5 Mortgage Technology Changes Every Industry Leader Needs to Know
Mortgage technology is evolving, and there’s no better display of potential and promise than the annual Digital Mortgage Conference.
We spent two days in Las Vegas taking in the sights and sounds of an industry under renovation. There were compelling speakers, thoughtful demonstrations, and an overwhelming excitement about the days ahead. We even left with a pretty cool souvenir.
Couldn’t make it to the City of Lights? We’ve got you covered. Here are five ways technology is changing the mortgage landscape, according to those who presented at Digital Mortgage Conference 2018.
Digital Is the New Normal
Notarize is proud to be the first platform to enable anyone to buy or sell their home online. It was an achievement that required some forward-thinking partners who saw digital’s potential when others did not.
Just a year later, the consensus opinion is that if you’re not investing in digital, you’re falling behind.
“If you are in the mortgage space and you’re not thinking about technology, if you don’t view yourself as a technology company that happens to do mortgages, you’re missing it,” said Bill Emerson, Vice Chairman of Quicken Loans. “Everybody’s got to understand the importance of the intersection of mortgage and technology.”
Smaller, more tech-focused organizations have benefited as early fintech adopters. Big banks have struggled or been reluctant to adapt due to entrenched business models that require a greater lift to roll out digital solutions.
It won’t be that way much longer.
“I think once Ginnie Mae makes the move sometime next year, I think the dominoes will fall,” said Jeff Bode, Chairman of the Board, CEO, and President of Mid America Mortgage, Inc. “I think within two years, 80% of the loans will be done with eNotes.”
“Change is not an indictment of the past. It just means a different future, and if done thoughtfully, a better future.” -- Bill Emerson, Vice Chairman, Quicken Loans
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Consumers Want It All
The buzz around mortgage technology at Digital Mortgage 2018 was how it will revolutionize the consumer experience. In an age of increasing options and dwindling profit margins, greater customer satisfaction is a focal point for every party in the mortgage experience.
Today, the customer controls when and how they are acquired, and it’s almost always digitally. Mortgage technology offers consumers the convenience and control they experience elsewhere in their daily lives.
But when it comes to going the distance with a digital mortgage, consumers don’t have all the answers, and they know it.
“Customers are telling us very clearly that they need help,” Hsieh said. “They lack the confidence to choose the best vendors. They feel frustrated, and they would love to have a group of trusted vendors that they could select from.”
Hsieh noted that borrowers would prefer one trusted brand over many, but a single-brand solution doesn’t yet exist. He believes it will be a race among traditional lenders and contemporary digital brands - perhaps even Google and Amazon - to provide consumers with an all-in-one answer to their lending needs.
“You have to get more complex, because that’s what the customers want,” said Hsieh. “It has to be more than a digital mortgage.”
“Customers want the convenience, the ease, the control they have utilizing technology. They want to be the boss in communications, but darn it, when they want good service, you better be there.” -- Anthony Hsieh, CEO and Founder, loanDepot
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Communication Can Ease Change
Quicken Loans Vice Chairman Bill Emerson said the real estate market is undergoing an “evolution,” not a “revolution.” Our to-do list is no different than before, but how we achieve each item on the list is radically changing.
An evolution is not a series of isolated incidents. Every active participant sees change in different ways and at different times, and real estate is no exception. Regular communication becomes essential, not just within an organization, but with partner organizations that are also evolving.
Take the relationship between realtors and lenders, for example.
How borrowers find the home of their dreams is changing drastically. The National Association of Realtors’ 2018 Home Buyer and Seller Generational Trend Report found that 99% of all millennial home buyers surveyed used an online search engine during their home search, and 56% found the home they purchased online.
Ninety percent of millennial home buyers ultimately purchased their home through an agent or broker, but the agent is becoming involved further into the home buying process. According to loanDepot’s Anthony Hsieh, 4 out of every 5 borrowers are first identifying their lender, and then asking that lender to recommend a realtor.
Changes to the lending space will bring changes to the realtor space, and the only way both parties move forward together is through constant communication.
“Getting involved with a high-caliber realtor early on and having good communication between the lender and real estate professionals is paramount,” said Tyler Thompson, a partner at Second Century Ventures. “The earlier you can have that, the transparency that comes along with that, and ongoing communication throughout that funnel is incredibly important. That’s how we build trust.”
“Reach out to some of your partners. Find out what their pain points are. Look for ways to reduce friction there. Build early relationships with them, and I think they’ll become quick allies.” -- Tyler Thompson, Partner, Second Century Ventures (Click to tweet)
Mortgage Technology is Disposable
It’s easy to buy a product that looks cool and offers a new, exciting way of doing business. However, there is no single solution that helps every company with every need, and to assume any product has all the answers will likely leave you disappointed.
If we approach fintech like we approach our cell phones - where we upgrade every year to something that promises to be faster, better, and more powerful - chances are we won’t see our desired results.
“Don’t expect to buy technology and immediately see a return on investment and more business coming your way,” said Erin Dee, Director of Business Solutions at Thrive Mortgage. “As lenders, we have to find a way to use the technology to completely reimagine how to do what we’re doing.
“I think there’s a direct correlation between all the new technology and increasing costs of origination, because we’re just layering technology on top of existing processes.”
Dee explained that every technology investment should begin with a strategic roadmap that analyzes how a vendor can help you achieve your goals. What the roadmap will look like for each company may vary drastically.
You may need multiple providers to help identify and create the solution that you want. Most or all of your partners may be plug-and-play solutions, affording you some flexibility should a better solution show up down the line.
Whatever approach you take, you should consider technology as a tool, not as the end itself
“The time of monolithic systems is gone. Technology is changing so fast that it’s becoming disposable.” -- Caroline Watteeuw, EVP, Chief Information Officer, Caliber Home Loans (Click to tweet)
The Fear is Real
Up to this point, we’ve highlighted the more forward-thinking talking points you missed at Digital Mortgage Conference 2018. But not every discussion was about upside.
Change isn’t always comfortable, and as the industry races towards digital mortgage solutions, there are people at different levels of the mortgage transaction that feel expendable. If we cut down on human processing, what does that mean for the humans who do the processing?
According to several Digital Mortgage panels, mortgage technology will bring speed and efficiencies to loan officers and title agents, but it certainly will not replace them
“Really, it’s about helping loan originators get the vision that the technology can allow you to be much more high touch 24/7,” said Tom Tousignant, Senior Vice President and Regional Manager of Fairway Independent Mortgage Co. “Merging that technology with that local touch is going to make the retail loan officers that embrace the technology really productive.”
Addressing the fear begins with a conversation. Most originators, processors, or underwriters whose jobs will change with digitization are left to speculate how things will be different. Bringing employees to the table to hear their concerns and act on their considerations can make them feel less threatened and more empowered.
“Giving them a voice, giving them a seat at the table, and understanding their concerns - that’s buying in,” said Anthony Casa, Founder and Chairman of the Association of Independent Mortgage Experts. “When they feel like they’re part of the technology discussions and part of the decision-making process, the fear goes out the window.”
“Dealing with fear is part of our job. We need to be evangelists and explain that technology is going to allow us to increase our volume with the same number of people.” -- Tom Tousignant, Senior Vice President and Regional Manager, Fairway Independent Mortgage Co. (Click to tweet)
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