The downturn in the mortgage lending market around a decade ago resulted in strict requirements imposed by financial regulators on borrowing. New technology has been critical to ensuring operations run smoothly. As Josh Hebert, SVP and CIO of Highlands Residential Mortgage explains, rather than being a hindrance, this has turned out to be a win-win for the industry.
Highlands Residential Mortgage, founded in 2010, has seen explosive growth in the last five years. To help manage this, the organization reached out to Josh Hebert, who has over 18 years' experience in mortgage banking.
The financial crisis brought with it increased regulation, but Hebert explains that this has in fact lent itself well to technology. "Now we have all these new requirements to adhere to, what is better than technology to solve for that?" he explains. "Everyone has to operate in the same way, and as a result, a level playing field amongst all companies in this industry has been created."
It has also transformed the experience for customers. "For many years it was like buying a car," he says. "You sit in front of someone and fill out reams of paper, but now a consumer completes an online application and provides all of the necessary information to us."
On a broader scale, it enables the organization to operate with more flexibility in a fluctuating market. "There is constant disruption where volume goes up and down" Hebert explains. "It's cyclical to some degree, due to the timing throughout the year when people buy their homes, but you have to utilize technology to make it very flexible, especially in cost. The old days of buying a solution outright and trying to use it over the next three to five years is not as prevalent anymore. Now it's like leasing technology, you're paying either per unit or per seat and a lot of times those contracts are written in a way that's very flexible, so if your company grows the technology and the cost grow with it, if the company downsizes, the cost comes down."
As a result, Highlands has switched from CAPEX (the capital expenditure model) to OPEX (the operating expense model), where they pay-per-site and employee rather than paying upfront costs.
To support this change, Highlands partnered with Computex, an IT solutions provider headquartered in Houston, Texas. Hebert explains that Computex took Highlands' infrastructure and support needs, which were mainly centered around a traditional IT structure including the voice, network and subdirectory, and helped transform it into a managed service provider (MSP) model, "where they ultimately manage, service and support all of those types of technology for me so I no longer have to. It allows my internal team to focus on more strategic and innovative solutions to help increase revenue."
"From network to voice to cybersecurity to technology support, all of it has been enhanced" he says. "We had support from 9-5 before, now we have it 24-7. We did it in such a way that I didn't have to hire a large staff to maintain it because ultimately, we're using a managed services provider to do it.
We're able to build the model out to its predictive cost, whereas in the past, when we would do a proforma to see if a particular new location was going to be profitable based on how we do business, you would have to come up with an arbitrary number and it was very difficult to determine the total cost of technology for that site."
Computex uses cutting-edge enterprise level technology, allowing Hebert and his team to focus on the more strategic aspects of the business. "Things that are very industry-specific, like the consumer experience or digital mortgage, areas that are ultimately going to drive the business forward, that can bring in additional volume for the organization."
In terms of fraudulent activities, new regulations have weeded a lot of these out, however issues like phishing and falsified documents, like doctored paystubs, can still pop-up. "There are a lot of solutions that can analyze these and make a phone call to the employer to validate whether that pay stub is truly accurate and that person really does work at that organization," Hebert explains.
While interest rates may be high, making homebuying somewhat less affordable, and the market as a whole has slowed down as far as mortgage applications go, Highlands has had a record year of growth. Hebert explains that what sets them apart from their competition is their customer service. "The amount of effort, time, communication, and collaboration we go through on every single loan makes us different," he says.
He also cites their agility as a key differentiator. "We are very nimble, so consumers are coming at us with all kinds of different scenarios. It could be their credit or the timing in which they need to get their loan done. We are able to support someone closing a loan in as little as 10 days if that's what is needed, when most of the larger organizations take between 25 and 60 days."
In addition, Highlands was named as one of the 50 best companies to work for in 2015 and 2016. Hebert credits this to Highlands being a small, independent organization. "We're not bank-owned, we're a family-oriented company. From a cultural standpoint we're not constantly breathing down your neck. We don't just talk about leadership, we live it. We are very focused on hiring qualified, quality employees who can get the job done with little to no micromanaging. In this heavily regulated environment, you have to know your stuff, but at the same time we like to have fun and challenge each other. We're all about supporting our employees."
Since Hebert joined Highlands in 2016, he cites his biggest achievement as revamping the organization's IT operations. "Overhauling the infrastructure was very much about our internal employees, and we needed to build that foundation. Now we have that in place we can go out and put these strategic technologies in, that will ultimately bring in additional sales."