Blue Sage’s VP of Sales and Marketing Joey McDuffee discusses the company’s commitment to simplifying mortgage technology for lenders facing growing complexity and consolidation pressures. He highlights how the Blue Sage platform helps reduce cost to originate by cutting through tech bloat and enabling faster LOS transformations.
This interview with Allison LaForgia also explores Blue Sage’s distinctive approach to AI, which focuses on delivering tangible benefits for both lenders and borrowers. He outlines key growth opportunities for lenders seeking scalable solutions in a competitive marketplace.
#MortgageTech #DigitalLending #LoanOrigination #FinTech
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00:00From the George Bush Center in Dallas, Texas, I'm Allison LaForgia, Managing Editor of
00:12HousingWire's Content Studio, and today I'm with Joey McDuffie, the VP of Sales and Marketing
00:18at Blue Sage.
00:18Joey, thank you for joining me.
00:20Thanks for having us.
00:21I'm so excited to sit down with you and talk to you first a little bit about your role.
00:26Blue Sage is a company with deep roots in enterprise mortgage tech.
00:31Can you tell us a little bit more about your role and about your experience in the industry
00:36and how that shapes the way that you work with lenders today?
00:40Surely.
00:41Not to date myself, but I've been in the business since 1993, and actually my first job in mortgage
00:49technology was back when we were moving all of the deeds of trust and mortgages from letter
00:55to legal.
00:55And legal the letter.
00:58And so I really got to understand the nuts and bolts on how data was used and how you
01:04close a loan.
01:06From there, I actually moved into support and implementation, and ultimately, I became head
01:12of training.
01:13In college, I was actually a TA.
01:15So it was great interacting with our employees and our customers, and ultimately, our head
01:21of sales actually went in a different direction.
01:24So somehow I was talked into getting into the sales role, and I really enjoyed being out
01:31in the field, solving customer problems, arguing with the platform, so I could kind of bridge
01:35that gap.
01:37And that was exciting for me.
01:38Fast forward to Blue Sage.
01:41I actually joined Blue Sage because of not only the technology, but the people at Blue Sage.
01:48Over my career, I'd never worked with anybody this experienced.
01:54I think our team actually has an average of about 20 years of experience across the board.
02:00So what that means to help clients is that when there are changes in the industry, when
02:05new innovations need to be made, they can actually get to them very quickly.
02:11So that way, we can help our clients a lot sooner, rather than some of the newer guys that are
02:16just getting their feet wet.
02:17So you just mentioned what made you interested in joining Blue Sage and some of the talent
02:23that the company has.
02:25Let's take two steps back for someone who's maybe unfamiliar with Blue Sage and talk about
02:30how you would describe the company and how its mission helps lenders meet the needs
02:39in a rapidly changing market like we're in right now.
02:42Sure.
02:43Yeah.
02:43I mean, I think from its inception in 2011, so we've been around for a while, we wanted
02:50to create the most modern, you know, end-to-end integrated lending platform to help drive efficiencies,
02:58reduce cost, and actually provide a great borrower experience.
03:02So that's really our mission statement and really is how can we get more people into houses
03:08easily, how can we help lenders, staff, actually make it easy for them to actually be a lot
03:15more productive?
03:17And, you know, from the beginning, our architects, our designers have actually created a platform
03:21that's all API first.
03:23So that means we can actually plug and play as technologies change, like AI, et cetera,
03:28as those things grow and mature.
03:30We can actually get those things in a lot quicker to support the changing environment in lending.
03:37As a matter of fact, over the last few years, of course, verifications, validations, those
03:42things have actually moved up in the process flow.
03:45So we can easily plug and play those into our POS so we can get decisions faster and make
03:51it easier to get approved.
03:53Now, that's all very exciting.
03:56But the reality of today is that there's a lot of conversations about platform consolidation
04:01and the need to reduce tech blows, specifically.
04:07So how is Blue Sage helping lenders streamline operations and what impact does that have on the
04:14cost to originate?
04:16Yeah.
04:17So I think really, in essence, that's why we created what we call the digital lending platform.
04:22So really, it's the only combined POS, LOS written, you know, natively from the ground
04:27up that includes a loan officer portal, loan officer mobile in the market today.
04:33And, you know, what we find is as clients move over from kind of a bifurcated process,
04:38you know, a POS and then an LOS, what's interesting is there's a lot of data loss.
04:43We wanted to actually get rid of all that.
04:45So there's one set of data, no matter if I'm in the LOS or the POS, and it's all exchanged.
04:50So as a borrower changes and uploads documents, makes changes to a loan, the LOs see it,
04:56the operations staff sees it.
04:58As they actually operate on the loan, the borrower sees that.
05:01So I think the biggest thing is that we created this platform to kind of bridge that gap of
05:07legacy platforms where there's a lot of bolt-ons and bots, which I call digital duct tape.
05:13And they're very fragile.
05:14They're very, you know, they can break very easily.
05:17And they're very costly.
05:18So from a cost-to-originate perspective, I think most folks actually look at what is
05:23my POS cost per loan?
05:24What's my LOS cost per loan?
05:26But they forget about all of these, the bots and the bolt-ons.
05:30We just finished doing an evaluation with one lender, and they had about 20 of these.
05:34And what we found was that 18 of those at first glance could be just natively supported
05:39in the Blue Sage platform.
05:42So again, using that.
05:43And then the other big piece of the puzzle is automation, of course.
05:46We have clients that, since we're API first, we have clients that are actually doing automation
05:52of disclosures, automation of skills-based routing for loans.
05:57And again, what we find is using a combination of APIs and automation, they've actually cut
06:04their approval process for portfolio products from three to seven days to 30 minutes.
06:08So ultimately, with a consolidated platform kind of normalization, the cost to originate
06:16right now is anywhere from $11,000 to $13,000, depending on who did the study.
06:20And again, what we find is about $1,000 to $2,500 can be removed from that by automating
06:28manual tasks, consolidating platforms, and eliminating vendor overlap.
06:31So it sounds like there's not just benefit in reducing the cost to originate, but you're
06:37also providing a better experience for not just the lender, but also the borrower.
06:42That's right.
06:42Yeah.
06:43I mean, one of the big things that we've really focused on, and we have a dedicated team for
06:47this, is the POS piece.
06:49We actually want to make sure that they're in the loop.
06:52I mean, in this day and age, as we all know, we want to actually order our Amazon product and
06:58get it tomorrow, right?
06:59So borrowers expect the same kind of level of service.
07:01So with our POS, and we've actually gone through studies where we've been very highly rated
07:07on the POS side, we want to make sure that they're kept in the loop all the way throughout
07:11the entire loan lifecycle.
07:13And it's not just a borrower MLO kind of relationship.
07:17It's also the appraisers, the realtors, the brokers, the settlement agents, so that everybody
07:23can understand what's going on from a borrower engagement perspective.
07:26So we can also drive that business back for recurring business going forward.
07:32This sounds really exciting.
07:35But we know as an industry, implementation has been a problem for when you go to switch
07:41LOS, especially when you're going for an LOS transformation, right?
07:45So what has BlueSage done to accelerate deployment and even reduce complexity for lenders?
07:54Because this can be a really complex, arduous process.
07:58That's right.
08:00You know, you can have the best technology in the world, but if you can't implement it
08:03and the lender can't get the ROI that they expect, what good is it, right?
08:07So a few years back, we were really focused on this aspect of interacting with clients.
08:13And we really focused on three things.
08:16How can we change our process?
08:17How can we make the product better?
08:19And how can we create more tools to enable both us and our clients to make changes faster?
08:24So for the first one, we actually hired a very experienced PMO.
08:29She came from Morgan Stanley.
08:31She actually really focused on repeatable project plans, project visibility, and issue tracking.
08:39And I know it's not a feature function, but it's just as important to make sure that everybody's
08:44doing what they need to do and we're marching towards the same deadline.
08:48So having her in place actually really, you know, that no matter what size lender, whether
08:54it's a mid-tier or an enterprise lender, having that rigor in place really made a big difference.
08:59Secondly, we've really focused on creating what we call a reference build.
09:04So with a reference build, it's a pre-configured system so that within six weeks of a client signing,
09:09they can go in and they can actually start playing with the system.
09:12It has, you know, best-in-class integrations with PPE vendors, dock providers, all kinds of integrations.
09:20And that's all built in so that they can really get a feel for how the system can help them.
09:26And, you know, before they even start, before we start implementing.
09:30And then for the next step, in order to increase the implementation even faster,
09:35we've gone in and we create, we do workshops with each client so that, you know,
09:40we go through functional areas and say, why won't this work versus what do you want?
09:45And I know that's a very nuanced conversation and question, but what we find is, you know,
09:50clients have always done it this way or they have some kind of system limitation of this is
09:55when we get under the covers, that's why they do it that way.
09:59And what we find is they can adopt that out of the box, you know, that profile.
10:04We even had a lender that does hundreds of loans a month using this approach,
10:08go live in about six months.
10:10So very exciting that that happened recently.
10:14And it's all because of this process change and using those workshops.
10:18And then lastly, just to kind of mention, we've created a number of change management tools
10:23to apply changes very easily and rapidly, whether it's Blue Sage personnel doing that
10:28or if it's the client.
10:30So that way we can actually get changes out from test to production a lot quicker.
10:35And all under this umbrella.
10:38And that's not only during implementation, but going forward once they get into production.
10:42So speaking of new features, AI is top of mind.
10:46There are lots of different companies that are suddenly AI powered.
10:51How is Blue Sage differentiating itself?
10:56And how are you applying AI to improve the lender and borrower experience?
11:03Sure.
11:04Yeah, AI is certainly the buzzword of the day.
11:07I mean, we're here at the Housing Wire Conference, which we're excited about.
11:12You know, I was reading the other day that AI actually, you know, AI may not replace your job,
11:19but somebody using AI will, right?
11:21So that's a big thing.
11:22And then I was at a conference recently, and they projected that you could get another 470 hours
11:28of productivity out of your year if you use AI.
11:32If you think about that, that's really providing you with 15 months of something versus 12,
11:38whether that's getting more leads, spending more time with your family, or, you know,
11:41doing more loans per person.
11:44So from an AI perspective, we haven't really sat on our laurels.
11:49We've, you know, we've actually been using AI for a couple years now.
11:52Our first foray was to work with a client that did portfolio loans and analyze their entire
11:59portfolio of HELOCs to figure out how we could make decisions faster and better versus the old
12:05FICO LTV matrix.
12:07So that was, you know, we've been doing that ongoing for two years.
12:11We've also incorporated AI into our doc management platform so that we can do a lot better
12:16classification and extraction.
12:19We use that in conjunction with our income analyzer.
12:21So we can pull data off pay stubs and other documents, and then we apply a confidence factor.
12:26If that confidence factor is over a certain threshold, then we can go in and either auto
12:30clear a condition, or we can go in and we can actually auto escalate that for the borrower
12:36to actually provide a different set of documentation.
12:39So that's another foray.
12:41And then lastly, we have just released our AI sales agent, which we're excited about.
12:47And this is a companion product to our loan officer portal and our loan officer mobile
12:53so that LOs can use basically a chat GPT-like interface, ask any information about their contacts,
13:00their in-process loans, do scenarios, guidelines, compare products, you name it.
13:05And the nice thing about that from an LO perspective is there's no ramp-up or training.
13:10There's no screens.
13:11There's no menus.
13:12There's no fields.
13:13It's just, what do you want to do?
13:15It is a very, having seen it, it is very cool, and it is very user-friendly and intuitive.
13:20And it sounds like there's already been intentional work on Blue Sage's thought process for years
13:27with AI incorporating it.
13:29And we've been very deliberate about it because, you know, the nice thing about it is, you know,
13:34going back to our inception of having an API-first technology is that as these models get better
13:40and better, we can replace them very easily.
13:42So, you know, again, we have all of that data at our fingertips, not only in our system,
13:47but we have the entire world at their fingertips as well.
13:51And I think having that from a loan officer perspective is our first foray, but we're actually
13:57doing the same thing on our POS for customers to help them across their customer journey of
14:03both applying and interacting with the loans going forward.
14:06So it sounds like you just alluded to what's next.
14:09Talk to me a little bit more about what the next big opportunity is for Blue Sage and for
14:16lenders who are looking to scale, especially for those who maybe don't have the resources
14:20of a top 10 lender.
14:22Yeah.
14:23You know, what's interesting about that is that, you know, what we see with some of the
14:26larger lenders, their tech stacks are very old.
14:29There's a lot of legacy, you know, stuff involved.
14:32Let's call it stuff.
14:33Very technical word there.
14:35And with some of the mid-tier IMBs and other entrants in that space, it's a lot easier for
14:44them to adopt technologies.
14:45The decision timelines are a lot faster.
14:48And what used to take months and years to implement, especially in some of the larger
14:52lenders, we can do in days or weeks, right?
14:55And I think having that access to an integrated platform provides that agility and that nimbleness
15:03that allows those folks to compete against other folks that are much larger.
15:08The other thing is that as these folks go in and adopt, you know, let's say auto condition
15:15clearing that we're doing, what we're finding is their processors or their underwriters can
15:19actually achieve about three to five hours of efficiency.
15:23So what if you could double your productivity in one day instead of actually, as a traditional
15:29mortgage, you know, our industry has always been cyclical.
15:32You know, when loan volumes are high, let's hire more people.
15:36When loan volumes are low, let's do a normalization.
15:39So this allows them to kind of compete or really compete against those larger lenders and having
15:44prepackaged, you know, products and software to give them that access to, you know, what
15:51all the large lenders do, but to be able to implement that quickly and then realize the
15:56ROI sooner is really where they can compete.
15:58Well, what a great note to end on.
16:00Joey, thank you so much for being here.
16:02Thanks for having me.
16:03All right.
16:04Thank you so much.
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