One-stop shop plans must be measured, mortgage players say

Real estate firms are increasingly honing their one-stop shop homebuying bona fides, moving more services under one brand attempting to make the purchase process easier for consumers.

Companies across the mortgage landscape believe the platforms will be the largest disruptor to the industry over the next three years. Building multiple services in-house is an attractive prospect, but leaders from some of the industry's prominent players say having a narrow focus and creating strategic technology partnerships are the stronger plays. 

"Focus on the part that truly is differentiating, which tends to be the customer experience part,"  said Zeenat Sidi, president of digital products and services at loanDepot, at National Mortgage News' Digital Mortgage 2022 conference in Las Vegas on Tuesday. "And then partner with others who have built the technology and have the specialization, the commercial capability to add that that is not the differentiating aspect and then the power is in bringing these two together."

LoanDepot tapped Sidi in March to run mello, which develops new lending products and houses the Foothill Ranch, California-based firm's real estate, insurance, title and escrow services. The major lender wasn't the first, nor the last mortgage company to recently diversify its offerings; lenders and fintechs are adding personal loans, cash offer and home equity line of credit products as well as acquiring title companies and other ancillary service vendors. 

One-stop shop homeownership platforms remove appraisal, compliance, escrow, title and other required mortgage checks out of the equation for borrowers who may find them complicated, said Dominick Marchetti, chief technology officer of Guaranteed Rate. His organization this year already added personal loan and HELOC products to its offerings.

"(Customers) don't care to understand pricing manageability engines and platforms and investors," Marchetti said. "They want to move into a house. So I think our responsibility is to simplify that transaction, right?"

The platforms have room to expand to post-mortgage services such as insurance warranties, remodeling, vendor management and other services yet to be discovered, said Rhett Damon, head of brokerage operations and industry relations at Opendoor Technologies, a leading iBuyer. Opendoor last month announced a multi-year partnership with one time competitor Zillow to allow their users to request an Opendoor offer to sell their home, a recent example of platform consolidation.

In forming a one-stop shop homeownership platform, companies can go astray in a few ways, panelists explained. Businesses for example shouldn't "hard code" mortgage solutions that don't ultimately prove to be nimble and agile, Sidi said.

"We have generally taken industry solutions and customized them to such a degree that there was no benefit in actually leveraging an industry solution," she said. "So I think we've got to change our mindset."

Sidi warned against "technology for the sake of technology," reciting her experience in fintech where firms had an obsessive focus on the customer experience. Mortgage lenders are already prolific producers, evidenced by their record $4.4 trillion in origination volume last year, Marchetti said. Now it's time for them to "buy commodities and build differentiation," he said, citing a proverb.

"Just enhance it, put in a magnifying glass and be way more effective," he said. "How do we strip off the mundane? How do we allow originators to lean on commodities? Tools that are best in class, many of which are represented in this room, and allow them to do what they do, which is best in class."

A difficult year of declining mortgage activity and decades-high rates is forcing firms to lay off thousands of professionals. Companies seeking more efficiency should also use resources right now to improve their internal operations, Damon said. Consumers will continue to demand new services, he emphasized, but enough of a market remains for organizations to support their primary businesses. 

Sidi suggested mortgage players utilize technology vendors to avoid over-hiring for the market's next boom cycle. The industry added thousands of professionals to deal with the overwhelming volumes in 2020 and 2021 and are now reckoning with the consequences. Marchetti doubled down on the advice that companies need to stick to strengths.

"I think it's really important to stay anchored around where you can have the biggest impact, where you can drive your budget," he said. "And with budgets, we can do some pretty fancy stuff."