Small Mortgage Lenders Continue To Grow With Help From Fintechs in the US | The Fintech Times

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Ensuring a strong, lasting relationship between lender and client is of the utmost importance, however, many traditional lenders have not prioritised this, giving small lenders an avenue to prosper. Maxwell, the fintech mortgage solutions platform, has announced the launch of Maxwell Processor Assist to meet demand from small to midsize lenders as they look to modernise and increase mortgage processing efficiency. Keep reading to see The Fintech Times‘ exclusive interview with John Paasonen, Co-Founder and CEO of Maxwell.

The product platform integrates with a lender’s loan origination system, using machine learning to accelerate the document review process and detect data discrepancies before underwriting. The technology also streamlines communication with borrowers and stakeholders to increase processor capacity while reducing costs and loan approval times.

Processor Assist comes at a crucial time as mortgage costs continue to soar. Loan expenses reached a near-record high of more than $8,600 in 2021, squeezing local lenders’ already thin profit margins. Increased market compression and rising loan costs mean profit margins will be even harder to maintain in 2022 as interest rates continue to rise and mortgage volumes shift more towards purchases.

John Paasonen, Co-founder and CEO of Maxwell
John Paasonen, Co-founder and CEO of Maxwell

“Inefficiencies are holding the mortgage industry back at a time when lenders need speed, accuracy, and capacity more than ever. Manual operations, handwritten notes, and ‘stare and compare’ work have long hindered mortgage processor efficiency, leaving loan files prone to errors and inaccuracies,” said John Paasonen, co-founder and CEO of Maxwell. “As the market shifts and margins compress, we see a huge opportunity to partner with lenders across the US to enhance their teams’ abilities. Processor Assist will offer technology that streamlines mortgage loan processing, helping these lenders manage the cost and quality of their loan production.”

Maxwell currently serves over 300 lenders nationwide and has facilitated more than $150billion in loan volume to date. Its solutions help loan officers to close 15 per cent more loans each month, while reducing the time to close by over 13 days. The company recently raised $52.5million backed by Wells Fargo Strategic Capital to further boost innovation and product development.

As an onshore mortgage fulfilment provider built by an integrated team of engineers, mortgage processors, underwriters, and closers, Maxwell takes an agile and nimble approach to responding to market trends and customer needs. The industry has seen net income per loan decrease nearly 63 per cent since its high in Q3 2020, while the cost per loan has ballooned by over 15 per cent in the same period. To combat this trend, Maxwell developed Processor Assist alongside its own processing teams to help lenders lower their costs and improve their margin by realising a clear increase in the number of closed loans per processor per month. This ability to boost efficiency is key to lender profitability as interest rates continue to climb.

Speaking on the announcement, Maxwell customer Matt Clarke, chief operating officer of Churchill Mortgage, said, “People will always be critical in the mortgage process—but they need to be elevated to managing risks and relationships so they can focus their time and energy on the tasks that mean the most for borrowers rather than entering and validating data. With Processor Assist, Maxwell has created a solution that recognises this distinction and tackles operational complexities head-on.”

Maxwell continues to be recognised for its innovation and was recently named a winner on the 2021 Deloitte Technology Fast 500 list, ranking as the 65th fastest-growing technology company in North America. Processor Assist represents another step towards Maxwell’s aim to modernise the entire mortgage process from point of sale, onshore contract fulfilment, and fulfilment workflow automation to due diligence, QC, and secondary market trading.

Sitting down with John Paasonen, Co-Founder and CEO of Maxwell

Why do you think fintechs should enhance and not replace boots on the ground workers?

JP: “Today over half the of the homebuyers in the United States are millennials. They’re young and new to the market, and 80 per cent are first time buyers. This leads to a huge debt decision that must be had and it’s very complex. Having a human being guide you through it, if nothing else for the council, but also for the comfort of having a human voice on the other side that knows what they’re doing, rather than talking to a bot, is incredibly valuable.

“The journey is also complex for the lender. What we aim to do is help empower human beings, the lenders, that are already good at their jobs, and enable them to be more successful by getting in touch with more people. We want to help lenders and customers create a meaningful long term relationship with the lender helping them with all financial decisions later in life.”

How can big banks make the community and its needs a priority again? 

JP. “Four out of the top ten least loved brands are US banks, and I think this is because many people see them as a bit faceless. Certainly, over the last 20 years, headlines that relate to large banks haven’t always led to a lot of trust from consumers, so I think that’s why a lot of these smaller lenders are so well placed to serve their communities. Many rural areas only have a community bank, and especially in terms of creating a long-lasting relationship, big banks just can’t compete.”

What digital solutions can local mortgage lenders seek to adapt, compete and survive?

JP. “It’s a complex business. Many small mortgage lenders run on very, very thin margins if any at all, as when you’re small you don’t have the market power to compete and drive prices down. So firstly, we looked at how can we help them deliver a really phenomenal borrower experience to their consumers? Then secondly, we look at their back office: how can we help their processors or underwriters be more efficient with technology? So there we use artificial intelligence and machine learning to extract data, place data and manage all the documentation that comes through the platform.

“Finally, we look at how can help them have a great margins in their business and great execution when they sell those bonds? We buy from our clients and sell them into the secondary market. Combining these three pillars together by our unified data platform, we feel our clients can’t lose.”

What will ensure local lenders remain community-driven as they deal with more clients and a bigger market?

JP. “Loans are only going to become more complex to get a loan as interest rates increase, and this is where local knowledge will come in handy. They can provide information that would not be available when compared to a call centre for example.

“An example could be if someone wanted to get a mortgage on a 100-acre farm. From a big established lender who isn’t familiar with the area, this could be difficult. A local lender, however, could say ‘Let’s cut this in parcels. A 10-acre parcel could qualify for this type of loan and then we can do different types of loans for the remaining 90 acres.’

“You won’t get that sort of advice from a call centre. The amount of of licensed lending institutions in the US has grown exponentially in the last decade, and in the last five years alone, figures have gone from 15,000 institutions to 20,000 which speaks volumes about small lender popularity.”

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

Go to Publisher: The Fintech Times
Author: Francis Bignell