PERSON OF THE WEEK: Amit Kothiyal is CEO of ISGN, an end-to-end provider of mortgage technology and services.
MortgageOrb interviewed Kothiyal to learn more about how the company's online regulatory solutions are helping lenders achieve compliance, as well as the innovations the company has planned for 2014.
Q: As ISGN's new CEO, what is your strategic vision for the company, and will it differ from previous years?
Kothiyal: ISGN's strategy is to enable our industry to "transform the borrower experience," as mortgage transactions continue to be a challenging process for consumers. The cost of mortgage origination (averaging more than $5,800), the amount of closing time (>50 days) and complexity are daunting for many families.
In response, ISGN offers a full set of solutions for handling origination, servicing and default management through technology and services that ultimately improve the borrower experience and transform the mortgage industry.
We are also heavily investing in our solutions, such as increasing the features and functionality of our Catapult Loan Origination System. Currently, the industry needs are focused on solutions that provide a more seamless experience through the origination lifecycle. To achieve this, we are committed to building an online model, allowing borrowers to instantly and easily know the status of their loan. This is something we also intend to explore with our servicing and default management platforms.
Q: The future outlook of the regulatory environment was a central theme at the Mortgage Bankers Association's 100th Convention & Expo this week – what do you believe are the biggest challenges facing lenders and servicers?
Kothiyal: Balancing compliance and profitability is undoubtedly one of the biggest hurdles. On one hand, adherence to regulatory guidelines is critical, and the fines for not complying can be detrimental; on the other, maintaining compliance will be costly, and additional headcount is not always a possibility. Lenders are now faced with a serious dilemma – either risk severe fines, or add staff to meet regulatory requirements. Both will significantly impact profitability.
We believe that the solution can be found in automating technology and outsourcing, especially compliance reviews. To maintain regulatory compliance and lower costs and increase profitability, institutions must leverage an outsourced experienced team, responsible for tracking regulatory changes. In turn, institutions can focus on their core business – originating and servicing loans.
Q: What technologies or services are available to help institutions remain compliant with pending rules?
Kothiyal: With the finalization of the Consumer Financial Protection Bureau (CFPB) rules approaching in January, many lenders are looking for guidance in navigating the swirl of new regulations that burden even the strongest compliance teams. In order to avoid and mitigate hefty fines, lenders must fully understand and prepare for the new rules.
With this in mind, ISGN has developed its CFPB Mock Audit to provide recommendations and ratings to lenders and servicers to help them develop an action plan toward meeting the new CFPB rules and Fair Lending requirements.
This best-of-breed approach provides institutions with the ability to conduct a ‘dry run’ to bring out any issues prior to the actual regulatory review – a much-needed function to avoid severe penalties and fines. Many of our clients find that this variable outsourced solution can help them overcome challenges in building out capital intense infrastructures.
Q: What can we expect to see from ISGN in 2014?
Kothiyal: Currently, 2.5 million borrowers are no longer underwater on their mortgage. As home prices rise, more homeowners are regaining equity, and we predict that the market will see an increase in home equity lending in 2014.
Since the mortgage crisis, many large banks have made public exits not just from wholesale home equity lending, but retail and consumer direct channels as well. But the environment has changed with the following three primary factors driving demand for home equity lending:
- More homes in a positive equity position;
- Rising interest rates driving down refinance demand; and
- A wave of existing, maturing home equity lines over the next three years.
Undoubtedly, some players will exit, and we will see consolidation across the industry, but for others, the right strategy with the right solutions to capitalize on market changes will be paramount.
To meet this emerging need, ISGN just launched its Home Equity Advantage, a suite of products and services designed to help home equity lenders transform and scale their operations. With the market environment now favorable for increased home equity lending, Home Equity Advantage combines technology, title/settlement, valuation and outsourced fulfillment in a cost-effective solution set targeted at the unique dynamics of the Home Equity process.
We're also looking at combining social media, mobile technology, analytics and cloud technology – what the industry refers to as SMAC. Lenders must look at how to leverage big data and analytics to improve processes and close loans faster for the borrower. This will ultimately drive the next generation of mortgage technology platforms. Furthermore, outsourcing will continue to be key and provide tremendous value to the mortgage industry, helping our clients realize improved metrics and cost reductions.
As ISGN has over 5.5 million loan records and serves a number of lending partners on both component and end-to-end processes, we have the advantage of our in-house laboratory for continued improvement in the mortgage industry. Our focus for 2014 and beyond is around innovation and delivering value to the entire mortgage industry.
We expect these solutions to be a real game changer in 2014.