Lykken on Lending

[David] Allen Pollack is in the house. He is Chief Operating Officer and consultant tech expert in the world of everything technology mortgage tech. He’s here this week with the mortgage. That’s more than mortgage. Just the whole tech update that the amount of AI that’s coming in, Alan is just this we’re now an AI platform. Is this my imagination or a fad that, there is legitimate AI, Angel AI is doing legitimately some amazing things. But what are you taking of this?

[Allen] Everybody, the shock is over. Everybody knows what AI now is. Even Gmail just introduced AI  into all Gmail messages where you can click respond with AI. So it’s never going to go away. It’s going to get better. Some people will find it to be intrusive to their privacy.  Some people will find it to be very helpful. Even, my daughter, who’s going to be a junior in college at the University of Mississippi, so that the rush process to get into a sorority is something crazy that I didn’t realize. And, for these young kids that are graduating high school and want to be in a sorority, they have to get letters or referral from somebody that was in every sorority. So that you go into all these websites and you upload it. Anyways, my point, David. Is my daughter’s on the committee that reads these and they’ve got close to a thousand of these that they have to read. And she’s dad, some of these are written with AI. It’s so simple. It’s so easy to see like a human didn’t read it. And that’s what we’re up against, right? Everyone’s going to understand and know it. You can use it for ideas to help. It’ll have more useful terms like booking travel. You train it to know your preferences and it will work out things that you typically would have to scroll and click, but it’s, Yeah, it’s here, David. It’s not going to go away. And there’ll be better guardrails of when you can and can’t use it is probably the best I should say. It’s so unregulated right now that a lot of people will use it for a lot of different things. There’s people saying they’re using it for stock traders and option buys. And, so it’s got a lot of uses. It clearly is making its way into our industry. It has just remember, and we mentioned this on a podcast. A lot of people will, make one text box have a button that generates something for AI. That doesn’t mean they’re an AI platform. So don’t be fooled, right? Don’t click the clickbait. But yeah, there’s AI has so many good uses of what we do.

[David] That’s so true. So true. Absolutely. What else is on your agenda and on your radar today?

[Allen] Oh man, I wish I didn’t have to talk about this, but let’s do it. Oh no, rip the band. Come on. There have been more data breaches that you want to know about, it is getting worse. It’s not getting better. This has to do with sloppy technology performance by organizations, and I’ll just call it what it is, that have either not hired the right consultants to lock down their systems, they do what they think they know, or they’re just doing what they did forever and not realizing that the times have changed, right? So let me just talk about what’s in the news. A data breach involved. Everyone knows Evolve Mortgage Services. Evolve is much larger. A data breach at Evolve is hurting many of its fintech partners. There’s a lot of them. I’ll just name a few. Yieldstreet, Wise, the Affirm Buy Now Pay Later card, among many others. There’s some other major ones, have all been tied up in this recent data breach. The number of financial institutions caught up to the ransomware attack. So, ransomware, by the way, is where someone says, I found access to your data. Pay me $5million. I’m making up a fake number and I will delete this information. It’s yep. And so the attack was on Evolved Bank and Trust. It continues to rise as they continue to learn more. But WISE and Affirm have both said that they have been materially affected. We’re talking about social security numbers, birthdates, addresses, account information, you name it. Also, banking as a service provider Evolve. I’m reading some details folks, so if it sounds a little bit out of order, I’m just trying to catch up. It says that they officially disclosed that it fell victim in late May to the Lockbit Crew on. I googled lock bit crude. I didn’t see that they had other names and mortgage. But anyways, they do these ransomwares. Also in December, Flagstar had a huge data breach. Also four days after a ransomware attack. A California based  Patelco credit union just this past week remained unable to tell its members. Yep. When banking operations would return to normal another ransomware attack. Also recently 1.5, this is huge. 1.5 billion records exposed disclosing massive real estate names. So it says the real estate data breach together with prominent personalities across the industries, exposed the database. There was no password protection on the database. How simple is that? David links to the New York based real estate wealth network. You ready? 1. 5 billion records encompassing sensitive real estate ownership data on diverse individuals, including high pro figures like celebrities and politicians. 1.5 billion data records. Loan care. Mortgage firm loan care warrants 13 million people of a data breach. 17 million social security numbers were exposed in the Loan Depot breach, which just recently happened January, February. They’re still cleaning up from that. In addition, Planet Home Lending experience a collateral damage from a ransomware gang vendor software breach. Oh, I’ll get to union home in a minute. That’s good news, Alice, not union home on the data breach side. So anyways listen you gotta pay attention.

[David] You got to talk to your vendors. Yes. Yeah. And this is not easy.  My accountant is one of the most conscientious. They do enormous amount of training of their staff.  And one of their people happened to be a new employee that they’re growing and they’re doing well and somehow it was so subtle clicked on it and opened the door and all of a sudden their computer said, we’re out shopping. My wife needs a new vehicle. So we’re out shopping for a new vehicle. We’re at the Toyota dealership. Want to get this? Grand Highlander, but I really like it.

[Allen] Oh, you’re going back to the minivan grandpa days now.

[David]No, we’re not doing the minivan, not doing the minivan. We’re just, we’re stepping it up a little bit. Cause more grandkids. So we need to have a pastor. We need a bigger car hauling grandkids around. We want them to say, but here’s the deal. They’re back at the Toyota dealership auto nation is all that their dealers are back to filling out everything by hand, because they got hit two, three weeks ago with a ransomware and they’re ordering parts by hand, filling out forms, they’re doing credit reports. Everything is by hand. And she said, it’s wild. It’s real. It’s real. And it’s happened to Welsh run companies. And I think this is what I look at AI, look at quantum computers and how fast you can just barrage bombard a system with all these possible configurations. So we’ve got, and that’d be your world, your job Allen is looking really secure here for a while and working in that space. All right. So you teased us with at Union Home. So you had something good. You said.

[Allen] Yeah, I thought this was great. And Alice, you didn’t bring it up. So union home mortgage announced that it’s down payment assistant program has reached 1 million milestone. And it says the program aims to help first time home buyers by providing financial assistance for down payments, making home ownership more accessible. And the reason I bring this up on the tech side is I’ve talked to a number of people about this. If you have a point of sale system. You’re collecting information. Your loan offices are talking to people. They’re trying to drive people to their tech solution, right? They want the automated or whatever we’re going to call automated underwriting the pre-approval letter. We want customers to engage well, to get them to engage down payment assistance, by the way, which is a company, it’s a vendor in our industry. It’s called down payment assistance.  They actually have.  That’s right. They have an API. They have the ability. You could integrate their solutions directly into your point of sale or into your loan officer dashboard. You need to look at ways to help homeowners get into homes. I also saw something. I can’t remember if I mentioned it last week, David, I think I did actually it has to do with everybody talking about, you can either say, Hey, I want you to take 10,000 off the home price or take 10,000 and pay it down in a point against my mortgage as a seller buy down, those are ways that loan officers need to leverage. Technology is not going to solve every problem. You still need to be a person. You need to create a relationship, leverage a technology to help you do better. So anyways, it was a great call out to a Union Home, Alice. And  I thought I’d mentioned that.

[Alice] Thank you. Yes. It’s a great program. We are very proud of that program and it’s. I’m going to continue at least till the end of the year. Make sure you reach out to loan officer, a little plug there to find out more on how all that works.

[Allen] Yeah, that’s great. Thank you. So I use chat GPT for this one today, David, this next little topic. And I’ll go into it just briefly. I’m not going to get into all the detail. It was having to do with why really hire a fractional consultant. So the reason I bring this up is on the lender side. Too many lenders are stuck. They have the same staff. they don’t want to hire very expensive tech people. Chad GPT said to me, hey, your podcast opening should be maximizing efficiency with fractional consultants for vendor oversight and mortgage tech, right? But vendor oversight’s not really what you think. It’s not about just making sure that the integration documents have been sent to you and your team is reviewing them. No. First of all, what it said is that there can be up to a 30% increase in operational costs,  but you can lead to a huge loss annualy.  Chat GPT based on what things cost in the mortgage industry. And I fed it some information. Half a million dollars annually for midsize lenders could be left on the table or lost by not optimizing vendor relationships. And by the way, that includes things like detailed oversight in all of your vendors and the integrations, verifying with AI. All of your release notes and making it where you can communicate and chat with your release notes to understand what’s new, what’s different, things like being able to negotiate contracts. Contracts have to change. You can’t keep signing a five to seven year contract for something that you don’t know what is five to seven years out. Too many people are stuck. Now vendors will give you a smaller term contract. They may change the terms, but you need, you’re the one paying. You have these solutions. You need to negotiate on your behalf and not be bound to these contracts. And then what typical salespeople do and listen, I’m from the vendor side. I get it. Is, if you sign this month, I got to close out my month. I got to close out my quarter, right? That’s typical in any sales organization. There’s many different sales tactics. You have to be able to hold strong and understand what you truly need as a company, as an organization. You’re becoming a part tech company, which is not something you necessarily signed up for from the very, very beginning. And then it’s ongoing vendor performance. It’s further integrations. It’s understanding when your vendor releases new features, how does it impact your current way of doing business? In other words, if they put a feature out. You suddenly lose all contact with your customers for four hours. Cause you didn’t know where the new button is. And that’s a simple example, but that’s what you need to look at. So please, there’s a lot of people out there. You can hire myself. I’m always available. You can hire David Lykken, but there’s other people out there too. I don’t make it a shameless plug for anyone, but leverage people use our industry. We have so many wealthy and wealthy and knowledge people that have been there and done that so many times and they’ve been burned. Don’t get burned. Leverage their experience. So I leave you with that. With all these data breaches, it is just so important. You have to pay attention. Make sure your data is buttoned up. There’s things you can do. You can cleanse data. You can archive data. Don’t leave 15 years of data sitting in a database if you don’t need it. Why don’t you archive it off and put it in cold storage? Great. Great. Great. So anyways, lots of great stuff today. Sorry to be so negative, everyone. I love you all. Thank you for listening every week.  I toss it back over to Mr. Minivan grandpa, David Lykken. Thank you.

[David] Yeah. We’re not doing a minivan. That’s for sure, you want to get ahold of Alan and hire him to provide this kind of service. Get ahold of them at Allen, a L L E N at TMS dash advisors. com. Allen. Thanks for a great report.

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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.