After going through a poor homebuying experience, Rajesh Bhat was compelled to find a better way.
Bhat is the CEO and co-founder of Roostify, an enterprise mortgage origination platform. The complexity and diversity of different parties participating in the mortgage ecosystem make creating a high-quality enterprise solution particularly challenging. Roostify is getting there, though, as evidenced by its vendor relationships with JPMorgan Chase, Guild Mortgage and other regional lenders and credit unions.
We caught up withRajesh about his intentions of building a technology-enab led mortgage product, the challenges and opportunities in online mortgage and different the future of mortgage will look from the offline version we know today.
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Below are highlights, edited for clarity, from the episode.
Why did you enter the digital mortgage space?
I had nothing to do with mortgage or real estate previously. I had spent my entire career in management consulting working with large Fortune 500 companies. The previous firm I was with was based in D.C. and it had opened up an office in the [San Francisco] Bay Area. I moved with my wife to help build out the west coast practice.
That first year, we spent the entire year looking for a home to buy and it was an entirely painful and traumatic experience. Born out of that was the idea behind Roostify. That’s where we began building out the solution we have today.
Why are mortgages so hard to digitize?
The eligibility aspect is complex. Once eligibility is determined, the fulfillment process is equally complex — if not more. Those two things coupled with the fact that on a normal year over half the mortgages issued have a real estate transaction integrally tied to the mortgage transaction make it very complex.
What you have from a consumer’s perspective is a party-counterparty transaction. But for the industry, there are multiple stakeholders behind the bank: title company, settlement company, appraisal company, etc. These different silos have done a poor job interfacing with one another historically. It creates a lot of the opacity and inefficiency in the mortgage market and frankly, a lot of the inflated costs that consumers bear in the process.
Where are we in the evolution of the digital mortgage?
If this is a four quarter game, we’re still in the first quarter. The evolution has been, and will continue to be, driven by the consumer. Banks recognize that consumers are willing to do certain tasks themselves to drive this process. Companies are launching now that really understand the consumer pain points and they’re delivering to that as opposed to banks’ pain points. That’s a paradigm shift.
They’re banking on that solving for the consumers will solve bank problems. That’s less of a hope now — it’s pretty well proven out.
How have banks addressed the demand to move mortgages online?
I believe banks have been passive. That’s largely because they were not motivated themselves to push the envelope nor were there solutions out there to help motivate the industry to change. As solutions have come forward and there is more momentum and credibility around new solutions, banks at a minimum have to take a look and understand what’s happening.
The early adopting banks are really proving out the space. In this space in particular, B2C companies have proven out the consumer appetite to transact digitally. When it comes to mortgage and real estate, though, there aren’t very many B2C companies proving it out. It is an ecosystem, so if I’m a very large title company getting my business through larger banks, I’m not going to pay a lot of attention to fintechs until they achieve scale.