MReport March 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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26 | TH E M R EP O RT FEATURE T he mortgage industry is undergoing a time of dramatic change. In an industry that has for years been characterized by cum- bersome, time-intensive processes, lenders are now responding to market demand and transitioning to digital services and automation. Even the U.S. Treasury and other regulators are actively urging mortgage professionals to embrace technology to remain relevant in today's digital economy. However, leveraging technol- ogy to streamline processes in a vacuum (i.e., adopting technology for technology's sake) is not likely to help lenders succeed because there is still a significant segment of borrowers that want a face-to- face, person-to-person relationship with their mortgage lender. Lend- ers offering "mobile mortgages," or similar programs, may have some success within their niche market, but will be unable to build mean- ingful long-term relationships with borrowers—a critical element of the overall lending process and the only way to ensure every family served is positioned for longer-term financial peace, not just a quick and immediate transaction. There's no question, technol- ogy is and will continue to play a role in enhancing the mort- gage process for borrowers and lenders alike. Lenders should be prepared to embrace technology to stay ahead of the competition and customer needs, but the key to success will be in the proper use of technology to truly reduce expenses and foster a more conve- nient relationship-based mortgage experience for borrowers, not one that works to eliminate human-to- human connections. Technology as a Mortgage Enhancer A ccording to Liberty Street Economics, automated underwriting processes reduce the time required to close a loan by nearly 20 percent. Consider- ing it typically takes anywhere from a few days to weeks for lenders to underwrite a mortgage, such a reduction is meaningful and would certainly help lenders improve their relationships with borrowers. After all, a key source of borrower stress is the time they spend waiting for news of whether their loan has been ap- proved or not. A digital or online mortgage can also provide borrowers with a significant degree of conve- nience, allowing them to apply for a loan from virtually anywhere. Of course, lenders understand that many of the manual, 'behind-the- scenes' processes remain largely intact, but to borrowers, it can seem an entirely new experience. Some lenders have even taken this as an opportunity to leverage AI and machine learning to more easily identify, document, store, and report borrower information within their various departments. Even considering the opera- tional benefits of new technology, however, Fannie Mae conducted a study that found that the most influential source of mortgage information is still mortgage lenders themselves. Regardless of the quality of the technology or information provided, borrowers still regard lenders are generally more credible and trustworthy than merely going through a digital process. While borrowers may turn to digital and online technologies to support the pro- cess, recognizing that borrowers still want in-person guidance and education is the foundation of any lender's value proposition. Likewise, it's the lender's expe- rience and expertise that allows the borrower to fully conceptual- ize their mortgage as a funda- mental part of their future life. Lenders, for example, can provide borrowers with in-depth loan analysis tools that outline multiple scenarios and breakdowns of costs, interest rates, and potential monthly payments. Without the lender to provide context around such information, however, the value of these tools is easily lost and can frequently overwhelm the customer with more information than they can or want to under- stand on their own. As borrowers seek out lenders who bring more to the table than a low-interest rate or automated workflow, they will look to those who not only leverage convenient, resourceful, and educational technologies but also guide them throughout the mortgage process and serve as mentors to them. Technology & Relationships T o create the most efficient and beneficial lending process, mortgage lenders should focus on utilizing technology to enhance the critical steps of the process that are most meaningful to their relationships with borrow- ers. Even though technology is improving every day, it does not negate the value of a significant, personal relationship between borrowers and lenders. Consider borrower-lender com- munications as an example. Open and honest dialogue between lender and borrower is crucial to the speed and efficacy of the mortgage process. Lenders cannot qualify a borrower (much less understand their unique needs and financial situation) without honest insight into their finances and future goals, and borrowers cannot trust a lender who does not provide frank and up-front answers to their questions. It's a two-way street. Great ques- tions are often better than great Meeting in the Middle New tech options are creating the perfect convergence between relationships and convenience. By Matt Clarke

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