TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1491913
18 | M R EP O RT COVER STORY Mark Walser President, Incenter Appraisal Management Lenders need to adopt technolo- gies that enable them to continue streamlining processes, making transactions more affordable, and speeding time to close. For example, as a market recovery occurs and mortgage volume picks up, lenders cannot go back to relying solely on the standard appraisal process, which reduced overall turn times and added as much as two additional weeks to the lending cycle during the 2020–2021 housing boom. They will need the capability to fulfill desktop appraisals—using virtual inspections by trained, profession- al appraisers. Solutions like these also empower lenders to reduce expenses that they might normal- ly pass along to the consumer. With the housing industry seek- ing to stay strong while making homeownership more accessible to everyone, these technologies are a win for all. Louis Zitting Founder & CEO, MonitorBase Lenders will need to invest in automation and AI-driven technologies to gain insights into the behavior and preferences of potential borrowers. This will allow them to target their market- ing efforts more effectively and make more informed decisions about loan approvals. As the mortgage market comes back, business owners operating with a much smaller staff will look to their technology providers to fill the gaps. Is the industry any closer to an all-digital mortgage process? Or do you feel that the inclusion of the human touch during the process will prevent an all-digital process from ever becoming a reality? Danna: We're much closer to a fully digital process than ever before, at least in terms of the data used to underwrite and pro- cess loans. But digital lending is not an alternative to the human touch. Even with all our digital data, from application to close, we'll still be counting on knowl- edgeable loan officers, careful underwriters, accurate appraisers, and personable closing agents to do the work. Angela Hurst Chief Administration Officer, USRES Family of Companies Surveys show that today, bor- rowers lean towards digitization more often. But when it comes to outside-the-box requirements and critical milestones in the process, personal interaction is preferred. Additionally, the mortgage pro- cess remains extremely complex and heavily regulated during the origination process and well into the life of the loan and servicing. Regulations at the federal, state, and local level continue to dictate one to one contact with the bor- rower, preventing an "all-digital" process from becoming a reality. Matt Lehnen CTO, Deephaven Mortgage The mortgage industry has made enormous progress towards fully digital loans. Borrowers can shop for products, apply online, eSign documents, link accounts, and close loans without ever meeting face-to-face with their lender. The differentiator for lenders, though, is the human touch, experience, and comfort that borrowers appreciate. Borrowers want the efficiency of digital processes while knowing that there is a real person on the other side who truly cares about making their dream of owning a home a reality. That's especially true in the non-QM space, where the guidance from expert mortgage brokers and loan officers on different products, features, and terms is invaluable. Levin: No matter how "digital" the process gets, some borrow- ers are always going to want to work with a loan officer to help guide and direct them through obtaining a loan and coach them on product options and finan- cial implications. However, the back-end tasks in the process, like underwriting, should become more automated over time as the technology improves, allowing for a largely digital fulfillment process. Walser: Human touch will continue to be an important com- ponent of closing a mortgage. It's the process that humans use that will change. Take digital closings, for example. Like a contactless appraisal, the idea will be to save paper-processing costs, enable signing anywhere, and preserve the veracity of the closing using technology. There is growing acceptance of processes like these, but change will have to work its way through regulatory and gov- ernmental hurdles. My opinion is that lenders should focus less on trying to get to an all-digital mortgage process, and more on "digitizing" the parts of the pro- cess where technology is ready to bring efficiency and speed. Zitting: The industry is constant- ly getting closer to an all-digital mortgage process, but I still think there is a need for human interaction because the homebuy- ing and mortgage process is so emotionally driven. At the end of the day, people are better suited to guide borrowers through their emotions in order to achieve their financial goals. What advancements in artificial intelligence (AI) and machine learning (ML) will take the digital mortgage process to the next level? Danna: We rely heavily on ad- vanced technologies like AI and ML. They are already embedded in some form in most of our sys- tems, and much of the technol- ogies we employ today. Beyond the mechanical functionality, the next steps are more likely to be about human adoption of our advanced tools. For instance, we have appraisal management technology today that is fully au- tomated and provides expansive data and insight into the quality and performance of the lender's processing team and appraiser panel. Is the lender's appraisal de- partment using this information? Going to the next level will in- volve making the most of today's modern mortgage technology. Hurst: To have significant ad- vancement it requires partnering with regulators to adapt to today's regulatory requirements, and a con- tinued partnership to prepare for the evolution in design, creation, and adaptation of technology sup- porting the digital mortgage space. Lehnen: Transparency between the machine and customers will be key to adoption and long-term success. With a human conver- sation, the unique details of a borrower's situation are discussed first-hand, and questions can be answered in real-time, whereas a machine only has data ele- ments as inputs and a set of decision criteria to reference. For borrowers with simple and straightforward loan scenarios, full automation may be particu- larly useful for predictability and transparency. Providing insight to the borrower as to how decisions are reached can help build trust and long-term participation. In the non-QM space, AI and machine learning can assist by reducing processing and un-