MReport July 2022

TheMReport — News and strategies for the evolving mortgage marketplace.

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20 | M R EP O RT COVER STORY enabled and enhanced by digital capabilities. That said, it's important to note that, no matter how digitalized they become, mortgages certainly won't ever be "human-less." Human expertise is critical to the mortgage process. As we innovate our digital tech using AI, machine learning, and other advanced technologies, the goal isn't to replace that expertise but to support it and maximize its impact on operations. Jampedro: A 100% digital process is not out of the ques- tion, but it depends on the needs and experience of the potential borrower. Regardless of their age, borrowers who have a few real estate transactions under their belt are more comfortable with a mostly digital experience. They have already had the benefit of an originator, real estate agent, and title agent guiding them through the process and explaining the different documents and what comes next. As it relates to the transaction itself, the difficulty of the transaction based on borrower qualification, collateral concerns, or deal structure can dictate the need or desire for human assistance. Human involvement in a difficult transaction, for one reason or another, creates a sense of certainty that is preferrable to an all-digital process. Matt Lehnen, CTO, Deephaven Mortgage: I do feel that the industry will embrace a full 100% digital mortgage. This will be a gradual process, as consumers increasingly gravitate toward self-service models. The value of the self-service technology market has been projected to grow from $32.23 billion in 2020 to $88.33 billion in 2030. The industry will need to meet consumers where they are in adopting these solutions. A 100% AI-guided mortgage process may not be the most favorable option. For many borrowers, buying a home is still the biggest financial decision of their lives. AI is extremely helpful for alleviating redundant work and flagging potential risks, but it will always need to work together with underwriters. Leonard: While 100% digitiza- tion is something to aspire to, we believe it must be balanced with practical considerations. We do not view the future as one that is exclusively digital. Instead, we see our role as advancing what we call "the modern mortgage." We define the modern mortgage as a seamless blend of front- and back-office technologies and work- flows with human involvement. It drives a superior consumer ex- perience, and it is delivered more efficiently and profitably than the status quo. McCall: Looking back about three decades when the GSEs rolled out their AUSs, there were thoughts that the AUSs could replace human underwriters. An all-digital mortgage process is certainly realistic, but given the amount of evolution still required to reach that point, I feel we are still many years away. AI has also come a long way in general, but within the mortgage indus- try, we've yet to reach the point where our data standardization will support the full growth of AI. We've seen how that technol- ogy has changed and evolved, but in no way has it eliminated the need for an actual underwriter providing that human touch. Still, the market has continued on a path to become more digital and allowing the data that we must drive process in a standardized way, which is and will continue to create significant efficiencies. Brian D. Pannell, Chief eServices Executive, DocMagic Inc.: Over the next few years, I do not believe that the industry will embrace 100% adoption. Is it likely in the foreseeable future? Absolutely. It is well-known that paper-based processes are expensive and inefficient and the evolution of the centuries-old mortgage industry and the processes and legalities that surround it would appear to be primed for intervention. However, many industry participants still rely on the "old way" of doing things, as the motivation and support of electronic mortgages from origination, secondary marketing, and through to servicing is inconsistent at best. All indicators show that the industry is well on its way to embracing eMortgages and on a trajectory to going fully digital. Jim Paolino, CEO/Co- Founder, LodeStar Software Solutions: I don't believe we'll ever achieve a mortgage process that's "human- free." And I don't believe that we would want to. What homebuy- ers—especially millennials—really want is to be spared the email upsell or time-wasting conversa- tion on the phone with an LO (such as for data collection that could be more easily and conveniently handled via docu- ment upload). I believe we are slowly heading in that direction, although I think we need to put even more investment on automating the "back end" of the consumer facing part of the process. But people still want a person to answer their questions or guide them at the difficult points of the transaction. Homebuyers will always want a knowledgeable, professional human being who understands the complexities of an extremely unique process and how to communicate those, with advice, to the consumer. Sivert: The industry will ulti- mately be forced to embrace a 100% "true" all-digital mortgage process because homebuyers want simplicity, transparency, and convenience when they apply for a mortgage. There was a study from 2017 that showed the aver- age American spent more time researching a flat-screen TV than they did researching a mortgage company. That is a crazy statistic. Now, a human touch will still be needed to be there for the people who want it, but similar to how people trade stocks and invest, getting a mortgage will be a user-driven experience with the human touch acting more as advisors … more of a true digital concierge experience. Sogorka: At Sagent, we empow- er our customers to combine digi- tal simplicity with smart human advice at scale. That human touch will always play a role in the mortgage process, and the right digital tools need to drive that effective engagement with custom- ers—not push it away. On the ser- vicing side, we don't want to lose sight of the fact that our custom- ers serve human beings through good times and bad. Engaging on a person-to-person level, work- ing to understand their situation and intent, and providing them the tools to manage their loans is an absolute necessity for servicers today, and will continue to be so in the future. Louis Zitting, Founder/CEO, MonitorBase: I don't think our industry will ever embrace a fully 100% all-digital mortgage process, nor should it. Getting a mortgage is too emotional and complicated to become fully digital. Rising cases of online fraud have also made consumers nervous about a fully digital experience for something as complex as a mortgage. No doubt, there will be more and more technology made available, but borrowers are still going to need a trusted advisor. It's far more valuable and effective to have a conversation with someone and listen to the different tones in their voice. That's particularly true for minority groups, who are already at a disadvantage if they have a specific question or a unique

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