Speaker 1:
From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism, here at the NYSE and ICE's exchanges around the world. Now let's go Inside the ICE House. Here's your host, Kristin Scholer.
Kristen Scholer:
Homeownership is synonymous with the American Dream. The freedom of having a place of one's own, a refuge from the world, and a shelter for our families, and the setting of so many lifelong memories. Yet today, between affordability challenges and the complex and often overwhelming process of getting a mortgage, that dream can often remain frustratingly out of reach. That's why through its mortgage technology business, Intercontinental Exchange, NYSE ticker symbol ICE, is digitizing that path to homeownership to make the process faster, more transparent, less expensive, and more equitable.
Today we're speaking with the man in charge with making that happen. Longtime listeners will remember Tim Bowler, our guest from way back in May of 2018 on episode 26. Back then Tim was at the helm of ICE Benchmark Administration, where he oversaw the management of some of the most crucial financial benchmarks. They include ICE LIBOR, ICE Swap Rate, and the London Bullion market's gold and silver prices. Six years later, Tim Bowler joins us once again, Inside the ICE House, now as the President of Ice Mortgage Technology.
Beginning with its 2018 acquisition of MERS, the Mortgage Electronic Registration Systems, intercontinental Exchange has been assembling an end-to-end digital housing finance ecosystem with the goal of benefiting American homebuyers and owners. Today, Tim reflects on how ICE Mortgage Technology is leading the charge in digitizing and automating the entire real estate and housing finance life cycle. By streamlining these processes, ICE is delivering a faster, more transparent and more seamless experience for everyone involved, from homeowners to lenders and servicers. We'll delve into Tim's background reflecting on his experiences during the 2008 financial crisis and his time at the Department of the Treasury. We'll also discuss how the 2023 acquisition of Black Knight further secures ICE Mortgage Technology's position as a leader in the industry, setting it apart from the competition. Our conversation with Tim Bowler, President of Ice Mortgage Technology, is coming up right after this.
Speaker 3:
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Kristen Scholer:
Welcome back. Remember to subscribe wherever you listen and rate and review us on Apple Podcasts so that others know where to find us. You can also find full video episodes of Inside the Icehouse podcast on Tv.nyse.com and on the NYSE YouTube channel.
Our longest listeners may remember Tim Bowler's first appearance on episode 26 of Inside the ICE House in 2018. At the time, he was President of ICE Benchmark Administration, but now he joins us as President of Ice Mortgage Technology, a wholly owned subsidiary of Intercontinental Exchange. Prior to joining ICE in 2017, Tim served in roles at Goldman Sachs, JP Morgan, and the US Treasury. Tim, welcome back Inside the ICE House.
Tim Bowler:
Well, Kristen, it's great to be here. It's been way too long, and I'm super excited to connect with you and your listeners. So thank you for the opportunity, and also the opportunity to talk about some of the really dynamic things we're doing at ICE Mortgage Technology to make the mortgage market a more functional ecosystem.
Kristen Scholer:
I'm excited to hear that story as well. So let's dive in, Tim. September 5th marked one year since ICE completed its acquisition of Black Knight, following earlier acquisitions of Ellie Mae in 2020, Simplifile in 2019, and MERS in 2018. What was the vision behind this series of deals?
Tim Bowler:
Oh, that's a great question and actually at a high level, pretty basic one to answer. The mortgage market in the United States, the process of buying a home, financing that purchase, and then making payments on that mortgage over the life of the mortgage to the point in time which you either refinance it, or on that happiest day in that homeowner's life when they pay off their mortgage, it's just far too complex and riddled with too many points of friction.
And from our standpoint at Intercontinental Exchange or ICE, we thought by creating an end-to-end technology ecosystem from that point in time in which that homebuyer is look for a property to live in, from when they've decided and have found the right home, trying to figure out how to best finance that property in a way that's affordable and sustainable for them. And then once they're in that house with that mortgage, making it as easy as possible for them to make their mortgage payments and then optimize their homeownership journey, whether that be through a refinancing down the road or a home equity loan down the road, or as I mentioned earlier, the day that they're ready to pay off that mortgage.
We wanted to make that as seamless as possible with the least amount of cost and the greatest amount of flexibility and optionality that could be delivered to homeowners. But we need to do that within the context of a technological apparatus that could easily dock into the various constituents that interface with homeowners and the mortgage ecosystem in the United States. Because in our country, as you know, you have mortgage lenders, which provide the financing to the families and individuals. You have mortgage servicers, which are the entities that interface with those households, those individuals, those families in the homes.
Once they obtain their house and use a mortgage to finance it, we wanted to make it as easy as possible for them to provide life of loan solutions to those households or those individuals that have bought a home and then own a home over the life of that mortgage. And that's what we think we can deliver by tying together world-class software that helps the mortgage origination be as seamless as possible. And then once that mortgage is originated, recorded, and registered, and then ultimately serviced for the life of the mortgage, make that servicing process as an easy and straightforward and as frictionless as possible for that family. And facilitating that being done through best-in-class technology that we're providing to our clients that can then be on shared with American households.
Kristen Scholer:
How much of the market does this cover?
Tim Bowler:
Oh, a substantial amount. On the origination side, we serve thousands of lenders and there's statistics that have gone back and forth quite a bit, but we cover a very large percentage of the mortgage origination market. And then on the servicing side, we provide our servicing software for the vast majority of the largest mortgage servicers in the United States. So our footprint is really substantive and its large enough that we can create an end-to-end ecosystem that's going to touch a large percentage of the mortgages that are outstanding in the United States of America, and those that will be originated in the future.
Kristen Scholer:
What are your thoughts on the current state of the housing market and how IMT plays a role?
Tim Bowler:
It's really, really hard right now for families, and we have a bunch of core trends that are making it hard for homeowners or potential homeowners.
So number one, you have high home prices. So we have a dearth of supply in this country. I think there's almost universal agreement, even remarkably enough across the political apparatus in this country, that we have way too few or we've built way too few homes over the last two decades since the great financial crisis. And that dearth of supply have really driven up the price of existing housing stock. So that entry point for that individual or that family buying their first home is very, very expensive. And this is intersected at a time in which mortgage interest rates are as high as they've been really, since the great financial crisis. So the affordability of buying that first home is, I don't want to say it's never been worse, but when I've looked at the statistics, I struggle to find periods in which it's been worse right now for that first time homebuyer to be able to acquire a property.
And I think this is the number one ask that we get from our mortgage originator clients is, how to try to help them be as thoughtful and dynamic as possible and engaging with that first time homebuyer in order to try to make it easier. And that from our perspective really comes down to streamlining the underwriting process, making sure that every loan that's possible to be made to that individual buying that first time home is made available to them, whether that be a loan that's through Fannie Mae or Freddie Mac, an FHA insured loan, special programs from housing finance authorities. It's really, really important to us to make certain that that lender can then work with that family to find the right option to help that first time homebuyer.
And then once that first time homebuyer is in the house, making certain that the servicing software that is used to collect the payments and manage that loan is as simple, straightforward as possible. And also, if that household ever faces a hardship it's easy to navigate so that household can effectively basically ask for help in either a digital form if they feel most comfortable, or through a live individual that they might reach out to through that technology platform, and we've designed both.
Kristen Scholer:
After years of high interest rates and thus high mortgage rates, because the Fed had to hike those due to inflation. We are finally seeing interest rates start to come down and an outlook of lower rates ahead. How does that impact IMT?
Tim Bowler:
It's good. Just all things being held equal, going back to our last conversation. Home prices are expensive and interest rates were very, very high, as the Fed had to tighten dramatically in order to curb tail inflation. So any reduction in interest rates that we get we think will be net-net beneficial to our clients, lenders, servicers, and then therefore to us. I mean, we operate in partnership with the industry, we operate in partnership with lenders, we operate in partnership with servicers. We operate in partnership with those companies that provide services to the nation's biggest and smallest lenders and mortgage servicers. So if interest rates are coming down and the housing market is becoming more dynamic and it's becoming easier for that first time homebuyer to actually acquire a property, that's only good for the market and that's good for us.
Kristen Scholer:
For our listeners and viewers, since we're also taping this, Tim, if they're wondering how they first engage with IMT to help them along the process, what is that like?
Tim Bowler:
It's really through the lenders and mortgage servicers that we provide technology to. So ultimately, we're a software company at ICE Mortgage Technology. We provide software to that lender, whether that be an independent mortgage banker or a credit union or a bank itself, that's helping that individual or that family buy that home. So that family or individual is going to be working with that lender, but we're providing software to make it easier for that lender to interface with that family.
On the servicing side, so once that individual or family has bought a property, that loan's going to be serviced, which means that those payments, those monthly mortgage payments are going to be collected and processed until that loan is either paid off or refinanced. We provided digital tools to those servicers to make it easier for an individual or a family to monitor what's due on their mortgage, monitor the amount that's left to be paid off, monitor the value of their property, monitor whether there's efficient refinancing options or home equity options. And so really, it's the same on the servicing side as it is on the origination side. It's providing tools, technology and solutions to those that are interfacing with households, is what we're all about. And then constantly taking feedback from those clients that are using our software, our tools, our solutions, to refine that technology to make it better so that they can interact more efficiently and in a more pleasant experience with American families.
Kristen Scholer:
Tim, you've given us a great overview of ICE Mortgage Technology, what it is, what it does, and of course, how it's playing a role in the current market environment. How did the acquisition of Black Knight really accelerate what ICE Mortgage technology is able to do?
Tim Bowler:
Well, it's another great question, Kristen. It allowed us to have that end-to-end life of loan ecosystem. So just taking a step back a second, just to remind the audience, a mortgage gets originated through a lender. So this is whether it be a credit union or a bank or an independent mortgage banker, helps that family go out and get a mortgage to go buy an underlying property. We had the market leading software to help facilitate that experience and make that as efficient and straightforward and pleasant as possible.
Once a mortgage is originated, somebody's got to be there to collect the payments over the course of the next, there'll be 15, 20, or 30 years over the life of the mortgage, until such point in time as that mortgage is either paid off or refinanced. And Black Knight had the market leading technology for the collection and record keeping associated with mortgage payments, something called MSP, system of record that's used by the vast majority of mortgages in the United States that are active in being serviced.
By acquiring Black Knight, combining that with our market leading technology to help on the point of origination, we can create a life of loan experience where all the data that is being created and is necessary in order for a family to get a mortgage, in order to fund a mortgage, that data sets can be transferred over to MSP, which is a software record for servicing, which is going to maintain your record of the payments that you made and what's your mortgage balance, and how much do you owe on your mortgage, and what it would take to pay off over time. That data set can flow seamlessly from the origination software that we have, to the servicing software that we acquired through Black Knight.
And then very in lower interest rates environments, like hopefully the one that we're entering into now, if interest rates drop and that borrower says, "Wait a second, I was paying 7% on my mortgage because I had to buy my house over the last couple of years when interest rates are high, and I now see I can refinance my mortgage at 5.5%." We can make it very easy for that mortgage servicer to take that data sets that's sitting in their system of record that we provide to them, MSP, and feed that back into our loan origination system software to be able to refinance that family faster. So instead of having to wait a month or two before they refinance their mortgage, they might be able to get that done in a matter of weeks and be able to start saving money faster by dropping that interest rate.
So let's use my example, from 7% to 5.5%. We could have never done that without making the acquisition of Black Knight. So it was really necessary to bring those two pieces of the ecosystem together, those two technological pieces of the ecosystem together, in order to make it easier for that household to refinance in the way I just articulated.
Kristen Scholer:
It's good to crystallize that, especially as we are about one year since that acquisition.
Tim Bowler:
Exactly, and hopefully we're in an environment in which rates are really going to drop, but fingers crossed, as I've learned, it's never a good idea to predict anything in the financial markets.
Kristen Scholer:
Let's talk a bit about your background, Tim. You've had experiences at JP Morgan, Goldman Sachs during the 2008 financial crisis, and the US Department of Treasury during the Obama Administration. I want to hear about your time at Goldman and how navigating that challenging financial period shaped your understanding of mortgages.
Tim Bowler:
Wow, that's a great question, and the way to answer that is actually pretty direct and blunt. It taught me one thing, because that a housing finance system that works provides unbelievable value to the US, to our economy, and most importantly to families, because there's no better tool than for wealth creation and generational stability than homeownership. We've seen that time in and time out in this country. But a housing finance system that doesn't operate appropriately like we had back in the 'OOs that led to the great financial crisis, is a pathway to ruin.
And for better or for worse, I spent a large chunk of my time at Goldman Sachs in the financial institutions group heading into the financial crisis, and then shortly thereafter, having to unwind the aftermath of, I didn't personally, but I'm sorry, being part of teams working on helping unwind a lot of banks and mortgage companies and enterprises. Some of the aftermath of the financial crisis, where the fact that you had the intersection of entities that were poorly capitalized and excessive amounts of mortgage credit risk in the system because mortgages were poorly underwritten at that point in time, really taught me the risks associated with the system that is not appropriately structured, monitored, or put in place.
Seeing a little bit of the flip side of that right now, where we have a system in which we have, as I mentioned earlier, too few homes have been built. Mortgage interest rates are very high relative to where they've been over the last 20 years, and that intersection has now created housing markets that isn't as functional as it should be, particularly for those if you're in your 20s or your 30s or your early 40s and you're starting... For that matter, any age actually, if you're trying to start that homeownership journey. And that's why we as a country need to do better about addressing the supply equation, because that's what's driving that right now.
So really, it's [inaudible 00:20:20] come back, circle back to the crux of your question. Working as a banker with financial institutions during the financial crisis really did teach me the risk of the housing finance system if it's not structured well. And then highlighted the benefits that coming out of it of a more appropriate housing finance system, what that can deliver to American families.
Kristen Scholer:
I also want to dig in on a point that you referenced there, Tim, about inventory. There's been a lot of focus on inventory and the lack thereof when it comes to housing, of course, since COVID. But we know even leading into the Coronavirus pandemic, inventory was a challenge. What do you think is the solution there or what can get us to a better place?
Tim Bowler:
Well, it's multifaceted. So first I'll start with an optimistic point. This is one of the great things about the United States of America, that we have so many folks and families that want to buy a home. It's different than many other nations across the world. And we're also blessed with a strong, robust economy to facilitate the capacity for numerous individuals and families to buy homes.
Now on the supply equation, it really does need all of the above solution set. It starts with localities, local municipalities being more creative around how they zone and where they create incentives for new housing construction. Second, we've got to find ways to reduce friction and the system associated with permitting and illegal costs associated with homes. Third, I think it would be exceptionally wise of the United States government to begin to look to place dynamic subsidies that would facilitate the construction of more starter homes, particularly in those markets that have the capacity to actually build and create new supply.
And then finally, and I always like to remind stakeholders when we engage on this subject matter, we need to continue to also make certain that we're investing in low income rental housing, particularly in metropolitan areas in which you just don't have the capacity to build anymore. Because for many, many households, they do need that starting point of an affordable rent as they begin to create savings to facilitate them on the journey to hopefully one day when the time is right, buying a home. And one of the things that's really made me happy about what I'm hearing out of policy makers certainly over the last six months is much more universal acceptance that we do need an all of the above approach to try to address the housing affordability, crunch, crisis, whatever word you want to use that exists in the country today, particularly for that first time homebuyer.
Kristen Scholer:
I want to use this platform and conversation to hear more about your background, Tim, that's informing the decisions that you make now at ICE Mortgage Technology. I see while at the Treasury, you led TARP, the Troubled Asset Relief Program, which did aim to stabilize the financial system, prevent foreclosures, and restart economic growth. What was that like and how did that inform your own journey?
Tim Bowler:
It was an honor and privilege to get to work at the United States Treasury and serve the American people. I'm very blessed and honored that I was asked to do so, and I'm proud of the team that I got to work with and the work that they did in my time there. And I think I learned a couple of key lessons. Number one, the risks associated with a financial system that's broken is just too great and we just don't need to go through that again.
Number two, within the context of trying to design responses to crises, they need to be simple and straightforward and understandable for those stakeholders that might engage with that. And just to make that very tangible, I saw firsthand in my time at the Treasury where there was a definitive need to evolve how we were engaging with families that were facing material hardships around employment, around homeownership, coming out of the great financial crisis, and a need to basically make the response programs as straightforward and as easy as possible. Such that that family could evaluate their options for trying to stay in that home. And then when they did choose to stay in the home and choose to take a program, it was easy, transparent for them to understand and interface with. And I think that's guiding a lot of the work that's being done today by the industry and policymakers on thinking about, how do you interface with families that might face a hardship?
Third, it's the power of teamwork. I got to work with an incredibly dynamic and diverse set of individuals at the US Treasury that had backgrounds from all different places. And having a group of people that were brought together with private sector experience, public sector, policymaking experience, academic experience, and coming together in a collaborative team environment to get things done was really a hallmark of my time at the US Treasury when I served there. And that's something I try to bring every day and every way to my work ethic and my leadership style within the context of my team that I engage with at ICE Mortgage Technology.
Kristen Scholer:
What are those leadership skills that you took away from that experience?
Tim Bowler:
Listening is more important than talking. Being a good listener for when you're faced with challenging, complex problems is absolutely critical because a problem gets to be complex and challenging because it's multifaceted in nature. And if it was an easy problem, most folks would be able to come up with a solution right away. Where some of the challenges we faced then coming out of the great financial crisis, and then to make it tangible today. Now within the context of that, the housing affordability crunch that we're facing, they're multifaceted and you have to be a very good listener in order to be able to try to identify what will make the most sense to try to address the problem. And contemporaneously, what's actually the art of the possible? Because you might find the right solution, but unless you're doing enough active listening, you're not going to know what's the art of the possible, because not every time is the ideal solution to be on the table or available to you.
And I think I learned that firsthand when I was at the United States Treasury around the competing priorities, both economic and political, that needed to always be considered within the context of any type of policy response that needed to be put in place within the context of trying to solve a complex problem.
Kristen Scholer:
It's fascinating, Tim. I see that you left the Treasury in 2015, took on a volunteer internship with Mayor Mike Duggan in the city of Detroit.
Tim Bowler:
Yes.
Kristen Scholer:
What motivated you to make that transition?
Tim Bowler:
Quite simply, a visit from Mayor Duggan to the United States Treasury in 2014. When I was working there he came in and said, "We have a real problem in the city of Detroit where the individuals and families living there can't get mortgages." And I said, "Why?" And he said, "Basically, there's no way to get a property appraised in Detroit because we're only making a few hundred mortgages in a city of over a half a million people." And he came to me and he said, "Well, what I need you to do, and what I need the government to do is start making mortgages available to people regardless of what the appraised property value is." And I said, "Okay, well, I hear what you're telling me, but I'm not sure that's going to be feasible." But I promised him that I would try to come up with some ideas and some solutions that could help try to address the problem of the lack of mortgage credit in Detroit.
And there's a team at Treasury, a team at the Land Bank Detroit, the folks at Rocket Mortgage, and Dan Gilbert's foundation, and Home Depot, all collaborated to come up with the concept of rehabilitating properties in Detroit on a turnkey basis. And then selling those rehabilitated properties in various neighborhoods around the city of Detroit at the best prices we could possibly get to create a series of comparables that could then help facilitate mortgage lending against a fully rehabilitated property. And that became the Rehabbed and Ready program, and that's what I moved out to Detroit to go work on and facilitate and help stand up, in conjunction with the folks at the Rock Foundation, which is part of Rocket Mortgage, and Dan Gilbert's foundation, the folks at Home Depot and the Land Bank of Detroit. And so we did that. We put that in place starting in 2015.
And over the last seven to eight years, it's just been foundational towards creating property values throughout the various neighborhoods in Detroit that can then serve as points of valuation for appraisals. And it's unlocked mortgage lending in the city to an extent that they haven't had really almost to an extent since prior to the great financial crisis. So, that's what brought me out there. It's one of the true joys in my life that I got to have that experience. And it also was very nice to see the private sector and the public sector coming together to try to solve a core policy problem in a way that neither one of the two entities could have done on a standalone basis. The private sector couldn't solve that on a standalone basis, and the public sector couldn't stand in that. It took real collaboration in order to get that done.
Kristen Scholer:
And after your time in Detroit, that led you to Intercontinental Exchange?
Tim Bowler:
Yes.
Kristen Scholer:
I want to hear more about what led you to Intercontinental Exchange and what informed you about Jeff Sprecher's vision for transforming markets, products and processes since the company's founding in 2000.
Tim Bowler:
Jeff's vision of making markets and financial ecosystems more transparent, fairer, and as frictionless as they possibly can be, fits four-square with my values and how I perceive the capacity or the desire to try to do good through good business.
And there's been one thing about this organization since its founding almost 25 years ago now, it's been 100% anchored in taking processes that were artificially complex that added multiple nodes of friction, that made it harder for broader sets of stakeholders to use, broader sets of people to use, and breaking down those unnecessary complexities, breaking down those points of friction. Breaking down legacy guild mentalities to make markets and financial ecosystems such as the mortgage market in the United States, more transparent, more efficient, and more dynamic, is just exceptionally motivating for me as an individual to be part of that process and be part of that team in order to do that.
So I count my blessings every day to have had the chance to meet Jeff and become part of his team and meet the leaders at ICE and be part of that team and just get to work with a relentless focus on trying to make things better. And right now, my role in doing that is at ICE Mortgage Technology, and as we talked about at the beginning of the call, it's focused on making the mortgage market better in the United States, and we'll see what's next for my time here at Intercontinental Exchange. But I absolutely love and value my time here and my experiences here. And every day I wake up, I'm exceptionally motivated to do the best that I can to deliver for this organization, its stakeholders, and the clients and customers we serve.
Kristen Scholer:
The founder and CEO, Jeff Sprecher of Intercontinental Exchange often describes the company as an all-weather firm. How does ICE mortgage technology fit into the ecosystem of ICE at large?
Tim Bowler:
To answer your question, first and foremost, because I do want to talk about the benefit of being at ICE as part of a diversified business model. ICE has three core lines of business. We have our trading and clearing business, we have our data businesses, then we have our mortgage technology business, which as we've been discussing, provides software to the nation's mortgage lenders and mortgage servicers. So it's one of the three core business lines that we have here at Intercontinental Exchange.
And right now, as the individual responsible for running ICE Mortgage Technology and my whole team, we appreciate every day in every way that we're part of ICE. And that's because we have built an all-weather business model here at Intercontinental Exchange where we have a diversified set of businesses that certain businesses will be performing exceptionally well at certain points of time, while other businesses might be facing headwinds and structural headwinds.
So if you think about what we're experiencing today in the mortgage market in the United States, it has some nasty headwinds because as we talked about earlier, interest rates are high still and home prices are high. So the amount of mortgages that are being created in the United States or mortgages made in the United States is quite low. So it's actually on a unit count basis or the number of mortgages made, it's as low as it's been since the early 1990s. Not notwithstanding that because we're part of Intercontinental Exchange or ICE in that all-weather business model, we're still being invested in as part of the overall organization.
So the benefits of having other businesses that are diversified in that correlated to the one that you're in and doing well, means that the company can continue to invest in the business that we're in, which is facing headwinds during tough periods. And as you know, Kristen, when you invest during those challenging periods, that means you're going to be better and more prepared when the markets do turn to outperform and deliver better for your clients, deliver better for your customers, and then deliver better for your stakeholders across the board. So for us, it is a true blessing to be part of Intercontinental Exchange because none of the businesses on an individual basis, if they were standalone, would have anything near the capital budget that we have today or the investment budget that we have today that we're making in this challenging period in the mortgage market.
Kristen Scholer:
We have seen ICE successfully be an all-weather business across its many different entities, diversified entities. Tim, to your point there. I want to go back to the housing market because we know that market dynamics are at play as they always are. Yes, we expect interest rates to fall in the future, but we know consumers, younger consumers wonder whether or not owning a home someday is possible for them. What would you say to potential buyers who are still on the sidelines that do have the American dream of owning a home?
Tim Bowler:
By my very nature I'm an optimist, so I would say yes, it's going to be available to you. I think we as a nation, and for those of us that day in and day out live in the mortgage market in the United States, we're going to figure this out around how to try to address those two key factors that are making it hard for that first time homebuyer. I think we as a country are going to take a number of steps in the coming quarters and years to try to address the supply gap that we've talked about earlier. And I know those of us that live our lives day in and day out right now in the mortgage market in the United States are taking a series of steps to make that market fairer, more transparent and more affordable to help that first time homebuyer. So I am exceptionally optimistic about the future.
I think there's been a collective realization that we need to do better. And I think my hunch is that we as a country will be pleasantly surprised over the course of the coming quarters and years as we come together on this issue and try to help create a more functional housing market for that first time homebuyer in a way that we haven't done for many, many years in the United States.
Kristen Scholer:
I'm sure our listeners want to tap your brain here, Tim. We know that rates are very important to this equation. As the President of ICE Mortgage Technology, what else are you looking at? What other storylines are you following to make this a success?
Tim Bowler:
I'll start with just the success of the housing market, because anchored in people's everyday lives. I'll go back to the observation I made earlier, which is supply. It's getting more supply into the market, and that is, as I said, it's going to be multifaceted. That's going to be federal policy responses, local policy responses, and market responses, in order to meet the housing supply need that we have in the United States.
On the rate side, we've talked about, we've started to see the Federal Reserve system begin its process of adding liquidity and easing rates, and I think that's net beneficial. But I also think you'll see some of the spreads associated with the mortgage market start to compress in the coming quarters that will make mortgages more affordable. So, hopefully that intersection of a lower rates and more supply will help ease the crunch that that first time homebuyer is facing right now.
Kristen Scholer:
I also want to talk about what's ahead. In terms of what's on your docket in the fourth quarter and what you see in 2025, what's on your radar?
Tim Bowler:
Oh, it's partnering with our clients on an even more dynamic basis than we're doing today. Right now, myself, my team is just relentlessly engaging with those clients in person to try to figure out how we're going to help them take advantage of ideally continued drop in rates. How are we going to try to help them make the process of manufacturing a mortgage more efficient and lower costs? And then once that mortgage is made, how to find a way to have the most dynamic relationship possible with that family when the mortgage is being serviced, such that as your mortgage servicer, you can help them regardless what path they choose in their homeownership journey, in a way that's as seamless and straightforward as possible.
So right now, for me, my team, whether my coverage team, my engineers, my product team, my support team, it's all about spending time with our clients and finding out how we can help them best to take advantage of the current environment and the one we're all hopeful for in 2025.
Kristen Scholer:
I want to talk about some of the details of ICE Mortgage Technology. ICE has extensive resources like McDash, the ICE Automated Valuation Model, among others. How does that enhance mortgage servicing?
Tim Bowler:
Well, so I think taking a step back within the context of that question. ICE has this unbelievably rich data and analytics library that can be provided to originators or servicers. So I'll just use your point of reference with McDash and servicers. There's our market data that we can provide to servicers through McDash. It's our climate data that we can provide through a number of the ICE services technology offerings that we have that can help our services think and evaluate climate risk for properties. It's the market data that we have across Intercontinental Exchange that can help inform mortgage servicers and lenders, for that matter, about what's the right way to optimize engagement with the household around refinancing. And then once that loan's financed, how to sell that to an investor in an optimal basis.
And that goes back to fundamentally us having incredible data sets, incredible analytics sets, that can supplement the underlying software that we have that helps facilitate the process of regaining a mortgage efficiently or servicing a mortgage as efficiently as possible. So it's mirroring the two, it's best-in-class software, best-in-class data and analytics, to basically produce a best-in-class solution suite that our lender clients, our servicer clients can offer onto the households that they serve as their clients.
Kristen Scholer:
Tim, for many people buying a home might be the biggest financial decision that they ever make, and we know so much does go into it. How is ICE Mortgage Technology utilizing new technologies to help ease the burden or complexity of this decision?
Tim Bowler:
Kristen, before I answer that question, you bring up an excellent point. When you get a mortgage, it really is either the biggest financial decision or one of the biggest financial decisions that any individual or family will make. And part of that, and with that being the case, that homebuyer's probably going to want somebody with them, another human being to be a part of that process. So that's why at Ice Mortgage Technology, we're always thinking about how humans interact with the technology, the software to optimize that experience with that homebuyer, in such a way that you have a human in the loop, a human in the driver's seat, that can leverage best-in-class new tools in order to help facilitate best-in-class experience for the homeowner.
And so that's why when we think about generative AI or some of the new automation or machine learning tools, it really is all about helping that lender, that individual that's working with that family to buy that home, how to basically automate and efficiently get information to that individual as quickly and as efficiently as possible. Such that they can make the right recommendations or provide the right advice to that individual buying the home. So it's thinking, it's helping speed up underwriting processes. It's helping evaluate a borrower's financial information to give them the right advice on what's the right type of mortgage. It's helping evaluate a borrower's ability to pay on an ongoing basis, such that they're buying the right house for them and not too big of a house and taking on too much of a financial burden.
There's tools out there that can help facilitate that human-to-human interaction to make certain that the right advice is being given while never fully turning over the underwriting process to a machine. Given the fact that this is far, far, far too important of a process for the average American or the average American family to not have another human being be part of that process. So it really is all about marrying the best-in-class technology to help other people help that household through its homeownership journey.
Kristen Scholer:
It's a balance.
Tim Bowler:
It really is, it really is. And going in with that mindset, I think is absolutely critical to our future success. So it's like, how do you provide the right technological tools, the right technological solutions, to fundamentally help that person that's providing advice to that individual or that family that's buying a house or refinancing a house or thinking about a home equity loan. Because they're going to want it, and in most instances, they're going to need it.
Kristen Scholer:
Tim, thank you so much for joining us.
Tim Bowler:
Kristen, it's been a pleasure. So hopefully I get invited back.
Speaker 1:
That's our conversation for this week. Remember to rate, review and subscribe wherever you listen and follow us on X @ICEhousepodcast. From the New York Stock Exchange, we'll talk to you again next week, Inside the ICE House.
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