The digital mortgage platform empowering the rise of community lenders

The digital mortgage platform empowering the rise of community lenders
From the beginning, co-founder and CEO John Paasonen has been clear about digital mortgage platform Maxwell’s mission: to make mortgages simpler and more accessible. Since channeling his frustrations with the mortgage borrowing process into co-founding Maxwell in 2015, Paasonen has been busy honing a technology-powered platform meant to delight borrowers with a streamlined experience for lenders. Maxwell has grown steadily since 2015, today serving as a technology partner to over 200 community lenders across the country.

Maxwell’s technology and solutions are specifically geared to empower the community lender to offer personalized service to the borrower and to the real estate agent partner from loan application to closing. Paasonen and the Maxwell team designed its offerings based on insight from conversations with tens of thousands of front-line employees across the industry.

“We are putting the kind of technology, data insights and automation that was once only available to mega lenders into the hands of lenders doing $300 million to $3 billion per year,” Paasonen commented.

Community lender strengths and challenges

Another reason Paasonen sees an upside in building products for this niche is the industry’s recent shift towards community lenders — those credit unions, community banks and small-to-midsize independent mortgage bankers (IMBs) that today represent over half of mortgage originations in the U.S.

“Community lenders have seen incredible growth in market share in the last 10 years of recovery since the Great Recession, largely at the expense of the large banks like Chase and Wells,” Paasonen explained.

A part of this growth is driven by community lenders finding strength in exactly what large banks are challenged with: local knowledge, local relationships and local relevance. This naturally favors these lenders in strong purchase markets.

“Looking ahead, the macroeconomics and demographics are stacked in their favor here,” Paasonen said. “The key life changes — marriage, babies, children, job changes, empty-nesting — that the large Gen X and Millennial populations undergo will drive significant demand for housing in the next decade.”

Still, community lenders aren’t immune to the challenges inherent to a rapidly changing industry. According to Ellie Mae’s Millennial Tracker, Millennials — with dramatically different expectations around technology and ease of use compared to previous generations — accounted for over 60% of purchase loans in July 2020. As Paasonen pointed out, “The challenge community lenders will continue to face is staying relevant to these core populations, much like the shift real estate agents have undergone in the last decade as they adapted to the world of Zillow and Redfin, where buyers have information at their fingertips.”

Scalable fulfillment built to empower community lenders

After establishing itself as a key technological piece in the mortgage process, Maxwell saw an opportunity to help their small-to-midsize lenders with a common problem they heard time and time again: scalable loan fulfillment.

Maxwell’s Fulfillment Platform, which launched in May 2020, also ties directly into the goal of empowering community lenders to deliver a better, more streamlined experience to customers.

“With our Fulfillment Platform, we’re able to deliver flexible, efficient and high-quality processing, underwriting and closing services to community lenders, most of whom have never had the chance to access these kinds of services,” Paasonen said. “This is who Maxwell had always intended to become: a platform powered by the collective masses, built to give the scale and economics of a large lender to the community lender.”

Is it working? In short, yes. The addition of the Fulfillment Platform as an option to their network of lenders has been a tremendous success. “We really feel community lenders have been underserved in scalable outsourced services,” Paasonen said. “We have been growing our team and capacity in response to this need. In Q3 alone, we grew our team more than 200% to meet the demand from our lenders and will grow another 140% in Q4 to continue to help them scale.”

A common theme while talking with Paasonen was that signs of success go beyond numbers. Paasonen recalled a story: “One of our processors got sent a bunch of flowers from an LO telling her she was the best processor he has ever worked with. That’s the kind of deep partnership we want with our customers to help them drive their businesses forward.”

Giving community lenders a competitive advantage in the mortgage back office

Loans on Maxwell already close over 45% faster than the national average, but Paasonen sees significant opportunities in applying machine learning and artificial intelligence to processing and underwriting, with a goal of reducing many of the manual tasks involved with mortgage transactions.

“This will further accelerate productivity of our own teams, as well as for our customers, and ultimately deliver a much better experience to the LO, the borrower and the real estate agent partners at the end of the transaction,” Paasonen said.

This year has been record-setting for the industry — probably the best in almost two decades. Still, as the inevitable cycles of the industry ebb and flow, Maxwell strives to be the partner that is laser-focused on improving the experience and enhancing margins for community lenders in their network.

“A community lender is going to be the most competitive lender in their local market because they’re on Maxwell,” Paasonen stated. “And ultimately, it’s the borrower that benefits. That’s what pulls my socks up every morning!”
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