That is because Hsieh takes both mortgage technology and borrower relationships seriously.
The former head of two online lenders that later merged with LendingTree LLC and E*Trade has since 2010 run a third retail mortgage banker called loanDepot.
When Hsieh opened his first two companies online lending was new enough to make targeting it alone compelling. Today the growth opportunity lies more in the broader nonbank mortgage market that has opened up as banks have “tapped their brakes” on their home loan activities post-crisis, he says.
“Consumers have choices in how they obtain a mortgage. Many of them prefer the online experience. Many of them prefer the face-to-face. We want to develop all these options,” he says.
The company already operates a both a consumer-director online channel and a branch network. It also is building an in-house servicing platform and plans to expand into third-party origination channels this year. It plans to launch its wholesale division in the first quarter, and its correspondent unit in 3Q.
“We want to be a leader in nonbank mortgage space,” he says, noting that he expects the opportunity to eventually expand further as both the economy and loan volumes eventually recover and grow.
Among loanDepot’s distinctions is that it uses largely proprietary paperless technology it managed to build while starting up in the midst of a refinancing boom.
“We had to build technology for the new marketplace post-crisis,” Hsieh says, noting that this proved to be a challenging task but has paid off. “From day one, we have never used a paper file” to store loan documents. Rather the company uses dual monitors with displays mimicking hard copy files.
“There were a few times when we almost took a U-turn, but now it’s smooth sailing,” he says.
Lending executives have split opinions when it comes to whether to invest in technology during a boom, something Hsieh did largely because he was starting a technology-focused company in the middle of one.
Some save refi boom money to invest in and install tech on a “rainy day” when revenue is lower but they have more time. Others “pay for a rainy day” and install automation while they have funds for it, says Steve Calk, chairman/CEO of The Federal Savings Bank and Chicago Bancorp, who advocates this.
“It feels like you’re trying to put on your spare tire while you’re driving on the freeway,” says Hsieh of the tech installation done during the boom.
“We just knew that at some point we would go through the same challenges if we delayed, so we made the commitment,” he says, explaining why the company went through with the process.
Borrowers’ needs remained a priority as the company did this, he says, noting that some these are often misunderstood.
Some mistakenly think it is the younger generation of mortgage customers that prefers online lending, for example.
Hsieh finds that whether automation is used has less to do with how comfortable the borrowers are with technology than their comfort with the home loan process itself, he says. A borrower who has gotten a loan before is more likely to use technology than a first-time borrower, regardless of age.
Many also stereotype refinances as the most online-friendly loans but experienced buyers also find online purchase loans a good fit, he says, noting that there are borrower exceptions to every rule.
This largely “paperless” lender will provide “paper” if the borrower really wants it, for example. This is done more often at the branch level where newer borrowers tend to prefer face-to-face interaction, Hsieh says. It is rare, though, he says. So far it’s been sufficient to handle it on an exception basis.
The company funds over $1 billion of loans per month and gets only a handful of requests per year in its consumer-direct channel for hard copy, mailed documents, says Hsieh.
“As the industry continues to mature, I’m sure it will continue to evolve,” he says of the mix of methods currently needed to reach enough borrowers to grow nonbank mortgage market share. “For now, there is very little overlap and there is going to be very minimal channel conflict.”