[1]While compliance has been a major point of focus for the mortgage industry over the last few years, innovation was often put second for the sake of new rules and regulation.CoreLogic [2] identifies a few of the largest tech changes that the mortgage industry [3] has implemented in their businesses as a result of new regulations like the TILA-RESPA Integrated Disclosure (TRID) rule and the Home Mortgage Disclosure Act (HMDA).
First, the Consumer Financial Protection Bureau (CFPB) brought the industry TRID, which completely changed the way lenders originate mortgage loans and required some revamping of old systems.
"The idea of TRID is laudable and, over time, should be beneficial to consumers and make the home finance process more transparent and understandable," CoreLogic said.
In addition, CoreLogic pointed out that the CFPB is also a huge supporter of eClosings. The Bureau even released a notice in August 2015 stating that consumers could benefit from eClosings. [4]
Borrowers that close their mortgage using an electronic platform typically have a greater understanding toward the process and are more efficient and empowered, compared to those that take the paper route.
“While technology alone will not address all consumer concerns in the closing process, our study showed that eClosings do offer the potential to make the process less complex,” said Richard Cordray, CFPB director. “We expect this pilot project and its findings to help inform further innovation that will be a win-win for consumers and industry alike.”
Lastly, CoreLogic points to the HMDA, which was finalized October 2015, as another big change to technology in the mortgage industry. The rule is intended to provide more transparency and accountability, but will place more responsibilities on lenders.
"Over the past seven years. regulators have significantly altered the way our industry originates and services loans," CoreLogic noted. "For legacy players this has caused a great deal of disruption and discomfort. It has also created openings for new entrants—non-bank originators, private equity and hedge funds, mega-special servicers and now fintech companies."
CoreLogic continued, "These non-banks and new entrant aren't worried about how things have changed. What they are focused on is using new technology to drive inefficiencies out of originating and servicing loans. In 2016 and beyond, this kind of thinking will drive innovation."