Key facts
- Figure CEO Michael Tannenbaum believes technology and new products are essential for mortgage growth.
- Figure's AI loan assistant has increased conversion rates by 20%.
- The cost to originate a mortgage is approximately $12,000.
- Loan abandonment in home equity is around 49%.
- Figure's mortgage origination process averages a nine-day closing time.
- Figure is investing in faster capital markets execution, including pre-funded securitizations.
Figure CEO Michael Tannenbaum outlined strategies for mortgage lenders to achieve growth amidst a challenging interest rate environment, emphasizing the roles of technology and product diversification. In a conversation with HousingWire, Tannenbaum highlighted that while growth is universally sought, it has become increasingly difficult to attain. He noted that lenders are turning to technology and new products, such as home equity loans which can be countercyclical to interest rates.
Tannenbaum stressed that technology investments should focus not only on cost reduction but also on business growth. Figure's approach to AI adoption prioritizes measurable revenue opportunities. The company's AI loan assistant, developed with Sierra, acts as a support tool for loan officers, aiming to improve borrower engagement and conversion rates, which Tannenbaum stated have increased by 20%. Figure validates its technology through its own lending operations before introducing it to its network of over 500 partners.
Figure is also focused on reducing friction and loan abandonment in the mortgage process by integrating origination technology with capital markets execution. Tannenbaum cited the cost to originate a mortgage at $12,000 and identified loan abandonment, particularly in home equity at approximately 49%, as a "quiet crisis" due to the difficulty in acquiring leads. The AI assistant is designed to help address this by facilitating borrower outreach and follow-up.
Furthermore, Tannenbaum pointed to faster mortgage origination as a competitive advantage, noting that Figure's process typically closes loans in nine days, including a mandatory three-day rescission period. The company is also enhancing its capital markets execution, including pre-funded securitizations, to enable partners to access liquidity more quickly and manage interest rate risk. Tannenbaum concluded that lenders embracing innovation and new technologies will be better positioned for survival and growth in the current market.