Garg has been operating at the bleeding edge of fintech for years, so his opinion about the confluence of technology and the mortgage industry carries a lot of weight. “A digital mortgage is one that is something a consumer can go through on their own,” he continued, “all the way from click to closing without ever needing to speak or interact, other than in digital form, with anyone who works at a mortgage company.”

When Garg brought Better’s hyper-efficient, hands-off home loan to market in 2016, he learned the hard way what remains true nearly a decade later: most consumers are not yet comfortable with the concept of fully digital mortgages. But, in the mortgage business, the battle for tomorrow’s borrowers always begins today.

With a financial decision as consequential as getting a mortgage, consumer desire for the human touch remains sticky, despite the desensitizing influence and ubiquity of technology. But, lenders must balance future ambitions with the limitations of today’s borrowers and current regulations.

“One of the things that we have realized is that we may be too far forward in the future,” Garg admits. How far? “Maybe not 2035 — maybe 2030, maybe 2027.” 

The dance that future-looking mortgage fintechs like Better must master entails meeting the demands of current consumers while building a next-gen company. What’s true today may not be true tomorrow, so Garg and his team have to remain responsive to the ways that rapid advancements in technology are actively, and relentlessly, re-shaping those consumer demands.

Timing the consumer may be even trickier than timing the market. After funding $4.27 billion in total loan volume across 12,352 units in 2019, two-thirds of which were refinances according to Modex, Better catapulted to the industry’s top-charts during the pandemic-era Refi Boom, originating $19.6 billion across 56,474 units in 2020 (83% refinances) and $54.7 billion across 148,745 units in 2021 (82% refinances).

Better’s fortunes faltered the following year when inflation proved not to be transitory, the Federal Reserve hiked interest rates in rapid succession, and the mortgage market flipped to a purchase-dominant market seemingly overnight. Better funded $10.5 billion worth of mortgages across 28,879 units in 2022 (57% refinances) and $2.1 billion across 5,723 units in 2023 (13% refinances).

“I think we are the future. It’s just a question of making sure that we can be there to achieve it,” says Garg. “We have to work our way back to actually capture more consumers who need more hand-holding.”

After initially hiring novice loan officers to train in-house, Better reversed tactics in 2023 and began recruiting only seasoned originators who had adjusted to interacting with borrowers in a tough purchase market, where the majority of mortgaged homeowners cling to rates under 5%. In 2024, Better funded $2.4 billion in total loan volume across 6,597 units, nearly 70% of which were purchase mortgages.

“Hello, this is Betsy” 

In October, Better introduced borrowers to Betsy, the first voice-based, AI loan officer assistant (LOA). Despite her mid-century moniker, Betsy operates like an LOA from the future — always working, always learning, always improving. Wouldn’t every mortgage banker like to boast that of their production teams?

Programmed to communicate with prospective and existing clients to answer application inquiries, collect outstanding application data, and pursue internet leads, Betsy is plugged into Better’s digital mortgage platform, Tinman. With system-wide intelligence, Betsy can instantly recall every detail of a borrower’s file.

“We have a licensed loan officer originating every loan,” Garg explains. “In the future, we would love to work with the government to get Betsy an NMLS ID, and at some point that will happen. Betsy will ace the NMLS exam. Betsy will know all the underwriting guidelines across all the investors that we have.”

According to Garg, Betsy differentiates Better’s all-in-one loan platform, Tinman — which combines datasets for Point of Sale (POS), Customer Relationship Management (CRM), Loan Origination System (LOS), the Document Management System, and Pricing Engine — from similar platforms of competitors by enhancing the operational efficiency of Better’s loan officers.

With the average expense to originate and sell a mortgage costing upwards of $9,000 in 2023, Better’s technology has enabled the company to produce mortgages for 35% less by handling 80% of the labor involved in originating mortgages, says Garg. Loan officers at Better averaged 17.7 closed loans in 2023, according to the company’s public filings, far outpacing the 2023 industry average (approximately three).

On a deeper level, however, Better is turning the direct-to-consumer model upside down by realizing productivity gains for originators and processing teams that in turn drive the evolution of consumer choice.

Putting A ‘Better’ Mortgage On The Shelf

“It’s almost like what the consumer doesn’t quite know that they need,” says Paula Tuffin, who joined Garg and I for breakfast that morning in October. Chief compliance officer and general counsel at Better, Tuffin joined the company in 2016 after spending three years as a senior litigator in the Consumer Financial Protection Bureau’s (CFPB) enforcement division. 

“To me,” she continues, “it’s about creating more choice.” As in any grocery store, consumers can only buy the products that are on the shelf. The way Tuffin sees it, the faster Better can make digital mortgages available for consumers, the sooner consumers can pocket the cost savings of digital mortgages.

In joining Better, Tuffin recognized that Garg and his team of “beautiful mind engineers had actually created an LOS that was designed to be compliant with TRID.” Better’s technology allows it to operate ahead of the technological and regulatory curves that hinder traditional lenders’ paths to profitability. 

Better’s fintech focus allows it to withstand the pressures of modernization that has other mortgage bankers struggling to figure out how to adapt and evolve. Maintaining an advantage requires collaboration with regulators outside the bounds of existing regulations in an “ongoing conversation that develops over time, a relationship of trust.”  

“One of the key things lenders have to do, in my view,” Tuffin continues, “is develop communication with regulators in a way that they become a trusted arbiter, so that when new opportunities come up or when there are topics that need to be discussed, we want to make sure that the regulator actually understands.”

Because post-crisis mortgage regulations were not drafted with an eye on AI or blockchain, the privilege of paving new regulatory pathways belongs to those who operate outside its historical bounds.

This past summer, Better participated in the Federal Housing Finance Agency’s (FHFA) 2024 TechSprint, a collaborative problem-solving exercise that brings housing, finance, and technology experts together. This year’s event focused specifically on the role of generative AI in mortgages. These sandboxes facilitate regulators’ collective understanding of new technology, which in turn informs their approach to writing new laws.

Confronted by the promises and pitfalls of artificial intelligence, which has grown increasingly powerful and effective over the past year, lenders who are able to put their technology directly in front of regulators in the early stages of their rule-making can “get to that next new area in a way where the regulator and the company have learned together,” Tuffin says. 

Partnering on pilot programs and developing those relationships with regulators is Better’s technology and compliance hedge against the regulatory curve. To support those efforts, the company deploys cross-functional teams that align and reinforce internal processes with external requirements. The AI-implementation team is a subset of the company’s risk committee, for example.

Beyond the benefits of operational checks and balances, this approach improves Better’s agility when addressing compliance surprises or pivoting in new directions in response to regulatory feedback. “Can Betsy do something and then a human verifies it?” Garg posits. “Betsy can take the data, but then a human has to type it in? What are the fine lines?”

Despite the hype, though, an October 2024 study published by Cloudvirga, a provider of digital point-of-sale (POS) systems, found that as consumers expect more automated and more digital mortgage experiences, 60% of homebuyers raised serious concerns about the use of AI.

Among the 1,000-plus recent homebuyers Cloudvirga surveyed — three-quarters of whom bought for the first time and three-quarters of whom were younger than 40 — 63% said they would have preferred an even more digital mortgage process. Seventy-seven percent (77%) responded that they expect their next mortgage or refinance to be totally digital. 

However, even among this group of largely digital-native homebuyers, six of ten said the use of AI in the loan process would lead them to select another lender. With the purchase of a home being a deeply personal process, overcoming this resistance — and the tension between technological ease and anxiety around AI at the heart of it — will take time.

Where consumer hesitance delays handing AI directly to borrowers, “consumer preferences will manifest themselves so that they can understand and do more of the transaction by themselves,” Garg believes. “And as they do that, we think we have a unique opportunity to be at the forefront of that adoption.”

Who’s Driving The Driverless Car?

Ultimately, consumer expectations about how and which technology is used in the mortgage process currently remain in flux. This is due in part to a generational digital divide: adoption of, and comfort with, new tech is vastly different between a 68-year-old retiree looking to downsize and a 25-year-old first-time homebuyer. 

Forecasters expect affordability constraints pricing millions of prospective buyers out of the market to continue through 2026, as lock-in effects prevent most homeowners from trading homes, supply shortages prop up home prices, and macroeconomic volatility keeps mortgage rates higher for longer.

These pressures have caused purchase demand to bottleneck among younger first-time homebuyers and renters stuck renting — precisely the cohort that Better is building their platform to serve, both now and in the decades ahead.

The efficiencies, cost savings, and advanced lead generation that Betsy and Tinman offer mortgage lenders and originators represent make-or-break advantages in the market of 2025. Technology isn’t everything — but the writing’s on the wall for lenders as market contraction drives consolidation.

Over the next decade, Garg expects large IMBs to continue fragmenting and consolidating as department stores have, resulting in the geography-based sector dominance of brands like Home Depot or Costco. The growing share of broker business has accelerated this trend, just as a million Etsy and Shopify stores did.

Garg likens people’s awareness of the existence of Better’s digital mortgage to people’s growing recognition of a future with driverless cars. Those vehicles are already on the road, and people understand the future of transportation includes autonomous cars — but getting consumers to accept this new reality and actually getting them to sit in the back seat are two vastly different things. 

Knowing this, Better is working to address these obstacles to adoption. “What we’re trying to do now is literally put in a driver just to make the consumer comfortable,” Garg explains, “and that’s the world we’re living in.” 

Better Branding

Garg sees Better’s path to prominence and profitability requiring the same approach as Uber, Amazon, Carvana, even Rocket Mortgage — all of which, to sear their logos into the American psyche, burned through piles of cash.

“There’s just a cycle to becoming a household brand in America for a particular product,” Garg continues. “That’s going to take a bit of time for us, and it’s going to take a bit of money.”

As the ground beneath the mortgage industry continues to shift, Garg says industry stakeholders’ allegiance to the consumer, not just investors, must not be overlooked. As Figure Technology Solution’s CEO, Michael Tannenbaum, noted in the February 23rd issue of NMP, trust is forged like a steel cable, but broken like a paper chain.

> Michael Tannenbaum, CEO, Figure Technology Solution’s

“Anything that destroys the trust of the consumer on an industry-wide level or an industry-leader level is dangerous to the industry overall,” Garg believes, “because the industry has now spent 12 years trying to rebuild trust with the consumer in the same way that it had before the global financial crisis.”

The future that Better already inhabits feels both present and distant, shaped by the tension between emerging tech and consumer comfort levels. While the digital mortgage is here, bridging tomorrow’s technology with today’s borrowers remains the pivotal challenge. As Garg’s “driver in a driverless car” analogy shows, consumers aren’t quite ready to let Betsy take the wheel — and regulators must be reassured, too. Ultimately, bringing those two worlds together will determine how soon the mortgage process truly gets “Better.”