Why Maxwell’s Mortgage Solution Faces Fierce Competition
- Maxwell Processor Edge is a recently launched web-based application designed for loan processors, integrating with lenders’ loan origination systems.
- In the US housing boom, small and midsize lenders trying to preserve meager profits are an opportunity for AI and machine learning solutions.
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The news: Maxwell Financial Labs and its subsidiary Maxwell Lender Solutions, a US-based fintech mortgage solutions platform founded in 2015, have launched what they claim is a “first-of-its-kind” product platform. Maxwell Processor Edge, targeting small and medium lenders.
What does it do? The web application is tailor-made for loan processors and integrates with lenders’ loan origination systems. It uses machine learning and AI to speed up the document review process and detect data discrepancies before underwriting.
Loan closing times in the United States averaged about 52 days, according to the Ellie Mae Origination Insight report. Maxwell says its solutions help loan officers close 15% more loans every month while cutting the process by more than 13 days.
Maxwell CEO John Paasonen said Maxwell’s revenue has grown 250% over the past year. The company says it serves more than 300 lenders nationwide and has facilitated more than $150 billion in loan volume to date.
Over the past year and a half, Maxwell has raised $73.8 million from its backers, including Wells Fargo Strategic Capital, according to Bloomberg, which pegged the company’s valuation in October at $450 million.
What is the opportunity? The United States has seen the most home sales since 2006 last year. Faced with record demand for mortgage services, as well as social distancing requirements that have made in-person meetings more difficult, traditional lenders have shifted from manual, paper-based processes to automated digital solutions. As loan spending approached an all-time high in 2021, lenders sought greater efficiency and processing speed.
Small community lenders make up 60.7% of the $4 trillion US mortgage industry, but they compete with incumbent banks,
, and mega lenders like Quicken Loans and loanDepot.
Net income per loan is down nearly 63% from its peak in Q3 2020, while cost per loan has exploded over 15%.
Further market compression and rising lending costs mean that profit margins will be even harder to maintain in 2022 as interest rates rise and mortgage volumes turn to purchases.
Overview: To prevail in the crowded residential lending solutions market, Maxwell will need strong partnerships and additional funding to drive innovation.
Its biggest competitor, Blend, says it averages more than $5 billion in loans a day. Blend reached a valuation of $3.3 billion in April.
Other competing solutions and services include Google Cloud-backed Lending DocAI, Black Knight’s Underwriter Assist, Roostify, and Ocrolus (which recently partnered with Blend).
Two of the largest US lenders, UWM and Rocket Mortgage, have made their in-house mortgage origination technology available to their partners.
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