00:09from dallas texas i'm allison la forgia with housing wire and today i am sitting down with
00:14mike detweiler the ceo at mortgage cadence mike thank you so much for joining me today
00:20thank you very much for having me i'm glad to be here i'm excited to pick your brain because you
00:25have such incredible industry experience you've spent more than a decade in mortgage tech i want
00:33to ask you i'm so curious what brought you back to mortgage cadence well i sold mortgage cadence in
00:402013 left the business in 2018 when we started the business our whole idea was to automate the
00:50mortgage process so we embedded a rules engine into our los and the whole idea is it should be
00:56better it should be more predictable it should be faster we achieved that at some level but when i
01:02left in 2018 i did a lot of different things a lot of investing a lot of different businesses and
01:08then
01:08had the opportunity to come back in late 25 early 26 and with all the advances in tech particularly
01:16around agentic capabilities i thought we really can finally achieve the vision that we had back in the
01:23early 2000s and so i came back to lead that charge for mortgage cadence and that's why i'm why i'm
01:29here
01:29it's so exciting to hear that that was your vision years ago so it's already ingrained in the company
01:37itself and now you're really in a position where you can unlock that with all of the new capabilities
01:44that's right so an interesting thing is that as we look at tech it can become a very expensive
01:53conversation why are we still building expensive highly customized systems around what should be
02:03more or less a repeatable process it's a really good question um i've been involved in
02:11hundreds of implementations of technology mostly in mortgage but also in other industries
02:16and the common thread is that an in an industry whether it's mortgage or another one
02:24is faced with how do i do more with less it's in every industry and what really ends up happening
02:33is
02:33you're sitting talking with people that are assigned to that project that have a certain set of
02:39experiences that have a certain set of technology that they're familiar with they don't typically have
02:45broad multi-company or multi-industry experience and so they end up implementing what they know
02:53they implement new technology with the same processes that they brought along with them in their journey
03:01through mortgage and i think that's why we end up with a lot of fragmented and highly customized
03:07implementation because at some level the individual is implementing what they know
03:12and they're implementing what works in their department or what has worked for them previously
03:17and they're doing that with 10 or 20 other people in the room with it telling them what's possible and
03:23what's not possible and so you end up with a highly customized solution when that's never your intention
03:30so they instead of taking the opportunity to have a fresh start or bringing in perhaps things that
03:37should not be brought into the new system that's right people don't in many instances don't really
03:44know what the fresh start might be they don't have that vision they haven't had an opportunity to
03:50develop that now you've said something that was so interesting when we were first talking that the
03:58traditional los is on its way out what replaces it and what does that mean for how lenders actually run
04:07their business yeah good question um i would say that the traditional los is replaced by a loan
04:17origination system appliance so what's the difference well an appliance like a washing machine let's say
04:25when you want to do a load of heavy soiled clothes you just push heavily soiled the system knows what
04:36to do
04:36you don't have to program it you're not taking out the circuit board and having it run an extra cycle
04:42the system already knows what to do so when i refer to an appliance a los appliance it's a system
04:49that
04:50already knows how to handle very specific processes how to automate them how to order services how to
04:57handle the channel that the particular lenders in the type of product that the lender is offering
05:02and do it in an automated way it doesn't have to be customized it doesn't have to be programmed it
05:09doesn't have to be configured it's out of the box the goal is a compliant mortgage at the end of
05:15the process
05:15so if an appliance can produce that just like your laundry can be done by a washing machine that you
05:22push one
05:22button on a mortgage lending appliance can do exactly that and so i believe the traditional os that comes with
05:29months and months and months of implementation months and months and months of sessions of configuration of
05:36implementing old processes that are outdated is on its way out and i think what's coming in is a more
05:42automated out of the box mortgage lending appliance that is in that includes agentic capabilities out
05:50of the box you mentioned to me that you believe that lenders should spend less time perfecting their
05:58workflows and toiling in that space and more time focusing on acquiring customers why has the industry
06:07struggled to actually make that shift well i think they're being forced to we're down in dallas at the
06:15housing wire event and i've been in the sessions and most of the sessions have been about how do we
06:21acquire customers when everyone's competing for the same borrower in a high rate environment
06:27um so i think people are being forced to do it now but historically why they why haven't they done
06:32it
06:32i think there's a misunderstanding about the difference between certainty and speed
06:41and and lenders have been talking about speed for a lot of years typically when you're implementing
06:47a new los you're talking about speed you're talking about how do we make the process faster
06:53well jd power and associates their studies say that consumers are more interested in certainty
07:00and avoiding disappointment than they are in speed so setting expectations and meeting those expectations
07:07is really what satisfies a borrower in fact jd power says that satisfaction drops 41 points
07:17when a borrower has an experience that they weren't expecting so certainty matters and so when you talk
07:25about acquiring a customer i believe that being able to explain to your target borrower what they can expect
07:33and how you're going to give them certainty quickly and then meeting that expectation that's what creates
07:39customers for life people can go get loans anywhere they're on every every corner but what you have to be
07:45able to do
07:46is when a borrower comes to you they have to be able to know that i'm going to have my
07:52expectations set
07:53and that those expectations are going to be met
07:57it's so interesting that you mention that because i feel like increasingly with other industries that's
08:04what we've been told to expect if i can know where my groceries are in time and space before they're
08:10delivered
08:10or exactly how my clothes are going to come out when i go to wash them why can't i have
08:16that experience
08:16with what is the most important financial decision of my life right exactly and my guess is you probably
08:23have asked yourself that question you want that everyone wants that everything we do every day
08:31is driving that and feeding and fueling that expectation you order on amazon you get an email says it
08:38shipped you said you get an email that says it's on its way you get an email that says it's
08:42delivered
08:42if for some reason something goes wrong you're disappointed that upsets you but your assumption
08:48is that it's going to go just exactly the way that you expected it to go consumers and customers are
08:55going to demand the exact same thing for mortgage and already are doing it there's lenders out there i
09:01won't mention names but you can go get home equity from a lot of places the largest and fastest
09:07growing home equity lender is also the most expensive you can research it go why is that
09:13because they sell certainty and consumers buy certainty now mike we've talked a little bit about ai agents and
09:25how you're thinking about that full workflow ai agents could be handling everything from service
09:34ordering to qc and best execution what becomes possible when technology can validate every loan instead
09:42of relying on sampling yeah it's a good question about quality i'm gonna go a little bit further up the
09:50chain um agents do not work well in chaos and the underlying architecture of a lot of lending
10:03organizations so i i i i'm referring to platforms and systems that people use to manufacture mortgages
10:10are disconnected and even the ones that are connected are very complicated and they're configured in a way
10:16that it's hard to navigate for a user it's the exact same for an agent um and so the idea
10:23is that if you
10:24have a mortgage loan origination appliance that an agent can operate in and on the rails and you can
10:34you know research this this language the rails are the security sandbox that any age any any user any human
10:41user any agent would would carry with it so when you have agents in your system that are validating when
10:49a
10:49service was ordered that are analyzing the data in the system of record against the data that came in
10:55from a service order that's extracting the data and matching it you're basically building qa qc into the
11:02process and so it starts with having the right non-chaotic underlying system which i believe is a mortgage lending
11:09appliance putting the agent into that appliance to do very specific things have the human in the loop for
11:16high risk decisions or exceptions only and then by the time that the loan is at closing you allow the
11:24qc
11:24agents to go and validate the work that the human and the agents did together and then after it closes
11:31at closing you do 100 qa qc in a way it's like blockchain it's not blockchain for lending but it's
11:38very similar you know when the last service order for particular uh necessity was ordered you have the
11:46date stamp you analyze that date stamp and you analyze that service order and the data that's
11:50on that service order against what's in the system of record and that's how you produce the 100 quality
11:56control on every loan that comes out of a system so i do think there'll be disruption in the qaq
12:02qaqc space
12:03i think we will move more toward appliances and i think that the mortgage industry is right for that
12:09change will we achieve it we'll see you also talked about delivering certainty in days rather than
12:16months why do you think the mortgage industry hasn't made that experience the standard
12:23i think it goes to the complicated underlying systems i read a statistic that said that in the
12:33typical back office per department there is three to four days a month lost simply trying to navigate
12:43the system to navigate screens to identify when particular service orders came back i'm sure
12:50that your lenders will that listen to this part this podcast will um identify with checklists that say
12:58check and make sure that the appraisal came back check and make sure that we reordered credit or whatever
13:03the case may be that work is not necessary and so the more that with with agenda capabilities so the
13:10more that you can automate and have that validation where you're actually looking at things that aren't
13:15done instead of things that should have been done and validating that the the time will go down from
13:21weeks to days and that's what you'll be able to accomplish with a mortgage lending appliance like mortgage cadence
13:27now mike what do you think this next wave of agentic technology makes possible that the industry
13:39hasn't even considered yet
13:42again there's a session already today at housing wires event about agentic capabilities and how it's
13:48being deployed and token spend and token economics and all of those types of things
13:54um i think that that people are still experience experimenting i think that they're gonna have to
14:02move from experience experimentation to actually implementation what's interesting is that
14:08spending on ai has gone from 15 last year and cost reduced along to 60 but no noticeable change in
14:18either time spent or money spent that's a very very interesting rubric to solve and to think about
14:27why is that well because agents are only going to do what your technology allows them to do
14:33and you lay regulatory over that or just wanting to be able to manage what the agent can do
14:40you're you're going to have to be able to think differently than you think today and so i think
14:46that the mortgage industry hasn't made that jump because people still think of the mortgage industry
14:51as having to be a certain way and it doesn't have to be a certain way it has to be
14:56compliant at the
14:57end and the fastest way that you're going to get there is by automating your back office and
15:03automating the underlying chaos of your technology and the way you do that is you don't try to reinvent
15:09the wheel you accept the technology that allows you to produce compliant mortgages and 100 qc and
15:17then you market and collect your borrowers by selling certainty that's that's what i believe the future
15:24of the mortgage business is well mike thank you so much for sitting down with me today i can't wait
15:31to see how the full vision of your original vision for mortgage cadence comes together with you back at the
15:38home thank you very much thanks for the time
