MReport November 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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28 | TH E M R EP O RT FEATURE Y ou would think the mortgage world would be used to change since nothing in this business ever stays the same. Between regu- lations and requirements, consum- er behaviors, shifts in the market, and new competitors, change is all around us, and it is as inevitable as sunrises and sunsets. In our constantly evolving industry, the reasonable approach to most of these changes is to em- brace them. Any significant change creates a huge unknown for a business, and mortgage companies are no different. That's particularly true with digital closings. An increasing number of mortgage companies are attempting digital closings, but very few of these companies seem to know how to do these—or even of their options. Even those mortgage executives who believe they are aware of what's available to them have had their view of digital closings shrunk to fit the limited capabili- ties of their vendor. Understanding Your Digital Fears T he mortgage industry has reached a tipping point with regards to digital mortgages— and that is one of the biggest challenges lenders face today. Most companies have recently recognized the power of digital mortgage technology and elec- tronic closings in particular. They know the industry's digital transformation is inevitable, and that their survival is in question unless they adapt and change. Recently, I overheard a group of lenders explain their biggest fear— that a competing lender might undergo a digital transformation and suddenly vault into a market leadership position, taking every- one by surprise. Another common fear among lenders is the fear of change, so embracing fully digital closings has been a challenge. The key to competing under these conditions is to recognize that you don't have much of a choice. When lending is your livelihood, you must constant- ly adjust your culture to embrace and adapt to changes like a digital transformation. That realization is pretty powerful. When you know that you could be out of business if you don't do something, it can have a powerful impact. A great example of this is Blockbuster. At its peak, Blockbuster was a multibillion- dollar company with 9,000 stores nationwide. In 2000, the company turned down a chance to buy a little-known startup for $50 million because, as Blockbuster's CEO at the time famously said, "They don't do anything we couldn't do." That startup was Netflix. Blockbuster had blinders on be- cause the brick-and-mortar movie distributor went bankrupt and the online models now dominate the market. The lesson here is that the power and speed of technology will always drive rapid change and that sometimes denying this change from happening almost accelerates it into happening. After acknowledging that change is inevitable, the second step is to commit to chang- ing. We've all heard the phrase, "change starts at the top," and it's true. CEOs need to be the first and the loudest to commit to change, and they must follow it up with action by dedicating staff and resources to making change hap- pen. In the case of digital mortgag- es, the CEO needs to rally support from all levels of the company, as total buy-in is required for the initiative to be successful. The Importance of Mitigating Risk Y our organization can com- mit to change and be ready to devote the required time, energy, and resources to enable digital mortgages and eClosings. But to make it work, your or- ganization will also need a plan for mitigating risk. The first and most important lesson in risk mitigation is to choose your digital mortgage partners carefully. Keep in mind that great technology today won't necessarily be great tomorrow. A good technology partner will have a proven track record of continu- ous innovation and high qual- ity for a sustained period. They should also be able to understand your business and be able to cus- tomize its methodologies to work specifically for your organization's needs. For most lenders just begin- ning to embrace eClosings, the best approach is partnering with a company that has multiple digital offerings, including eSign, elec- tronic recording, eNotes, remote notarizations, and other products and services that enable a true end-to-end, seamless process. Such Change is Not the Enemy The challenges—and benefits—of implementing digital closings. By Mark McElroy

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