Taking the Bait

TheMReport — News and strategies for the evolving mortgage marketplace.

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Th e M Rep o RT | 27 Feature T he television commercial opens with a wife and husband on Skype discussing the kind of house they want. They consider one house that the husband rejects because of poor school ratings. The second house doesn't have enough bedrooms for when his parents visit. They finally agree on a house and buy it. When the mother and daughter swing open the door to their new home, Dad, dressed in Army fatigues, is standing there holding a bouquet of flowers. Technology is doing more than changing the way Americans house hunt. It's totally remodel- ing the entire mortgage process. Starting with finding a house and going all the way through settle- ment and servicing, the mortgage industry is in the midst of an electronic transformation. Thanks to advancing technol- ogy consumer portals, e-delivery, and e-signature tools are making paperless mortgages a mainstream business practice. Those same advances have whittled process, procedures, and practices that once dragged on for weeks, down to days or merely hours. "There are several pieces of lending technology that are hav- ing a significant impact on the efficiency of the industry," said Kelli Himebaugh, corporate VP at Mortgage Builder Software, maker of mortgage loan origination and servicing soft- ware systems. "Starting from the beginning of the process with consumer portals that allow for much faster, streamlined interac- tions with borrowers, there have been great strides made with regard to the levels of sophistica- tion these tools provide." And after the 2008 real estate crash consumers, are wary and demanding more information about the lending process. They want to know where their ap- plication stands at any given moment with ready access to the data. And in the age of smart- phones and tablets, they expect questions, answers, and decisions at the speed of the Internet. "There is no trust anymore so we are really back to this model where we want to exchange in- formation in real time," said Kim Weaver, leader of the electronic lending team at Fiserv, a pro- vider of information management and electronic commerce systems for the financial services indus- try. "And with the additional regulation, there are additional steps in the process." Those extra steps come courte- sy of the Dodd-Frank Wall Street Reform and Consumer Protection Act and more specifically the Consumer Financial Protection Bureau (CFPB). Lenders are now responsible for proving they are compliant with a law—a law designed to protect consumers. "There are huge demands now that are being placed from a regulatory and compliance point of view from organizations such as the CFPB," said Barry Moylan, head of global sales and market- ing at Aspen Grove Solutions, a provider of property enterprise software. "There is a lot of pres- sure and oversight particularly on large banks and financial institu- tions and how they manage and protect the consumer." Given the amount of data gen- erated, analyzed, and exchanged during the processing of a mort- gage, it's all but imperative that lenders complete the transition electronically. To stay competitive, end-to-end electronic lending is no longer the future. It's the present. "I think the day is coming rather quickly that you will not have to leave your old house to sign papers for your new house," said Michele Harbinak-Shapiro, a financial services expert with Hyland Software, maker of OnBase, a document management technology. "I think more people expect quick access. More people are expecting that type of service." From Himebaugh's perspec- tive, the past decade has been an era of interesting metamorphosis for the mortgage technology in- dustry. Not so long ago, lenders readily stitched together different, off-the-shelf "best of breed" tech- nologies to attain the solution they needed. Today, however, lending insti- tutions are more likely to partner with a software provider that offers a complete, end-to-end suite of solutions. And for good reason. By definition, marrying disparate solutions came with built-in prob- lems and serious data limitations that caused lots of errors. "Tools that facilitate report- ing and instant access to loan data and pipelines are extremely important to today's lenders," Himebaugh said. "Especially in light of today's regulatory environment, lenders need to have their data in order, not only to mitigate compliance concerns, but also so they can monitor and maximize their pipelines in a tight market." The new regulatory environ- ment, overseen and audited by the CFPB, requires banks and lenders to provide extensive documentation for each loan from start to finish, a huge paper burden that can quickly run up costs. Those costs and require- ments have encouraged a wider adoption by lenders of electronic document management systems. "With the new regulations in place, there are more steps that all lenders now have to do that is adding time back into the process Looking Forward As technology continues to evolve, companies are finding tools and resources to increase efficiency while ensuring accuracy. By Robert Calandra

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