Ask the Expert: Architecting the Future of Mortgage Lending

March 25, 2021

Jessica Shaumoun Hello, everyone, and welcome to Ask the Expert, where we ask industry leaders about their unique perspectives on how to navigate the most difficult challenges faced by the broader real estate and financial services ecosystem. We’ll also give you a chance to ask the experts some of the most pressing questions on your mind. I am Jessica Shamoun and I’m the Senior Director of Business Operations here at States Title. Today I’m really excited to welcome Selene Kellam. She is the Chief Operating Officer for Thrive Mortgage, and we’re going to talk about a topic that is extremely relevant in today’s world, “Architecting the Future of Mortgage Lending.”

By way of quick background here, Selene is the COO for Thrive Mortgage. They are a national mortgage company based in Georgetown, Texas. We are really honored to have her here because she has guided her company to multiple firsts in the industry. Including one we’re going to dove into today, which is an economic initiative which led Thrive Mortgage to completing the first fully digital mortgage in the state of Texas. She was also the chief architect of Thrives ‘Quality and Efficiency Initiative’, which produced some of the most competitive cycle times in the industry. And while, as we all know, it’s incredibly difficult maintaining quality, service, and loan quality.

So, with that, let’s begin. Selene, we’re so excited to have you here. I would love to just start with some background on your digital closing program and what drove you to kick off this initiative. We know it’s not an easy one.

Selene Kellam Yeah, absolutely. It’s been a journey. And believe it or not, we actually started our journey back in 2016, with eNotes, and continued that journey as the remote online notary bills have become passed in some of the states. I will say it was an opportunity for sure for Thrive to be an industry leader. But most importantly, it was an opportunity to really provide our borrowers with an alternative singing experience that would fit more easily in their day. We saw that millennial market really move into the buying power and that millennial market has a digital preference. We saw a lot of the point-of-sale systems come online to really collect that documentation and that information from these consumers digitally. But we really saw that missing in terms of the closing piece. So, it was an opportunity for Thrive to deliver the technology piece, not just on the front-end process, but also again on the closing. So, the operations benefits just came later.

Jessica Shaumoun Yeah, I’d actually love to dig into that a little bit because I imagine there’s a lot to take on when you change so much about the way your business works, both from an operations perspective and from a technology perspective. And so, I’d love to hear just a little bit about what did it take to actually do that. How big of an effort was this? Where did you start? Talk us through.

Selene Kellam Yeah, of course. I feel like the environment today and starting a digital closing experience for consumers will be a lot easier. I mean, you’ve got Fannie Mae that now has a checklist that helps the lenders really start this process. When we were getting started, we were kind of learning, as Fannie Mae was learning, and the warehouse banks were learning. So, I feel like that there are a lot more tools out there that really guide lenders and to a path of adopting this initiative than before. I know even the title companies, there’s a lot more education and information out there around digital closings as well than when this all kind of started back in 2016 and even in 2018 for us. I will say that there is a lot of things in the mix in terms of really kicking off an eClosing in a digital experience for closing. Warehouse banks is definitely one of those getting those on board, making sure you have warehouse facilities that are going to adopt eNotes. Title companies are definitely having that good partnership with people like yourself that are open to this digital closing. Got to have an eNote vendor. You’ve got to have your agencies on board. And obviously, the state legislation is important as well. So, getting all those things in line takes a lot of effort. So, you’ve got to be intentional, making sure that all of your stakeholders are on board with this, and you’ve got the resources around it.

Jessica Shaumoun Yeah, how long did this take from when you had the idea until when you were able to launch your first and handle your first closing?

Selene Kellam Quickly. You know, we found out that this was coming on board and the legislation was getting passed. And so, I would say that within a matter of a few months, we were able to scramble to make this happen. If I could go back and do it over again, obviously be really intentional. I mean, our intent was to be the first and I would say was a little bit of permission to be imperfect. But I think just in terms of getting it done, I feel like now you could probably do this easily in about 90 days.

Jessica Shaumoun That’s incredible to me, just knowing how many moving pieces you just mentioned. And I’m curious, you know, one of those big ones was that you mentioned you have to have an eNote provider. Even just identifying those, vetting those, signing contracts, all of that kind of stuff. How did you go through that process?

Selene Kellam I think look for partnerships that have the experience. I mean, and, you know, we’ve partnered with, you know, Notarize, which I believe is a partner of yours as well. And they have experience offering remote online notaries. Obviously, there’s great vendors out there, all different vendors out there that have good services. But it’s finding those that really have the experience. But I would also say have the same purposes as you in terms of your digital closings. We were intentional about making sure we provide a consumer with an alternative to our traditional closings. And so, if you pick a vendor in a partner that has that same purpose, you’ll actually find that I think you’ll get to a result more quickly.

If you pick a vendor in a partner that has that same purpose, you’ll actually find that I think you’ll get to a result more quickly.

Jessica Shaumoun Yeah, and do you have an integration with the? How do you work with them?

Selene Kellam Absolutely. And that’s some of the things that you’ll hear me mention in terms of success. Tight integrations with your systems is really important. That wasn’t something we had early on. And it does make it clunky. It makes it less efficient in terms of supporting a digital closing. And sometimes it even requires more work in terms of communication, setting expectations. So, integrations are absolutely important, not only in terms of your process and having a smooth process, but also the quality and the efficiency of the process.

Jessica Shaumoun Yeah, I can see that. I think the more faultlines you have right, the more places there are for things to go awry. So, I’m curious, it sounds like integrations and partnerships is a major takeaway for this. I’m curious what else either positive or negative you’ve noticed or that you would recommend to a person just embarking on this journey?

Selene Kellam I would say the biggest takeaway in terms of our initiative and our digital closing initiative is that the market really doesn’t move nearly as fast as you would think and or that we would hope it would. I think you can experience that as well, Jessica.

However, I will say absolutely, digital closing is a great tool to offer our consumers and we have to continue to trailblaze into increasing the adoption. That could be having conversations with your partners, having conversations with your referral partners, your title companies, and really finding out from your consumers as to why this would be important to them. And what I find a lot of times is lenders maybe get scared of all the work and time and energy that has to go into it to not offer this to their consumers. And not to say that this, especially like remote online notaries, might not be an everyday solution. But I promise you, there is going to be a handful of people in your experience that is absolutely going to benefit from this tool. So having that tool in your tool shed is important in today’s environment.

Jessica Shaumoun Yeah, I would think even for things like split signings or someone’s out of town, it’s just, you know, this feels like the solution we’ve been waiting for that could really make a change in the industry.

Selene Kellam And to kind of add to that, I think, be committed to the process. To your point, this is a great tool.

Overcommunicate the process, the expectations, to your title companies. Have that good conversation and open conversation, because what ends up happening is if this is new to them, they don’t have the knowledge, they don’t have the experience. They, too, can create anxiety within that closing process.

What I will say and some other takeaways is we talk about designing bumper rails, you know, design things that are going to help your teams be successful and this change. Right. So, if that’s your origination teams, your processors, even your closing teams, those are kind of your key stakeholders in terms of supporting digital closings. I would also suggest overcommunicate the process, the expectations, to your title companies. Have that good conversation and open conversation, because what ends up happening is if this is new to them, they don’t have the knowledge, they don’t have the experience. They, too, can create anxiety within that closing process. And some of the examples I can probably give to the audiences, we created just a one-page LO eClosing checklists. And this was really meant to be a tool to equip our sales team, not only in terms of value, but communication and expectation of the process. And then really the other key piece of it. And these are things that we learned after the fact. So, I share this now, is deployed communication through our CRM. Setting up drip campaigns for your borrowers, really helping communicate what they can expect through this new process. Even simple things like, “What is the required equipment needed for a remote online notary: laptop, desktop, tablet with video, microphone, camera.” All those things in order for the notary to verify, you know, their identity.

Doing things like that. Really make sure that you’re setting your sales team up for success, but also your operations team that’s required to support the process.

Jessica Shaumoun That checklist sounds like something important, because you just when you’re entering a new process, but you don’t know what you don’t know and having someone give you that, “here’s what you need to know, here’s how to think about it”, seems like one of those bumper rails, I think you call them. I’m curious, you mentioned you set up some bumper rails for yourselves in the operation as well. Can you share a little bit about what you did to give yourself a little leeway?

Selene Kellam I think in terms of operations, it’s definitely probably isolating your eClosing experience to a set group of operations. Don’t try to roll it out to one hundred percent of your resources because they’re not going to have it frequent and often enough. And so, this, too, just like a sales and a loan originator selling this, it’s going to feel different. So, if you can isolate that to a set group of experts, so, if that’s your closers and even those that are handling the post-closing aspect of it. Specialize your operations team in this as you continue to grow the adoption and it becomes more frequent and often and then you can expand it.

Jessica Shaumoun Yeah, I think that makes sense testing with the smaller group to start. I’m curious, I know you mentioned that it wasn’t always easy to get title companies on board. Right. And not even all of the LOs. I think what’s tricky about eClosing is that it requires so many partners to change. Right. Customers have to do things differently, lender’s, title companies, et cetera. And so, I’m curious, how did you how did you engage with them? How did you get them on board or choose the ones you would work with for the initial test?

Selene Kellam I mean, really, it’s just conversation. You know, I think to your point and finding the right people, it’s finding individuals that want to embrace the purpose of digital closings. Yes, I care about offering our consumers this opportunity and finding a convenient and fast closing experience. Also, you’ll find that remote online notary’s, I mean, are beneficial to people that can’t be in a title company for whatever reason. Maybe that is to your point of split signing experience, where you’ve got spouses that are clear across the country from each other. But, you know, they want to make sure that they still close on their dream home in time. You might have a missionary. So many different just great stories that I can share with you as to why that’s important.

I think just be purposeful about who you’re picking to be a part of that initiative.

Jessica Shaumoun I think it’s very important who you, especially when you’re starting small, who you do that with. So, I’m glad you were able to find good partners. And I’m curious, once you launched, what were you hearing from customers, from title companies, after you did it? You know, did they see the benefits that you anticipated?

Selene Kellam Yeah, I think so. I’d like to think of digital closings as kind of the trifecta of mortgage closings. You know, really, that’s the bar experience, you know, offering that convenience factor back to them. And even giving our title partners like yourselves, I mean, able to serve more customers, even if that’s through a hybrid eClosing or if that’s through a remote online notary. That it gives you the opportunity to serve more customers in your markets. And then I really think the last piece of it to focus on is also shortening the life cycle of loans. We talked about those operational benefits that I mentioned that kind of come. We’re able at the end of the day, to get some operational benefits and some cost savings as a result of that, while helping our partners out and giving our customers a better experience. So, if you really kind of break that down even further, you know, we talk about the convenience factor. Think about this. If I have to take time off and away from my day or away from my kids, I’ve got to drive clear across town to go set up an appointment that works for all the different parties, spend 45 minutes or an hour or so. The last time I did an in-person closing, it was 2015 and I spent over an hour in the title company and get back to my office to potentially be behind and take away from time on other things. So, I really think that the remote online notaries and or the hybrids are an alternative solution. Again, they don’t have to be for everyone, but I think that there is a lot of people like myself that would find value in that. And so, again, making sure that you have that tool in your tool shed to offer I think is important.

Jessica Shaumoun Yeah, I’m curious, you’ve mentioned RON and hybrid solutions. Which of those do you offer? Are there certain types that customers are gravitating more towards?

Selene Kellam Yeah. I mean, initially, we offered what we classify as RIN’s, which I was so impressed to find that, you knew what a RIN was, which is a remote in-person notary and that’s where we started. And we actually went straight into RON’s.

That was something that we felt like was very valuable to our customers in the end. And then hybrid’s, I would say, is something that we’re really starting to embrace now. I would say hybrid’s is a less embracive approach to allowing your customers some time back and some efficiencies back, but still being able to go and have that experience and title. Maybe they’re a first-time homebuyer and they want to go have that experience and still get that picture and get that experience. That’s great. And actually, heard this from one of our customers who’s also one of our partners went through that hybrid solution here at Thrive. And she said, I still wanted to be a part of it and still have that experience. So, she did the hybrid. She signed her documents prior to closing, showed up to close and did all of her notary documents, got to take her pictures, and she had her keys in her hand. She said in and out in ten minutes. So, I like the hybrid’s because that’s a great probably starting point for most lenders and even for customers and for those partners. But again, I keep coming back to RONs because RONs have such a benefit and they’re such a tool and they become very helpful in many situations.

Jessica Shaumoun We’ve noticed that as well, too. When you use RON or even RIN, hybrid, you know, that the package, everything will be signed correctly. There will be no issues. Right, because you can’t move on until it’s clean. And so, it avoids any last minute, “oh, we missed this one”. Or “the stamp wasn’t dark enough”. Or whatever it might be. Right.

So you know that it’s actually faster on the backend as well for faster days to close and not tied up on the loan.

Selene Kellam Just to add that, Jessica, where it really benefits, even on the lender side is think about this.

We can do a closing this morning. Right. And we already have access to the entire closing package because it’s out there and in the “eWorld.” Right. It’s a digital space there. And so we’re not waiting on documents. To your point, we’re not going to be missing signatures because we use the technology to increase that quality piece of it. And so in the end, what’s cool about that for lenders is locks are shorter, purchase devices are coming quicker, and lenders can really save money in terms of execution.

Jessica Shaumoun It’s a slam dunk.

Selene Kellam It’s a slam dunk!

[Both Laugh]

Jessica Shaumoun So I know that you have kind of conquered this really, really cool feature that obviously benefits customers and title and everyone throughout the process. What’s next on your list in terms of big initiatives?

Selene Kellam There’s a lot. I have what I call a “GPS” to keep me grounded to that. But I would say probably the largest thing is going back into that Quality and Efficiency initiative.

One of the things that we’ve really work on, probably from the moment that I really started getting into operations management is paying attention to your processes and understand that your processes have to be changing and keeping up with the changes in the market, changes with the technology, changes with products, with the consumer expectations, all those different things.

The big thing for us is just constantly looking at our processes and looking to see where we can add quality and efficiency back to that.

And so, I really have spent a lot of time and energy probably since 2015 and going back in and really inspecting what we expect. And what I mean by that is understand not only what it takes from start to finish alone, but what’s actually happening in your process. Because what you will find is things that you think should be happening or you are not aware of. That’s what adds that clunkiness. That’s what adds maybe that extra day on closing or your cycle time or increases your cost per loan or has a bad experience. So, I think the big thing for us is just constantly looking at our processes and looking to see where we can add quality and efficiency back to that. I would say the element that is different about that initiative this year is really starting to look at what I would say is automation and looking to technology to help us work smarter, not harder. And there is no intent at all about it replacing jobs, but looking to our experts and saying, hey, as a processor, as a closer, as an underwriter, I’m giving you 30 minutes of your day back. So that means that’s one more loan that you can serve. It means that’s one more borrower that we can impact. So be intentional about that through automation and technology and sometimes that just basic process optimization as well. So that is a mouthful, but that is what we’re really working on and looking forward to in 2021.

Jessica Shaumoun Yeah, I’m curious, actually, and I think we’re having some questions come in around that too. You just mentioned the quality and efficiency initiative and are you using that to kind of identify the pain points of where the automation could come in? Or are you thinking about things that take a really long time? Or how are you prioritizing where you want to put that automation?

Selene Kellam I think we’re I would say we started is really just going in and documenting our mortgage process and then having somebody objectively look at it and say, OK, why are we reviewing a title policy three times in this process? Why is it having to be touched multiple times? So, some of that could be just simply duplicate. You know, there’s a duplicate task happening. Maybe it’s not in the right stage or the manufacturing process. But to your point is there is an opportunity a lot of times for then automation and technology to make that task easier. Maybe the reason why it is having to be looked at currently in today’s environment three times is because of the complexity of looking at the title. I’ve got to look at this and this and this. Maybe there’s an opportunity to shrink that down into a smaller bite size, which then would allow us not only to have now three people, but let’s shrink that down to one person because they’re having to look at less in that particular task. So, I think it’s a combination of many different things. I like I said, process optimization is some of it.

But I think it’s identifying where technology can help you either reduce task and or help you shrink down what that subject matter expert needs to look at in that task.

Jessica Shaumoun There’s definitely a lot of that in this industry because there’s so many forms and so many different pieces that go into every loan.

Yeah, we actually have a question here also on what types of metrics did you use to kind of say will this eClosing initiative be a success or not? So, did you look at any key indicators in terms of number of loans or days to close, or how did you measure that?

Selene Kellam I think initially it was really just getting a pulse on the feedback of the experience. That was kind of our first focus because we knew that if the user experience, both in terms of the borrower or the title company, your real estate partner, even your loan officer, if they weren’t going to have a good experience at the end of the day, then we were going to be running uphill on this already. So, I think it was just making sure that you have a feedback system and understanding those that are participating in it or having a good experience and also at the same time utilizing that feedback to make adjustments. So, if there is an opportunity to make it a smoother process, communicate better. And we took that feedback and then we implemented it. I think in terms of KPIs is what I would call it, operational efficiencies.

Starting small and then working big and finding ways to get people to want to adopt that and be a part of that.

A lot of it at the end of the day was dwell time on warehouse banks. How quickly were we actually getting these things from the time that they were closing and funding off of our warehouse lines and delivered? So that was another KPI that we were looking at. And then I think the last piece of that is obviously driving adoption. We had an initiative early to say, OK, we wanted a certain percentage of our business, which equated to “we want this many of our closed loans to be equivalent to a digital closing.” So, starting small and then working big and finding ways to get people to want to adopt that and be a part of that.

Jessica Shaumoun And did you how did you sell that to customers? Was it just offered as your potential option or was it more proactive in trying to get customers to say, like, I want to try this for my loan?

Selene Kellam Yeah, I think initially it was really teaching the loan officers the value proposition. Right. So I’ll go back to that loan officer checklist.

We actually identified the value proposition for the customer and almost made it to where this was something fun and exciting and new, and “don’t you want to be a part of it?” And some people said no. And some people said, you know, a lot of people said yes. I have heard of lenders were they were forcing this. And this was something that they just wanted to go all or nothing. That doesn’t really work for us. That wasn’t our motto. It’s not even fitting of our culture. We’re very flexible. We want to make sure we’re meeting the needs of our customers and of our originators and our sales teams there. So we took more of a, you know, let’s go sell this and see if it’s something that they’re excited about. In fact, when we got our first online notary, we were actually advertising that they get to be a part of this and there is a whole marketing campaign around it, and these people were so excited to be a part of that. So I think, you know, obviously identifying what the value proposition is for the consumers and just making sure your loan officers buy into it and they can get excited by selling it.

Jessica Shaumoun Can I ask, how did you celebrate when you had your first remote loan close?

Selene Kellam Big bottle of champagne!

[Both Laugh]

We had was such a great team behind that.

There were so many more stakeholders. And I’ll mention Kelly Cooper Spencer, which at the time was our closing manager, and she actually was part of it there just to support the borrowers. And it happened at midnight, which is even more crazy, actually at 12:01. So able to be there and support them just to make sure that they didn’t have any questions and drove back three and a half hours to come back and do a second one here in Austin that same very day. So I would say her and I celebrated with a big bottle of champagne.

Jessica Shaumoun Well deserved. All right we have one more question if you don’t mind. Where do you see the future of eClose going? So, do you think more states will pass laws to allow for these? There’s also a lot of technology coming into the industry right now, so I’m curious what your perspective is.

Selene Kellam Yeah, I mean, just look, Fannie and Freddie were early adopters to this, and, you know, I think now that you see, I’m sure everybody knows by now Ginnie Mae is coming on board, which is uber excited about. You know when you’re rolling out a digital closing initiative and it only impacts a fraction of your business because you have agency restrictions, you have investor restrictions, you have state restrictions, it makes it difficult to actually create a process to say, yeah, let’s do all of our closing this way. Oh, wait, I can’t. It’s a government loan. So, you have all those restrictions. I am excited to see Ginnie Mae come on board. That’s going to allow us to serve our government borrowers that are getting into those FHA and VA loans. So, I’m really excited about that, especially our VA and our veterans that we know are remote and traveling. And so, I think that’s going to be a great opportunity as well as you’re starting to see a lot of investors come on board. And that was a lot of our hesitation initially, too, is the fact that this was only going to be able to be sold at the agency windows versus now you’ve got some major investors coming on board.

And so, we can go back to that secondary window. And then the states I mean, you get Virginia, who was your first adopter? Texas then following and then you’ve got Florida and then the pandemic hit and it really for some of those legislations to happen just out of necessity. So, hoping a lot of these other states that are still slow to adopt see the benefits that it has, as well as the fact that these legislations in the process that’s built around it is great for the customer.

Jessica Shaumoun Yeah, yeah. I mean, I think talking to you, I feel even more strong and more excited about the potential of this technology. And so, I’m excited to see it grow and really, really excited to talk to people like you who are diving in headfirst and really changing how this works in the industry. So, I want to thank you so much for your time. And it was so wonderful to talk to you and your insights and experience are invaluable. So, thank you so much.

Selene Kellam Thank you.

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