was overseas, so we did the closing with our notarized solution. With the lender and the borrower being overseas, it was pretty seamless. Their adoption was good. They had more closings after that. They’re adopting eNote and looking forward to doing full eClose, as in no paper. That’s the exciting part that’s happening. Lenders are saying, “When am I going to digitize closing?” It is not going to be that some pieces are going to happen on paper. They’re taking advantage of the eNote solutions and also the RON solutions.

 

We are taking that even further to say we could enhance our roadmap to say, “What else can you do that would reduce the paper?” You think of your tax information sheets, disbursement sheets, title policies, and short-form policies. We are going to think about all of that for the lender. Lenders like First Colony, where Nick and Sheer true good partners, allow us to build that way because of all the excitement and the adoption they have. There are many more stories like that.

I have lenders that skin their knees a little bit, but they want to start again. The exciting part to see is they’re coming back. If they tried it a few years ago, they want to come back and try it again to make sure they can scale. The other piece I’ll add is what we are seeing and what lenders are realizing. Advances in other technologies are going to help us go paperless faster because we are mobile-first. As advancements take place in the mobile industry, we are able to take advantage and provide this full digital mortgage to the borrower.

You talk about skinning your knees. Is there some advice you could share, Jay, with all of our readers or some tips on how the industry can do a better job of tech adoption?

First is standardization. Let’s build some standards that we could work with together where everybody’s talking the same language. It goes from the simplest things to character limitations on the way you build your databases. It’s as simple as that. Increased communication within the industry would be great. On a lender level, lenders can establish champions within their organizations and understand their workflows. Remember, post-closing was such a huge back-office function that most people never paid attention. It’s somewhere the loan went, it closed, and the magic happened.

Post-closing was such a huge back-office function that most people never really paid attention to it. Share on X

More people are pulling the curtain on that a little bit and saying, “There is a process here. What was that process? How do we automate that process? How can we reduce some of the friction in the process and increase the liquidity?” Establish those champions that are willing to dive a little bit into your process and see which parts you can automate a lot faster.

Also, look at how the technology will help you remove some of those burdensome workflows. Success folks look at that and say, “I can remove this. I don’t have to replicate every keystroke.” Build your champions, look at your workflows, and communicate with your trading partners and your title companies. All of them are interested in doing this. I’ve been to multiple eMortgage bootcamps, and it’s the same message, “Title companies and trading partners are ready. We need to come together, figure out your individual workflow, and find that entry point for that technology to be helpful in your workflow.”

The industry is now ready, but not every company is ready, which is so important. Shane, I’ll give you an opportunity to add to what Jay talked about as far as some of the adoption. Looking from the outside, now being inside the industry, what are some of the observations you have on that same point?

With adoption, maybe one thing to add is knowing the right timing and approach. It helps when customers have a realistic view of, “I’m going to do hybrid first and get that humming very naturally.” It’s an easy option with hybrid especially because they’re usually doing disclosures electronically with eSignatures. Hybrid’s a great next step. eVaulting and eNote, as Jay mentioned, are generally accepted everywhere.

RON gets a little bit trickier because we don’t yet have a national law allowing everyone to perform RON. Folks in California and a few other states do have some limitations there. In terms of implementation, it needs to be a consideration in the workflow to trigger it, but it’s not as scary as it sounds. As Jay mentioned, people, step by step, have a very cognizant approach. Know that software’s not a panacea. It’s change management. It’s a lot of training and encouragement and involving people that maybe weren’t involved in the past in a lot of these decisions, like your title companies and settlement agents themselves, and how they get trained. We provide options there. That way, it helps everything go smoothly.

Shane, we’ve already talked about one of the things that’s unique about SimpleNexus, which is also unique about successful companies like SimpleNexus, is the people they attract. From your perspective, what is it that sets SimpleNexus apart from some of the other vendor options lenders are looking at?

You mentioned a great one, and it’s the people. We’ve tried very hard to hire these experts, the people that have been around and know what they’re doing. It’s such a great culture as well. Not only are they experts, but they’re fantastic individuals like Jay and others who have this passion for building a great solution. There are a lot of differentiators on the technology and product side as well.

SimpleNexus’s platform was built as a mobile-first. It started as a calculator and is almost like a business card within a mobile app. It’s expanded beyond that. The mobile aspect has a lot of very important points for us. One of them is as the world has shifted, and everyone has a cell phone in their pocket or purse. Instead of having a lot of these bottlenecks, because of this technology, for example, if somebody’s at work working hard and then they don’t see an email notification about disclosures that they need to sign until they get home and check their personal email, but if they get a push notification on their phone and go tap, and sign, and done.

Suddenly, we’ve taken processes that take days and boiled them down to minutes. That has been a huge benefit. Especially for our mobile app, we’ve taken a white-label approach. It’s not the SimpleNexus app, but we put our lender’s brand and name on it. It is their app. The reviews on the App stores are theirs. We have over 800 apps with App Stores and tens of thousands of ratings of 4.5 out of 5 stars or higher.

It’s phenomenal to see that. That’s key to the borrower, the loan officer, and the agent’s experience to allow people to do their job anytime and anywhere. That’s probably one of our biggest differentiators. A lot of others will check the box and say they have a mobile app, but unless you have the white-label mentality, it’s not the same. We also have the highest NPSs. Again, we’re very persona-focused. We track NPS by persona or NPS ratings.

 

NPS is Net Promoter Score. A lot of people don’t know that, just in case we’re using that acronym. I wanted to throw that in.

I appreciate that. Our Net Promoter Score is 72 or higher. That’s great. We have deep LOS integrations. We realize that we’re not the only tool that people use. It’s integrating into your loan origination system and all the different tools you work with. It can be a one-stop shop, and it can be that seamless experience. Another one that I’ll mention is we were acquired by nCino, and that’s been great. nCino has been a fantastic partner. They’re mostly keeping us fairly separate but starting to leverage a lot of the synergies that we might have with technology, such as their OCR and their banking platforms that can be leveraged for a lot of scenarios that we didn’t handle before. It also provides a lot of financial backing and stability. We’re excited about what that partnership is looking like and all the future to come.

I had the privilege of meeting, interviewing, and having on the show Cathleen Schreiner Gates. I can’t tell you how impressed I was with her. I watched her and how she interacts with her employees and how she carries a culture I so much respect. I was talking to one of my friends who knows Pierre at nCino Pierre well, and he goes, “Let me tell you one of the reasons these individuals want a job there with you all,” and he said, “It’s because of the culture that Pierre champions. He does not allow the big egos to exist and dominate in that negativity that can get so toxic.”

I’m excited about what we can anticipate in the future with SimpleNexus and all the way around. I hope to get Pierre and Cathleen on and do an interview with them and talk about the future, but you’re the guy that sits there in the catbird seat. What can we anticipate in the future from SimpleNexus, Shane?

As I mentioned, there is a lot of automation. We’re trying to remove any little friction points during the whole process to make it easier for the borrower, loan officer, or the like. Also, we have a big vision for the loan officer and their involvement in how they should interact. We want SimpleNexus to be the one-stop shop, or they are the interface and don’t need to go to the loan origination system to do anything, but use SimpleNexus to set up the rules and let everything be automated that can be automated or should be automated, but then allowing the touchpoints for that human interaction.

It should morph into more of a consultative-type product where they can help borrowers make this important decision by having all the data at their fingertips, having options, and knowing what’s going to be a good decision for them in their situation. There are a lot of integrations on the horizon as well. We’re working with a lot of other fine vendors and tools within the industry that we’re extremely excited about. As I mentioned with nCino as well, there’s a lot there that is merging the commercial and the residential products into more of a seamless environment for those that need to deal in both worlds, especially the depositories of banks and credit unions that need that experience. A lot of great stuff to come.

We sat out and watched SimpleNexus buy my good friend Laurie Brewer’s company, we got closed, and we were all excited about that, and then the whole acquisition by nCino. You start looking, and you’re like, “nCino is a great company, and they see great things happening there at SimpleNexus.” A big shout out to my good friend, David Bolan. I’m so grateful that he saw value in our show. We’re so grateful to have you as our sponsor. Thank you both, Jay and Shane, for being here.

Our pleasure, David. Thank you so much.

Thank you.

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Jack, as you read that interview, which I thought was good, I want to get your reflections and thoughts.

David, I’m a little dumbfounded that we’re having this show trying to drive the adoption of eClosing. We are a business that works off of referrals. One of the biggest pain points to borrowers and sellers is the paper close. I get it. A few years ago, you had warehouse lenders that weren’t sure if they wanted to accept eNote, and you had sub-servicers out there that didn’t have the capability to handle an eNote. Ginnie Mae wouldn’t allow them in Ginnie Mae’s security.

That’s all been resolved. We then had this thing called COVID lockdown. You would’ve thought that would’ve driven so many companies to eClosings, and then on top of that, eliminating a substantial or significant pain point at the end of the loan origination journey. You can have a great loan officer that stays right on top of the deal and good operation staff and the deal flies through the pipeline, but if the closing is painful, you lose the referral. It’s like fumbling the ball at the one-yard line.

I’m dumbfounded that we’re so slow to adopt. Technology at a process point creates so much friction and pain from borrower optics. Forget the mortgage company for a minute, and we’re still talking about this now. It’s like, “Come on, let’s drag the mortgage industry kicking into the 21st century.” I’m happy that we have companies like SimpleNexus out there that are focused on this part of the process. The software and hardware are there. A lot of the barriers, like warehouse sub-services, Ginnie Mae, and the industry, have melted away. To me, this feels like a no-brainer. You put in the effort and go across the finish line on this. It’s a big win.

It is, and it should be. You were one of the first adopters of eClosing at the Texas Capital when you were running that. Why do you think there has been a lag? Any advice you would have for anyone reading? They should be getting ahold of our guests and SimpleNexus. They do a phenomenal job. We have that other guest that all partners with SimpleNexus. What advice would you say to those that may be laggards in this process?

We were one of the early adopters. We allowed eNotes on the warehouse line and through our correspondent aggregation unit. We purchased eNotes. We were one of the first to deliver both the Fannie and Freddie Mac eNotes purchased through a third-party acquisition. The roadblock is we’re getting inundated as an industry with so many technological opportunities to advance process and fulfillment, and which one do you do first? Where do you go?

Much is happening now in an industry that has been stagnant for so long. Where do you put your time, money, and effort at to start the re-engineering of your process? For me, it’s really simple. I look for areas of either high cost or borrower friction. Certainly, the eNote or virtual closing is a borrower friction point. It goes back to what I said at the very beginning of my comment. We are a business that lives with referrals. I don’t want to fumble the ball at the 1 or 2-yard line. This is an opportunity to take away a borrower’s pain point that doesn’t need to exist anymore.

Jay was talking about having the borrower in Europe or overseas. It is a virtual closing room. Everybody logged in, authenticates, and you do the deal from the comfort of your home, your villa, or wherever you happen to be. We have to pick and choose where we’re going to innovate first. It’s hard to innovate all across the process fulfillment map. You got to pick your battles wisely. This is a battle that our readers should pick.

Well said, my friend. Readers, there you have it. Download or share this with others. We’re grateful to have both Shane and Jay on the show. Next ep, Jack and I are going to be here. We’re going to be talking about the latest trends and some of the things going on. He and I are going to gather around. Jack, thank you in advance for taking the time to come on and share your thoughts with me about leadership, how we should look at these markets, and what we help others do to look at it and lead their organization.

I’m very excited about it. I want to say a special thank you to our sponsors, Finastra, FormFree, Lender Toolkits, Snapdocs, Total Expert, SimpleNexus, The Mortgage Bankers Association of America, Lenders One, The Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MI, Modex, The Mortgage Advisory Tools, and DW Consulting. I appreciate you all. Have a great week, everybody. Look forward to having you back here next episode. Keep the comments coming in. We love your feedback. Text them to me at (512) 632-2900, or you can go to LinkedIn and share them that way. Thank you.

 

Important Links

• SimpleNexus
• Finastra
• John Weinkowitz – Past Episode
• FormFree
• Christy Moss – Past Episode
• Brett Brumley – Past Episode
• Briana Ings – Past Episode
• Total Expert
• Josh Lehr – Past Episode
• Mortgage Bankers Association of America
• Lenders One
• The Mortgage Collaborative
• SuccessKit
• The Knowledge Coop
• Mobility MI
• Modex
• Mortgage Advisor Tools
• DW Consulting
• nCino
• Cathleen Schreiner Gates – Past Episode
• Shane Westra – LinkedIn
• Jay Arneja – LinkedIn