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Technology is becoming one of the single most important aspects and drivers of growth in the housing industry. Originators, servicers, investors, and others in real estate need to ensure that they are implementing different technologies within their businesses.
A whitepaper released by Berkery Noyes Investment Bankers shows the impact that technology has on the mortgage sector.
In the past, the housing industry has been slow to innovate, but recent years and additional regulation has brought about the need to streamline business operations, the report said.
John Guzzo, author of the paper, stated that there are five key trends that are currently impacting both the real estate and mortgage sectors:
1. Additional compliance expense for vendors
2. A constricted mortgage market
3. The convergence of real estate and mortgage technology
4. Acquisition or creation of products
5. Acquisition or organic growth of customers
Guzzo points out that regulations like the TILA-RESPA Integrated Disclosure (TRID) rule and Title XIV of the Dodd-Frank Act requires lenders to meet extra minimum standards before issuing residential mortgage loans and to make a “reasonable and good faith determination” that the borrower will be able to repay the loan.
"This could play a role in originators seeking more integrated end-to-end offerings from technology vendors in order to help ensure compliance and streamline the originations process," Guzzo wrote.
He also says that the mortgage market is constricted due to rising demand and limited supply in many areas, and "mortgage originators are looking for tools to shorten processing times, better manage sales leads, and bolster customer retention rates when dealing with repeat homeowners."
According to the whitepaper, mortgage technology vendors and outsourcers that provide "better quality control, promote process efficiencies, facilitate borrower communication, and improve regulatory compliance" are most sought after by investors and acquirers.
"There are several significant drivers impacting the evolution of mortgage technology. This includes restoring consumer confidence, decreasing the volume of delinquent loans, stabilizing the debt markets and adhering to new regulatory guidelines," Guzzo noted.
The report also outlined some of the new technology options available to those within the mortgage industry. Debt servicers are able to put together different pieces of information about consumers through new database technology. Servicers can streamline their communications to borrowers through the use of mediums like email, text, and complex print/mail options. Lenders and debt servicers have the capabilities to obtain, store, and transfer data about consumer debts. Outsourcing has also become a popular option in the housing sector.
"Each of the trends discussed above are leading to both innovation and consolidation in the market. The real estate and mortgage sectors are still highly fragmented, and further consolidation over the next several years is inevitable," Guzzo concluded
He continued, "Many industry participants will seek economies of scale, critical mass and need to have additional product offerings to enhance their competitive advantage. Lenders, vendors, and servicers will continue to embrace tactical acquisitions to shore up product lines, capture customers, increase market share, and ensure they are prepared for the next wave of mortgage originations."
Click here to read the complete whitepaper.
