MReport June 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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48 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Demand for All-Digital Mortgages Grows More homebuyers are embracing tech tools in the home shopping and home search process, as lenders continue to take measures toward a fully electronic experience. I CE Mortgage Technology's latest Borrower and Lender Insights Survey found that more borrowers and home- buyers are taking advantage of tech tools to simplify the home- buying and search process. The survey found that 99.3% of lenders believe technology can help improve the mortgage appli- cation process in at least one way, with the most commonly cited benefits including simplifying the entire process (74%), reducing time to close (70%), and minimizing data entry (67%). "Last year brought our in- dustry a perfect storm," said Joe Tyrrell, President, ICE Mortgage Technology. "You not only had COVID-19, which required lend- ers to shift to virtual workforces, but you also had to conduct business in a safe and socially distanced way with borrowers; at the same time, we were experi- encing a historical increase in loan volume. This caused many lend- ers to reevaluate their technology partners, how they were leverag- ing technology, the systems that they employed, and the tools that they relied on. We heard many stories from our lenders across the country that had to completely and permanently shift the way they served borrowers." According to the survey, the importance of lenders offering digital solutions to borrowers increased in 2020, with 58% saying the availability of an online ap- plication would likely impact their lender decision (up from 50% in 2018). The offering of a mobile app was found to less likely to influ- ence a borrowers' lender selection, with 47% saying the availability of one would factor into their decision in 2020, compared to 40% in 2018. Social distancing and virtual meetings became the new practice in 2020, as pandemic-related fears pushed more homebuyers to a more digital and less hand-on process. "From a borrower's perspective, the pandemic has accelerated the demand for a consistent, digi- tal first borrowing experience," Tyrrell said. "Signing documents electronically is quickly becom- ing the minimum, and borrow- ers expect a seamless experience from start to finish. In 2020, many lenders cobbled together differ- ent solutions to meet borrower demands, but that often led to a more confusing, fragmented process. COVID-19 highlighted the need for a single consistent digital experience for borrowers." The report found that home- owners who used an online ap- plication appreciated the simpler application process (55%), reduced time to close (53%), and resulted in fewer in-person interactions (49%). Not surprisingly, decreased in-person interactions grew in importance in 2020, as just 37% of consumers in 2018 cited 'no need to meet in person' as something they liked about their online ap- plication process. Whether they had been through the mortgage loan process or not, 62.5% of consumers surveyed believe that an online mortgage process would make buying a home easier than an in-person process. The adoption of more digital tools caused lenders to pivot and develop new solutions to meet this growing need for a more "hands-off" process. "Due to the large scale of volume happening and an in- crease in consumer demand and expectations, a number of lenders in 2020 had to piece together dif- ferent electronic closing solutions to keep up," said Nancy Alley, Vice President of product strategy, ICE Mortgage Technology. "The survey results completely align with the growing need for one consistent and seamless automated platform that connects borrowers to lenders all the way to e-signing, and saves lenders time and money along the way." Currently, online applications and online portals are the digital tools most offered among lend- ers, with more than nine in 10 offering both options to borrow- ers (91%), respectively. Of lenders who offer online applications, 60% said more than half of all loan applications are submitted online, while 38% said more than 80% of their applications were completed online in 2020. However, tradi- tional loan application methods may be more common at larger organizations. Half of large insti- tutional lenders, or those with 200 or more employees, indicated that less than 50% of their loan applica- tions were submitted online. In addition to satisfying bor- rowers, ICE found that technol- ogy played a major role in the time to close all loans in Q1, from 58 days in January to 52 days in March. The time to close all purchase loans decreased over the quarter, from 57 days in January,

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