ICE Mortgage Technology

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Dark Matter Technologies, formerly Black Knight Origination Technologies, is focused on mainly two things: the smooth transition to new owners, and lowering the cost to originate loans for lenders.

Executives from Dark Matter Technologies, under the Constellation Software umbrella, said that a down market is the best time to make investments in technology and prepare for the next cycle.

With lenders focused on bringing origination costs down in a tough origination environment, the firm saw up to a 300% year-over-year growth in new user numbers for the past couple of years.

“We actually do well in any kind of market,” Rich Gagliano, CEO of Dark Matter Technologies and former president of Black Knight, said in an interview with HousingWire on Friday.

“Now we’re in a down cycle, they need to do it with fewer people and they need to be more efficient to get the cost down. So it’s really the same story, just different markets,” Gagliano said.

Dark Matter Technologies, which completed the acquisition of Black Knight’s Empower and Optimal Blue last week, will be working towards a smooth transition over to Constellation Software with its 1,300-plus employees for the remainder of the year.

The company doesn’t plan to raise pricing for Empower and is focused on services and products that will drive down the cost of origination and employee borrower retention, executives said. 

Gagliano, Sean Dugan, CRO of Dark Matter Technologies and Tom George, co-president of Romulus, part of the Perseus Group of Constellation Software, participated in the interview.

Read on to learn more about Dark Matter Technologies’ plan for mortgage.

This interview has been condensed and lightly edited for clarity.

Connie Kim: Constellation’s Perseus Group has a pretty big real estate portfolio. What were the reasons for buying Black Knight’s Empower and Optimal Blue? What opportunities did the firm see?

Tom George: The way Constellation operates is that we focus on acquiring vertical market software companies and portfolios of vertical market software companies with the intent to stay in these industries forever. 

We started almost 20 years ago and Perseus in the homebuilding industry, we built a significant player in homebuilding software, that led us to an adjacency residential real estate where we bought over 20 companies. More recently, we started acquiring businesses in the mortgage tech space. 

We plan to be in the mortgage tech space forever. And we plan to continue to acquire there. 

Kim: What other mortgage tech companies has Constellation Software acquired?

George: We’ve acquired three other businesses in the mortgage space. We bought Mortgage Builder Software from Altisource Portfolio Solutions in 2019. There have been two additional acquisitions – ReverseVision, which is a leader in the reverse mortgage LOS space, and then a document storage product called Back Support.

Kim: Are you expecting any layoffs during the transition? Will the same management from Black Knight’s Empower and Optimal Blue be in place? 

Rich Gagliano: We’re not expecting any changes. [About] 1300 [employees] are going to move over with us and it’s business as usual.

Kim: It’s a tough mortgage origination market right now. How does the company expect to manage profit amid industry consolidation, bankruptcies and attrition?

Gagliano: We’ve seen a strong pipeline. Even though the markets are down, what we encourage and talk to clients about is when you’re slow, that’s the best time to make technology changes. Now is the time for that change, and get yourself ready for the next cycle.

We actually do well in any kind of market. But honestly, when the market is crazy, lenders are looking for efficiencies because they can’t find and hire enough staff. Now we’re in a down cycle, they need to do it with fewer people and they need to be more efficient to get the cost down. So it’s really the same story, just different markets.

Kim: I definitely hear a lot of mortgage tech companies saying ‘this is the time to invest, especially when the market is down.’ You mentioned a strong pipeline, are we talking about new clients? 

Sean Dugan: We’ve had 200% to 300% growth year-over-year for the last couple of years. And we don’t see that backing up. Those are not financial metrics, that was just on the number of clients acquired. When we took the Empower LOS platform to the down- to mid-market clients and really focused on that, we saw the number of acquisitions per year grow in a really significant fashion. 

Kim: Empower has an estimated market share of around 10-15% after ICE’s Encompass which takes up about 40 to 45% of market share. How does Dark Matter plan to compete against Encompass?

Gagliano: We believe strongly in technology. We’re generally in most of the deals when we know about them. We believe that the automation, and the technology and the solution that we bring, and the ecosystem that we have, is best in the industry and really helps these lenders drive cost out of the system.

We compete with multiple product providers out there, including Encompass. But we like where we are positioned and I think our clients like the innovations that we’ve brought over the past over years.

Kim: When I talk to lenders, they say when using a company’s LOS, using the same company’s add-on products makes it more cost-efficient and seamless. What are some of the add-on products the company has already developed or is seeking to develop to win over lenders?

Gagliano: Just over the past couple of years, we’ve added Ava, which is our artificial intelligence capability. Ava has added a couple of additional products over the past two years. We’ve added an underwriting efficiency product, we’ve added a post-close product that’s going into production – so fairly new products.

We’re going to continue to use the products that we have in our bundle today and sell those so no changes there. But we are incrementally adding new technology, new innovations, that are going to help drive that cost down.

Dugan: We’ve also delivered digital portals for each one of our business channels within Empower, which would include retail, wholesale, correspondent, home equity and assumptions. We also have business intelligence as a component, and then a vendor aggregation platform, which was by the name of Exchange. Those are some of the components that make up the Dark Matter-owned bundle of services within Empower.

Kim: I know Ava has some kind of AI aspect to it. Right now, a lot of mortgage tech companies are focusing on AI. How they’re going to utilize AI to be that middleman between the customer and the loan originator. I’m curious how Dark Matter is going to integrate AI and machine learning (ML) to the LOS and other products.

Dugan: Regardless of what the technology solution is, clients are looking for flexibility, configurability – things that they can configure to meet their particular requirements. They’re looking for a really significant return on their investment, and they’re looking to drive the cost of origination as well as employee and borrower retention.

Kim: One of the concerns about the ICE-Black Knight merger was the fear that ICE would raise prices on the LOS products. Will there be any pricing changes for Dark Matter Technologies?

Gagliano: We don’t have anything planned at this point. Our Constellation partners haven’t asked us to come in and raise prices. That’s not part of their strategy, their strategy is to acquire quality companies and run the businesses.

Kim: Who does Dark Matter Technologies consider as competitors right now?

Dugan: It’s any origination technology provider. There are a number of providers that are delivering services specific to underwriting capabilities, so we would compete with them. So I think it’s a host of providers and vendors across the ecosystem of this particular vertical that we compete with on a day-by-day basis.

Kim: What are your prospects for the remainder of the year for mortgage origination? What are some of the larger goals for Dark Matter Technologies?

Gagliano: Through the end of the year, we’re going to be transitioning to Constellation moving off Black Knight Technologies. We’ve added some corporate-level capabilities already. So we feel good about where we are and stay focused on that through the end of the year.

Source: housingwire.com

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Hedging, PPE, Fee Collection, QC Products; Gov’t and Conforming News; Producer Inflation Alive and Well

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Hedging, PPE, Fee Collection, QC Products; Gov’t and Conforming News; Producer Inflation Alive and Well

By:
Rob Chrisman

Thu, Sep 14 2023, 11:15 AM

This morning I head from Chicago to Orlando along with 74 million others (yearly). More fun with numbers: Although the MBA thinks we’ll fund about $1.7 trillion in 2023, weekly applications continue to reflect a declining market so let’s use $1.5 trillion to make the numbers easier. That averages out to $6 billion per business day of production. The Fed is looking to offload $13 billion in MBS from bank seizures. To keep things in perspective, that is only two days’ worth of production, certainly not enough to “swamp the boat.” Perspective is good, and here’s another example. Higher and volatile interest rates, uncertainty about property values, and stresses in some property markets have increased pressure on some loans and properties. Accordingly, MBA reported that commercial and multifamily mortgage delinquencies increased in the second quarter of 2023. Even with the uptick in delinquency rates, they remain at the lower end of historical ranges. Loans backed by properties (and property types) with stable cash flows, are faring better than those that may have seen declines in incomes. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, an nCino Company, and award-winning developer of mortgage technology for modern lenders. Hear an interview with C2 Financial and Revest Homes’ Jim Black on how originators can win business in a tough rate environment.)

Lender and Broker Software, Products, and Services

Amidst changing QC requirements and increasing repurchase risk, lenders must invest in automation to drive efficiency and protect profits. The industry needs to shift its focus from crisis management to prevention with proactive QC. Not only does this approach set lenders up for success regardless of the origination environment, but it’s also a regulatory imperative now that Fannie Mae requires lenders to conduct pre-funding QC on a minimum of 10% of their production. ACES Quality Management empowers mortgage lenders and servicers to take control of their operations and embrace proactive QC. ACES seamlessly combines cutting-edge technology with comprehensive data analysis, giving mortgage professionals the tools they need to identify, anticipate and rectify potential issues in near real time. Learn why financial institutions and third-party providers rely on ACES.

“Looking for a full-service depository bank that will help you achieve your long-term growth plans? NexBank has been a dependable lender to our clients through all business cycles. We’ve been in the wholesale, correspondent, and warehouse lending business since 2008 and don’t compete with our clients for retail originations or refinancing business. Our long-tenured account executives, with an average of 24 years of industry experience, know our business well and are dedicated to helping you grow yours. This month, we celebrate the 15th anniversary of three professionals who have contributed to the success of our clients and NexBank. Lance Hackney with $4 billion closed volume; Brandi Horton with $4.5 billion closed volume; and Steve Smith with $5 billion closed volume. We support all channels: Wholesale, Non-Delegated & Delegated Correspondent with Portfolio, Conventional, FHA, and VA products, and offer Delegated & Emerging Banker Warehouse Lending and Escrow Deposit Management. Email Jon Hodge to reach an AE. Member FDIC. Equal Housing Lender. NMLS 672886.”

If you’re using Encompass® by ICE Mortgage Technology™ and you’re not using Fee Chaser to collect your upfront fees you it’s time to get your act together. Fee Chaser enables your borrowers to pay their upfront fees right from a text message. No more missed appraisal fees, no more paper checks, no more credit card numbers floating around on printed forms. Check out Fee Chaser here and they’ll text a demo right to your phone.

“Optimal Blue’s market-leading product, pricing and eligibility (PPE) engine has been the industry’s preferred choice for years because of our ability to serve our clients’ needs. With Optimal Blue’s open-API platform, our clients can access and use all of the functionality that exists in the Optimal Blue PPE via APIs, including creating customized rate quoting tools, fully automating lock events, and ensuring LOs have on-demand access to product and pricing where and when they need it. Reach out to Optimal Blue today to learn more about our open-API platform and how you can use it to unlock hidden efficiencies and improve your business!”

Government and Other Conforming Program News

Plaza Home Mortgage® reminded brokers of the ins and outs of getting government deals done. Here are five really great reasons to look to Plaza first for your government loans:

Manual underwriting may be an option for loans that do not get an approval through AUS-Total Scorecard (manual underwriting requirements apply). FHA and VA FICOs down to 550. USDA FICOs down to 600. Cash-out allowed on FHA and VA. Experienced Underwriting team that is willing to go the extra mile for your borrower.

Effective August 25th, the Attorney Authorization Approval (AAA) Matrix is available within Property 360™ on both the Claims and Excess Fees landing pages. The matrix remains accessible on the Excess Attorney Fee – Cost Guidelines webpage in the Single-Family portal.

Federal Housing Agencies issued a reminder for mortgage assistance for those impacted by the Maui Wildfires. In a joint statement, the Federal Housing pledged their offices’ ongoing support for Hawaiian residents affected by the devastating wildfires on the Hawaiian island of Maui.

Hurricane season has begun, MBAF provided a reminder of MBA’s Disaster Recovery Resource Guide. This guide outlines what to do before and after a natural disaster, along with how to start, and then, work through the recovery process. Additionally, another resource available is Hurricane Help FAQs.

Fifth Third Correspondent Lending Communiqué 2023-6-9.1.23 has the following topics:

Final Document Reminder, as a reminder, Fifth Third expects Final Title Policies and Recorded Mortgages to be delivered within 90 days of the loan purchase date. Excessively aged documents will be assessed a fee per section 1.07 of the Correspondent Seller Guide.

Maximize Cash Out with Loan Stream Mortgage Non-QM Closed End Seconds. Program highlights include clients can Access Equity with our Non-QM CES Cash Out Refi: 90% CLTV Full Doc, 85% CLTV Bank Statements, 80% CLTV Investment Properties and 75% CLTV DSCR. Also available on Purchase, Rate/Term Refinance & Cash Out.

Chaos has a way of bringing on unexpected opportunities. Plaza Home Mortgage®. Co-President and COO, Michael Fontaine, shares with National Mortgage News how Plaza navigates in the evolving wholesale landscape. From diverse strategies to tapping into improved technology plus Plaza’s training offerings to help amplify broker clients’ strengths, take a look.

Plaza Home Mortgage® Jumbo opportunities keep getting better, now offering 2-1 and 1-0 Temporary Buydowns on its new Jumbo Elite loan program. Get in touch with your Account Executive for the qualifying details. Explore the complete range of Jumbo solutions Plaza offers for your borrowers.

Capital Markets

Why do those in the mortgage space watch the 10-year U.S. Treasury note? Historically, the 10-year U.S. Treasury yield has been considered a key benchmark for mortgage rates. Mortgage rates, however, are not actually based on the 10-year U.S. Treasury note (as is commonly believed). MCT released a blog, “How the 10-Year U.S. Treasury Note Impacts Mortgage Rates” that serves as an excellent primer for how mortgage interest rates respond to moves of the benchmark U.S. Treasury note. The piece discusses why mortgage rates and Treasury yields move together and how bonds are influenced by Treasury yields. With a trusted capital markets partner like MCT, you can rest assured that you will be notified of how economic trends could have the potential to impact your business. Sign up for MCT’s newsletter to receive educational articles like this one and learn more about variables that impact mortgage rates.

In rate news, even though inflation in August showed a larger than expected increase in core CPI (actual 0.3 percent when it was expected at 0.2 percent), it showed ongoing improvement on a year-over-year basis, enough to prevent any significant change in Fed rate hike expectations. The implied likelihood of a rate hike in December sits around 46 percent.

Digging into the numbers, gasoline prices contributed to nearly half of the increase to the headline number, rising nearly 11 percent over the month, and that inevitably had some trickle-through impact on the core reading, as transportation services were driven higher by energy prices. The 3.7 percent year-over-year rate of CPI is still well above the Fed’s 2 percent target, reflecting stickiness that, while probably not compelling enough to the Fed to raise rates further at this point as the trend in inflation has downshifted since the spring, will certainly keep the Fed in a “higher for longer” mindset. Looking forward to the FOMC meeting next week, another pause in rate hikes is already baked in, so the importance is actually much more about rate decisions in November, December, and January.

Today’s economic calendar is under way with several releases. Events kicked off with the ECB releasing its latest monetary policy decision (+.25 percent, as expected, in an effort to continue to tame inflation) followed by ECB head Lagarde’s press conference. The U.S. calendar is also under way with retail sales (+.6 percent for August, much higher than expected), the Producer Price Index (+.7 percent, much stronger than expected, core +.3 percent), and weekly jobless claims (220k, 1.688 continuing). Later today brings July business inventories, Treasury announcing the sizes for next week’s reopened 20-year bonds and 10-year TIPS auctions, and Freddie Mac’s latest Primary Mortgage Markets Survey. We begin Thursday with Agency MBS prices worse a few 32nds from Wednesday evening, the 10-year yielding 4.27 after closing yesterday at 4.25 percent, and the 2-year at 5.02 after this slew of economic news.

Employment

“Foundation Mortgage is rapidly expanding after several record months and is looking for top tier experienced Non-QM account executives to join our team. We have a vast array of non-QM products to choose from and common-sense underwriting. We make exceptions that other lenders won’t. If you are looking to join an experienced team that knows how to get loans done contact Dean Ayres.”

On the heels of the successful acquisition of Platinum Home Mortgage Corp, Planet continues its appetite for retail acquisition by looking to consolidate several independent bankers into its organization. If your firm is seeking better economies of scale or a strategic exit, let’s talk. With our strong multichannel support, speedy turnarounds, dedicated recruitment, and customer retention, Planet will give you a remarkable edge. Please contact Lee Gross to find out what Planet could do for you. All inquiries will be held in strict confidence. Confidentiality will also be honored for single MLOs or smaller sales teams who contact VP of Talent Peter Briggs or 435-709-6287.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

Today is the 15th anniversary of the collapse of Lehman Brothers. The great financial crisis (GFC) revealed a defective supply chain, metrics unable to assess local risk and markets incapable of answering Ben Bernanke’s defining question – “what’s this stuff worth?”

The requirements of a Digital Housing Platform were well understood long before the crisis.  The components needed to move housing past a costly, error prone, disconnected system include:

  • Authentication: Identity is the key control point in any digital interaction. The capability to “identity proof” the participants in a complex, multi-party transaction is fundamental to establishing trust, reducing fraud and removing friction between “relying parties.” The capability to authenticate, issue and revoke digital credentials is central to controlling access, verifying rights and accepting content from supply chain partners.
  • Authorization: A digital loan file of record accessed by a broad range of trusted identities from lenders to guarantors to investors requires a permission structure. What functions are individuals and organizations allowed to perform including viewing, editing, printing, exporting and approving? The capability to enforce these rights can eliminate errors and rework. The result should be collapsing costs and cycle times, improving quality, reducing repurchase risk and certifying that a loan, and its related assets are “Fit 4 Sale.”
  • Non-Repudiation: E-sign became federal law in 2000 but digital signatures are only a subset of the integrity component. Investors require assurance that a file, note or instrument reflects the verifiable intentions of the committed parties. Sensitive content must be protected in motion over networks and at rest within repositories. Technologies like encryption help deliver certainty that content has not been tampered with.
  • Validation: Mortgage is a manufacturing process with end products dependent on accurate information. Data is imported from multiple sources including credit agencies, public records aggregators, appraisers, inspectors, title and insurance firms and Realtors.  How do we know that the data is correct, can the source be verified, does it meet quality standards and can compliance with pricing guidelines be guaranteed?
  • Federation: Integrating the fragmented, localized and diverse housing ecosystem is the major challenge for any network delivering content from trusted sources. Standard agreements define shared responsibilities and what happens when mistakes happen.  These policy considerations, enforced by technology and legal conventions, are required for interoperability among supply chains and between competing “Super Apps.”  
  • Registration: A golden record of who owns the asset is a prerequisite for any commercial trading system. Improving the ability of MERS to verify and transfer ownership required capital, time and technology. Extending the registration component to county recording offices was another platform foundation.
  • Transactions: Platforms are “plug and play” once federated policies are widely implemented. Matching and clearing trades in open exchanges for multiple asset classes is a core ICE capability. The Ellie Mae component provided a critical mass of connections to begin the process of reinventing the property transaction. 
  • Compensation: Payments reveal the end points of the ad-hoc networks that characterize real estate. A servicing system that touches the consumer every month can be extended to all the participants in the original transaction. As every consumer facing commercial platform will attest — payments are the prize.
  • Information: Listings are on platform and new metrics will assess the risk, value and volatility of submarkets.
  • Integration: The sector reimagines portals, anchors federations, converges markets and makes money.

The DC3 platform launched in 1937 featured five components that had to be invented to make commercial air travel possible. Apple’s iPhone integrated 12 new components in 2007, and its reach has been extended to multiple vertical markets including banking. Housing finally has a Digital Platform that can attack several hard problems. What’s next?

Stuart McFarland is the former EVP Operations and CFO at Fannie Mae, EVP General Manager at GE Capital Mortgage Services, and CEO at GE Capital Asset Management.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Stuart McFarland at [email protected]

To contact the editor responsible for this story:
Tracey Velt at [email protected]

Source: housingwire.com

Apache is functioning normally

The ICE — Black Knight merger creates the first end-to-end digital infrastructure that will reorder incentives and change how housing markets operate. New competitive pressures on long-protected positions will force many to rethink delivery systems and reinvent organizations. The digital future is unknowable, but we do know that information power moves to consumers, value resides in networks and data rights are the new currency. These principles of digitization will test the adaptive capacity of every element in this diverse ecosystem. 

The most likely outcomes include:

  • Lenders: Fewer than 50 mortgage lenders will transition to a federated model that enforces the controls necessary for secure cross-industry interoperability. The cost and benefits of migrating to network centric production will be substantial.  The ERP projects of other manufacturers offer examples of the change management challenges lenders will face. Networks that have earliest visibility at the consumer points of intention will capture the data to win loans, provide servicing, create content and build a loyal audience.
  • GSEs: The concentration of lenders will lead to new systems that may reach deeper into the primary market.  Lenders will align with marketing and services partners to gain pricing power.  New methods, metrics and marketplaces will emerge from the non-QM segment that challenge conforming orthodoxy. Investor expectations will change, and government entities will attempt to coordinate their response. Any future exit from conservatorship will confront issues beyond capitalization such as data monetization, risk parameters, secondary market design, FHA execution and the pricing of mortgage guarantees.
  • Portals:  These destinations become marketplaces that integrate the supply chain and allow consumers and their advisors to choose and close within minutes – not months.  Portals will authenticate identity, validate content, facilitate standard agreements, and ensure timely payments between buyers and sellers of homes and service providers.  Audience assets will be valued based on transaction volumes and bundles of listings, lending, loan sales and servicing and trading content.  Consumer profiles will describe the interests, intentions and preferences that signal future purchases for the platforms that dominate the homeownership supply chain. Google, Amazon and their networks want to know when buying patterns are about to change.
  • Title: Title may be best positioned to implement the “trust model” that defines the responsibilities of all parties to a complex transaction. Beyond reps and warrants this structure would assure the range of “soft” components required for digital transactions such as – interoperability compliance, security standards, credential criteria, data quality, payments reconciliation, sales and repurchase terms, limits of liability and audit requirements. These essential tools require a collective commitment. Will providers like MasterCard, that recently acquired Finicity, capture the opportunity to bring digital trust to the largest asset class?
  • Insurance: How will PMI and P&C firms address the opportunities as electronic marketplaces lower the cost of customer acquisition across a rapidly changing competitive landscape?  Every ancillary service will rely on a deeper understanding of local environmental and credit conditions. Access and affordability may be dictated by the regulatory actions of higher risk states and the cost of increasingly ESG sensitive capital.
  • Brokers: Digitization puts middlemen in every industry at risk.  Real estate and mortgage brokers will be marginalized as friction is removed. Advisory services based on relationships and unique insights will command price premiums in every metro, submarket and product niche. Effective local and national advocacy could allow agents to monetize their data and personal networks that extend across the entire homeownership cycle. MLSs must evolve from listing repositories that extend offers of compensation to become “Metro Property Networks” that serve the broader real estate interests of every major job center. 

Housing can finally be rewired to make the leap to a smarter, safer, connected system. Networks that create richer data will change the game and control the trajectory of an AI powered future.  Digital infrastructure arrives as earnings erode and liquidity risk forces change upon an unstable structure. Every leader in the ecosystem will be on a shared  journey to a connected mindset. Thinking differently about digital will matter more than any technology.

Stuart McFarland is the former EVP Operations and CFO at Fannie Mae, EVP General Manager at GE Capital Mortgage Services, and CEO at GE Capital Asset Management.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Stuart McFarland at [email protected]

To contact the editor responsible for this story:
Tracey Velt at [email protected]

Source: housingwire.com

Apache is functioning normally

Intercontinental Exchange (ICE) completed its acquisition of Black Knight Tuesday, making the combined company the biggest player in the mortgage tech space. I sat down with Tim Bowler, president of ICE Mortgage Technology, a business unit of ICE, to talk about the company’s mortgage automation strategy — and what keeps him up at night.

Sarah Wheeler: ICE’s acquisition of Black Knight just closed today. What is top of mind for you moving forward?

Tim Bowler: We’re incredibly excited about what we will be able to bring to our customers, to borrowers, as well as to other stakeholders across the mortgage ecosystem. We’ll accelerate our focus on delivering value and efficiencies with the combined ICE and Black Knight entities so we can continue the journey of helping more people into homeownership.  

SW: ICE Mortgage Technology is known for its focus on automation. What parts of the mortgage loan process have been the most resistant to digitization up to this point?

TB: It’s hard to say because there are so many different kinds of transactions between borrowers and lenders. What we’re trying to do at ICE is break down the various transactions where a borrower and a lender might interface and figure out how we can deliver a set of technology tools and solutions so that the borrower can get their loan — for purchase or refinance — as fast as possible with the least amount of cost.

That mindset of knowing that mortgage transactions vary depending on the borrower’s circumstances is an important lens for us because it helps us actually get to the solutions that make the most sense for each one of those discrete transactions.

SW: How does ICE determine the right balance between automation and the human element?

TB: The reality is that the mortgage process, particularly in today’s purchase market, is still a deeply human process. We realize that we are providing the appropriate set of tools and solutions to those humans who are helping those borrowers through the most important financial transaction of their life, so that the processcan be as efficient, seamless and pleasant as possible. The right technology can help you achieve faster approvals and faster closing, while also giving greater comfort and certainty to that borrower.

It’s also helping those borrowers find the right products. Those will inevitably flow through a lender, so we make sure that the lenders have as much information as possible around what might be the best, most appropriate alternatives to present to borrowers.

SW: The FHFA recently held a tech sprint for the mortgage industry and part of the goal was to find out why adoption was low on some of the tech solutions that have been available for years that could really benefit lenders, servicers and borrowers if they were adopted. What do you see as the key obstacles to tech adoption now as, as opposed to in the past?

TB: It seems like each mortgage process should be relatively standardized because we’re manufacturing loans — the vast majority of which will be purchased by the two GSEs or insured by FHA, VA or USDA.

But in the midst of that process is an individual or family and it ends up being a very human-to-human experience. Maybe in the past, the industry looked and asked how we could just industrialize everything associated with the mortgage underwriting approval and funding process too myopically. We think taking a step back to look at that origination process through a human lens will be helpful to increase the uptake of some of the tools that are out there to make the process work.

SW: The cost of origination has been front and center for mortgage banking executives. How are the most successful mortgage executives prioritizing their resources right now?

TB: In this purchase market, it’s the ones who are identifying borrowers they can work with on purchasing that first home. Or, if they are selling and then buying another home, the lenders getting them approved as fast as possible. It’s so important in this market that when a buyer puts an offer on a home, it’s 100% clear that financing is available and ready to support the purchase. And then closing as fast as possible because we’re still in a tight housing market with tight inventory.

SW: We know that homeowners who locked in low mortgage rates might stay in their current home for years. And that’s just building on a trend that’s just been going on even before we got to these really low mortgage rates. What’s the role of tech as lenders play the long game in this market?

TB: Many families and households locked in extremely favorable rates. But I think there’s a dynamism in the U.S. economy and in the housing markets that means people will still move, they’ll still buy a bigger home when the time is right.

In today’s environment, I think there are going to be more households looking to use their equity to invest in their home within the context of retaining the existing primary mortgage that they have at attractive rates. So, for us as a technology provider, it is finding solutions that make it efficient for borrowers to make important investments in their house through mortgage products that meets their needs from a pricing perspective, while also delivering a smooth experience throughout the process.

SW: Affordable housing initiatives are on the radar of more lenders this year, but your typical loan officer may not have a lot of experience there. How are lenders helping borrowers take advantage of loan product innovation and affordable housing initiatives?

TB: There’s no doubt that debt-to-income levels are going to be stressed for that first-time borrower because home prices have remained high despite higher interest rates. And I think it’s incumbent on all of us in the industry to provide tools so lending officers have the knowledge they need to help borrowers access affordable programs, so they know what’s available and how pricing works for those programs.

SW: AI has really stepped into the spotlight this year. Is this going to be a time we will look back on as being a turning point?

TB: The way I think about a lot of these new tools that are being created, whether they be generative AI or more efficient search or more efficient document recognition, is that they should be used to help buyers have a better experience. Correctly harnessed and used, AI could ultimately lead to a more efficient process where decision-making for the borrower is faster.

Our team is focused on thinking about technology in this way: How do we help our customers and partners help borrowers have a better experience through the advanced technologies and tools that are being developed?

SW: Looking out 10 years, what part of the mortgage ecosystem will have changed most in that time frame? What challenges do you think we’ll still be talking about solving with technology?

TB: There are four key aspects to the mortgage process that could be evolved. First is determining whether the homebuyer has the capacity to cover that housing cost on a regular basis. And my hunch tells me that over the course of the next decade, we’re going to develop better tools than those that exist today to be able to highlight the fact that borrowers have the ability to repay on their loan. And a lot of that will come from better mechanisms to evaluate past rental history and the borrowers’ ability to manage housing payments consistently.

As a technology provider, we want to find a better way to show the ability to repay so that the ultimate investor in that mortgage or the insurer feels comfortable with it without having to retain massive amounts of personal information on a multi-decade basis, which is inefficient for the system and puts that information at risk.

Secondly, I think the tools around how we assess the value of the property and the risk associated with that property will evolve to drive a more efficient process, particularly for that first-time borrower or that lower wealth transaction.

The third area is trying to find a way to have a better outcome with refinancing for lower loan balance borrowers than what we saw in the last period of refinancing where the frequency of higher loan balances refinances was just so much greater relative to moderate-balance borrowers, who could benefit the most.

Lastly, this is just a deeply personal point for me because I’m always shocked at how inefficient it is: We’ve got to be able to use technology so when a borrower makes that last payment on the mortgage and owns that house free and clear, the release of liens or security interests is improved.

SW: You are the head of a very large mortgage tech company. What keeps you up at night?

TB: The lack of housing supply in the country and the lack of affordable housing supply, specifically. That lack is driving the cost of housing to artificially high levels that is really squeezing so many lower- and middle-income households.

And I’m hoping and praying that policymakers can be more creative and collaborative in that regard because we have to solve it for this generation of kids and the next generation of kids to come. So that they’ve got adequate housing at fair prices that does not chew up half of their paycheck — that is absolutely critical if you want to keep this economy going.

SW: Lastly, what makes you hopeful or optimistic about our industry right now?

TB: I’m deeply optimistic about our industry. Despite the fact that we face a myriad of challenges, I wouldn’t trade our mortgage market for any other mortgage market on the planet. We’re innovative, we’re dynamic, we have the ability to fund mortgages through thick or thin. We have all the tools at our disposition to retain the best mortgage market on the planet.

It is just incumbent on everybody in the ecosystem to work hard every day and in every way to make a difference to have a better, fairer, more dynamic market.

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Source: housingwire.com

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Intercontinental Exchange (ICE) completed its acquisition of Black Knight in a $11.9 billion deal that dragged on more than a year due to antitrust concerns. It’s now easily the biggest player in the mortgage tech space.

“Since our founding over 20 years ago, ICE has steadfastly adhered to our founding principle, demonstrated throughout our history, that applying technological innovation and digitization to traditionally analog businesses can make markets more efficient and transparent for all participants,” Jeffrey Sprecher, ICE’s founder, chair and CEO, said in a statement. 

“Our team is well-positioned and ready to apply our proven playbook across the U.S. mortgage ecosystem to help improve the homeownership experience for millions of American families.”

“The aggregate implied value of the Merger Consideration payable to the former holders of Black Knight Common Stock pursuant to the Merger was approximately $11.9 billion, including approximately $10.5 billion in cash and approximately 10.9 million shares of ICE Common Stock,” according to ICE’s 8-K filing with the Securities Exchange Commission (SEC) on Monday.

As agreed to by the Federal Trade Commission(FTC) last month, ICE and Black Knight will complete the divestiture of Black Knight’s loan origination system (LOS) Empower business and product and pricing engine unit Optimal Blue to a subsidiary of Constellation Software Inc. within 20 days after the acquisition.

ICE plans to hold a conference call with investors to discuss the acquisition on Sept. 28.

FTC accepted a binding settlement that both firms will divest Black Knight’s two businesses, settling FTC charges in March that ICE’s deal with Black Knight, which combines the two top mortgage technology providers, would drive up costs, reduce innovation and limit lenders’ choices for mortgage origination tools.

Under the agreement, ICE and Black Knight are required to seek approval from the FTC before acquiring any other businesses related to LOS or PPE for the next 10 years.

Both firms are prohibited from enforcing any non compete or non-solicit provision or agreement against any employee who seeks or obtains a position in the divested businesses.

Constellation would receive a license to resell with Empower certain other Black Knight mortgage-related products and services that would be acquired by ICE. A monitor will be appointed to oversee compliance with the proposed consent order.

ICE’s planned acquisition of Black Knight went through a bumpy road after the announcement was made in May 2022. 

In addition to both firms’ decision to sell Empower and Optimal Blue to address antitrust concerns, ICE and Black Knight amended their deal terms to reduce the valuation of Black Knight to $11.8 billion from $13 billion.

The deal announcement between ICE and Black Knight also stirred up strong opposition from some lawmakers and the Community Home Lenders of America (CHLA), which claimed the merger would affect the pricing of mortgage loans and mortgage servicing rights, especially at a time when affordability is being challenged. 

The Black Knight acquisition follows ICE’s 2020 acquisition of Ellie Mae, its 2019 acquisition of Simplifile, and its 2018 acquisition of Mortgage Electronic Registrations Systems (MERS), which together created the foundation of its ICE Mortgage Technology business segment. 

Source: housingwire.com

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Intercontinental Exchange (ICE) received the green light to move forward with its acquisition of Black Knight after the Federal Trade Commission (FTC) accepted a binding settlement.

Under the agreement, both firms will divest Black Knight’s loan origination system (LOS) Empower business and product and pricing engine (PPE) unit Optimal Blue to a subsidiary of Constellation Software Inc, the FTC said in a release on Thursday. 

The commission voted 3-0 to accept the consent order. The binding settlement comes after the FTC, ICE and Black Knight reached an agreement last week for the merger deal to close on September 5. The consent agreement now goes through a public comment period.

The proposed consent order settles FTC charges in March that ICE’s deal with Black Knight, which combines the two top mortgage technology providers, would drive up costs, reduce innovation and limit lenders’ choices for mortgage origination tools.

“This deal as originally structured would have reduced competition in key areas of the mortgage origination process, raising costs for lenders and homebuyers,” Henry Liu, director of the FTC’s bureau of competition, said in a statement.

To address these concerns, the commission’s order provides structural relief and tools to preserve competition.

ICE and Black Knight are required to seek approval from the FTC before acquiring any other businesses related to LOS or PPE for the next 10 years.

Both firms are prohibited from enforcing any non compete or non-solicit provision or agreement against any employee who seeks or obtains a position in the divested businesses.

Constellation would receive a license to resell with Empower certain other Black Knight mortgage-related products and services that would be acquired by ICE.  A monitor will be appointed to oversee compliance with the proposed consent order.

ICE’s planned acquisition of Black Knight went through a bumpy road after the announcement was made in May 2022. 

In addition to both firms’ decision to sell Empower and Optimal Blue to address antitrust concerns, ICE and Black Knight amended their deal terms to reduce the valuation of Black Knight to $11.8 billion from $13 billion.

In April, the FTC filed suit in the U.S. District Court for the Northern District of California to prevent ICE from consummating the Black Knight transaction pending the outcome of the Commission’s administrative challenge.

ICE’s acquisition of Black Knight would be the second massive mortgage tech deal for ICE, which acquired Ellie Mae from Thoma Bravo for $11 billion in 2020.

Source: housingwire.com

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Intercontinental Exchange Inc. (ICE) and Black Knight announced late Friday an agreement with the Federal Trade Commission (FTC) for the $11.7 billion merger deal to go through. The settlement comes months after the FTC sued ICE alleging antitrust concerns surrounding a buyout of Black Knight. 

According to the agreement, ICE is expected to complete the acquisition of Black Knight on September 5. In addition, the two companies are set to complete the previously announced divestiture of Black Knight’s loan origination system (LOS) Empower business and product and pricing engine unit Optimal Blue to a subsidiary of Constellation Software Inc. within 20 days after the acquisition.

September 1 is the deadline for Black Knight stockholders to decide if they want to receive cash or ICE stock in exchange for their shares as part of the merger deal.

ICE’s planned acquisition of Black Knight — announced in May 2022 — has been stalled due to antitrust concerns raised by the FTC.

The companies that have the two largest loan origination systems would allegedly raise costs to lenders, which would then be passed to homebuyers; and the deal would eliminate competition for product, pricing and eligibility engines (PPEs) and other various ancillary services that are add-ons to LOS, the FTC alleged in a suit against ICE in March 2023.

ICE and Black Knight’s agreement to sell Black Knight’s Empower business and Optimal Blue was to address antitrust concerns, leading to speculations of a possibility that the FTC would settle on the merger deal with ICE and Black Knight. 

However, amid expectations that FTC would settle on the merger deal, the FTC dropped a federal lawsuit seeking to block ICE’s acquisition of Black Knight earlier this month. 

Despite the agreement for the merger deal to go through, antitrust concerns surrounding ICE’s acquisition of Black Knight still linger.

In a recent letter, representative Maxine Waters, the ranking member of the House Committee on Financial Services, raised concerns that the deal will “no doubt” affect the pricing of mortgage loans and mortgage servicing rights.

Waters urged the FTC to ensure safeguard protections to avoid additional pricing pressures in a housing market that already faces serious consolidation and affordability concerns.

In recent years, ICE has sealed several deals to expand beyond its core exchanges business.

ICE’s acquisition of Black Knight would be the second massive mortgage tech deal for ICE, which acquired Ellie Mae from Thoma Bravo for $11 billion in 2020.

Source: housingwire.com

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The FTC’s administrative hearing on the deal is scheduled for July 12.

“Preliminary relief is warranted and necessary,” the FTC said in the complaint. “Should the Commission rule, after the full administrative proceeding, that the Acquisition is unlawful, reestablishing the status quo would be difficult, if not impossible, if the Acquisition has already occurred in the absence of preliminary relief.”

The FTC sued ICE to block the transaction in March on the premise that merging the country’s two largest providers of home mortgage loan origination systems and other key lender software tools will drive up costs, reduce innovation and reduce lenders’ options for the tools used to generate and service mortgages. 

“ICE is fully confident in our position and look forward to presenting it in court,” the company said following the FTC’s suit against ICE. The company affirmed its plans to complete the acquisition in the third or fourth quarter of 2023.

In an effort to quell antitrust concerns regarding the merger, ICE and Black Knight amended the terms of their proposed deal to reduce Black Knight’s valuation to $11.8 billion — about 11% lower than its valuation when the agreement was announced last year. 

Black Knight sold its loan origination system, Empower, to a subsidiary of Canada’s Constellation Software Inc. in March, prior to the FTC’s suit against ICE. The deal included its Exchange, LendingSpace and AIVA solutions.

Source: housingwire.com