While industry investment has historically flowed into front-facing aspects, home loan players have shifted spending to back-office efficiencies in recent years, multiple experts said Wednesday at the Mortgage Bankers Association Annual conference in Las Vegas. 

"What we're seeing now is more investments on planning, risk, (quality control), appraisal servicing," said Garth Graham, senior partner at Stratmor. "AI and machine learning are predominantly part of solutions that some of the tech are using, versus a big vertical investment."

Attendees packed smaller rooms on the conference's final day to hear consultants and lenders share more tech and artificial intelligence strategies. They repeated overwhelming messaging for mortgage firms to take great care in implementing tech, and avoid unfocused spending simply to keep pace with competitors. 

Nonbanks spent billions of dollars in the recent downcycle, but investment dry powder has since dried up considerably, said Dimitrios Lagias, managing director and partner at Boston Consulting Group. He pointed to fintechs, which are still commanding large initial public offerings, versus lenders which typically have one or two IPOs per year but haven't since Better Home & Finance's Wall Street debut in August 2023. 

Graham also previewed upcoming Stratmor research which showed industry executives sharing they had "fairly average" satisfaction with their tech stack, although most of them aren't planning to replace vendors. 

"Many times we see dramatically different levels of satisfaction and adoption with identical solutions from two different lenders," he said, adding it's dependent on a company's staff and evaluation processes. 

Implementation advice and productivity questions

Lending executives emphasized thorough vetting of technologies, suggesting missteps would only add to already lofty origination expenses. 

Just think it through before you buy the technology," said David Gates, chief operating officer at Premium Mortgage Corp. "Are you solving one problem and creating 15 others?"

Lagias advised companies to double the change requirements in big transformations. His consulting firm recommends clients start with two vendors on the same module for a 2-to-3 month period and compete, to prevent the frustrations that could arise 6-to-12 months into a new partnership. 

Graham also urged lenders to not be afraid of failing fast. While banks are "incredible" at capturing return on investment, they're resistant to innovation, he said. 

Panelists weighed productivity, which the MBA said is falling, although by no fault of full-time employees. While monthly retail applications per underwriter and loans closed per loan officer have sunk from the highs of the refinance boom, they're running below averages in the past decade following the Great Financial Crisis. 

Graham, disclosing that he was a former loan officer, shared one take that he acknowledged was slightly snarky. 

"If we keep paying people on basis points, they don't need to do as many loans to make money," he said.