A Lender’s Automation Journey

Episode 29 | The Construction Lending Podcast

Keith Stracensky, VP of Construction Lending at CrossCountry Mortgage joins us to discuss the state of the construction lending industry and automation’s role in streamlining loan processes and improving efficiency. Tune in to learn how tech is transforming construction lending and discover new opportunities in affordable housing options.

Episode Recap

The Future of Construction Lending: Navigating Industry Trends and Automation Innovations

Keith Stracensky, Vice President of Construction Lending at CrossCountry Mortgage joins The Construction Lending Podcast to discuss the current state of the construction lending industry, the innovative trends shaping the future of housing, and the transformative power of automation in mortgage processing. With CrossCountry Mortgage standing as one of the largest independent mortgage lenders in the U.S. and the top retailer this year, Keith’s insights are both timely and instrumental.

State of the Construction Lending Industry-Impact of Industry Conditions
We kick off the conversation by emphasizing the critical role construction plays in the real estate industry, especially given the current housing crisis. Although supply chain and labor challenges, worsened by the pandemic, have mostly subsided, it did cause a temporary setback. This newfound stability now presents home builders with a chance to significantly address the housing shortage over the coming years.

Emergence and Popularity of Alternative Housing Solutions
Affordable housing remains a central issue, and rising interest in alternative housing solutions such as manufactured, modular, and prefab homes is redefining the landscape. Unique property types like barndominiums and 3D-printed homes are also gaining traction, offering innovative ways to meet the affordability challenge head-on.

Innovative Housing Solutions and Educational Needs
One of the pivotal discussions in the podcast involves overcoming the stigma associated with manufactured housing. Keith emphasizes the necessity of consumer education in changing perceptions about the quality and value of manufactured homes. He points out that CrossCountry Mortgage strives to demonstrate equivalence in value and standards between manufactured and traditional site-built homes by offering the same loan products for both.

The popularity of Accessory Dwelling Units (ADUs) is also addressed, noting their potential to provide consumers with additional income streams to manage mortgage payments. Different guidelines exist for including ADU rental income in loan qualification, and Keith expresses optimism about the growing acceptance and support for this mode of housing.

Financing and Appraisal Challenges
One of the significant challenges mentioned is financing unique property types. While most can be financed through traditional means, appraisals and inspections present hurdles due to the unconventional nature of these homes. Keith expresses hope for increased agency support to ease these processes, aligning them more closely with traditional site-built homes.

Automation in Construction Lending
The conversation shifts to the transformative role of automation in the construction loan administration process. Keith highlights how automation can significantly streamline tasks, such as handling draw requests and inspections, mitigating time and cost constraints associated with borrowing money. Automation’s ability to expedite transactions saves builders interest costs, which can accumulate over several days.

Future Potential
While automation has already revolutionized several aspects of the industry, there are still areas ripe for further development. Keith envisages future automation in roles like builders’ risk and inspection result reviews, which would further enhance efficiency and accuracy. However, the integration of AI also brings concerns about data privacy and occasional errors, demanding a balanced approach to its adoption.

Adjusting Construction Lending Timelines
Given the current economic and environmental conditions, Keith suggests that standard construction lending timelines (typically 12 to 18 months) often fall short. These insufficient timelines can lead to additional costs and complications for consumers. He advocates for extending lending timelines and making exceptions for extraordinary events such as hurricanes and pandemics. Aligning lending practices with these realities could ultimately benefit both lenders and borrowers.

Automation Adoption and Trust
CrossCountry Mortgage has embraced automation for its construction lending significantly in recent years to enhance both efficiency and service quality. Tasks like processing draw requests, ordering inspections and titles updates have been automated, showcasing the transformative impact on draw processing times.

Initially, there was some hesitation to adopt automation due to comfort with existing manual processes. However, once implemented, the benefits became evident, winning over skeptics within the industry. Builders have noticed the benefits of automation as it directly impacts their bottom line.

Conclusion
Our conversation journey offers a comprehensive overview of the current and future state of construction lending. From navigating industry challenges and cost management strategies to embracing innovative housing solutions and the transformative power of automation, the insights shared pave the way for a hopeful and efficient future in construction lending. As the market continues to evolve, aligning lending practices with emerging trends and leveraging technology will be integral.
CrossCountry Mortgage remains at the forefront of these advancements, continually seeking to improve and adapt to better serve builders and consumers alike.

Connect with Keith Stracensky and CCM

Keith Stracensky

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CrossCountry Mortgage

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