Two of Orange County’s larger finance companies are expecting big sources of growth from new software offerings.
Foothill Ranch-based loanDepot LLC, the second largest nonbank retail mortgage originator in the U.S., said its new “mello smartloan” digital mortgage process trims the often time-consuming and frustrating loan application process to as few as eight days.
“We’ll see savings of up to 50% of the typical cost of a loan,” loanDepot Chief Operating Officer Tammy Richards said in an interview. “There’s nothing else like it in the industry.”
In Newport Beach, registered investment adviser United Capital Financial Advisers LLC reported its white-label software platform has won such acceptance that partner assets using the product has doubled to $22.5 billion in the past four months.
“It’s a large opportunity—you’re talking in the trillions of dollars,” said Mike Capelle, a co-founder of United Capital and its chief platform officer.
“We’re just getting started. We’re happy to see the reception.”
Representatives of both companies said it’s not only Silicon Valley that can produce groundbreaking technology.
“Development can come from anywhere,” Richards said. “It doesn’t need to come from a valley. Quality comes from the deep understanding of the mortgage industry that we have.”
Faster Mortgages
Since Anthony Hsieh began loanDepot in 2010, the company has exploded to 6,500 employees and has originated about $165 billion in mortgages, including $33 billion last year, trailing only mortgage giant Quicken Loans Inc. among nonbanks.
Previously, mortgage companies relied on applicants to supply information such as employment, income and tax filings, which needed to be verified by a manual process involving a paper trail, Richards said.
Now, loanDepot can obtain the same information directly from financial entities such as banks, she said.
“We’re getting data straight from data sources rather than paper that needs to be reviewed,” she said. “It was not done before because it’s costly to create the technology.”
LoanDepot has spent more than $80 million on proprietary technology to improve the online process, she said.
One of the biggest changes is a “digital appraisal” that can eliminate the need for a physical appraisal of a home if certain criteria are met, such as the property being within a price range for that neighborhood. The cost savings can range between $500 and $900 if an appraisal isn’t needed.
Many other companies claim they have an online application, but their back-end process is still inefficient with much paperwork, Richards said.
She said Quicken Loans, the leader in mortgage originations, will have to catch up with loanDepot.
“I’m not trying to poke the bear,” she laughed.
United Potential
Chief Executive Joe Duran began United Capital in 2005, boosting its assets through a strategy of both organic and acquisitive growth by rolling up smaller firms around the country. It now has 89 offices nationwide, 700 employees and $23 billion in assets under management, making it one of the country’s biggest registered investment advisers.
Since the company is spending about $15 million annually on technology, Duran saw an opportunity to license its software to other RIAs and in 2016 the company introduced FinLife Partners, a white-label wealth management platform.
The platform permits advisers to use United Capital’s software tools, which provide a variety of financial analysis in an easy-to-use format.
Last year, the company made two key changes to the software, relating to costs and how it’s distributed:
• It switched the fee structure from 10 basis points of a client’s portfolio to a more simplified $600 a year fee, per client.
• It opened the platform from just Salesforce.com to permit other customer relationship management software like Junxure and Redtail Technology Inc.
“We went around the country to get feedback and learned quite a bit,” Capelle said. “It’s what the market is asking for.”
The platform now provides software for clients at 38 other RIAs.
The potential market could be trillions of dollars as the company plans to license the product to institutional investors and brokerages in addition to RIAs, Capelle said.
The firm’s annual revenue now tops $200 million.
Duran, in a statement, suggested that United Capital’s licensing business may overtake its wealth management unit.
“The day may come soon when FinLife Partners eclipses United Capital in size,” Duran said.
