TheMReport

TH E M R EP O RT | 31 FEATURE W ho knew that 2019 would start with mortgage data breaches? We owe it to Bob Diachenko, the independent security researcher who first discovered the 24 million mortgage and bank loan documents lying exposed online with- out data protection. He was quick to report it to TechCrunch and then began the investigation. Mortgage data going back more than 10 years— containing highly sensitive personal information, including names, addresses, dates of birth, social security numbers, and more—was found accessible on a server for at least two weeks. With no pass - word protection, the server gave complete access to anyone who cared to access the massive cache of documents. The issue worsened on January 24, when TechCrunch found another unprotected and exposed server that stored some of the original mortgage and banking documents that would typically be needed for getting a mortgage. What is most amazing is that it took so long for a data breach of this magnitude to hit our in - dustry. It makes one wonder, what is the extent of damage we are exposing our borrowers to in order to get ahead in the race of technology? Rising Risks T he breach is now being investigated by forensics, and critical facts will be reported over time. We live in a world where fraud and cybercrime are increasingly prevalent, and such scenarios make it easy for cyber thieves to steal identities, file false tax returns, and fraudulently secure loans or credit cards. Despite these red flags, the need for stronger cy- bersecurity measures seems to be drowned out by other innovations designed to speed up the mort- gage transaction and save money. The conversation today centers on AI, robotics, machine learning, big data, cloud technology—and the list goes on. But is our industry spending enough time evaluating what's right for us and what's not? For more than two decades, experts have predicted that technology will take over the world and traditional players will be out of business. But is the traditional way of doing business obsolete yet? A deep dive into our everyday mortgage process suggests that it's not. Technology has certainly changed financial services, but these changes have not come without risk. Cybercrime and fraud are rising every day. One can still manage the damage in certain nonfi- nancial industries, but can a lender today share the liability of exposing their borrower's financial infor- mation? If the answer is no, then why are we so eager to jump aboard the technological bandwagon without understanding the risks associated with it? Lenders must understand the needs of borrow- ers in order to best use technology to improve processes that are critical to enhancing the lend- ing experience. The mortgage industry today is losing sight of the critical factors that, when done right, can help them enhance their customer satisfaction—security, face-to-face interactions, commitment to timelines, simpler applications, and telephone conversations. Ellie Mae's Borrower Insights Survey 2018 was helpful in sharing insights about what borrow - ers want and need. Topping the list was a faster process (29.1% of borrowers surveyed), followed by a simpler application (26.8%), and more commu- nication and face-to-face interaction (27%). While we generally think millennials want everything online, 37% of borrowers within this age group said that more face-to-face time with a lender would have improved their mortgage application experience. Furthermore, 44.7% of borrowers surveyed said applied for their last mortgage without any online intervention, a sign that a significant number of consumers prefer an "in person" mortgage. Also interesting was that 46.5% percent of homeown - ers said they were "somewhat concerned" about entering their personal information online, while 22.6% of borrowers reported they were "very con- cerned" about entering it. Clearly, borrowers are nervous about sharing their personal information online, and there is growing evidence that they should be. Up in the Cloud? C loud storage may be a feasible option for mortgage lenders to reduce their IT and infrastructure costs, especially when the entire industry is looking at cutting costs. But is it the safest option? The facts about data breaches are bound to keep lenders awake at night, as it's not only their borrowers' documents but also their By Alok Datta

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