In 1989, Silicon Valley was just beginning to boom with the innovation of desktop computing. Companies like Apple, IBM and Intel were dominating the imagination of everyone, including Rick. His company America’s Funding Source (AFS) created software to manage mortgage loan pricing. This is commonly known today as a “Product Pricing Eligibility” engine, or PPE.
Take a look at some of the articles and photos in The Vault. It’s a little like watching a 1960’s episode of the Jetsons!
The PPE was decades ahead of its time, and this innovation lead to tremendous success of Rick’s company by 1991. Rick had assembled a great team around his vision of automating mortgage pricing and processes. System innovations and enhancements were based on two simple premises, “Automate to improve processes and focus on what customers will want next”. From these core values a dynamic incubating environment was born, and the result was the first “Loan Origination System” (LOS) built around a PPE. AFS branded their new system EMC (Electronic Mortgage Clearinghouse). Real estate offices were determined to be the best place to deploy the system, and by 1994 EMC and loan originators were operating in 33 real estate offices in California, which increased to 165 offices by 1995. Because at its core, EMC was built to deliver customers with the best possible mortgage pricing and a predictable and consistent experience the new system was a rapid success. Consumers flocked to real estate office locations after learning that they could now locate the best available rate and obtain a loan with greater ease than ever before.
Rick’s continued innovations help propel AFS’s wildly successful EMC product to become the Realtor’s “in-house lending program” of choice. In 1994, Rick ventured into the virtual world by creating the industry’s first Video Conferencing Systems for mortgages within the EMC platform. The system was designed to allow for the sharing of the EMC application during a video call. Take a look at Jim Goldman’s Silicon Valley news reports in The Vault from 1994. This was all accomplished 10 years before the launch of GoToMeeting and other streaming video conferencing systems that are utilized to conduct business today.
AFS caught the attention of Charles Schwab and Company in 1995. Together the two companies created Charles Schwab’s Personal Mortgage Broker (PMB). This product allowed consumers to complete a mortgage loan application from their home PC through access EMC’s rate data base. Advanced algorithms were added to EMC which allowed customers to decide which loan was right for their personal needs. PMB operated much like Charles Schwab’s current “robo-advisors” for ETF investing. PMB’s pre-internet era pilot was successfully launched in Northern California to Schwab’s customers in 1996. Several years later in Palo Alto, E-Loan launched one of the mortgage industry’s first venture capital backed consumer direct websites, based on the identical concept which was test marketed by PMB.
Rick’s aspirations to take his EMC technology to the entire industry. This idea was the genesis of LoanCity in December of 1999. His vision was to provide mortgage brokers internet access to EMC, enabling them to compete with newly launched and well-funded consumer direct entrants in the mortgage market like E-loan, mortgage.com and Home Shark (yes, they really called their company Home Shark!).
In addition to LoanCity providing software that allowed brokers access to a secondary market while LoanCity acted as a single point of loan delivery, a clearinghouse for all the top lenders. This combination of technology and fulfillment was another home run. In late 1999 and early 2000 E*Trade, Morgan Stanley Dean Witter, Century Capital Partners, New Enterprise Associates, Marsh & McLennan Capital, InterWest Partners and Insight Capital Partners all bought into the vision, providing $45 million in new capital in support of the endeavor. Rick brought his technology and industry insight to every state by the end of 2001, and by 2006, LoanCity was the 10th largest mortgage lender in the United States with its software widely used by nearly ten thousand mortgage originators.
Banc America Securities entered the picture in 2002 and purchased a controlling interest in LoanCity. B of A brought additional capital which gave LoanCity the capacity to fund as much as $1.5 billion in loans per month. LoanCity was soon closing 7,000 loans per month. Rick remained in his role as CEO and continued with his tradition of innovation, as he and his team built one of the first integrations to Fannie Mae’s Desktop Underwriter (DU) as well as Customized Desktop Underwriter (CDU). These integrations, combined with LoanCity’s EMC, made for an unbeatable product, now simply called LoanCity. In 2002, LoanCity added document imaging to its technology arsenal, completing the first all-digital platform. By 2005, his customers received a formal online approval and digital delivery, making LoanCity the first end to end digital mortgage origination platform. These services were available for all loan products. LoanCity was leading the industry in automation and innovation and was constantly ranked in the top 10 of nationally ranked wholesale lenders. In early 2007, at the onset of the financial crisis Banc of America securities decided to conduct an orderly shutdown of LoanCity before the collapse of the mortgage market.
Rick wasn’t done in the mortgage industry, and in late 2008 Western Bancorp began operations. Western Bancorp was formed in partnership with the owners of Intero Real Estate in Northern California and quickly ramped up mortgage lending operations. In 2014, Rick’s partners sold their ownership in Intero Real Estate to Berkshire Hathaway, as well as selling their interest in Western Bancorp to Rick. With sole ownership of Western Bancorp, Rick has returned to his wholesale roots, utilizing the tech he created to make it happen. Today we call that tech ReadyPrice.
ReadyPrice & Mortgage.Exchange
When Rick sold Western Bancorp, he thought deeply about the future of the industry. He had become concerned by the idea of companies, large & small, being beholden to tech gorillas and realized that the tech he had spent years developing was, in fact, a way to free the industry from these outsides. He has built a network of like-minded industry folks, all working together to create and operate within a common ecosystem that gave control back to the industry stakeholder. ReadyPrice’s SaaS platform now known as Mortgage.Exchange is the cornerstone of that network. It’s PPE and MBBO are now on one easy to use SaaS platform and available for all stakeholder. Most important to the story is that ReadyPrice was born and bred within the mortgage business, tested by Rick’s own companies as well as other companies. With a never changed core value: “Automate to improve processes and focus on what customers will want next”. Building a system that enhances the lives of all that use it. Learn more about Mortgage.Exchange below.