TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1439961
20 | M R EP O RT FEATURE Surprisingly, the homebuying and financing experience hasn't changed much at all. Financing terms are determined, as ever, by a borrower's ability to establish credit, capacity to pay, and the value of collateral. Some lenders are better than others. However, their rates and fees are higher than other lend- ers with less technology. The top two lenders in the industry leveraging heavy investments in technology, Quicken Loans/ RocketPro and United Wholesale Mortgage (UWM), have less than middle-priced rates. So, why are they the leaders in the space? Customers generally don't expect the mortgage closing process to be pleasant, straightforward, or fast. Most people will only go through the process a few times in their lives, so they have a narrow frame of reference. The industry adage is that the average adult will own fewer than three homes in their lifetimes, generally purchased during early adulthood (a starter home), midlife (the upgrade), and near retirement (the leisure abode) 9 . A homeowner might also refinance their mortgage multiple times during a falling- rate environment, but today's homebuyers are not likely to see lower rates ahead. Let that sink in … we will likely never see rates this low again. Feel free to get rid of the word "likely." The situation is unpleasant for mortgage loan officers as well. In good times, they are overworked and pressured to push financings through despite being saddled with antiquated technology, manual processes, and frequent errors made by those submitting and reviewing documentation. The best loan officers own their own brokerages or work for well-funded franchise broker- ages that treat them well. Many burn out and move into other industries. Others work long hours during boom periods and find themselves out of work when the economy turns, never to return to an industry which could benefit from their experi- ences. Technology Can End Reactionary, Boom- Bust Thinking W e now have reliable and scalable technology that can increase the productivity, efficiency, and accuracy of the mortgage loan officer function, allowing companies large and small to keep, reward, and retain their best talent in good and bad economies. In a digital age with machine learning and artificial intelligence widely available, forward-thinking organizations should adopt automation into their mortgage application and underwriting processes. Document Management: Systems allow for borrowers and their representatives to upload standard documents such as tax returns, wage, and bank statements while quickly and accurately analyz- ing those files to determine if additional documentation will be needed early in the process. A homebuyer might not know, for example, that they need to report court-ordered alimony or child support payments. However, an automated system can capture such an omission right away so that the borrower isn't left scram- bling to provide documents in the final days before closing. By quickly correcting these errors and omissions, I believe that such systems can reduce the time and effort required on the part of borrowers and mortgage lender staff by 50%, allowing energies on all sides to be spent more productively, improving the customer experience. Information Warehousing: These systems can provide a common point of reference for every professional who needs to touch the loan throughout the process, including the borrowers, loan offi- cers, loan processors, underwriters, and other professionals involved in each transaction. Everything is in one place, clearly labeled, stored securely in the cloud, and available for download as needed, eliminat- ing the need for phone calls and for busy professionals to hunt down documents. Systems Integration: Real estate is a fragmented industry with many organizations using free, generic software systems that can't be customized. An intelligent docu- ment and process management system will augment existing sys- tems and prevent errors through- out the ecosystem and process. The Business Case C ompanies that implement automated solutions now will free themselves from the boom- and-bust decision-making that has grown endemic. Technology that increases efficiency and capacity while shortening closing times by eliminating errors will allow man- agers to help their teams succeed in a scalable environment. Technology allows lenders and brokers to hire fewer people and make them more productive. Newer workers will ramp up faster and provide a higher level of service sooner. This will improve the customer experience and could alleviate the need for excessive and expensive marketing, as custom- ers will not only return for their refinancing or next purchase but will refer their lenders and brokers to their networks. If you're skeptical that an industry that has been so slow to change can be moved in this way, your skepticism is understood but won't serve you in the face of changing market dynamics. The machine learning and artificial intelligence algorithms that are revolutionizing manual processes like driving a car are happening for loan origination, underwriting, and servicing. Nothing stays the same forever. Not our current real estate boom, and not our present ways of doing business. Adapt now, or risk falling behind. CHRISTOPHER HUSSAIN io?Totat plautet odi conem quo evenectum volorro blabore vent omnisto tatur, sectaqu iasimus dolessi ncieni unt ullorro doluptatibus quodit dolorehent liquasint occullore, iur? Qui quos disquodis vollorectis ne vendaes sincte quae mi, aut ut hit ut inciis dolorrum Ullabo. Nequisq uodicipicia dolupic Technology allows lenders and brokers to hire fewer people and make them more productive. Newer workers will ramp up faster and provide a higher level of service sooner.