In the immediate mortgage-crisis aftermath, most consumers believed getting a mortgage was hard. And it was. But something changed. The past four years spawned multi-billion-dollar ad campaigns from mega lenders reassuring consumers that getting a mortgage is simple now - thanks to technology. (Spoiler alert: it’s not.) The perception may have changed, but mortgages aren’t “easy,” and the true transformation from an analog to a digital mortgage process is still in its infancy.
When we ask clients what they’re looking for from their technology solutions, most, but not all, lead with, “We want to do things like we always have, only faster, cheaper and in a less-cumbersome way.”
So why is this taking so long? Compliance, until relatively recently, was an all-consuming, moving target diverting attention and resources away from innovation. The boom-and-bust mentality of the mortgage business — “We’re too busy doing refis to upgrade our systems; refis have dried up and now we can’t afford to” — hasn’t helped.
Also, many of the interactions we take for granted in the traditional application process can take on new dimensions when digitized. For example, who is completing the application, and how do you know they are who they say they are? In the traditional process, the applicant and/or co-applicant sit across from the loan officer, indicate they want to proceed, show photo IDs and provide Social Security numbers as verification, and the app is good to go.
Transforming a traditionally in-person interaction into a compliant, customer-pleasing, digital transaction requires a dedication to process analysis and innovative solutioning. With a wide range of company types in the industry, access to expert residential lending resources can vary. Larger companies may be able to support a more robust legal and compliance team and have the financial capacity to implement a digital solution independently. Smaller companies, on the other hand, may not have this option, or might be unable to prioritize a compliant tech-driven solution. This is where innovative solutioning becomes key.
Additionally, lenders of all sizes must maintain a dedicated focus on delivering quality loans into the secondary market. Recent Mortgage Bankers Association statistics indicate the current cost to produce a loan is around $9,000 - some of that is Loan Officer commission. The staff, technology, and legal requirements are making it increasingly difficult for community-based and regional lenders to compete with the national lenders.
Creating digital efficiencies is essential to maintaining competitiveness in today’s markets. But, it’s only part of the equation. More than ever, lenders need to deliver efficient services that ensure borrowers are participating in a compliant, transparent and trustworthy process.
Advancements in technology are changing the residential lending process and, with that, expectations are shifting. Borrowers are expecting a digital application process and quick close. Lenders should all be thinking about the best way to compete in today’s market while ensuring compliance. While we're still striving to achieve a truly digital mortgage, there are technology and fulfillment partners that lenders can leverage to reduce costs, save time, and meet the expectations of a transitioning industry.