TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1418210
24 | M R EP O RT FEATURE focus on relationships with customers, improving the ease of the mortgage application and closing process, as well as other factors, Focardi said. Even if a consumer is seeking a jumbo mortgage, the difference of five or 10 basis points is unlikely to prompt the search for another lender. Twenty-five basis points or more, however, might prompt the potential borrower to look elsewhere. Focardi pointed to automa- tion as the key to bringing in more leads at the top of the sales funnel; driving those leads to loan officers who use a combination of technology and their own knowledge to advise customers on loan products and to engage them in real time and for efficient loan application and fulfillment. Today's borrowers tend to be millennials or members of Gen X who are fairly adept at digital technology, so they expect the same level of tech savviness from their lenders, something the more successful depositor lend- ers understand, Focardi noted. "Converting leads into loan applications and processing them are the highest priorities among financial institutions." Kilgore added that some independent mortgage lenders, like their depository institution counterparts, still need to add or improve upon their digital mortgage lending technology. "What Rocket Mortgage has done in some ways is inflated the sense of ease of getting a mortgage," said Paul Katz, Managing Director of Bank Relations, Promontory Mortgage Path. "With the mortgage pro- cess, it's not just press button, get mortgage. But when you're advertising at Super Bowls, and you're saying that, basically, you hit the easy button and get a mortgage, that's creating a chal- lenge for all the other players in the space to be able to provide a seamless and user-friendly experience." Focardi said that depository institutions need to use technol- ogy that decreases the end-to- end cost for the institution while enhancing customer satisfaction. While the investments in these technologies does result in higher costs for depository lenders, the availability of these technolo- gies also means higher customer satisfaction. Among the technologies that depository institutions should invest in if they don't already have them, according to Focardi, are ones that provide: • eSignatures for applications and disclosures • Digital verification checks • Online loan status checks • Point of sale/loan origination system integration • Digital process transparency for the customer • Digital eClosing Remote online notarization as another key technology for mort- gage lenders, Kilgore added. "It's a really useful tool for efficiency and borrower empowerment." "Lenders need to provide a digital mortgage shopping and buying experience similar to online mobile/retail," Focardi said. The area where depository lenders lag the most is with clos- ing technologies, he added. "Keep borrowers engaged with the loan process by conveying a sense of accomplishment once the application is submitted," Kilgore advised. "The goal is to demonstrate that progress is being made on the application, even if a lender's digital process doesn't include automated loan pricing and other tasks that accelerate the speed of the ap- plication. This can be achieved by automatically assigning the loan file to a lender employee or providing interactive tools in the borrower portal with consumer education and other relevant content." However, it's not neces- sary for depository institutions have the latest and greatest mortgage technology, Finnegan said. "Technology is important, especially in terms of how the interface with customers works, an easy online application, but bleeding-edge technology isn't a make-or-break differentiator for banks and credit unions. They just need to be current and be able to execute well on the tech- nology that they have." Some depository institutions are behind in adopting that technology, though, Finnegan said. "They have to have easy-to-use technology, a local presence, and someone to talk to at the bank [or credit union]. Oftentimes, they can tailor products to a particular customer's needs, and that's harder for larger mortgage lenders to offer, that's where depository institutions can oftentimes set themselves apart in terms of competing." The marketing, regulatory, and other challenges will persist, ana- lysts agree. However, depository institutions that stay committed to mortgages and commit to the technologies to compete with the independent lenders can com- pete effectively going forward, a Katz noted. "I think the ease of entry or re-entry, and ability to stay in that game with agile and strategic partnerships, will enable them to draw the line and if not, grow, on a micro-level, grow their business. But that's easier said than done. It feels like those that are innovators want to stay in it, or in it want to grow. We're a whole host of conversa- tions with those that want to re-enter the business." However, any market share discussion would be skewed negatively if a large depository institution decided to exit the mortgage business, Katz cautioned. . PHIL BRITT started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions magazine in 1992. When the publication moved its offices to Washington, D.C., in 1993, he started his own editorial services firm and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications. "The independent mortgage bankers operate with a lot less capital, so they have to be nimble to keep their costs in line. So, they're more likely to quickly right-size themselves, if volume goes down. The banks have historically been less nimble in right-sizing when volumes go down." —Tom Finnegan, Principal, STRATMOR Group