MReport December 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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26 | M R EP O RT FEATURE A lthough we talk about it quite a bit, it's time for the mortgage in- dustry to make clarity one of our highest priorities. As an industry, we're collectively proud of our role in helping homebuy- ers achieve the American Dream. Nearly two-thirds of our popula- tion is comprised of homeown- ers, most of whom were able to achieve homeownership because of the help of a mortgage. But ask most consumers what they think of the actual process of buying a home, and words such as "confus- ing" or "frustrating" are most likely to be used. A 2019 survey of mortgage loan applicants conduct- ed by CNBC and the Consumer Financial Protection Bureau reported that only 47% of those responding found their experience to be "satisfying." Are we happy with that? Less than half of our ultimate custom- ers are satisfied with how we do what we're here to do? Yes, there are many legitimate reasons for the lack of transparency in the mortgage and homebuy- ing process. A dizzying maze of federal, state, and local regulations and requirements is a very real im- pediment over which we have little to no control. While most of those rules were enacted with the best intentions, all too often, they end up having negative consequences for the consumers themselves. There are other valid reasons that the mortgage process hasn't quite evolved into the Amazon- like experience many other loan-application processes (student loan, car loan, personal loan) have, but we do have some level of impact on those. I believe it's past time for us to do what we can to increase our transparency and bring greater clarity to the process required to fund one of the most noble transactions there is. Clarity in the Process T he primary cause for confu- sion on the part of the typi- cal mortgage borrower is simple. It's a confusing process to originate a loan in the first place. I'm not aware of many other industries that require so many different chefs in the same kitchen to create a single entrée. Consider that a typical mortgage loan applica- tion is "touched" by a real estate agent, several people with the lender (loan officer, assistant loan officer, underwriter, etc.), then a couple more from the title agency (search, clearance, escrow, closing, plus assistants), not to mention an appraiser and home inspec- tor. Further compound that with the likelihood that many of those touching the transaction aren't with the same companies, and the root of the issue becomes evident. (And that list doesn't even begin to consider mortgage brokers, post- closing, and a dozen other profes- sionals who directly or indirectly impact the transaction.) Now, add to that realiza- tion the fact that the majority of those different entities pulling in the same direction to bring a mortgage to closing don't com- municate with each other very well. Again, that's for a number of reasons. Too many technolo- gies, even those purporting to be multiprofessional portals for "all" parties involved, require that they be the alpha technology. So, while an LOS may have a means by which the real estate agent, appraiser, and title agent may be able to communicate, it requires that each of the other profession- als use that technology, when, in all likelihood, each has their own primary technology better suited to their part in the delicate ballet that is a mortgage closing. What that looks like in reality is loan officers using workarounds and unauthorized third-party apps just to get the job done. Or an agent leaving three voicemails with the title agency simply to find the status of the order. All of this is the result of some mix of a "the way we've always done it" attitude, the inherently high production cost to make a mortgage loan, a system of applica- tions and technologies that don't always work together, and develop- ers who aren't interested in work- ing together with other elements of the typical tech stack. We all have some say in this, whether by our own choice of tech, our demands to vendors, or how we build our own part of the process. It's time for all of us to work on our end for increased clarity of process. Clarity in Communication A dmittedly, there's some over- lap when it comes to clarity in communication and clarity in process. Here's a great starting point. Because the transaction is so segmented (siloed?), there can occasionally be some confusion as to whom the "client" really is. For an appraiser, that could be the lender, the real estate agent, or the consumer. All have some say in which appraiser will provide the valuation. For a title com- A Call to Clarity The mortgage is a worthy tool for most consumers' most important transaction. That's why we need to work even harder to bring clarity to the process. By Jim Paolino

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