Reflecting on 2019, Looking Ahead to 2020
As we closed out an exciting 2019 and immediately jumped into our annual Ellie Mae Sales and Services Kick-Off in early January, it gave us time to look back on an amazing year that has us well-positioned for an even better 2020. Our mission has always been to automate everything automatable for the residential mortgage industry and we remain committed to that “North Star” today.
Year in Review: 2019
This time last year, few of us would have imagined the huge changes—and incredible opportunities—that we went through as a company. Apple co-founder and tech visionary Steve Jobs once said, “You can’t connect the dots looking forward; you can only connect them looking backwards.” Let’s take a look back at 2019 and connect a few pretty big dots:
- Early year headwinds: Rates were up, inventory was down and there were big question marks around US and global political and economic stability. Like others in the industry, we hunkered down and prepared for challenging times, at least for the first few months of 2019. Even as the leader in the mortgage software space, this had a big impact on our stock price and sparked discussions around the best path forward for Ellie Mae and for our customers.
- Thoma Bravo acquisition: After eight years as a publicly traded company, we accepted an offer from private equity firm and great strategic partner Thoma Bravo to acquire Ellie Mae for $3.7 billion. This was both a testament to what our employees have built since our founding in 1997 and the start of a new chapter that will allow us to innovate and deliver incredible value to our customers, partners and employees as a private company.
- Preparing for URLA: Ellie Mae has built a reputation on ensuring that our customers are prepared for industry changes, big and small. The upcoming changes to the Uniform Residential Loan Application (URLA) has the potential to disrupt our industry in a major way, but we prepared early and were ready, even when the GSEs announced a delayed timeline. Since launching a comprehensive resource page in 2019, we’ve had more than 40,000 visitors and 5,000 people sign up for our “I Love URLA” email updates.
- Products to fit the needs of our customers: 2019 was a big year for the Encompass Digital Lending Platform, as we grew to more than 43% market share. We saw expansive adoption of both Encompass Consumer Connect [now used by 1100+ customers] and Encompass Investor Connect [+60% of market on board]. We also made it easier to take advantage of the HELOC boom with key updates to Encompass and gave loan officers on the go more freedom to access Encompass with Encompass LO Connect.
- Welcoming Capsilon to the Ellie Mae family: We know the value of data, automation and artificial intelligence and our acquisition of Capsilon enabled our customers to leverage best-in-class automation throughout their workflow. The Capsilon IQ and Instant Underwriter products are used by many of the biggest and best in our industry and our plans for continued integration and expanded use of their technology will be a great benefit to our customers.
2020: Looking Ahead
It’s always difficult to predict what will happen over the next 12 months. That being said, here’s several things we’ll be watching in 2020:
- Politics and the economy: With a presidential impeachment process underway, an election year in full-swing, plus instability and unrest in the Middle East and beyond, there is a general sense of unease and uncertainty both at home and abroad. At the same time, the economy is strong, unemployment is at an all-time low and business in the mortgage industry is booming, at least for now. Any or all of these factors could have an impact in the coming year. Lenders that have been through the cycles we’ve seen over the last decade should be well-positioned to adapt to any changes we might see in 2020.
- URLA updates: After some delays and lots of discussions, the GSEs have published their revised timeline for the redesigned URLA. With a number of important milestones during the year, November 1 st marks the start of the Required Use period. We’ve got our customers covered and have developed a wealth of helpful resources, available here.
- Ongoing product innovation: Coming off of great momentum in 2019, we’ll continue to bring value to the Encompass Digital Lending Platform in our quest to automate everything automatable. Preparing for the URLA changes will continue to take time and resources, but we have some great things planned for Encompass LO Connect, Encompass Investor Connect and our Ellie Mae Consumer Engagement solution to help lenders lower costs, get more value and deliver great experiences for borrowers.
- Opportunities for growth and expansion: Our new relationship with Thoma Bravo has empowered us to look for opportunities where acquisitions would fit nicely into or fill gaps in our current offerings, allowing us to grow and bring added value to our lenders and partners—in addition to all of the innovation underway in-house at Ellie Mae. Our status as a private company makes bringing well-run businesses under the Ellie Mae umbrella an attractive option.
- Continued consolidation: We saw a lot of industry consolidation in 2019, as companies looked for more ways to drive down costs, realize more efficiencies and position themselves to compete in today’s market. This trend will likely continue, as the pool for new business stays relatively level and lenders look for ways to maximize revenue.
- eClosing: Perception doesn’t always mirror reality, with less than 5% of residential closings completed electronically in 2019. But while it is a complex issue, there are clear benefits for lenders, borrowers and investors. We will likely see a lot of activity in this space, with mortgage technology companies helping to drive adoption in 2020.
We look forward to an exciting year ahead with our customers, partners, prospects and will keep you updated as we see new trends over the course of the year.