TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1439961
24 | M R EP O RT FEATURE ily because borrowers wanted them—although they did—but because they had no other choice. Still, when rates fell and refi vol- umes soared, the vast majority of originators went on hiring sprees to address capacity issues rather than leveraging their digital processes. This could explain why many borrowers had a poor experi- ence with their lenders last year. According to JD Power's re- cently released 2021 U.S. Primary Mortgage Origination Satisfaction Study, overall customer satisfac- tion among mortgage borrowers fell by five points on a 1,000- point scale as originators strug- gled under the weight of large refinance volume. It happened despite the fact that lenders have adopted more digital processes and self-help tools. The problem, apparently, was that lenders failed to provide a highly tailored ex- perience that blended technology and human assistance. So, what do borrowers really want? In my view, customers are looking for holistic solutions from their lenders, including a consistent customer experi- ence throughout the entire loan process. While more borrowers want self-service technology that enables them to shop and apply for loans on their own, they also expect personal attention from their loan officer when they need it. They also want to sign disclo- sures electronically, submit loan paperwork online, be able to digi- tally access their accounts, and utilize some form of eClosing, whether that happens through a hybrid approach or fully online with remote notarization. To accommodate all types of borrowers—those who want human assistance, those who prefer self-service, and every- one in between—lenders need access to an end-to-end digital experience, including eCosings and remote online notarizations (RONs). In addition, they need technology that can be custom- ized for their channel or chan- nels of business, including retail, consumer direct, and affiliates. Finally, they need the flexibility for a loan officer to jump in at any point in the transaction to guide the borrower through the process in a timely and seamless manner. Many banks, lenders, and credit unions we talk to tell us that this is what they want. The problem is that their current technologies cannot be optimized to meet their business goals, so they typically piecemeal together different platforms and software. The result is reflected in the JD Power study. However, end-to- end technologies are becoming increasingly more available and easier to implement. In the coming year, we should see a direct link between lenders that adopt an end-to-end approach and those that improve customer satisfaction levels. How Close Are eMortgages? O f course, it's difficult to talk about an end-to-end mortgage experience without mentioning eMortgages, in which the entire mortgage process is digital. Very few loans originated today can be described as eMort- gages, in spite of the fact that most borrowers are comfortable with online processes and are demanding the kind of speed and convenience eMortgages provide. Theoretically, true eMortgages are possible, given available tech- nology and the increasing use of RONs. But what percentage of origination volume will be eMort- gages by the end of this year? What obstacles remain in the way, and how easily or difficult will they be to overcome? One thing that would greatly accelerate adoption of eMort- gages is the passage of the federal Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act, which would make RONs legal nationwide. From the start of the pandemic, when lenders were forced to use remote processes, at least two-thirds of U.S. states passed temporary or permanent laws that legalized the use of a remote notary in real estate transac- tions. Since then, the American Land Title Association, MBA, and other groups have called for a uniform standard for remote notarizations. The SECURE Act would estab- lish a national standard for RONs and require federal courts to recognize RONs from any state. Should it pass this year, RONs, along with a number of changes to lenders' processes and having a complete digital experience supported by strong compliance guidelines, will further increase the adoption of eMortgages. The bottom line is that, in today's transitioning market and declining levels of customer satisfaction, the best path forward for lenders in 2022 is not imple- menting digital processes one by one, as most do now. The better strategy is to reinvent the mort- gage production process with new, modern technologies that have recently become available. It's not reinventing the wheel. It is utilizing today's technology to overcome production delays and borrower frustrations. In the coming year, I believe we'll see a chasm form between two types of lenders. The first will be those that continue to rely on old processes and legacy systems, looking for incremental improvements where they can find them. As purchase volumes increase and profit margins com- press, this group will likely see their loan costs continue to rise while failing to make headway in improving the borrower experi- ence. The second type of lender will include those bold enough to reimagine mortgage manufac- turing and seize opportunities to reduce operational costs as purchase loan volume increases. These lenders will lean on new solutions to deliver the kind of end-to-end digital mortgage experience that borrowers really deserve. Lenders have already been choosing which group they belong to, whether they intended to or not. And by year-end 2022, it should become clear who made the right choice. JOEY MCDUFFEE is VP, Sales & Marketing, for Blue Sage Solutions. The bottom line is that, in today's transitioning market and declining levels of customer satisfaction, the best path forward for lenders in 2022 is …to reinvent the mortgage production process with new, modern technologies that have recently become available.