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Digital Mortgages of Today and Tomorrow

Our ability to originate a mortgage loan through a completely digital process is now a reality. We can start the process on a mobile device, underwrite and process the loan digitally and then sell the asset into the secondary market without ever printing anything onto a single piece of paper. However, many lenders may not be leveraging the technology available to them to its fullest potential.

Opportunity: A strong mortgage market

Even with the recent market shocks of COVID-19 and fluctuating interest rates making accurate forecasts difficult, most industry observers expect 2020 to be a strong year for home finance. Fannie Mae, Freddie Mac and the Mortgage Bankers Association are all forecasting another good year in terms of loan volume. MBA has predicted that mortgage loan volume will climb to $2.06 trillion in 2020, making it the best year for lenders since 2007.

Also, lender profitability has rebounded from a net loss of a few hundred dollars per loan in 2018 up to a reported net gain of $1,675 on each loan originated in the second quarter of 2019. This performance was the best recorded in nearly three years.

While investing in borrower-facing technology has been a high priority for lenders over the past few years, this high-volume market may reveal inefficiencies and a lack of adaptability with their LOS.

5 critical rules for success:

Making sense of actual technology requirements and charting a profitable course forward can be extremely challenging. Lenders who take these concepts to heart will be better positioned to navigate the new mortgage technology environment.

1: Any technology you own today is being underutilized.

Making additional investments in tech tools before you fully explore the capabilities of your existing investment will waste both time and money.

2: Any technology you own today will need frequent tuning.

Just because an existing tool isn’t performing at a high-level today doesn’t mean that the tool is incapable of doing so. For instance, many lenders might be facing bottlenecks while working in today’s remote climate. However, their LOS may have modern digital capabilities that they aren’t leveraging that can make remote work possible, including eClosing, cloud computing and AI. Modern technology is highly configurable and small changes in the way a system is set up can have a significant impact on the result.

3: Don’t shop for technology, shop for expertise.

Expert developers must think through the problems before the code is written, and that can only happen if your technology partner has the required expertise in-house. Buying technology before ensuring that this expertise is available from your prospective partner could be a critical error that costs a lender.

4: Think outside of the shop.

Innovation is a collaborative art and lenders who learn to reach outside of their enterprise in search of innovative ideas will always be more successful. This is especially true if they can identify partners with deep domain experience and a set of industry best practices that can serve as a template for executing on new ideas.

5: Don’t make this journey without a trustworthy guide.

There are solutions available to everything discussed in this article. It only takes an experienced team and the right technology to unlock those solutions.

The most forward-thinking mortgage executives have already realized that digital is quickly becoming the price of doing business, and the priorities of the last few years are fast becoming the table stakes of the future. Continuous innovation is now a competitive mandate.

About Author: Peter A. Espinosa

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Peter A. Espinosa is CEO of Mortgage Cadence, an Accenture Company. His firm provides mission-critical loan origination technology to banks and credit unions.

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