TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1472906
22 | M R EP O RT COVER STORY circumstance and their primary language isn't English. Q: What has yet to be uncovered in terms of mortgage technology by the industry? Has a ceiling been reached in terms of growth? Bossers: The profession needs regulatory consistency. New technologies in the mortgage space are extremely challenging to implement on a nationwide basis because of how the industry is governed. Originators, servicers, and investors must adhere to a library of regulations on the federal, state, and local levels, and there is currently no consistency to it. So, while some technolo- gies are great solutions to some of their problems, they are either not allowed to be embraced at all or cannot be uniformly and ef- fectively implemented throughout a lender's national operations. So many lenders just stay away as the downside risk of imple- mentation may exceed the upside of it. The federal and collective state governments are laser-fo- cused on reducing the consumer's cost to borrow. As a result, we absolutely have not reached a ceiling of growth. We never will. There will always be thought leaders looking to innovate im- pactful technologies to improve the service delivery model in this and every industry. Furey: We've just come off two of the largest production years our industry has ever experi- enced. We're now seeing a major pendulum swing with rising in- terest rates, diminished refinance opportunities, and a housing market that still demands inven- tory. It will take time and market stabilization to return consistent, predictable production levels. This down cycle presents an oppor- tunity to take a step back from throwing people at volume and commit to advancing block- chain, AI, and machine learning technologies that have just begun to scratch the surface of their ulti- mate potential. There is absolutely no reason why upwards of 80% of the mortgage fulfillment process cannot be fully automated. Kahn: When it comes to oppor- tunities to create efficiencies for outdated or manual workflows, the sky is still the limit. There is plenty of room to enhance and improve current technologies. The value proposition of all mortgage technology shifts with market trends, creating more opportunity. During the refi boom, for ex- ample, the stronger value proposi- tion for our products and services may have been speed of process to closing, which of course is still important now, but maybe it's not as high a priority as rates begin to rise. With current mortgage rate increases and lesser volume, cost reduction becomes a stronger value proposition. Whenever there is change, there are new technolo- gies to be discovered to ease the mortgage process. The market is always changing, and that's the time to create those opportunities for growth. Lehnen: Although digitiza- tion has improved borrower and property credentialing, it's often complicated to access and integrate data and files from dif- ferent sources. In my opinion, a ceiling has not been reached in terms of growth. Despite data access and integration challenges, the industry is seeing exciting advances with blockchain and similar technologies—which have the potential to make borrower and property data available to all parties in a transaction simultane- ously. Blockchain is an immutable, secure ledger that others can see on a permission basis. Imagine all parties involved in the mortgage process—borrowers, lenders, title agents, appraisers, real estate agents, attorneys, etc.—all having instant access to this data and being able to access updates in real time. With back-and-forth emails and calls reduced or elimi- nated, the lending process would be transformed. There is great po- tential in taking this a step further by putting borrowers in control. Leonard: To uncover areas for improvement, we must constantly ask why we do things the way we do them. Only by challenging the way tasks have always been accomplished can we identify new and different workflows—all the while balancing the need to still meet risk and regulatory requirements. I think it is impor- tant to examine the areas where technology can be used to truly make more efficient processes— rather than just using technology for processes simply because they exist. By diving deep into the workflows, you can better assess how they can be performed more efficiently and reinvent them. John McGee, President/CEO, OptifiNow: Technology growth in the mortgage industry will never stop. The mortgage process is way too complex for there to ever be a point where technology can't make it more efficient. I think the real issue is whether there's enough acceptance and support in the market to allow a technology innovation to thrive. There are many different parties that must cross a threshold of adoption for technology to gain widespread acceptance. That's why technology advancement tends to be slower in the mort- gage industry, but the potential for change always remains high. Parker: We're seeing greater trad- ing of mortgage servicing rights (MSRs), as well as new technol- ogy that is expanding opportuni- ties for buyers in the secondary and MSR markets. There is also a tremendous opportunity this year and next to build a better network ecosystem for sellers and buyers to find each other in the secondary market. While mort- gage loan commerce is still very one-to-one, single-seller to single- buyer, that trend may be chang- ing this year. In addition, there is room to use digital technology to create buyer-seller connections during the origination process, while the facts of a particular loan scenario are changing, which can ensure greater sales certainty in the secondary market. Zitting: There is still a lot that can be done to make the process easier and smoother, particularly when it comes to sales enable- ment. So far, much of the focus of innovation has been in the areas of taking applications, process- ing loans, and the underwriting and closing processes. There has been some headway made in CRM technology, but most future growth will be in the area of data analytics on consumers and feeding that information to sales- people, which is why sales enable- ment technology will become so valuable going forward. Q: What can the industry expect next in terms of digital and AI processes to move into the future? Bossers: A lot. There are tech- nologies being brought to market that will change how funds are delivered in the mortgage process, in real-time payments, replacing the archaic methods of wire and check delivery that require more attention to mitigate security risks. As data continues to be more and more accessible the flow of data will become easier and more streamlined, thereby shortening production efficiencies, and allowing AI to serve a more powerful role in the origination of loans and in transaction process- ing. This will allow for more fixed process rules to be built into underwriting, which should allow more units per underwriter to be completed. Consumer demand for digital closings will increase, but the methods for that delivery will be different, and originators will need to be flexible as to how they are provided. There will be a con- solidation of tech companies in the space, as the market reassesses the fintech industry, and begins to appropriately value companies on profitability, and not on potential.