Transforming the Mortgage Experience and Empowering Consumers
Dec 17, 2019
I’ve spent the past two decades with a front row seat to the mortgage industry – the highs and lows, the innovations and false starts – seeing first hand the unaddressed opportunities to serve borrowers and investors, alike. With Millennials now driving the housing market, rapid increases in non-GSE lending and the increasing prominence of digital process solutions, the time is upon us to transform the mortgage experience. I’ve joined SimpleFinance to see this transformation through.
Last month I joined JP and the team to lead Mortgage and Capital Markets. We are reimagining the mortgage experience in an effort to reshape the home transactions for millions of homebuyers and sellers each year. We are working to create a future where the home transaction and financing processes are more streamlined and less complex, to empower both homebuyers and homeowners. This transformation is long overdue, and to date, the industry has done little more than pay lip service to this fact. Ironically, industry-wide, only 18% of lenders rate improving operational efficiency as a top priority. As a career industry professional, I believe this change is a mandate. This is the future. We have a moral responsibility to reshape this market.
If you have ever taken out a mortgage, you know the process leaves much to be desired. It takes nearly 46 days to complete, requires multiple rounds of document submission, multiple rounds of verifications and credit checks, and repeated calls and emails with the Loan Officer and Processor. It is riddled with uncertainty with most borrowers not getting a full loan approval for nearly a month after the application. So with 78% of home transactions being financed by a mortgage, the inefficiency wreaks havoc throughout the mortgage ecosystem. With so much process uncertainty and more than 30% of mortgage applications not getting funded, it is no surprise that many home sellers accept a lower price to avoid selling to homebuyers using a mortgage.
To put it into perspective, Attom data recently quantified the issue citing that cash buyers yielded a 9% discount to those using financing (surprisingly that is down from 2016 when it was a whopping 23%). This translates to a premium of over $26,000 in purchase price, nearly $19,000 in interest and $8,000 in property taxes paid over the life of the loan. That’s enough to put a child through college!
With the US housing affordability crisis persisting, the large scale solutions like new zoning and redevelopment garner enormous attention, but I see low hanging fruit in the form of a faster mortgage process that empowers financed homebuyers.
I’m all too familiar with the frustration burdening borrowers and the lack of offsetting outcomes for investors (despite the increasing cost and pain consumers shoulder, investors are generally making less on their investments with a similar risk profile). I’ve spent my career in mortgage – 10 years at Fannie Mae, 2 years at Roundpoint and the last 4 years at mortgage operations startup Lenderworks. Along the way I have amassed a unique perspective drawn from my experiences in lending, trading, securitization and ops. Despite other segments of consumer finance rapidly advancing, mortgage has been left behind. We are building solutions to close the gap. We get to the core of the challenges by improving automation in back-end operations and enhancing the use of AI and predictive modeling.
We are firm believers in synergistic partnerships and not recreating the wheel. We are forging partnerships with leaders throughout the ecosystem to deliver a better outcome for all. We have a clear vision and the fortitude to see it through. We are forging partnerships with like minded providers. If we haven’t talked, please contact me:
Capital providers: we are designing loans that enable us to work faster, provide certainty and create better outcomes for all homebuyers.
Tech Providers: we are building and constantly revising our workflows. We are looking to compile the most advanced services throughout the journey to accelerate the origination process to days, versus weeks or months.
Mortgage Professionals: LOs, operations professionals, recent graduates - we are building the future. Put your fingerprints on the reshaping of housing finance. We are hiring. Contact me.
The time is now.
Shayan Salahuddin is the Head of Mortgage and Capital Markets at SimpleFinance. Shayan has over two decades of experience in the mortgage industry, including over a decade at Fannie Mae, leading Capital Markets at Roundpoint, building the startup Lenderworks, and consulting for fintech and mortgage-related startups. Shayan begin his career at Accenture.
Sources for data in this post: Fannie Mae, Attom Data, and SimpleFinance internal calculations based on industry forecasts.