LodeStar Guest Blog: Automation

Jim Paolino, CEO, LodeStar

One of my favorite things about the spring conference season is talking to clients and lenders. I always make a point to ask the question, “What do you hope to get out of the conference?” and I usually get a lot of different answers. This past spring, however, I heard the same answer over and over again…


I know, I know. Automation is as overused as any buzzword, especially in our industry these days. But there’s a good reason people are more interested than ever in automation.

Breaking the Cycle

In 2022, the huge volume of LOs, account reps, and sales employees that were hired during the refi boom of 2021 quickly became dead weight and got cut en masse. Recently, a guest on the LodeStar Lending Leaders podcast, Leora Ruzin, aptly called the practice of hiring to manage upticks in volume a dependence on “human spackle.” We have an industry-wide problem with ignoring the human cost of our refusal to adopt new solutions.

But maybe that’s starting to change a little.

If my experience is any indicator, COOs are increasingly interested in ways to weather the cyclical nature of the industry. That’s a good thing! I’ve said many times before that adopting new technology and embracing automation should be our first move when it comes to breaking the hire/fire cycle. And lots of people agree with me. But what does automation really look like?

Hybrid Automation

An industry friend Babar Chaudhary, gave a really great, really simple definition of automation: “If you left the office and turned off the lights, everything should keep working as-is.” Yeah, that sounds great, but everyone knows it’s never going to happen. And maybe it shouldn’t. What’s way more realistic—as in, attainable in the real world—is hybrid automation.

Before we dive into exactly what that means, let’s remember just how much redundancy and wasted time there is in the mortgage origination process. To cite just one example, the property address is manually entered something like 70 times. That’s outrageous. If your loan volume swings way up during a market boom, no wonder some shops feel the need to hire loads of people to spend every day on the phone, taking and recording borrower information over and over and over again.

It’s precisely redundancies like these—typing in the borrower’s income and credit score, checking the property address, ordering title, calculating and disclosing closing fees—that we should reassign to the computers. Some of these processes can be automated through software integrations, such as LodeStar offers with NOVA, Mortgage Builder, BeSmartee, and others. Other processes can be automated using APIs (Application Programming Interface), which are intermediary mechanisms that allow two programs to “talk to each other.” Think logging into Instagram using your Google account. Still others, especially repetitive clicking and scrolling, can be automated using RPAs (Robot Process Automation); software programming that automates manual tasks within, for example, an LOS.

All of these and other forms of automation have benefits and drawbacks. No one of them will be a silver bullet and solve all of your problems. And that’s kind of the name of the game with hybrid automation. A true “lights out” automation is simply not within our grasp. So, we have to integrate lots of different systems and implement automations wherever we can. Regardless of what hybrid roster of automation systems you adopt, the goal will be the same: make the manual processes easier and less time constrained.

What can’t (or shouldn’t) be automated?

Given the limits of tech, some things just can’t be automated. At least for now. For example, when reading bank statements or pay stubs, a computer can’t currently differentiate between, say, an anomalous deposit and income. Only a person can do that.

Also, regardless of tech’s various advances and limitations, there is strong evidence that most buyers (yes, even Millennials, like me, and Gen-Zs) are decidedly not interested in replacing the traditional LO with an app. Sure, especially younger buyers are frustrated with how long the homebuying process can take and how confusing it can be—but that’s all the more reason why they want personalized, hands-on guidance from an expert.

They want a human being, one who has the time and bandwidth to listen to them. Yes, many people are primarily focused on locking in the lowest rate, but that doesn’t mean a sense of trust isn’t important to borrowers.

And here we come to one of the most important benefits of adopting automation technologies: empowering your LOs to be irreplaceable. Buying a house is one of, if not the, most important financial decision in a person’s life. It’s scary, exciting, and confusing all at once. When it comes to competing with other mortgage lenders—especially in a tough economy—what better strategy could there be than investing in a relationship of trust with the borrower?