“Fintech” or “Financial Technology,” is a term that has great meaning to me, my history and the history of my family. Having all of my children in the mortgage business along with me has been one of the more interesting and pleasant memories of my life. It all comes to fruition because of my family involvement in the business starting about 1957.
As a teenager, I worked with my dad at one of his startup businesses. It was called Century Mortgage Company, based in Camden, N.J. He started that business in order to finance the properties he was selling through his real estate business. It seemed that without knowing it, we were imbued with a genetic predilection to the finance industry that overtook us, whether we wanted it to or not. I personally went from a loan delivery supervisor, then a loan solicitor in the 1960’s and 1970’s, to executive positions at banks and grew into an entrepreneurial mortgage broker enterprise in the 80’s. Eventually, I became a consultant/coach/speaker/author in the 90’s through present day today.
My three children span the entire spectrum of the industry with them having positions that run the gamut of all levels of responsibility.
It is really not necessary to give the entire history of what has taken over our lives, but what this history does is to give me a unique advantage over almost anyone else in the industry as to the advances we have seen and what my opinions are of the mortgage technology business as it is constructed today.
When I started in the business in my mid-20s, I was in charge of keeping track of the inventory of mortgages for the company where I was working, both the loans in process and the closed loans, sold and unsold. We accomplished this inventory accounting system by using an IBM card sorting system. That was the way we could know what our secondary marketing was going to produce. That company, Associated East Mortgage, was the first company to issue a Government National Mortgage Association Mortgage Backed Security (GNMA). The value of that document, GNMA #2, was $2 million, and consisted entirely of VA mortgages originated in the Tidewater region of Virginia. I personally went to Washington, D.C. to pick it up and bring it back to our office in New Jersey. It was a source of great pride for the people I worked with. It’s always good to be first. That was an advancement that changed the secondary market as we automated the creation of the document using our IBM Card sorter to print out the forms needed to submit it to GNMA.
You can well imagine the way a mortgage-backed security (MBS) is created today by using algorithms that create the documents in seconds, whereas when we did it in the mid-1960’s, it took us a couple of days to do all the required calculations. Secondary marketing requires an in-depth knowledge of hedging and future values that were never a consideration for us.
Insofar as the processing of loans, we kept track of the documents on a 3X5 Kardex card. We had one card that represented the entire file. When a document was ordered, and then received, it was recorded on the card. It was an advancement of keeping the information that was previously printed on the face of a file. It was necessary to do keep the record on a card, because if we wanted to know the status of a file, it was not necessary to actually search throughout the office to find the file. The Kardex system was utilized into the 1980’s.
That was when it became apparent that the mortgage industry was already far behind other industries in keeping records and performing the many calculations necessary to understand the value of “one” mortgage to an interested buyer/investor.
The sales area has been even more behind the rest of the business world, as loan officers, not easily open to change, are still fighting the value of the many CRM systems that exist today.
I recently had a conversation with a good friend and highly respected veteran of the industry. We were reviewing, in a cursory way, how the industry had changed from when he started in the last century. I surprised him by telling him my viewpoint of the lack of involvement by all companies that I work with at present, insofar as the involvement of the sales force with their accepted and paid for CRM system. I said it that day and I’m saying it today as I sit here coaching almost two dozen MLO’s, that the company CRM is utilized to about 25 percent of its individual capacity. I find the lack of the use of a CRM is just an awful untold truth for every mortgage company I have ever worked for. I believe that if senior management were to spend the time and effort necessary to train and follow-up with their MLO’s, the amount of business would skyrocket.
Overall, the mortgage business as I look back on it from the vantage point of six decades, has been a miserable failure at the advances of fintech. Today, we are in the middle of a pandemic that has frozen the financial markets to their very core. The advances that have been promulgated on what I’ll call the back end of business today is so far ahead of the mortgage industry, it is an abomination. Mortgages cannot close because government has put a padlock on having people meet to sign papers to transact as simple an activity as borrowing money to finance the purchase of real estate. Laws, rules and regulations prevent documents from being signed electronically in many states. Notarization in some states still requires a face-to-face presentation in order to complete a mortgage closing. When are we going to catch up and become part of the 21st Century?
I’d love to hear from you as to your frustrations with all of this. Feel free to reach out to me at [email protected]
and share your thoughts.
Ralph LoVuolo Sr. has nearly 60 years history in the mortgage business. He was a co-founder/president of the NYAMB and a long-term member of the Board of Directors of NAMB. The Mortgage Godfather is available to help your salespeople do more business. He does sales rallies, Webinars, personal coaching. Call, text or e-mail (917) 576-1230 or e-mail [email protected].