How technology is changing the mortgage industry

Fergal: [00:00:13] Hello again and thanks for joining us for another edition of CMP TV. I'm Fergal McAlinden, news editor of Canadian Mortgage Professional. And today we'll be continuing our series of discussions with some of the major players in Canada's mortgage space on navigating the current market and what could be coming down the line in the future. My guest today is Jesse Abrams, co-founder and CEO of the company that's been making waves across the mortgage space in recent times. Homewise Solutions is an online brokerage that blends a cutting edge digital approach with a team of dedicated advisors and brokers to support each customer's mortgage journey. Jesse, thanks so much for joining us today. Our thanks. 

Jesse: [00:00:48] My pleasure. Thanks for having me. Things are great. Obviously crazy time. So excited to chat about them. 

Fergal: [00:00:54] Yeah, for sure. I want to start just by talking about Homewise, first of all, because it's obviously been a really eventful couple of years for the company. What's been new with Homewise this year? 

Jesse: [00:01:06] You know, we we're always building new technology. And the goal of that is to make the customer experience faster, easier, more transparent. But also on the mortgage advisor side from our team make their experience easier, faster and have them focus on what's most important, which is providing value to their clients and getting as many deals done as possible along the way. 

Fergal: [00:01:29] And it's been such a kind of whirlwind start to the year in the industry that it's almost easy to forget that we're actually kind of done with the first quarter and almost hurtling towards the midway point. But have there been any interesting trends that you've noticed in the market so far this year from your own point of view? 

Jesse: [00:01:46] I think obviously the increasing rate environment has created even more craziness in terms of us trying to have that crystal ball to say what is next week even going to bring the first three months of this year. We're fast and furious with lots of people signing up for pre approvals, especially to get themselves into the market because I think last year was a bit crazy with the increasing prices, but with a lot of people knowing that interest rates were going to rise, people want to get ahead of it now that they have increased quite substantially, even though a lot of the pundits and people have been following the market, it said no question that was going to happen. I think it still caught some people off guard. So that's definitely been interesting to see and we're already starting to see because we also have a real estate brokerage as part of our business. We're starting to see a lot less craziness when it comes to 20 offers on a home, 30 offers on a home in a lot of places. And some places even going below asking, which is kind of pleasant to see. 

Fergal: [00:02:45] Yeah, that's that's interesting. Some brokers that I speak to, the majority actually say that even though it might lead to some kind of cooling off for business, it will probably be better in the long run and that there won't be those crazy bidding wars and people will have more time for appraisals and things like that. But are you expecting activity to go down substantially in the market for the remainder of the year, or what do you think is going to happen? 

Jesse: [00:03:06] It's hard to take a guess. I would say there should be a slowdown compared to what it was like last year. With the craziness, however, you never really know. I think about our users. We really focus on first time homebuyers and the stats are all up in the air. If it was 20%, 30%, 40% or I think it was 50% of buyers last year being either investors or people who own more than one property. As interest rates increase, they're less likely to buy a second property or an investment property when the price becomes that much more expensive to manage on a month to month basis. So it'll be interesting to see companies like ours and many others in the market that focus on the end user and the actual homeowner and how that can actually see some more parity in the market where they get to enter, much more home prices decrease so. I'm on the optimistic side for the potential homeowner saying this could be an interesting time to get into the market and maybe we'll see. Hopefully, we'll see prices decrease quite substantially this year, which probably won't happen, but I hope it does. 

Fergal: [00:04:10] We've talked about this a little bit in the past and I mentioned at the start of the program. But I'm really interested in just hearing a little bit more about the importance of technology for Homewise and how it uses tech and online solutions in the mortgage process because it is quite innovative. 

Jesse: [00:04:26] Yeah, you know what? I went through the mortgage process like many others six years ago when I bought my first home, and at that time I was working with a large bank and got totally jaded to that model. There's a lack of transparency and exceptionally archaic processes. Now, not a lot of banks are getting better in those places and the industry has changed quite a bit. But it was it was really scary to see that I was making such a large financial purchase of financial decision and I was going in completely blind. And I'm a commerce grad from a university where I took finance courses and I should have known what I was doing. But it's just not it's not something we're taught every day. And then I use rate aggregators that confuse me. So we just really realized that there was a big opportunity to simplify the experience for clients, and that's where technology really comes into play with us. It's not just a five minute online application because enough people are doing that, even though we think ours is very fast, easy and simple. A lot of it's the data infrastructure on the back end. We've built the CRM, we built really powerful, intelligent practices in the back end, which is all kudos to our data science team and my co-founder Carlos, who does that. I just pretend I know what I'm talking about. He does all the work there, but a goal of that is in the older practices. I always compare it to blind dating. Blind dating. 20 years ago, you knew nothing about the person that set for what your Aunt Susie told you about her. But now you can look up so much about that. That person online on Facebook, Instagram, you could Google them, you could check LinkedIn. There's so much valuable data so we can take in that application online, but it's what we're actually doing with it that's exceptionally important. We're actually tailoring the solution to the client, both from a mortgage perspective based on their application, and that's pulling in data like where they're coming from, their type of salary, their type of job, their type of home ownership experience. But also we also score them in, price them based on their elasticity and how much that product is right for them. And then we create a full guiding schema for them where they can upload their documents online, see where their status is from a mortgage process perspective, and hook into partners on the insurance side and the real estate law side, like a company like deeded, where they could do the full process digitally, much more simply and much easier, and hopefully save them a lot of money. Our clients on average are saving a good amount of the money per deal, which is really important. But we're starting to add more and more external mortgage advisors to our team as we build out our network effect there. And the external advisors love the fact that they're not having an hour and a half phone calls right off the bat, and a lot of it is manageable in the CRM. So we're just seeing the speed is so important, but also the transparency is also important for both the client and for the advisor who gets so much more information right up front. 

Fergal: [00:07:10] And it's been a really interesting couple of years for technology in the mortgage space because we've often heard that throughout the pandemic, the importance of technology was really supercharged and accelerated in a way that it might not have otherwise been. A bit of an open ended question here, but how significant do you feel technology is going to be, or what role is it going to play for the future of the mortgage industry? 

Jesse: [00:07:31] I think it will be huge. Open banking is the contentious issue. I don't like when people talk about cryptocurrency and blockchain and mortgages. I just think that's people making guesses and where a market could potentially go open. Banking is the big one. And the reason for that is we know how much fraud there is in this industry. We know the lack of transparency. We know how difficult it is for consumer to understand how many documents they're supposed to be getting at all times. If we allow things like open banking or create better access to data through Interac and companies like that are looking to with their acquisition of Secure Key and things like that, that's a huge opportunity to provide value to clients by unlocking key documents, bank statements, and we're starting to see more of that happen, which is really great. But the more that can be done in one click, the more that can be done in a way where a consumer actually has the power to do that. They don't have to go through a practitioner to do it, but they have access to it. And the practitioner, be it a mortgage agent, a bank, whoever it might be, can view a full profile. They're just going to provide a better solution to the client. There's a lot more transparency and a lot less fraud. We all know this new thing that was introduced by Trudeau a couple of weeks ago with no foreign buyers for two years, it's not going to do anything right. It's everyone's buying through a family member who's here or through a numbered corporation. So it's not going to really. Do anything. But if you have open banking or if you have ways to see the direct source of of the currency or the dollars, that's where you create a lot more parity in the market. And hopefully you have a lot more people buy homes to live in homes, which is to me the most important thing and to us at Homewise the most important thing. 

Fergal: [00:09:14] There were some interesting comments on open banking last year by the federal finance minister, Chrystia Freeland, who seemed to indicate that it would be something that would be in Canada's interest and that it could be introduced in the next couple of years. But there seems to be some skepticism among members of the industry that I speak to that it's going to be that quick. What do you think about it yourself? Do you think that is imminent or far down the line? 

Jesse: [00:09:36] I think it's so far down the line. I don't I actually don't see it happening in the next five years in Canada. The reason for that is we are so financially dependent on our big banks and it's it's in their best interest to do it, but they don't seem to be interested in it. And it's a very interesting thing. So to me, we're going to start to see more and more technology companies come into play. And this isn't just tech startups like Homewise. This is some of the incumbents in the market who have been around for some time saying we need to make change as well. And I think that's going to be the catalyst for this. And I say five years conservatively, I'm hopeful it will be in the next 2 to 3 years. And COVID really changed things. We didn't have documents signing online two years ago. I remember when COVID first hit, one of the lenders had our client drive by a branch and hold up their paper to the window as they signed. Now we have Hello sign and E sign and DocuSign. So I have hope. But the rational side of me says there's a lot of red tape to get that done. And when it does come, though, I think we're going to have a lot of technology companies leading the way and and being the ones who are pushing it to the next step. 

Fergal: [00:10:45] Yeah, for sure. We'll all be keeping a very close eye on that one as it develops. Look, Jesse, that's all that we have time for today. Thanks so much for coming on and sharing some of your perspectives. We'll be looking for some of the trends and developments that you mentioned. Yeah. I want to thank you for coming on. Really appreciate your time. And I look forward to chatting very soon. 

Jesse: [00:11:03] My pleasure. Thanks for having me. 

Fergal: [00:11:05] That just does it for today's program. Our thanks again to Jesse Abrams of Homewise for taking some time to talk with us today. As always, stay tuned to CMP TV for even more great content in the coming weeks and months for now. Thanks for watching. We'll see you very soon.