MReport February 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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M R EP O RT | 19 COVER STORY Nair is not too concerned about the too much of it, but instead, his worries at that there could be too many tools aimed at solving narrow business problems, which has led to poor user experiences. "It is very important to first understand what the customer wants and needs before determining how best to solve business opera- tion challenges using the right data, technology and tools," he said. "A major downfall for our industry has been the lack of using an 'applied technology' approach to integrate fragmented business processes to gain speed, agility and efficiency." Ghamsari said technol- ogy needs to be built with core principles of simplicity, transpar- ency, and maintaining high loan standards. "Pairing this technology with lenders who have real people helping consumers through a daunting process, can only en- hance a consumer's home buying experience," he said. Stubbs, however, noted that the industry has nothing to fear from a possible thought of too much technology, but said there could be challenges to having too many solutions to the same problem. Stubbs added, "It's a natural part of innovation to have periods where there are competing solu- tions, but natural selection tends to operate on them and the best solutions emerge in time. I don't think any customer will mind if someday getting a mortgage is similar to getting a Coke from a vending machine." Smith there will always come a point where too much of a good thing can be bad, and the hurdles technology need to get over are building trust and comfort with consumers. "Going through a complete digital process isn't what everyone wants, so loan officers need to have differ- ent options available when someone doesn't want to permission their bank data and would rather email PDFs or deliver paper documents," Smith said. "As much as lenders need to adopt new technology they can only do it as fast as borrowers are willing to use that new technol- ogy." Lenders, Smith said, need to educate borrowers on the new and improved experience technol- ogy can deliver, and the same can be said for loan officers. He added that the mortgage process won't be efficient and automated until loan officers are comfortable with their role and how they can close more loans. "The biggest risk would be instituting technology that either isn't used or isn't a better process, it's just digital," Smith said. McGuinness said one of the largest challenges is integrat- ing new technology with legacy systems that are antiquated. She noted many of the largest servic- ing systems are "still on black and green screens with hot button wrappers" and that she wouldn't attempt to update a legacy system unless the tech provider is build- ing their own solution to allow for a true integration of a lenders selected technology partners via API's or refinements to their core. "If they're not moving it into a more technology driven base case, I would actually instead use web or app-based technology and then push and/or pull data out of the older system if the organizations are not able to retire those sys- tems until when or if they can be replaced with something else. The sad reality is you will find pretty regularly that they cannot be replaced, as a clean transfer to a new system is not possible and thus its lower risk to retain what is already there thus the "wrapper" around these systems will need to remain. but even using this method the lender is delivering a better experience both for users internally as well as their client base," McGuinness said. On the Horizon G hamsari said every year the industry moves closer to "making every step of the home- buying journey digital." "The technology is already available, and we're starting to see widespread adoption. 2020 is the year where the different technologies developed in the last ten years should begin talking to each other," he said. "This way consumers have one place to do everything—from understanding what they can afford all the way to digitally closing on their dream home." For Stubbs, the technology he is most looking forward to in the coming year is the evolution and adaptation of blockchain technolo- gies. "So much of the home buying process is in perfecting the lien and chain of title. It's also one of the most costly and time con- suming parts of the transaction," Stubbs said. "Blockchain holds the possibility to make title search, recording, and insurance com- pletely unnecessary, and reduce costs from thousands of dollars to just pennies." Smith said the new technology that will impact housing in 2020 are: Truly digital, automated veri- fication of income and employ- ment and an "incremental move" to open banking." "Lenders now have access to a truly digital, automated verifica- tion of income and employment (VOIE) solution that triples the success rate of current employ- ment verification solutions. Whether used in conjunction with other services or as the sole VOIE solution," he said. Smith added that this process for VOIE uses consumer permis- sioned data from bank accounts and a digitized paycheck to verify income and employment that can be used to underwrite a loan. Smith said this new technology could "drastically" reduce closing times and that the customer expe- rience is very simple. Furthermore, Smith said large financial and non-institutional lenders are starting to come around to the idea of a global data-sharing standard that would "lay the foundation for innova- tion" around consumer-permis- sioned data. "When this data is freely avail- able anytime a consumer wants to use it to their benefit, lenders and financial institutions can depend on having access to certain pieces of data that can drastically reduce the time it takes to underwrite a mortgage," Smith said. He added that the Financial Data Exchange (FDX) is working to establish a global standard for secure financial data sharing. Many of the largest banks and mortgage lenders are members of FDX and are work- ing to make data access a simpler proposition for everyone. McGuinness said she is hoping to see lenders focus on technology platforms that metamorphosize the full lifecycle versus just being focused on one small "silo" such as the application process which is a generic user experience up- grade at best. "I think as we move through 2020, that this will begin to take shape There's a lot of guys all doing the same thing and I think that you're going to start to see certain companies that are all focused on the same space go down, devalue or be consolidat- ed" she said. Nair said the power of data— or the knowledge we gain from it—will help the industry better understand consumer preferences in order to provide them with faster service in an efficient way by the use of AI. "Consumers are used to one-click shopping for nearly all purchases and their home shop- ping experience shouldn't be any different, whether it's acquiring a home loan (purchase or refi), or making payments, or changing escrow in servicing. "Mass digitization is the future of housing," Nair said. . A graduate of the University of Alabama, MIKE ALBANESE has worked for news publica- tions since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, and sports and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the Pilot Point Post-Signal and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the Dallas Morning News and the Denton Record- Chronicle over the past several years. "Mass

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