EPISODE 289

Experience 2022: The State of the Mortgage Industry with ICE’s Joe Tyrrell

47 minutes · March 21, 2022

Live from Las Vegas, it’s ICE Experience 2022, the mortgage industry’s biggest annual get-together with nearly 3,000 attendees. Off-stage, Joe Tyrrell, President of ICE Mortgage Technology, spoke with Pete Asch on how ICE makes the connection to provide the technology and data needed to transform the home loan process. Joe provides fresh insights on how the past two years have reshaped the homebuying market, and explains why improving 1% at a time is the secret to unlocking the digital mortgage and democratizing the dream of homeownership.

Speaker 1:

From the library of the New York Stock Exchange at the corner of wall and broad streets in New York city, you're Inside The ICE House, our podcast from intercontinental exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at Ice's exchanges and clearing houses around the world. And now welcome Inside The ICE House.

Pete Asch:

Welcome to a special episode of Inside The ICE House recorded from the exhibition hall at Ice Mortgage Technologies experience 2022. Thousands from the industry have gathered for a pack schedule of training and sessions on encompass and other products, advice from industry experts and to hear from thought leaders like ICE's own Jeff Sprecher, soccer legend, Abby Wambach, and many, many more. The conference was also the first time that ICE's new branding under make the connection was revealed to clients. Listeners will recall that our last episode, McLaren racing CEO, Zach Brown was the first of a special series that goes behind the scenes of ICE's national advertising campaign to make the connection. Over the course of the next weeks, we'll share those conversations of everyone who participated in the making of that spot, playing on major channels and viewable on ice.com. This year's experience was also the first to be in person since Ellie Mae became ICE mortgage technology.

Pete Asch:

Our guest today, Joe Tyrrell is the maestro of this gathering and was the guest on this podcast back on episode 211. In his first appearance, just a year ago, Joe shared his vision for the future of mortgages and how the combination of Ellie Mae MERS and simply file under the banner of ICE Mortgage Technology would unlock that potential. Joe returns to give us the inside scoop of the buzz around the conference, the latest from ICE Mortgage Technology and how the sector is striving to meet the needs of borrowers. Our conversation will be right after this.

Speaker 3:

Connecting the opportunity is just part of the hustle.

Speaker 4:

Opportunity is using data to create a competitive advantage.

Speaker 5:

It's raising capital to help companies change the world.

Speaker 6:

It's making complicated financial concepts seem simple.

Speaker 7:

Opportunity is making the dream of home ownership, a reality.

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Writing new rules and redefining the game.

Speaker 9:

And driving the world for forward to a greener energy future.

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Opportunity is setting a goal.

Speaker 11:

And charting a course to get there.

Speaker 3:

Sometimes the only thing standing between you and opportunity is someone who can make the connection.

Speaker 12:

At ICE, we connect people to opportunity.

Pete Asch:

Our guests today. Joe Tyrrell is the president of ICE mortgage technology. Joe previously was the COO of Ellie Mae prior to his acquisition by ICE. He joined the company in 2002 and previously served as VP at Providian Financial in addition to several other executive positions in the mortgage industry. Normally we welcome guests Inside The ICE House, but in this case, thank you for the hospitality.

Joe Tyrrell:

Oh, it's our pleasure.

Pete Asch:

So this is the first time that Experience has been in person since 2019. Before you step on that stage for the first time from the 2000 people, what's going through your head?

Joe Tyrrell:

Just gratitude, grateful to actually be able to be here in person with so many of our customers and our partners. The mortgage industry isn't that dissimilar from any other asset classes where a lot of the business gets done based upon relationships. And so the ability to make those relationships or reconnect to people that you haven't seen in a while, all it really does is it strengthens the connection and bonds that we have makes it that much easier for us to understand how to better serve our customers. And quite honestly, it gives us a better opportunity to get a sense of what else is needed. With the ability to continue to do business through Zoom and WebEx and other mediums we're able to still get business done, but we're really just scratching the surface. It's these in-person interactions that really get to that next level of conversations. And it's how we truly build relationships for the future.

Pete Asch:

Yeah. And I mentioned in the intro, this is also was the coming out party for ICE Mortgage Technology. Well, what's the number one thing you hope participants would take away from the conference on how combining Ellie Mae Simplifile, MERS and ICE would change not only how they interact with ICE Mortgage Technology, but the industry overall.

Joe Tyrrell:

So I'm going to share with you my perspective there. And then I also want to share with you the biggest surprise that came out of this, that I wasn't expecting. So coming into this, what we really wanted everybody to understand is now that we're part of ICE, is that going to mean that things are going to change? Are we going to continue to have the same culture that we have one of in engagement and inclusion and how we think about creating roadmaps and the problems we're trying to solve.

Joe Tyrrell:

And we also wanted to make sure that all of our customers understood that there was still going to be a pretty significant investment going forward to help with this analog to digital conversion that so many of the participants in this ecosystem rely heavily on us to drive. And so what was so great is when Jeff came up and was on the main stage and just kind of telling his story about how he got started and how he started ICE coming from really humble beginnings and some of the really bold steps that he took from renting a truck to putting servers on the lawn in front of a state building in order to get people to see what he had built to just kind of his confidence in being able to expand the services that he provided to ultimately culminate in acquiring the New York Stock Exchange.

Joe Tyrrell:

But it didn't stop there. He talked about how he thinks about getting ahead of the market and making investments in things like Coinbase and backed well before those platforms are becoming as commonplace or as necessary as they are today. And so what was so great is to go out and talk to customers and partners after that and have them tell us that they got such a sense of who ICE is based upon what Jeff shared and the confidence that they have in our ability to continue to invest in this industry, to continue to make bold decisions and steps, and to really push this whole analog to digital conversion. So exactly what we had hoped would happen was really accomplished incredibly well by Jeff, just sharing his story and his journey. The unexpected part, something I hadn't taken to consideration was after our session concluded and Jeff was done speaking, and we'd all kind of left the main auditorium and started to go back to the scheduled meetings we had.

Joe Tyrrell:

I started getting emails and texts and hearing from so many of the teammates here at ICE Mortgage Technology, about how much it meant to them to hear Jeff's story, how much they've felt like they were still being led by this entrepreneur with vision of doing big things and how it increased their confidence that they were at the right place. Because, since the acquisition that ICE is made of Ellie Mae, it was really the first time that they were able to kind of feel connected into what drives ICE and realizing that the culture that Ellie Mae had is identical to the culture that ICE has.

Pete Asch:

I actually want to lean into that idea of the culture. We're now launching this, Make The Connection, part of the reason for doing this whole rebrand was to make sure people understood why does ICE own exchanges and data and mortgage technology. So really what does Make The Connection mean to you?

Joe Tyrrell:

For us when we're on this journey of converting this entire industry from analog to digital, this is an incredibly complex industry, heavily regulated. It relies on verifying information, no matter what the source of it is, it requires on a lot of conversion from unstructured data into structured data. It relies on third parties trusting one another. It relies on an entire ecosystem in a secondary mark, which creates liquidity in order for lenders to be able to serve the needs of consumers and help people realize the stream of home ownership. And what that means is to make this conversion from analog to digital, it's not something we're going to do by ourselves. It's something that we're going to need the industry to be committed to doing. And what we've talked about here is, there is no magic bullet. There is no single solution that's going to address the needs of absolutely every participant in the supply chain.

Joe Tyrrell:

What it really requires is each of us to make a commitment to adopting just one more technology, one more automation, one more step towards this digital mortgage that we're all striving to achieve. And so when we talk about making the connection, it's helping the customers make the connection into what's available to them today. It's helping make the connection between them partners who might be able to provide just one more solution that they can now offer either to help their process go faster and more digital, or to help them engage just one more consumer, to be able to accomplish their dream of home ownership. And so for us Make The Connection, isn't really a slogan. It's really what defines our culture. We're an open technology platform. So we're inviting people to come and build on top of it to help us solve the problems that we know that our customers face every day.

Pete Asch:

And speak of inviting. You invited 2000 of your closest customers and clients to this event. I've been embedded with your teams since the executive summit kind of really kicked off Sunday afternoon. When does the planning start? I mean, you've had a three year ramp up this one, but Experience 2023 is less than year away at this point.

Joe Tyrrell:

So we will start the planning for Experience 2023 next week. And it starts with doing a retrospective on how experience 2022 went. What was really good? What did we hear of feedback from the participants? How can we make an even better experience for all of our customers and partners next year? So, we are very self reflective as an organization and we're constantly challenging one another to get better. And so we want to start while it's fresh in our minds while we can think of, here's the one or two things that I'd like to do differently, or here's three or four ideas that we got from customers, or here's how we can better engage from a UX perspective or allow more partners to participate. So, yeah, we'll get started on next year, literally next week.

Pete Asch:

Have you gotten anything yet that you know is going to be top of that agenda next week from either one of your customers you've talked to, or one of the booths surrounding us, literally as we're speaking right now?

Joe Tyrrell:

Yeah. If I could sum it up in one word, the feedback that we've gotten from everyone, whether it be partners or customers, media, the one word is more, they want more of this. Now, some of that I suspect has just been a longing for the ability to make those connections coming out of the pandemic. But there's a palpable electricity that you feel when you're here. You've probably experienced as you've talked to some of our customers, like we're not just a vendor.

Joe Tyrrell:

For lenders that use our technology, we are their most trusted business partner. If you come in the morning and our technology doesn't work, you're sending 500 people home at 11 o'clock in warning. So it's mission critical. And so they want to consume more from us. They want to learn more about what we're doing. They want us to be able to include more people, more solutions that we can introduce them to. They want to bring more people with them. One CEO that I spoke with said she brought 12 people to this year's experience. Her intention is to bring 35 next year, and she's going to make it a incentive within her company. Her top performers, whoever qualifies as a top performer will automatically be allowed to attend Experience Next Year. So Moore is going to be the key driving factor for us is going forward.

Pete Asch:

Moore is always welcome. You mentioned sending people home because the system's aren't working, but we're coming off of two years where everyone was sent home or in some cases to their parents' home, you were speaking a little bit earlier in Experience about some of the findings from the 2021 survey of the Gen Z millennial customers. But you actually had a very personal experience in your home. What insights did you get from when your daughter, Hannah sat you down and explained to you what her plan was for housing post pandemic?

Joe Tyrrell:

You know, it was really interesting because the story I told was about my 24 year old daughter, Hannah who's of all my four daughters, she's got the most independent spirit of all of them. She was the one that absolutely could not wait to get out of the house as soon as she could. And so she had a really successful career. She was living on her own and then the pandemic hit. And as an esthetician, her entire industry went away literally overnight when you're dealing with social distancing and wearing a mask, you're not visiting a dermatologist or an esthetician. And so she was faced with the reality of, needing to figure out how she was going to continue to live going forward. And so she kind of came back and said, I think I need to move home. And I could tell that when we had that initial conversation, she felt defeated.

Joe Tyrrell:

She felt as if she had failed. And the reality is this has happened to a lot of people who are impacted by the pandemic. But now that it's been two years, we've kind of come full circle because now, she's back in her career, she's doing incredibly well. She has the means to now move out. But to her credit, what she's realized through this pandemic is that the next time she moves out, she wants to do it with some purpose behind it. And the purpose is she wants to do it to actually build equity and build wealth. She wants to own a home. So that was incredibly surprising to me. And not because I underestimate her ability to understand these things. It's just, we hadn't talked about it, but she had seen that this was something that she wanted to make sure going forward she did again.

Joe Tyrrell:

What even more surprising is when she told us that she wanted to wait, not only to have enough to be able to buy a home, but she wanted to be able to buy a home near where my wife and I live. And that was the other really interesting thing that came both out of my conversation with her, but also the data from the survey that we did, I expected when she got back out on her own she'd again want to be as far away from us as she could, not that we're bad parents, but just that you want that feeling of independence. And it was actually just the opposite. She recognized and realized the importance that family has had in helping her get through this pandemic. When we look at the data from the survey, we found the same information when we looked at, the 1000 Gen Zers that had recently purchased a home in the last two years.

Joe Tyrrell:

And we asked them, what was your driving factor of buying a home during a pandemic? We expected a lot of them would talk about the low interest rates that have been in existence for the last two years. And certainly there was, 26% of them said, yeah, it was the interest rates, but it was not even close to the number one reason. The number one reason that Gen Zers and millennials bought a home during the pandemic at 53% is because they wanted to be closer to family. And that's a surprising statistic when you're talking about a generation that wants to declare its independence by getting as far away from parents as they can. And now they're saying, no, no, I want to own a home, but I want to be closer to family. And then the other thing that was surprising in the data is when we ask that same population, those Gen Zers and millennials, well how'd you determine what lender to use the overwhelming response at 68% said that the driving factor in who they decided to use as their lender was based upon a referral from a family member. And so it just reinforces the fact that family has become more important to this generation than perhaps we imagined, or even maybe it was prior to the pandemic.

Pete Asch:

This is also a group that's buying houses that grew up in the technology culture. You've said that digital mortgage is not a product, but a process. There's also still a lot of resistance from the generations above these Gen Zs and millennials. I actually, this week completed the sale of a home and I was told to fax my payout system because, and I will quote the lawyer, "You can't trust email." It's 2022 and a lawyer's telling me that I can't trust email. How do you convince the industry to modernize? And is it these kind of insights you're you're putting out on the Gen Z market?

Joe Tyrrell:

Was this on being sold in New York?

Pete Asch:

New Jersey.

Joe Tyrrell:

New Jersey? Okay.

Pete Asch:

Similar backdrop.

Joe Tyrrell:

Very similar structure. So, it's interesting, there are some pockets, New York, New Jersey, North Carolina, and the only word for this is tradition. Based upon tradition of how some of those regulators have looked at the process they've yet to embrace technology the way that other parts of the country have, even in areas, that are maybe, people would think of being less technically advanced, deep south parts of Texas. They have modernized this process well beyond other states. And so why we say it's a journey is because we could bring to bear a technology that solves every concern, every issue, every problem for one lender. But when we show it to the next lender, they'll say that well, they doesn't meet my needs at all. Even though they all have to navigate the exact same obstacle course, right? The obstacles in their way are exactly the same.

Joe Tyrrell:

Now there's some nuances if you're in New Jersey versus Texas, but the majority of the manufacturing process is identical no matter where you go. So why is it so different for one lender versus another? Well, it gets back to their background, their comfort level. There is risk associated with originating a loan, especially when you're talking about an asset class that depends heavily on being able to sell that asset into the second day market to create liquidity in order to make the next loan. And so when we talk about the digital mortgages in a product it's 6,500 different products because there's 6,500 different lenders. So the way we approach it is let's build a framework, a flexible framework with an open platform that allows both the lender to build on top of it through a full suite of APIs that we provide, but also partners and independent software vendors to also be able to consume our APIs so that they can build solutions on it. That way we drive chains as an industry, not as one entity, trying to convince everybody that our way is the right way. We allow each person to find their own personal digital mortgage journey, but all using the framework and technology that we provide.

Pete Asch:

ICE Mortgage Technology from Ellie Mae, from ICE has two things at its core technology and customer service. You just touched on sort of that individual experience. How does the company use AI and automation to really create that individual journey through the process for not just each of your 6,500 lenders, but their end customers?

Joe Tyrrell:

When we've talked in the past about what does ICE differentiate itself with in terms of other technology providers in the mortgage space? One of the things that's always been the hallmark for us is how we handle compliance and regulations. This is an industry where you have to navigate county requirements, city, state, federal, agency requirements, depending upon who you sell loans to in the secondary market, individual correspondent investor requirements, which makes it incredibly difficult for lenders to think about innovation when in any given week, there might be a change introduced with five day notice of when it's effective. And so what we've made really as kind of a foundation in core to what we do is focusing on building technology that can always be compatible to the changing landscape from a regulatory perspective. That way lenders don't have to worry about the heavy lifting of staying compliant, they can rely upon us to do that.

Joe Tyrrell:

Well now we're entering this environment where machine learning, artificial intelligence and automation is really ready to drive the next wave of innovation in our industry, and really accelerate that analog to digital journey. But there's this apprehension the lenders have for a couple reasons. One of the things that we talk about all the time when we implement encompass in a lender, that's never had it and they tell us, well, we want you to take our system. And we want you to do this process is we tell them all the time and we have to be very candid about this. We have identified some flaws or what we feel are flaws in their process and our fear and what we've come to experience is the only thing worse than a bad process is an automated bad process. And so we have to help build their confidence that allow the automation to do things and will show you where you can have a high level of confidence that it's being done correctly.

Joe Tyrrell:

When you start talking about machine learning and artificial intelligence and an algorithm driven process, you always run the risk of am I ingesting data or waiting data too heavily to the point where it's going to create unintended bias? Especially now where we're in an environment where inclusion is so important, you have millions of Americans that want to participate in home ownership. We talked about just look at the rental community. There's 44.1 million renters in United States. 72% of them have said home ownership is their primary goal. So you're talking about 33.1 million people that are a really driven towards home ownership. But when you look closer at the data, you find that almost half of those are considered as underserved communities, which means it could be that it's because of their socioeconomic situation. It could be because they're either black or Hispanic, it could be a number of factors. So how do you make sure if you're going to use automation and technology that there's no unintended bias and people aren't being left on the outside, looking in? And that's where everything that we do from an automation perspective, we design, we build and we validate under a very structured and comprehensive governance process to make sure that we're documenting things, we're checking the outcomes.

Joe Tyrrell:

We're ensuring that how we're presenting it, isn't going to create any of that unintended bias. Now, at the end of the day, we hand the technology over to the lender and everything we do gives the lender, the ability to configure, but we also help them understand through snapshotting and other technological approaches, of here's what I was doing and here's what I've now changed it to be. And I can compare my results. So we have to be very thoughtful. There's a lot of companies out there that talk about AI and machine learning, but don't think of about it in the comprehensive way that we do. And that's because of the DNA we have of making sure our lenders are going to be able to go as fast as they want to while we keep them on the right path.

Pete Asch:

As fast as they want to, but also as fast as our customers want to.

Joe Tyrrell:

Absolutely.

Pete Asch:

And as a dip back into it Tyrrell research, well, we start with Hannah. I want to go to a different, one of your daughter know you were talking about an insight you learned in your house where you found out that in 2022, the amount of time it takes someone to watch the movie, How To Lose A Guy In 10 Days is how quickly a relationship can evolve. How does the speed of this generation impact what you want to do with mortgages?

Joe Tyrrell:

Yeah. I mean, it's really all around expectations and it doesn't matter whether you're responsible for providing technology to drive the mortgage industry, or you've got a consumer application or you're in some other asset class. The reality is there's a next generation of consumers, a next generation of investors, a next generation of homeowners. And so understanding their expectations is going to be really important to meeting their expectations. And this experience I had with my daughter where somebody hadn't responded to her after a couple of hours through a text message and she jumped to a conclusion of what that would mean actually gave me really good insight about the importance of speed of response. I see this with one of my other daughters where she's working full time. She has a very busy day when she happens to have five minutes to catch her breath.

Joe Tyrrell:

She goes on the fam chat and she says something funny that happened in her day. And if myself or my wife or one of her sisters doesn't respond back in five minutes, then we see her with another post going, is anyone there? Does nobody care? And again, while I might think boy, that's crazy to expect responses that quickly just think about what we've gone through in the pandemic. As so many of us were working from home, we found ourselves kind of falling to this always on mentality, right? Where used to be that you'd end your work day, you'd get in the car, you'd drive home, and then you'd start the second half of your day or really the second half of your life. And so we were good at compartmentalizing work from life, and we strove to have a balance.

Joe Tyrrell:

For the last two years, there's been no a balance. There's been a blending of working and living because we're doing both in the same place. And so what happens at now is at 9:00 9:30 at night, you're standing in the kitchen and you hear a ping from Slack that you got a message, or you hear the notification from Teams that someone sent you a message. And what do we do? We walk into the other room to see who's trying to get ahold of us. And then we feel compelled to respond at 9:30 at night.

Joe Tyrrell:

When we do that, not only are we conditioning ourselves that yeah, we have to be always on, but now we have those same expectations of everyone else. So when you send someone else a message at 9:30 at night and they don't respond to you until the next day, you're suddenly offended, or they're not as good of a teammate as you would expect them to be. So this is the reality coming out of the pandemic. It's both a new perspective on expectations from a social viewpoint, but also from a business viewpoint. And so what that taught me is that we need to be prepared to go faster because the expectations of this next generation is when I'm looking for an answer, I expect to get that answer very quickly. And if I don't get it from you, I'll assume that means you don't care and I'll open up a browser and find it from someone else.

Pete Asch:

Increasing the speed also takes a lot of inherent risk and hedging off the table. If the dream of going from 45 days of closing to a week, what impact does that have on the financial infrastructure that goes around just an individual, getting their mortgage? And how does that drop a lot of the risks that right now lenders and others are taking on?

Joe Tyrrell:

Yeah, I mean it, and it was a fantastic point that Jeff made. If you think about the number one concern for a lender, aside from the risk of having to buy back a loan, which they're not really built for, right. They're built for selling loan, getting the liquidity to make the next. So if they ever have to buy back a loan and hold it on their books, it eats up a lot of their kind of capital reserves that they're holding onto. But when we are all focused on going faster, it requires all of us to make sure that the technology that we're building has got really good guardrails in it so that people can go as fast as they want, but they don't have to worry about sliding off the road. The guardrails will be there to keep them. So if you can take that away, then what's the second biggest risk that lenders have it's fallout rate. It's that they've incurred so much of this cost of acquisition only to have that lender at the last minute decide they're going to go somewhere else.

Joe Tyrrell:

And so way we can address that fallout rate is just go faster. When you got 45 days to think about it and you're constantly seeing advertisements on TV or internet ads about somebody who can get your loan done in 10 days, even though that might not be true for a lower interest rate than what you were just quoted. It's really easy when you still have 20 days left in the process to say, well, maybe I'll give them a call. If you talk to our lender today and your loan's going to be closed in four days, you're not shopping. And so it's a huge advantage for lenders to embrace this thought of this analog to digital conversion, because not only is it going to get so much cost out of this process, it's going to help them when they engage with that consumer know that they're going to be able to see that as a closed loan.

Pete Asch:

Yeah. And going from 45 days to four or five days, it starts with an hour here and there at first I've been hearing a lot from you and everyone else said from ICE Mortgage Technology about this. Focusing on 1% changes, how does incremental progress allow the industry to serve not only individual customers, but millions of more customers over the course of a year?

Joe Tyrrell:

The whole 1%, I is a fascinating story when you look at its origin and it actually goes back to the British cycling team. So the cycling team in England for years and years and years competing against in the Olympics, competing in Tour de Frances always had these world class athletes, always had this incredible equipment available to it, but yet could never seem to get over the hump. Couldn't win the Tour de France, couldn't win the gold medal. And it wasn't until they brought in a new kind of coach of the cycling team a number of years ago, where they started to see the change. And what was interesting about this coach that they brought in is yes, he had been a cyclist and he was an avid supporter of the sport. But his background was in doing drawings for bridges and large engineering projects.

Joe Tyrrell:

And what he would always be focused on is making sure that he wasn't even 1% off, because if he was even 1% off, it could have cataclysmic consequences when you're to talking about building these incredible structures. So he brought that mentality to the England racing team. And he basically said, we are going to get 1% better at everything we do. We're going to get 1% better in our diet. We're going to get 1% better in our training. He's going to get 1% better as a coach. And when they, as a team made that commitment, that's when they went from never reins to perennial winners of the Tour de France to perennial winners of the Olympics. And it's the opportunity that we have in our industry is to take that same approach. There is no one solution that's going to solve all these problems, whether that's how we serve those underserved markets, how we make this journey to the digital mortgage.

Joe Tyrrell:

And so really what it is incumbent upon everybody in this ecosystem to commit, to getting at least 1% better every day. So ICLOS is a perfect example. You know, when we introduced the ICLOS, we could have waited until we had absolutely every aspect of what anybody could ever want done, but that's not really going to help progress the industry. And it's going to basically withhold a better experience for a large percentage of consumers. So we focused on the hybrid. Then we moved to ENO. Now we move to Ron video storage, and it's really this isn't a story specific to mortgage. This isn't any asset class. This is any technology company focusing on introducing incremental innovation, incremental progress. That's how we go from 45 days down to five. We do it 1%, one day at a time, keep shortening that path until one day, we're going to look up and go we're at five days.

Pete Asch:

If you go from 45 to five, in theory, that frees out 40 days of someone's time. Have you thought about how these underserved communities, these under supported groups does that then allow these lenders to get in those areas better and provide that more hand holding from step A, to step Z when the vast majority can go from A to Z overnight?

Joe Tyrrell:

If you look at a lender's cost to originate a loan. So it cost to lender a little over $9,000 to originate a loan. Now the vast majority of that cost is in the people that they have to hire. So it's people checking to make sure the documents came in. People making sure that the date on the documents matches what the borrower stated. People checking to make sure the document were signed correctly. As we're able to eliminate all of the need for the checkers, checking the checkers, checking the checkers, and rely on technology to ensure the accuracy of that data, which we can do today, right? This isn't a technology issue. This is more of a design issue. It's a tradition issue. As we're able to help them engage and adopt some of this technology. Not only do we lower that time, we significantly reduce the cost that they incur. And so what we want to help lenders do is to reinvest those dollars in helping more people participate in the dream of home ownership. We want them to be able to expand their services, serve more markets, create new loan programs, all being able to leverage the fact that they're saving significantly in the origination so they can actually originate more.

Pete Asch:

New York Stock Exchange president Lynn Martin often says that data is incredible input and an incredible output. How do you synthesize this input you're getting from the industry to know where the improvements are needed and where are those kind of low hanging fruit that you really very quickly can speed up automate or improve to start to whittle down that time? And what does your product roll map look like? And how often are you updating that?

Joe Tyrrell:

When we look at the data of what's coming through our platform, it really pinpoints for us where the opportunities are. There has been in the last five years. There's been a ton of FinTech that came into the mortgage space. Now that's kind of a misnomer because if you think about the companies make up ICE Mortgage Technology, MERS, Simplifile and Ellie Mae, those are the three original FinTech that have driven much of the innovation in the industry. So at ICE we've always been a FinTech, but if you look at the new entrance into the space, they've spent almost entirely their time on focusing on the application. And the application is 20 minutes of a 45 day process. So we still have 44 days and a lot more minutes to go, right? So what we're looking at the data is it's telling us, where does the loan start to slow down as it's kind of matriculating through the normal manufacturing process?

Joe Tyrrell:

Where do we see the bottlenecks? And there's a couple of areas. One is in verifications. So because again, this is an industry that requires so much verifying of what the borrower is stating that the initial approval was based upon. You have all these third parties that are really critical to the process. So now what we're doing is we're starting to see automation where we can verify instantly. And our intention is to take that and bring it to the application itself. So literally while a consumer's filling out question four, we're already underwriting the answer to question three. The other area is underwriting because think of a manufacturing process of a car, think of everything was assembled, but then it required one person to inspect, absolutely every aspect of the car. That's what an underwriter does in a loan manufacturing process. So what we've done is we've broken down.

Joe Tyrrell:

What does that underwriter do into 72 unique steps or tasks is a better way to think of it. And what we're now doing is we're applying automation to actually automate those tasks, but we're doing it in a way where we're going to present it to the lender across the spectrum. We will have some lenders that are so pro automation, they're going to say, I want to go into a headless processing environment and we'll have the ability to do that. We'll have other lenders that are a little bit more apprehensive about technology again, because that's secondary marketing risk. So they're going to say I'm going to use the technology, but I want an exception based process where I still have a human looking at it. We can support that as well. And there'll be other lenders that are just going pick and choose what tasks they want to automate versus where they would still want people.

Joe Tyrrell:

Because not only is this analog to digital conversion a journey from a technology perspective, it's going to be an individual journey for each lender based upon their risk appetite. So we expect, if we look at all the lenders that we support, we're going to see all different flavors of how people want to engage with this technology. So that's how we're designing it. So we're excited to start are to really go after the verifications, go after that underwriting task by task to essentially bring everything to what we call a real time underwrite so that it happens literally when that 20 minutes is done and that application is complete.

Pete Asch:

And by letting the lenders plug in as they wish, they kind of choose their own adventure ICE Mortgage Technology is also now plugged into other aspects of ICE, provide mortgage rate lock indices, for example, how does the data from one segment feed into another ICE business and how has that connection been so powerful for your and clients?

Joe Tyrrell:

What you just mentioned about Lynn talking about the inputs and outputs. That is the perfect example of what we're now able to as One ICE, but it really starts with the culture of ICE is so incredibly collaborative. I remember when we first became part of the ICE family, one of the first people that I got introduced to was Lynn. And at that time she was still running the fixed income and I stayed a services business. And so we were having lots of conversations about how do we take the data that's come across our platform and how do we share it out with the ICE data services team? Because when you look at, in the fixed income asset class, other than municipal bonds, those mortgage backed securities is one of the most heavily invested in tools. And so we thought about when we look at mortgage backed securities, what are the two things people struggle with the most?

Joe Tyrrell:

Well, the first is how do I price it? And a lot of what they're relying upon to price it is public records data. Well that data in some cases can be six months older than the data we have on our platform right now. And then the second thing you're looking at is that how do I appropriately model for prepayment risk, loans falling out of the pools that I've invested in? Again, a lot of those people doing modeling are using public records, data, which is pretty stale.

Joe Tyrrell:

Yet we have all of this data that's coming across our platform real time. So not only do we know what's happening right now, we know what's going to happen in the next 60, 90 days. So being able to connect our teams and start to share that data first with our first rate lock indices that we released, that is really just the tip of the spear. The team is already identified not only more than 50 additional indices that we can work on together, but so many other areas where we can provide more value to our fixed income, ICE customers, to creating new products together. And also how we can take the expertise that exists in ICE data services to better understand how we at ICE Mortgage Technology can monetize the data that we you've been sitting on for years.

Pete Asch:

Lynn actually was here at the conference also. She was one of the speakers at the executive women's networking lunch. An event that brings together not just women, but men and women, making sure that opportunity is offered. What impact does having greater representation in the mortgage industry at the decision making table have on making sure that really you fulfill the end goal, which is an equal opportunity for everyone in this country to one day own a house?

Joe Tyrrell:

We have a tool called the millennial tracker and what the millennial tracker does is it's a technology solution that can identify where across the United States, millennials represent a majority or a minority of homeowners or home buyers. And we have the ability to go in down to a census track level and we can then break that census track down by a number of different demographics. And what's interesting is I was in the tool a couple of months ago and I was just randomly clicking on a couple of different locations. And I found in Texas, this city in Texas and an interesting statistic jumped out at me as I looked at, it showed me in a two month period I just randomly picked up that the highest percentage of millennials purchasing a home in that metropolitan statistical area, that MSA were single female millennials.

Joe Tyrrell:

Now, if you think about that for a second, how would you know how to market to that demographic? How would you know that was even existing in that location? And the answer is you wouldn't. And so there's lenders marketing that area that are still sending postcards with pictures of a Caucasian family standing in front of a for sale sign. Here's the other interesting thing about that statistic, those single female borrowers were predominantly Asian. So that marketing that you're going to send is not going to resonate with what's actually happening in that marketplace. So diversity of opinion, diversity of planning, diversity of design, that's how you make sure that you can help everybody participate in home ownership. That's how you can make sure that the technology that you're producing is flexible enough to meet the needs of how everybody wants to actually deploy it. So what's interesting about the statistics at ICE Mortgage Technology is when you look at diversity for a technology company specifically in Silicon valley.

Joe Tyrrell:

And if you just look at gender diversity for a second. In Silicon valley technology companies tend to be represented by women in 32% of the employee base. At ICE Mortgage Technology, it's 47%. And so we are consciously looking to ensure when we have a voice that's determining what we do next, it's got to be a diverse voice. It's got to represent the needs of all of the people that we're trying to serve. How that then into changes in the roadmap.

Joe Tyrrell:

We have some things that are somewhat immovable in our roadmap because they're being dictated by compliance or regulatory changes that we need to ensure that are being accommodated in the roadmap to keep our customers compliant. But the remaining capacity. We set out at the beginning of the year with a set of prior driven by business goals, driven by feedback from our customers input from our partners, but we are always willing to change those priorities, if we think it's in the best interest of our customers, if it's in the best interest of our business needs. So we remain constantly flexible because we never know it's going to get thrown at us a regulatory perspective, but we also have to be nimble enough to know if the market changes, we got to be able to skate to where the puck's going to be, not to skate where it is today only to find out that now we're behind.

Pete Asch:

How do you make sure you always stay ahead of the puck? You mentioned regulation a few times. The head of the Mortgage Broker Association was on stage this morning talking about really how fluid WAschington is. So what do you need to do to make sure that while you're making sure that regulation is protecting the end user, and as you mentioned, make sure there's no unintended consequences. Also, isn't slowing process down for the sake of process.

Joe Tyrrell:

Before beginning part of the ICE family, we'd always had really good relationships with folks in WAschington to give us some insight of what was coming next. That has just been exponentially improved now that we're part of ICE, the resources that we now have available to us that can give us real insight into what's happening helps us to be much better prepared when we start doing roadmap planning. So that's been a huge bonus for us, but what it really comes down to is we've got to be talking to our users every single day. When we talk to our users, when we engage our partners, what we're really trying to avoid is blind spots. And that's really what puts you behind is when you hadn't contemplated what could happen. And so we are absolutely just vigilant about talking to customers every day. And so at any point in the day, someone in our company somewhere is talking to our customers.

Joe Tyrrell:

We're either soliciting feedback on what went well, we're doing a retrospective on what didn't go. We're talking about our releases. We're asking how our communication is. We're asking about what's important to them from the roadmap two years from now, we're reviewing our priorities with them to make sure that we're hitting the mark, but then we're also going and having those same conversations with partners. And some of those partners we operate off of a term called co-opetition. Some of those partners actually offer products similar to what we offer, but you have to realize when you're going to support this broad, this essentially this entire industry, your customers are going to demand choice.

Joe Tyrrell:

So we do it in a way where we have a flexible enough technology that we can allow everybody to participate. Our business model actually incorporates that co-opetition into it. So if our customer's going to use someone else's technology, we actually, there's a financial benefit for us doing that because we have a relationship with that partner. But those partners sometimes might cease things that we don't. And so we're constantly engaging everybody in this ecosystem, everybody who plays a part in the supply chain to make sure we have no blind spots.

Pete Asch:

So as we wrap up, we're just a few hours before the end of Experience 2022. What do you hope is top of mind for every single attendee that came and hope that they take home to their offices as they get back to work tomorrow?

Joe Tyrrell:

It's really about how can they each get 1% better? How can they help one more family own a home? How can they deploy one more technology, solve just one task in that underwriting process, deploy one more solution that will help them provide a better experience to that next generation of home buyer and improve the speed and the experience and the process for everybody that's involved.

Pete Asch:

It's a great thing to end on improve the experience for everyone. Thank you, Joe so much for joining us Inside The Ice House.

Joe Tyrrell:

Thank you for having me.

Pete Asch:

That's our conversation for this week. Our guest was Joe Tyrrell, president of ICE Mortgage Technology. If you like, what you heard, please rate us on iTunes so other folks know where to find us. If got a comment or question you like one of our experts attack on the future show, email us at icehouseattheice.com or tweet at us @icehousepodcast. Our show was produced by Stephan Capriles with production assistance from Ken Abel and Ian Wolf. I'm Pete Asch, your host signing off from the podcast studio at the 2022 ICE Mortgage Technology experience. Thanks for listening. Talk to you next time.

Speaker 1:

Information contained in this podcast was obtained in part from publicly available sources and not independently verified, neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content here. All of which is presented solely for informational and educational purposes. Nothing here in constitution offered to sell a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been of length or clarity.

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Information contained in this podcast was obtained in part from publicly available sources, and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice.