00:08In Dallas, Texas, I'm Allison LaHorja sitting down with Michael Crockett, the COO of Zactus.
00:15Michael, thank you for joining me today.
00:17Thank you for having me.
00:18Do you think AI is at a similar inflection point for the mortgage industry that we saw
00:25when we went digital? Or do you think this is bigger than that?
00:30It's bigger than that. Digital was simply looking at some of the areas that were manually being done
00:38and that you could bring some consistency and that you could have it flow a little bit differently
00:43through your workflows. With AI, AI is truly making decisions. AI is truly looking at information and
00:51being an extension of a human brain, if you will, and then making those decisions and moving forward.
00:58My only concern at this point is trusting of it without monitoring it, because we don't know
01:06where it's all going to take. Because what if all of the right decisions are being made,
01:10but then you somehow end up in some type of disparate that you are targeting and profiling
01:17in your results. And it's all done correctly, but it's done in a vacuum without looking at it. And the
01:26we have a fair lending concern. Those are the areas that it could lead you to. However, the difference
01:33that I see AI, it can pivot and it can change with a simple decision put into its system and
01:42now
01:42recognizing what it's doing. Whereas the digital was more static. It is, yes, it was moving. It was
01:48taking us from pen and typing it to more digitizing and extraction of data, but it was only at certain
01:57points, not from a decision making.
01:59What do you wish people considered or thought out more intentionally when they looked at actually
02:07taking AI and applying it into their operations?
02:14Where they see vulnerability in their process. And that's hard when you are looking at the
02:22vulnerability very well maybe in your most senior people, right? Because stuck in your ways, it's been
02:30done the same way and we haven't had issues. It's not a proper answer when you're trying to move forward.
02:37So when you look at it and you have to look at it truly with open-mindedness of where there
02:43is smoke,
02:45there probably is fire.
02:47Do you think from an adoption standpoint, there's any perhaps trepidation over the fact that people
02:56are concerned with this replacing them?
02:59Most definitely. Especially, let's face it, in the mortgage field that we're in and certainly as you
03:07start getting in the underwriters and those of us who have been doing this for a period of time,
03:12you hear AI and you hear job replacement. It goes simultaneously in your mind. However, when you look at
03:22bringing AI, it's the scalability that it brings. It's looking at the company should be looking at it
03:28as how can we grow without having to add, say, additional personnel, not to eliminate personnel,
03:34but how to grow without having to hire as many people. Still, there'll be people, but it's not a
03:41replacement. It's an extension and it gives the great minds an opportunity to do what they do great and
03:48specialize in those particular areas. And some of the more data that we would say these are
03:54decisions we're making, we know it, we can make them in our sleep. Well, let's allow AI to make
03:59those decisions.
04:01Do you think that AI has the capability of helping the mortgage industry get rid of our dirty secret,
04:08which is the hiring and firing cycles that all of us have lived through at least one of?
04:15Yeah, I think the ebbs and flows that take place is now that's interest rate driven. I think that is
04:20about the business and the type of business that one may be into whether it's in, you know, the
04:25wholesale to retail, if it's in the refi, that's still going to take place because that's interest
04:30rate driven. But would we be able to say now my scalability that I know for me to take on
04:37new
04:37business during these influx of business times, we don't have to go and make a massive hire
04:43knowing that it's only going to be temporary. That's the piece that I think the industry will
04:49certainly enjoy and it'll give us an opportunity to have more of the veteran minds in this industry
04:55that knows they can stay there because it's not a matter of where am I going to be next year
05:02or when
05:02rates change or if they increase so much or am I going to get back in it because now we're
05:08in a
05:08refi boom. Those are things when you can keep the same type of employees doing those jobs,
05:14the industry will be better for it because we're going to have more qualified people
05:18with more purpose in the jobs that they're doing.
05:21Do you think that that helps with the increase in complexity that we're seeing from the borrower
05:27side where we're seeing more complex financial backgrounds, multiple jobs needing to get verified
05:35and an all around more complex transaction?
05:39And that's where I would say the scalability comes into it because now you don't have to
05:45staff differently for a more complex file. For example, if I do have
05:49an individual that has various income types and they're 1099, then you're going to have to
05:57go through their returns. Now there is automation that can come and actually do those calculations
06:03at scale without having to add people. But again, I'm still going to add the important pieces and human
06:10looking at that and making sure that not just the documentation that's given to us, we can't always
06:16assume that it is true and accurate, right? There are the checks and balances that we have to look at.
06:22And by bringing AI into it, you now are limited as to how much that same scenario is going to
06:30take
06:30a processor or a loan officer, you know, half a day to go through and spread the tax returns and
06:36so
06:36forth. Whereas with AI, it's able to be done in a matter of minutes.
06:40Now, we've been talking a lot about the lender experience here. So I'm going to throw you a curveball
06:47and ask you if you think there's a net benefit to the end user, the borrower, because at the end
06:54of the day,
06:56they're really collectively still our focal point, right? And we are ultimately an industry that does
07:02serve the purpose of helping people achieve more home ownership sustainably.
07:07I think you get more consistent in the result, right? The variability is taken away with AI.
07:16I also believe that the best thing that is to come when you start talking efficiency,
07:22it will eventually equate to cost savings for that end user, that consumer, I borrower,
07:27which at the beginning of all of the various things that have been talked about, new scores,
07:33you know, how we're going to go, the various regulatory requirements on verifications and
07:38things of that nature. It's all ensuring that we get the accurate borrower accurately being able to
07:45be assessed. And then if you're able to do that without adding more costs, more product,
07:50then in the end, the borrower is going to win. And the more borrowers that win,
07:55the better we're going to be as an industry.
07:59Crockett, what's your favorite use case right now?
08:04Um, I'm going to go probably more in the verification of employment and income side of it,
08:10simply because there are methods, there are so many very variable places we can gather information,
08:18but as we can gather information and then bring it concisely, meaningful data and present it to
08:25the underwriter, to the loan officer, uh, the processor and able to make those decisions,
08:31we are seeing that, that that's something that they're happy about. Right. And our goal,
08:39my goal from a COO perspective is the client experience. I want everyone that deals with
08:45Zactus in particular, but this is an industry statement as well, that it should not be painful.
08:51This should be a joyous occasion when people are actually going and obtaining their American dream,
08:58being able to help and facilitate that and be a part of it, doing it where it's now accessible to
09:05more, but not putting them out into a situation where they're not ready or not qualified.
09:12That's important. And when we start getting more homeowners home ownership for people that are
09:18really and truly qualified that want to make that next step in that next effort,
09:23we're making that available to them.
09:26You said something that stands out to me and you said partner with Zactus. How critical is that piece?
09:35Because typically you don't see any type of vendor relationship positioned as a partnership. So
09:41talk to me a little bit more about that. Partnership is, it's imperative that when we are an extension,
09:48I have, we have several clients and we, we are blessed in that regards, but they have different
09:53needs. They have different workflows. They have different desires. Uh, there are different types of
09:58shops and we have to be able to accommodate all those differences, us going in and saying,
10:05this is the way to do it. And what, like it or lump it, or this is a verification is
10:10a verification
10:11is a verification is not how we approach it. We are going in, we are truly concerned and want to
10:17know
10:17your workflow so that we can be an extension of all of our lenders. And as an extension,
10:24that means you view us as a partner when there are issues. Um, there's no blame that we are going
10:31back and forth. We're now looking and seeing where are we, where's the process breaking down
10:35and we have transparency so that we're able to go into our process that we're doing for them as
10:41an extension, as a partner, but we're also able to go into their process, their workflow and say,
10:46if we were to do it in this manner, could this help you? And when you have that type of
10:52relationship,
10:53openness becomes opportunity. And we've seen countless situations where our recommendations or
11:03a lender's recommendation of how we should do it has been taken and we've gained nothing but
11:09credibility. And in the end, a great success for both us, the lender and ultimately the consumer.
11:16So Michael, what's the next piece that you're excited about everyone seeing of your vision
11:23as the COO over at SACTUS?
11:26I want our culture to stand out. I want it to be known that everyone from the entry level
11:34person that you speak to, to the president and the CEO of our company,
11:39we all have the same goal. We have the same interest. You can pick a phone up literally today
11:45and you can get to our president. You can get to myself. You can get to
11:49the processor who did the front end work on it and you're going to get a consistent answer.
11:55And that if we don't know, we don't make things up. We go back in and we understand
12:00we're not perfect, but perfection is our goal.
12:04I love that. And I love how you take that vision and that bleeds through in your approach
12:12to when you work with partners.
12:14I think everyone sees it certainly from a SACTUS perspective. We're out on the road quite a bit
12:20and it's not just going out peddling credit reports anymore. We have evolved and we are a true
12:29verification technology company. And in doing so, we love to hear the pain points and we love to
12:36solve problems.
12:37Who wouldn't want someone to come in and solve their problems? I would love that.
12:41I would love it. I ask for it daily.
12:44Well, Crockett, thank you for letting me pick your brain. I can't wait to see what's next for SACTUS.
12:49Absolutely. Thank you.
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