MReport January 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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30 | M R EP O RT FEATURE and borrower self-service as a long-term strategy two or three years ago were in a better posi- tion to handle the extreme loan volumes that tripped up so many competitors. Their fortunes have resonated with the rest of the industry—in fact, we are seeing more lenders looking at replacing their legacy mortgage software with digital technology than ever before, having experienced first- hand the flip side of not adopting them earlier. The challenge, however, is understanding what technology strategy is best. To answer this question, it's useful to look at industry trends emerging and the specific tools lenders will need to address them in the coming year. For example, our own industry is likely to see more companies getting into the space that are online only and use completely digital processes. We may also see more traditional banks and lend- ers take a more careful look at the rents they've been paying during the pandemic, when nobody was using their facilities, and begin looking at a more remote model that will help with their profit- ability. For most lenders, it's going to be crucial to leverage mobile tech- nology that provides loan officers with automated tasking, notifica- tions about when things are due, proactive lists of needs, and alerts about when they need to follow up with borrowers. This way, a lender's sales team will be able to build relationships with their customers no matter where they are and streamline the application process. Borrower self-service technol- ogy that enables consumers to shop and apply for mortgages, eSign disclosures, submit loan documentation online, and par- ticipate in hybrid or full eClosings will be increasingly important as well. During the past nine months, more and more people have become comfortable with online closing procedures as well as remote online notarizations, which will eventually become the way of the future. However, when we return to a normal work environment, most lenders will still need to have that on-the-ground sales network. We tell our own clients this because even though we're a technology company, it's incumbent to look at mortgages as a 360-degree experi- ence. Some borrowers want their hands held through the process, while others want to do the work themselves, and that will always be the case. There's no turning back from providing a digital ex- perience, but it's also important not to lose sight of the personal touch. Prior to the pandemic, artificial intelligence (AI) and machine learning were getting a lot of attention, and it's inevitable that both technologies will continue to grow in use. But lenders need to realize that effectively using these tools begins with having the right data. You're not going to get effective AI and machine learning results unless you have a large enough data set to allow for valid, predicted results. In many cases, lenders are sitting on 20 or 30 years of data. They're only now beginning to see the value of data and the ability to use analyt- ics and data modeling to predict things like borrower fallout and early payment default risk. What's Coming in 2021 W hile the ultimate impact of the pandemic remains to be seen, surely the big story next year will be how it af- fected mortgage volumes and the overall economy. Hopefully, it will improve our industry's ability to prepare for future disasters or disruptions and lead to more time spent on risk analysis and risk assessment as part of internal strategy sessions. The other big story is going to be what happens with inter- est rates and how lenders deal with an eventual shift in the rate environment. That discussion will involve how to mine leads and how to build better and longer lasting relationships with bor- rowers, Realtors, builders, and other partners. I think we'll also be talking about what additional regulatory changes were made with the new presidential admin- istration and how the Consumer Financial Protection Bureau's role will change as well as what it will look like. A year from now, lenders will also be looking at what impact the new Uniform Residential Loan Application (URLA) form had on their overall profitability. Did the new form really help bor- rowers or lead to greater customer satisfaction? Greater employee sat- isfaction? I think we'll learn that, ultimately, the new form itself will not have much of an impact, but how well lenders implement- ed the form to create more digital processes definitely will. The bottom line is that 2020 will go down as a watershed year for mortgage lenders. Whether the events of the past 12 months will prove effective at inspiring long- term—and long-needed—change remains to be seen. Hopefully it will, and hopefully we'll never face another crisis like COVID- 19. But if lenders once wondered whether digital technologies truly make a difference in their busi- nesses, I doubt they are wonder- ing anymore.. . JOEY MCDUFFEE is a VP at Blue Sage, a provider of innovative, cloud-based digital lending technology for retail, wholesale, and correspondent lenders that delivers a superior lending experience for all users throughout the loan process. McDuffee has more than 25 years' mortgage technology experi- ence. He can be reached at jmcduffee@ To some degree or another, every U.S. consumer is relying on technology and self-sufficiency in their daily lives more than they ever had before. This has affected many industries, not just the mortgage business.

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