StreamLoan CEO Stephen Bufler sat down with Power Originator to discuss the digital mortgage revolution.
Power Originator: How did you get into the digital mortgage space?
Stephen Bufler: As a real estate investor for the past 20 years, buying a home was always such a pain. It was this smoldering thing inside me that said, “I have to solve this problem.” It’s fun to participate in helping redefine how homes can be purchased. We came to market Q4 2015 before the launch of Quicken Loans’ Rocket Mortgage, which was right around the corner in 2016. You rewind the clock a few years, and digital mortgage was this very nascent concept. Our first product was mobile, so we were really pushing the envelope and really putting the borrower in the driver’s seat. The idea is to get everything done on an iPhone, as opposed to being directed to wet signatures and paper copies and downloading things.
PO: Your goal is to collapse the process from 50 days to 15 days — a dramatic reduction.
SB: Yes, some of that we have control over, and there are other poles in the tent where we don’t. But when we think about redefining the process, there is a significant amount of waste and back and forth. There is a recursive nature to the work — the borrower comes in and works with the loan officer to collect some stuff, and then the processor come in and then it is pushed back to underwriting. Each one of those steps in the chain has scheduling and waste.
PO: Tell me more about how you are able to get that kind of increased speed.
SB: We’re not claiming we can solve everything, but we can make things an order of magnitude faster. A piece of work that takes seven to 12 minutes can be collapsed to something that is 15 to 30 seconds. When you do that enough times across a hundred tasks, you see dramatic economies of scale.
PO: There is big buzz around millennial buyers and their love of apps and technology. You were really at the forefront in the digital space.
SB: I knew we were pushing the envelope in 2015 launching a mobile digital mortgage product, but today, those who haven’t figured it out are behind. This avalanche of millennials is active in home purchasing, and if you don’t have something for them, you are not going to be part of their world. Fortunately, we placed a big bet early that mobile would play an important role, and it’s what we’re seeing now.
PO: With mobile, there are always security concerns. How are you addressing that?
SB: My last mobile company was a mobile security company, which was acquired by NetApp, the second largest data storage company in the world. We built a lot of great security technology. This industry needs the same software that we sold to banks and the government and utilities. It’s about looking end to end at the chain. The other piece is data privacy. We’ve built a system that ensures each user only has access to the information she should have access to.
PO: Data is another issue. You have to be able to process huge quantities of data.
SB: We are hit on both sides. The borrower has to collect all these categories of data. The back end is also messy. These loan origination systems have been around for a while. All the data from the front end has to land in the right buckets. In the U.S., there also aren’t ubiquitous standards. Some banks are not as friendly (on data). We are having to piecemeal together across partnerships, and there is not a standard format. I hope there will be services available that make the data processing and management a lot easier.
PO: As you look to the future, do you think we will get a completely digital process soon?
SB: I wish I could say it will be quick. There are a bunch of people tackling it, and it will take all of us some years of work. Most of the attention has been at the front end, application process. We’re optimistic that we are making a dent.