Owning the Mortgage System of Record
Mike Yu, CEO of Vesta, on building a new system of record for the mortgage industry
This is why mortgage software startups usually get trapped as add ons instead of replacing the core. Once a company plugs into the incumbent loan origination system, it has to live inside that system’s APIs, approval process, data model, and commercial terms. That makes the startup do a lot of integration work just to reach customers, while the incumbent still controls the lender’s main workflow, the system of record, and often the economics of the ecosystem.
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In mortgage, the system of record is the place where the loan file lives and moves from intake to underwriting to closing. Vesta’s view is that most newer players, like Blend on the front end and Polly in pricing, improve pieces of the process, but still depend on a core LOS in the middle.
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That dependency is concrete. ICE’s Encompass requires supported partner setup and lender specific API keys for each partner and lender pair. Blend also markets a large partner ecosystem, which shows how much value in mortgage software sits in connecting into existing lender stacks rather than owning the core record itself.
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The tradeoff is that going after the core is much harder to sell and implement, but it gives more control if it works. Vesta describes running the old and new systems in parallel while old loans drain out over roughly 90 days, which is one reason a full LOS replacement is painful but still possible in a way core banking migrations often are not.
The market is moving toward more modular mortgage stacks, but the winner will be the company that owns the workflow spine those modules plug into. As more lenders want to mix borrower intake, pricing, compliance, and closing tools from different vendors, control shifts toward the system that holds the loan data, routes tasks, and decides which outside tool gets called at each step.