Sue Woodard on where AI fits in the mortgage landscape

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Sue Woodard, Senior Advisor at the STRATMOR Group, to talk about the state of mortgage origination and where tech, especially AI, fits in that picture. Sue has decades of experience in origination, fintech and lender advisory work and is now a strategic advisor at HousingWire.   Related to this episode:   Sue Woodard joins HousingWire as strategic advisor  https://www.housingwire.com/articles/sue-woodard-joins-housingwire-as-strategic-advisor/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Total Expert visit totalexpert.com   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:07Welcome, everyone. My guest today is Sue Woodard, Senior Advisor at the Stratmore Group, to talk

00:12about the state of origination and where tech, especially AI, fits in that picture. Sue has

00:18decades of experience in origination, fintech, and lender advisory work, and is now a strategic

00:23advisor at HousingWire. Before we dive in, I want to thank our sponsor, Total Expert,

00:28for making this episode possible. Sue, welcome to the podcast. I am excited to be here, Sarah. Thank

00:34you so much. I am so excited to have you here. So you recently joined HousingWire as a strategic

00:40advisor, and we could not be more excited. You've written your first article for us. You are already

00:46advising us on a lot of really important things on our events. And so I'm thrilled to have you on

00:52the

00:52podcast just to introduce you to the parts of our audience who don't know you, and also to pick your

00:56brain about some of the things that are going on right now. That sounds fantastic. I was thinking

01:01I should perhaps wear a silk shirt to really be in keeping with some of the HousingWire podcasts,

01:07but I went traditional. You know what? I appreciate whatever and anything you want to do to look like

01:15Logan or not, but you are your own person, so I'm super excited. So, of course, much of our audience

01:22will already know who you are. You have been a C-suite executive, advisor, board member. You have

01:28just done a lot over the course of your career. So, and you're going to continue, you know, right now

01:33you're the senior advisor at Stratmore Group, a really different senior advisor there. That means

01:37something different than what we're doing here. So maybe you can tell us a little bit about your

01:41background. Yeah, just, you know, like most people I have, you know, we all have a weird story about

01:46how we got into the mortgage industry. I was actually working in financial services at a credit

01:50union and our branch kept getting robbed. And I was like, I need to find a job somewhere that's a

01:55safer branch. And the job that was open was a mortgage processor. So about a billion years ago,

02:00I started as a mortgage processor and did kind of everything on the operations side, but I really

02:05fell in love with originating. So I was an originator for a long time, then became a national sales

02:10trainer and a leader at different mortgage companies. And then I made a transition over into the

02:15the technology side and got to work with a lot of great companies, most recently total expert. I was

02:19chief customer officer there. And then yes, I've made the move over to consulting over the last about

02:24five years, continued to do a lot of public speaking. But just I think like many people, you kind of

02:31fall

02:31in love with this industry and the business because we're doing something meaningful. You know, we're

02:36helping people get into homes where families happen and life happens. And I think it's, and it's

02:41generally the largest financial transaction of people's lives. So that gives me a lot of purpose

02:47and meaning in the work that we do together. Okay. So it's not, it just fits. I think of you,

02:53first of all, as a storyteller, I think it's one of your really, your gifts. So, you know, if you

02:58looked at your background, it's like, it's got technical roles, it's got all these different kinds

03:02of roles. But from my perspective, something that I've known over the years is just your storytelling

03:06ability. And so it's interesting to me that the way that, you know, part of your, part of your

03:12origin story was a bank robbery. That's terrible. Well, it was, it was exciting, you know, but it

03:17is, it is interesting. We can all look back at different junctures of our life and career. And

03:21sometimes it's the craziest things and sometimes not positive things that happen. But we say, man,

03:27if that hadn't happened, I wouldn't be able to do what I'm doing now.

03:32And I feel like for our industry, you know, we've all talked about, there's no linear path,

03:36like, okay, I'm going to go to school to be a real estate agent. I'm going to go to school

03:39to

03:39be a mortgage loan officer or whatever it is. Like most people either fall into this and a friend

03:44invites them in. It's a family connection. It's something completely random. And then here we all

03:49are like 20, 30 years later. Yeah, it is interesting. And you do, it's a great icebreaker. If you're meeting

03:55somebody in the industry is how did you get started? How did you get here? Where have you been? And

04:00where

04:01you headed, right? Well, I'm a true crime fan. So I'd be like, Oh, that's awesome. I was like,

04:05Oh, that could have been traumatic. I should not be so excited about the fact that you were part of

04:09a bank robbery. So it was crazy days. Yeah. So, so excited to have you on board. You know,

04:16when, um, what we're looking to do at housing wire is to help the thing that undergirds everything

04:21is helping housing professionals make better decisions faster. And that's one of the reasons we,

04:26we brought you on is to, um, work with our executive team to help us do that. It, whether

04:31that's content or, um, event content strategy, things like that. So super excited. So let's

04:37dive in. Cause one of the things that I think is unique about your background is that you

04:41have that origination part. You also have the, the technology angle, right? Uh, you worked

04:47with total expert. You have in many of your roles, there's been a technology aspect. So let's

04:52dive in right now and say, here we are, it is 2026 and the cost to originate, uh, a mortgage

04:58loan

04:58is still, it's over $11,000 despite all of our technology. You know, why is that? What is the

05:05disconnect there? It's interesting when, when I think back to, it was probably to the post 2008

05:11when people really started talking about this digital revolution and all this technology was

05:16going to come into place that was going to dramatically reduce the cost to originate.

05:19And we all had these magical dreams about all the technology, all it would do, and it would all

05:24flow together seamlessly and everything would integrate and it would just be magic. And, uh,

05:28how many years later we're sitting here nearly 20 years later, and that literally has not happened.

05:34And so you do have to start looking at it and saying, okay, what are we going to do? Um,

05:38a good

05:39thing that's happened. We were talking a moment ago about sometimes you go through something really

05:43hard or bad, but it brings something good that wouldn't have happened. Otherwise, I definitely can say

05:49the very challenging market that we've endured for the last few years has caused both lenders and

05:54technology companies to sharpen up their, their strategies around engagement, around adoption,

06:02um, around, um, ROI and what does that really mean? And those things are always paid lip service that

06:11they're important, but I think lenders are really taking a very hard look at their tech stack

06:15and making, making tough decisions. And the, the conversation that I think is also so interesting,

06:21we won't go into today, but this, the whole conversation about, can one or two technologies

06:27do everything end to end? You know, we kind of started that way. And then it was like, no,

06:31everybody's going to specialize and all integrate together. And now there's conversations saying,

06:35well, should there be more of a move to an end to end? So it's very interesting, but I'm,

06:40I'm excited to see because I have spent a lot of time working on, uh, especially engagement and

06:45adoption of technology, um, you know, for lenders and what does that look like as well as ROI. Um,

06:52I I'm glad that some of these conversations are happening because I think people are paying

06:57attention in a different way. I think the thing that always surprises me, but it shouldn't is that

07:02just that you have these very successful, uh, loan originators, their companies go out and spend a lot

07:09of money, a lot of time, a lot of effort to give them tech technology tools that they can use

07:15just,

07:15and they just simply don't do it. And that that has been allowed for decades, right? Like, oh,

07:20okay. You can just choose not to do that. So I do think that that's always surprising me at the

07:25same

07:25time. I go, you know, what we're fighting there is human nature. So what I'm asked is like, well,

07:29why is it so hard to get people to adopt? It's like, well, why is it so hard? You know,

07:33I mean, you're a human being and you don't like change. Yes. Yes. That's so well said. And one of

07:38the

07:38things that from anybody who knows me, um, has heard me say that I cannot stand this narrative

07:45of, oh, the loan officers are just so lazy. And that's, I dislike that narrative very much,

07:51not only because I was a loan officer, but yes, there are lazy loan officers. There are lazy

07:57underwriters. There are lazy executives. There are lazy podcasters. There are lazy doctors and lawyers

08:01and attorneys, you know, all of these things. And there's, and generally speaking, lazy people don't

08:06go into a hundred percent commission based businesses. So I feel like it's a, it's frankly,

08:11a lazy way to describe and try to solve the problem. And if either a lending executive or a

08:18technology company is going into conversations about adoption and engagement with a mindset of,

08:25oh, the loan officers are just so lazy, you're not going to solve it very well or very efficiently.

08:29And so that mindset is one. And generally speaking, the meetings that I'm sitting in with all

08:34these lovely people around the table from tech companies or lenders, they are there being paid

08:39on the backs of these lazy loan officers, right? So I dislike that phrase. And I do think what you

08:46just said resonates so much. It is human nature. So I think that puts a lot more onus on tech

08:52companies

08:52to say human nature is human nature. And so just like consumer apps, you have to work with how humans

08:59work and you have to kind of create that, that happy path that brings the right outcomes without

09:05it being really hard. You have to put yourself in the mind of a loan officer and say, how do

09:08I create

09:08that happy path? Not sit here and complain about, well, it's just not that hard. You just have to

09:13get in here and log in there and put in your password and remember all these things and do the

09:17dropdown. That's not easy for a loan officer. So there's pressure on both sides, both on the lending

09:22side to dispel that, that myth, as well as on the technology side to do a better job of making

09:27it easier.

09:28That is, that is a great way to describe it. I love that. I, you know, so I started at

09:34HousingWire

09:35in 2013 and I felt like at that time we were just like all the conversations about like all these

09:40tech

09:40companies were coming in. So you had Silicon Valley coming in and being like, I tried to get a mortgage.

09:45It was hard. I realized how backwards the, you know, this industry was. And so here's my solution.

09:51And they would lead with that. And I was like, that's so insulting, first of all, because people have laid

09:57the groundwork in a very regulated industry to do that. And so I've definitely seen that change over

10:02the last, say five, six years where it's like the people coming in understand that there is more

10:07sophistication in, in mortgage. And there is just absolutely, it is tough. It is a tough business.

10:12It's tough from a regulatory standpoint and it's harder than it looks. And that's what I see.

10:17You know, when we see a new tech company come on, we, we cheer on everyone. We hope that it

10:21works.

10:22We also go the hubris of coming in and being like, oh, I'm, you know, we're God's gift to the

10:27mortgage industry. It's really not the best way to start. It is not. And a lot of the work we

10:31do

10:32at the Stratmore group, specifically in the program that, that I work with the solution provider

10:37advisory, we, we work a lot with tech companies and it is interesting from folks coming inside the

10:43business, but especially outside the business, there is this mindset of, oh, you know, it's, it's not that

10:49hard and it's like, okay, but you haven't, you haven't been doing this. Um, always like, I love

10:54when people come from outside the industry because they do tend to bring a different viewpoint. They're

11:00not constrained by, you know, it's always been done this way or we'll never get people to do this,

11:04or this will never change. So I appreciate, uh, some of the new ideas and the vitality that they

11:09bring, but it is important to marry that with, you know, how things work and some of the challenges

11:16that are there and build upon rather than discard all of the great work that has been done to bring

11:21us to the point we're at, you know, stand on the shoulders of all the people that have come before

11:25you rather than just pushing them out of the way and assuming they don't know anything.

11:29Love that. No, that's a great perspective. Well, let's talk about AI because of course this has been

11:33the conversation and, um, actually I think it's, it's really an interesting conversation right now

11:39because there might even be some backlash against AI, right? But I think it depends on what you're using AI

11:44for how you're explaining it to people. What, you know, so where do you, from your perspective,

11:50what are you seeing that's really interesting about how people are, are implementing AI within

11:54mortgage? There's so much to talk about there, but, um, I'll try to be succinct as possible.

12:00Um, but you're right. As we talk about adoption, you know, some of the challenges are when these

12:04solutions are coming forward and you're telling, um, operation staff or underwriters, Hey, use this thing

12:10and teach it everything, you know, and let it learn. You can't help. And it's not just in the

12:15mortgage industry, outside the industry, there's a lot of statistics and studies where the majority

12:20of people have a concern of varying degrees of, is this going to come in and replace me? So, um,

12:27so you can, you can see why, you know, this would be challenging in terms of engagement and adoption.

12:32Um, but I do think that some of what I've seen the, the really smart companies engage in are to

12:38really think about the use case and be very, uh, relentless about picking first a use case that is

12:45going to serve and support and help your people and not feed into this thing of, Hey, this is probably

12:50here to replace you, but we want you to do it anyways. Um, so whether it's on the, the, uh,

12:55origination side, the production side, or the operation side, I think it is going into it with the,

13:00the eye for your people and how this is hitting them. And also realizing that this, uh, technology

13:06AI in particular is, it is moving so fast. I don't have to tell you or anybody listening.

13:11It is ridiculous how fast it's moving and it's moving faster than we mere mortals can keep up with

13:17and try to figure out and try to adopt and adapt. Um, so the, the smart companies I'm seeing are

13:23one

13:23of the, you know, there's a couple of like best practices that I've seen is they're starting somewhere,

13:27but they're being very realistic about why they are selecting this particular tool. What outcomes

13:32do they actually expect it to have being clear about that? Um, I've seen people develop, uh,

13:39internal committees of people before, during, and after the implementation of an AI or technology

13:45tool, but they're engaging people in this, uh, kind of committee where, um, it's taking people from

13:52across the entire organization, someone from processing, someone from underwriting, someone

13:56in all these different areas, because for two reasons, number one, because there are a lot of

14:00unintended consequences that we see with, uh, technology, with AI, there's an impact somewhere

14:06internally or externally to the customer or somewhere that you might not see until later.

14:11And so why not get all the eyeballs on it as soon as you can? And secondly, you can start

14:15to

14:15lower those defenses, dispel the myths and rumors, explain clearly what you're trying to get at.

14:20And I'm not saying that jobs are not going to be replaced by AI. They, it's already happening.

14:27Right. And that's just, that's reality. That's in the world. This is not just mortgage industry,

14:31but I think you can help to build champions within your company and people that will, um,

14:37get on board and help this not become an us versus thing, uh, us versus you thing inside of the

14:43company. So those are a couple of the things that I think are really, really good best practices.

14:47I'm seeing people use, you know, I think we've seen for, for decades, like, Oh, this new technology

14:52is going to disrupt whatever real, you know, real estate agents, mortgage loan officers,

14:58you know, whatever, you know, insert job there. And what we've seen is there are parts of that

15:03process that people want a person to interact with. And there are parts they don't care. They

15:08don't see it. It's in the backend. If, if you could do that more efficiently and lower my cost in

15:13some way, great. Yeah. But like, there is a part of this where I want to be in touch with

15:18a human

15:18being. Yes, absolutely. And, and it's interesting. Um, Stratmore group does a lot of secret shopping.

15:23And one of the things that is loud and clear is that the customer journey is still super broken.

15:29And it is something that when you secret shop these companies, the actual process, whether it be AI,

15:36tech supported human, uh, it's not a very good process in the majority of times. And so I think

15:45it's really important also for people to be paying attention to as you're implementing these technology

15:49solutions, it tends to become very internal facing. What is this going to do for us internally? How are

15:54we, Oh, look at all these things that are happening, but you're not putting yourself in that customer

15:58seat of saying, are we dropping? Are we, you know, our prospects just dropping off a cliff and we just

16:03suddenly don't talk to them anymore or after someone's closed, or what does it look like for

16:07the, the servicing transfer, which is one of like, that's a huge pain point for a lot of people where

16:12they're, you know, confused and upset. I mean, there's a lot of emotions that come up during a

16:16mortgage process. And so, yes, it is utilizing technology to do all the things that it can do

16:22to make us more efficient. And hopefully to your point earlier, bring down that cost of doing a

16:26mortgage, but it is finding those places of humanity and connection and, um, you know,

16:33particularly as we, you know, this is, it's going to be a purchase market. There's not a lot of

16:36revise to be done out there. Uh, a purchase transaction is an emotional transaction for

16:42the people we're working with. We talk about units. That's a human, that's a family. That's,

16:47you know, those are people as well as internally. Every time we talk about how many units I think

16:52about, well, some loan officer who's worried about maybe making their own mortgage payment did that

16:56unit. And that unit is a family that bought a house and moved across town. And so there is,

17:01we can't lose touch with our humanity, despite all the technology that I'm very excited about.

17:06We'll continue to make our processes better. I think that is a great point. And I haven't

17:10really thought about it before. Like when you, of course we have to talk about units, right? I mean,

17:14like we're, we're talking about numbers and stuff like that, but that has to be just on one part of

17:19the conversation and, and not, you know, not lose the reason that some of the people got into this

17:24business in the first and, and what gives them, you know, the motivation and the joy of,

17:29of their job, which is helping people get into homes is expanding homeownership along with

17:33a lot of other things. Okay. So when you look at this market, because we're in a pretty different

17:37market. Um, uh, although this, this year we were really hoping, yes, things are going to go back

17:43to normal a little bit and they have, you know, despite some, some crazy macroeconomic things

17:47happening, we've seen purchase demand hold up so far, so far, um, really, you know, better than

17:54expected. There are these, uh, other forces. What stands out to you about this market as opposed to

18:00others? Does it remind you of another time? Does it feel like very different? I don't know. It just,

18:06it reminds me of every tough time that we go through where it just seems like it will never

18:09end. And it always, it always does. But this one has been particularly, uh, particularly long.

18:16And I think at the beginning of this year, there was this feeling of, Oh, it's going to all be

18:21okay.

18:21We're going to have, you know, lower rates by the end of the year. And it was kind of a,

18:24Oh, finally. And now I feel like we've had to like catch our breath again. And so it just feels

18:30like,

18:30man, come on. Um, there are some, uh, positive signs out there. You know, the lock-in effect,

18:36um, it is dropping. I, I was looking at some stats just the other day where, uh, right now there

18:43are 22%

18:44of people have a rate over six and only 20% of people have a rate below three. And, and

18:49for a long time,

18:50you know, it was the other way around. And so that lock-in effect is, uh, declining, which I think

18:55can, can be a good sign. But I do think that we are having to continue for longer than we

19:02thought

19:02to really, again, kind of sharpen our, sharpen our implements and really be thoughtful about,

19:10um, you know, how can we do things continually more efficiently? How can we add, um, additional

19:15products perhaps so that we can serve different markets? You know what I mean? How, how do we

19:19seek out more production? How do we make our company a desirable place that people want to

19:23come work? I mean, it's just the reality. The pie is not as big as it used to be. And

19:27there can't,

19:28there isn't this feeling. I feel like people used to be like, well, pretty soon refis will come back

19:32and everything will be okay again. Um, I don't know when that's going to happen, you know, in any large

19:37sense based on where rates were. I will never say never in this industry because that's certainly

19:41proven me wrong many times. Um, but I think the most important thing that I get excited by is I'm

19:48seeing, um, more, I'm seeing people really execute on some of the things that they have thought about

19:54wanting to do. Not, I think hands are getting forced with, we are going to move forward with

19:59this thing. We are going to do this. We are going to, you know, cut this piece out because we

20:04can't do

20:04that. We are going to look into this way. I mean, just the execution that I'm seeing from a lot

20:09of the,

20:09the lending leaders, um, and some of it being because there's no choice except for to do something

20:16different. But I get excited about seeing the action, um, that a lot of really great companies

20:21are taking right now. Well, and we know that a lot of times innovation is born in these kinds of

20:26times

20:26where it's like, okay, well, how are you going to step up? How are you going to expand homeownership

20:31when, you know, you, you can't do a lot about that lock and effect. It is working itself out. So

20:36to your, um, point, I think product, it's really interesting. And also looking at that person

20:41and thinking of them more as a person and not like, oh, okay, they come in. I bet they're this,

20:45I bet they're, you know, like, I'm going to serve them this product, but like, how do I work with

20:50them

20:50to really get this done in a way that's good for them? Good for us. Right. So it'll be interesting

20:55to

20:56see how this year ends up. Well, Sue, I'm so excited that you, um, are advising us. Uh, of course

21:02you

21:03will be at the gathering. You're going to be on stage at the gathering. Um, you're going to be

21:07creating content for us. Uh, you are helping us, uh, you're advising us on our AI summit that's

21:12coming up, which I'm super excited about. So thanks for being on today, sharing a little bit

21:16of your background and your wisdom. And you know what? We will expect to see more of you going

21:21forward. Very good. Thank you so much, Sarah. I appreciate you. And thanks everybody for tuning in.

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