2017: A Mortgage Odyssey
It's hard to flip a channel or surf online without seeing ads drawing a parallel between mortgage loans and space travel. The term “Digital Mortgage” has quickly rocketed into our everyday vocabulary, and comes complete with a wave of highly shiny objects that have the consuming public wowed and industry insiders scrambling.
From a borrower's standpoint, what's not to love about the prospect of clicking to answer a couple questions and granting access to information online versus digging up and handing over mounds of paperwork? Clicking one's way through the application process feels so much less threatening than having to answer questions and face scrutiny or judgment in person. And credit scores look so much more charming in brightly colored, animated pie graphs than they do on a long, black-and-white printout that chronicles a financial lifetime and indiscretions that may no longer be relevant. Recent surveys show that borrowers are clearly receptive to this new way of doing things:
77% of respondents agree that completing the mortgage process online would be convenient.
~Wells Fargo, "How America Views Homeownership" survey - 2016
28% of customers completed their detailed mortgage application online in 2016, up 6% from 2015 and an increase of 10% from 2014. ~J.D. Power, 2016 Primary Mortgage Satisfaction Study
From a lender's standpoint, it can be daunting to determine how best to enter the Digital Mortgage world, suddenly having to provide a streamlined, super-fast, homogenized way to get consumers through a process that is fraught with variables, obstacles and historically takes weeks. But technology and automation are here to stay for reasons spanning from regulatory and compliance requirements to consumer demand to managing the costs of production – and the industry is struggling to adapt with varying degrees of enthusiasm and success. The phrase, "The robots are coming" has been bandied about for a while as a thinly-veiled warning and attempt to make light of the fact that companies and mortgage loan officers need to prepare for the inevitable, irreversible digitalization of the service we provide. Truth is – the robots are here.
The resistance to the mortgage industry's entre into the digital world can be summed up in the premise of a movie that came out way back in 1968. "2001: A Space Odyssey" may not have been the first chilling human-versus-robot story, but it's arguably one the most famous. With his unctuously calm voice and visual depiction as big red eyeballs placed throughout a space ship, the super computer HAL 9000 represented a whole new kind of villain. HAL's ability to cause mayhem and kill in spite of being an immobile object was scary enough, but the idea that he and his kind could render humans powerless and irrelevant opened the door to a whole new genre of things to be afraid of. Mythical beasts and fantasy foes seem sort of elementary when you consider an opponent that threatens to systematically remove your species from existence.
And as we enter the age of the Digital Mortgage, this fear is haunting some MLOs. (Of course, it’s not paranoia if they really are after you.) The truth is that the mortgage industry will indubitably experience some human casualties as technology use increases, but that's necessary for survival in a world where the cost of doing business keeps rising. Lenders seem to understand this, according to survey results released by San Francisco-based software company Capsilon Corporation:
· 70% of mortgage lenders report they expect total loan production costs to continue to rise in 2017
· 86% expect to spend more on technology to reduce production costs
But both lenders and MLOs can still win – and that victory will come only by embracing technology, not fearing or avoiding it. Instead of focusing on what technology will eliminate, companies and MLOs need to envision how technology can magnify their strengths and bandwidth, enhance the customer experience and increase production and profitability. Anyone who has spent longer than a year in the mortgage industry has found themselves in a situation where production volume increased and the demands of servicing that volume diverted time and energy from relationship building and prospecting. And inevitably, once the volume is closed, the pipeline is empty and it’s a race to build it back up. With smart technology in place to manage all the activities that can be automated, the old pipeline “roller coaster” is a thing of the past.
Rather than seeing automation as a depersonalization of our business and a threat to jobs, lenders should embrace the ability to delegate repetitive tasks to automated solutions so they can personally handle things like striking up new referral partnerships and giving guidance and advice to clients. Think about personal finance and the investment world for a moment, as it is not unlike the mortgage arena. This is certainly an area that ostensibly could be handled purely by technology, but the role of the financial planner and investment advisor is still alive and well – and is made better with the help of smart technology.
There are many solutions to help the mortgage industry with all the elements of the loan process from lead capture to close and companies have the ability to choose the best of breed for the different aspects. The key is to carefully consider which set of solutions are best for your company, workflow and goals – and have the ability to integrate with your loan origination system for the best coordination, management and results.
And while some speculate that regulation may ease up over the next four years, it’s not a wise bet to let up on compliance diligence. The Consumer Finance Protection Bureau reported 211,000 mortgage-related complaints and $11.7-Billion in relief to consumers as of the fourth quarter 2016. The cost of purchasing and deploying technology pales in comparison to penalties for violations as well as business lost to competitors who may be quicker to embrace innovation and respond to consumer demand.
There's a lot of fear and talk of what the proliferation of the digital mortgage will subtract from the lending industry. It's time to consider all the things this trend will add to our performance as service providers, protection for consumers and ourselves and our ability to step away from the repetitive aspects of the business. Refinance volume is dropping significantly and a variety of experts predict that 2017 will be a purchase-driven market. A common cliché in mortgage and real estate is that many people who are great at cultivating relationships tend to be less gifted in the paperwork and detail aspects of transactions. While technology can make things easier for those producers, it can also free up others to develop and exercise the “people skills” that are critical to survive and thrive when the refinances dry up.
Times, preferences and technology change, but human nature doesn't and that supports an industry truth that isn't likely to change any time soon: Getting a mortgage is messy. MLOs know that even though a credit score may pop up labeled "good" in a happy font, there may be some issues lurking in the background that could require first aid or even some hard core rehabilitation that mobile apps aren't equipped to recognize, explain and execute. Professional loan officers who love the business and who are in it for the long haul share a common problem-solving, obstacle-surmounting, get-it-done "chip" that computers, robots and other artificial intelligence have yet to duplicate. The ability to express empathy and understanding is purely a human trait. The satisfaction and excitement humans experience when helping others finance their dreams is also unique. The best thing we can do is set skepticism aside and get on board for the next generation of lending, fully embracing the digital mortgage – whatever shape that takes for your company. Production and profits can take off … and it's possible to send customer satisfaction over the moon.
Sue Woodard is president & CEO of Vantage Production, the nation's premier provider of content, technology and services supporting the sales and marketing of mortgage products. At Vantage Production, we are here to make good things happen for other people. www.VantageProduction.com [email protected]
As published in National Mortgage Professional, February 2017 www.nationalmortgageprofessional.com www.nxtbook.com/nxtbooks/nmpmedia/nmp_201702/index.php
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7yGreat Article, Sue! Thank you!
President | Premiere Mortgage Services, Inc. Boston Harbor Mortgage | Mortgage Home Loan Services - Market Price Leader
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