Slow Markets Enable Core System Swaps
Mike Yu, CEO of Vesta, on building a new system of record for the mortgage industry
The key dynamic is that Vesta sells a hard to replace core system, so buying behavior depends less on loan demand and more on when lenders have the staff time and pain tolerance to rip out old software. In boom years, operations teams are buried closing loans. In down cycles, those same teams finally have room to run a system conversion, retrain staff, and connect new vendors, even though Vesta earns less from per loan fees in the short term.
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Vesta charges an annual platform subscription plus a per loan origination fee. That means revenue moves with industry volume, but the sales opportunity can improve in slow markets because lenders are more willing to take on a large software migration when pipelines are lighter.
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The implementation burden is real. Vesta describes loan origination data as a river, not a lake, because lenders can run the old LOS and the new one in parallel while old loans drain out over roughly 90 days. That makes a switch feasible, but only when a lender is not overwhelmed by current production.
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This pattern shows up across mortgage software. Snapdocs, which automates closings rather than the core LOS, grew fast in the 2020 to 2021 refinance surge, then its estimated ARR fell from about $150.7M in 2021 to about $106.3M in 2022 and $101.7M in 2023 as mortgage activity cooled. Mortgage Bankers Association data also shows average production volume per company fell from 8,371 loans in 2022 to 6,021 in 2023, which increases pressure to cut labor and modernize workflows.
The next phase favors vendors that can turn a cyclical budget window into a permanent system replacement. As origination volumes recover, lenders that used downturns to swap out legacy LOS software will come out with lower per loan costs and a more modular stack, which strengthens platforms like Vesta that sit at the center of the workflow and data model.