Tim Mayopoulos is the President of Blend, a Silicon Valley technology company propelling the $40 trillion consumer banking industry into the digital age through partnerships with banks, lenders, and other technology providers. Before joining Blend in 2019, Tim served as President and CEO of Fannie Mae for more than six years.
Under his leadership, the company returned to sustained profitability, delivered more than $167 billion in dividends to taxpayers, and introduced new technologies to the housing finance system to make mortgage lending faster, safer and more transparent.
What was your reaction to the Quicken Loans IPO?
Well, my initial reaction was that it's not every day that you see a mono-line mortgage lender file to become a public company but then as I reflected on it, I think it makes sense for Quicken to be doing what it's doing. It's obviously achieved a leadership position and it has good market conditions in which to do an IPO, with interest rates low and expected to be low for the foreseeable future. Mortgage origination on the refi side should continue to be pretty high and the purchase market should be strong as well, at least once we get through the pandemic. There is an imbalance in supply and demand in housing markets, so we should expect there to be home price appreciation and continued demand for homes. We've got the biggest generation in history, the millennials, coming of age, and they all express the same desire for homeownership as previous generations. There's just been a chronic shortage of housing creation in the country over more than the last decade. The macro market conditions for Quicken are very favorable.
Quicken has been successful in growing and in differentiating itself from other lenders. Quicken is as much a technology company as it is a mortgage lending company and they've been innovators in the technology space. Because they have established a unique value proposition for the market, they may have an opportunity that's appealing to IPO investors.
How could Quicken Loan's decision spur other FinTech companies to do the same?
Quicken has, for some time, been a catalyst for change in the mortgage industry. I remember when I was the CEO of Fannie Mae, Quicken Loans announced Rocket Mortgage, which at the time might've been more hype than reality. The good thing about that was that it set a new standard in the industry. It really awakened a lot of people's ideas as to what consumers would and could expect in terms of a more digital and more automated origination process. That has served as a catalyst for the entire industry, including the FinTech industry supporting mortgage, to pursue that ultimate goal. The conditions are very favorable for FinTech companies going forward in housing finance to continue to drive towards that aspiration and to continue to attract capital.
What does Quicken's decision say about the state of FinTech in housing?
There's clearly a great demand for technological innovation in the mortgage industry. The idea that Quicken is looking at going public is a confirmation of that. There are many technology providers in the space. Most of them are venture capital-backed companies like ours, Blend, and as demand for financial technology continues, these companies continue to proliferate. There's a desire on the part of consumers to be able to apply for a mortgage and have it be a comparable experience to what they do on Amazon, or what they experience when they use their iPhone, or what they do when they watch movies on Netflix. Consumers expect that applying for a mortgage should be no different than any other consumer transaction. It should be simple, and elegant, and efficient, and fast, and it should help lenders lower costs.
There are clearly consumer expectations around this, but what I've noticed is that the expectations of lenders have also changed. They recognize that they can be much more efficient, they can be more cost-effective, they can create a differentiated experience for their customers, the borrower.
How will this pandemic impact the use of technology within the mortgage and housing markets?
The pandemic is an additional accelerant on the transformational change that's happening in housing finance. We've seen this underway for quite some time. Consumers want to be able to apply for a loan and have it fulfilled from anywhere, including from their couch in their pajamas if they want to. The pandemic is only reinforcing those consumer expectations. More importantly, the pandemic has taught the mortgage industry, which has historically been very conservative and cautious about change, that a lot of change can actually be achieved in a relatively short period of time, very effectively. It was just a few months ago that the entire industry essentially decided to go operate remotely, and many people wondered whether the industry would be able to adapt to that. What we found is that the industry largely was able to be nimble and meet changing consumer expectations and needs to a large extent.
We at Blend have been working with our lender customers to respond to challenges created by the pandemic, specifically in the areas of managing the huge influx of refinance volume through process automation, and perhaps even more importantly on providing fully digital closings.
Understandably, consumers don't necessarily want to have appraisers show up at their homes during a pandemic, and they certainly don’t want to go to an in-person closing with a room full of people. This illustrates the pivot that everybody in the industry needed to make an order to be able to continue to operate their businesses in a new way. Working remotely has given the industry newfound confidence that technological change can actually be adopted quickly, and effectively, and in relatively short order. It's going to reduce some of the reticence, some of the conservatism, that the industry has historically shown towards adopting new ways of doing things. Apart from the public health issues themselves, the pandemic has created a little bit of an experiment where lenders and others in the housing finance system have had to adapt to new circumstances very quickly. They have found that they can do that and that technology can help drive that change very effectively.
There clearly was already a lot of momentum underway in the mortgage industry towards becoming more technologically advanced. I think the pandemic is going to accelerate that tenfold because people see that not only is it possible, but it's actually more easily achievable than many might have thought.