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If there’s one overarching lesson to take away from 2018 Digital Mortgage Conference last week, it’s the need for brokers and lenders need leverage the online consumer experience in order to compete.

That’s what makes the sheer number of brokers and lenders who aren’t hooked up with the latest in mortgaging tech (the enterprise technology) so staggering. Many cited the complexities of digital mortgages and the magnitude of expenses as a reason to steer clear. However, one of the main messages of last week’s conference was that brokers and lenders must align with strong tech partners to ensure a position at the top of their field.   

Bill Emerson, the Vice Chairman of Quicken Loans highlighted an urgency to cease viewing digital mortgaging as an expense. Instead, stressed Emerson, the digital platform is an investment into the lasting success of brokers and lenders. According to the confident Vice Chairman, the mortgage industry moves at breakneck speeds and waiting too long to reap its benefits could leave your business straggling behind.

Catalysts for Digital Mortgages

– KPMG ran a poll that showed an overwhelming need for the optimal borrower experience. It topped the list for reasons why the audience prefers digitalization. Operational efficiency gains, cost reduction, and quality improvements were the other main factors driving towards the newer tech.

– According to Anthony Hsieh, the founder of LoanDepot, the new mortgaging technology is integral in driving down the price of labour.

– Emerson claims 300 pages of documents were needed for the standard mortgage in the United States prior to the housing crash, compared to 800 pages today due to new regulations.

– Via utilizing e-closings, larger lenders will save millions of dollars per year.

– The majority of the live audience at the event leaned towards “end-to-end” digital mortgages taking over as commonplace in as little as 2-3 years.

– NBER. J.D. Power hypothesized the digital application growth rate in 2017 was 54%. And online loan organizations have shown 30% growth annually in the United States since the beginning of the decade.

How to Maximize the Online Experience

– Hsieh shared data citing that frustration amongst borrowers is almost unanimous in regards to the mortgage process at 97%.

– A key idea pushed was that the mortgage application process should be palatable and simple enough to complete on a small phone.

– As a means to simplify the application process, mortgagers and lenders need to save borrowers as many steps as possible. E.g. limit the required fields to fill in. The more required fields, the more chance of viable borrowers not converting.

– Infutor, a U.S.-based company who spoke at the event, has the technology for lenders to pull up through information on new clients with simply a name and e-mail. Though, they may need one more piece of ID data to proceed.

– DocuTech believes an authentic digital mortgage hinges upon an e-closing.

– Digital mortgages have evaded the majority of governmental bodies to this point. However, lenders and brokers can force the hands of governments by digitizing the mortgage process as much as possible, believes DocuTech. If you haven’t hopped on the bandwagon, and still don’t even allow e-signatures on commitments, you’re actually 2-3 years late to the dance.

– During LendingConnect.com’s presentation, they emphasized the importance of pre-filling data, ensuring that customers aren’t facing the inconvenience of re-filling the same data.

Will There Still Be a Place for Underwriters and Loan Officers?

Emerson is of the belief that even with the changes in tech, loan officers are here to stay, but more and more people will lean towards a virtual loan officer instead of a human.

– Francis Lobo, the President of Cooper Labs, equated the future of loan officers with the current climate for taxi drivers having been trumped by Uber and its similar platforms. While digitization will ensure the mortgage process’s efficiency and commoditization, loan officers will still have their purpose.

– Underwriters will also be affected by the proliferation of technology, considering a platform such as “AutomatIQ Borrower” can do the following in seconds.

– take digital source documents (like tax statements, bank account statements, etc.) then load them into the system.

– utilize algorithms to analyze data and use to confirm down payment income. It can even survey tax filings and decipher income from other funds

-check credit

-calculate debt ratios and implement lender policies and guidelines

– automate the approval decision.

– Mortgage digitization with evolving over time, and not be an overnight sensation, explains Emerson.

– Interestingly, it was pointed out that automating the entire process – eliminating humans – could remove competitive differentiation throughout the mortgage landscape, removing options and variety (ie. Those who appreciate the personal, human relationship).

– If tech tools increase the productivity of top loan officers, the bottom tiered (60%) will find other careers, says Garth Graham, Senior Partner at STRATMOR Group. 40% of originators do 80% of mortgages.

Top Sources

– 20% of realtors are responsible for 90% of real estate business in the U.S.

– Emerson claimed that 95% of people being looking for a home digitally.

– The more digitally influenced market of the future will reduce the importance of realtors in the mortgage process. By utilizing cellphones, consumers will decide on their own lenders—a reality that’s been a catalyst for increased lead-buying, which is starting to gain prominence in the States, more so than Canada.

– Today, it’s believed that 92% of borrows do their research on mortgages on the web as opposed to the 57% of two years, showing startling growth. 72% are seeking the best possible rate, and 59% are trying to find how much money they can qualify for.

– Consumers want to stay anonymous.

– Approximately 90% of borrowers are solicited by competing lenders or brokers.

– The earlier lead-buyers can touch clients, the more they can influence borrower mortgage. decisions. It’s integral to communicate constantly with the borrower until closing.

 How to Ensure Success

– Daryl Grant, KPMG’s managing director of lending transformation explains that digital mortgages will be “table stakes” before we know it.

– It’s believed by some that capturing customers early with a 100% digital mortgage service will take over the marketplace for generations.

– Digital mortgaging should integrate with a variety of more traditional services such as realtors, home inspectors, and moving companies etc. This will make the digital process a full-stop shop in supplying the most convenient, stress-free, complete consumer experience. For this reason, Quicken Loans has partnered with Real Estate moguls, Rocket Homes.

– Mortgage Coach illustrated how the products with the lowest rate are not necessarily the most cost-efficient product.  Comparing current and future cost of two-plus mortgages is known as total cost analysis (TCA), and it’s a necessity when it comes to closing leads. The TCA should be easy to understand and communicate. Mortgage Coach highlighted the need to send video TCA presentations to borrowers.

– Emerson made clear the need to act now, because your competitors are, and you’ll be swimming upstream if you wait too long to truly please customers with the best experience.

Why Contact is Crucial

The best way to cultivate leads is with consistent communication. Top lenders are aware of a lead’s journey from beginning to end. Every single point of contact should be strategized around a client’s borrowing cycle.

– Today’s client contact should be centered around hyper-personalization. Every single instance of contact should be authentic—not scripted or templated.

– Don’t wait for customers to contact you after giving out a preapproval. While it seems like common sense, it’s a common mistake in today’s climate of online rate shoppers, according to Home Captain. Stay top of mind and establish trust with constant contact.

– Polls display results showing realtor’s lack of trust with direct-to-consumer lender making it even more crucial for these kinds of lenders to being in contact as much as possible.

Person-to-Person

– If the borrower is unsure of their ability to be approved, it’s a more emotional process. So purchase borrowers aren’t as sensitive to rates and more keen to be approved.

– BMO Harris Bank is getting rid of loan officers, highlighting the fact that while loan officers will still exist, there will certainly be much fewer of them.

– When it comes to refinancing, mass emails will become extinct. In an age where analytics caters ads to people’s direct needs, consumers expect the most distinct personalization. It has become more important than ever to make the right borrowing offers at exactly the right moment.

– Take note of how you make contact with customers. Factors such as time and manner of communication can tell you what you need to know. Eg. if they wish to be contacted via phone during the evening.

– Emails to clients need to contain their mortgage information, says LendingConnect.com.

How to Satisfy Millennials

– Emerson believes that millennials are the largest generation ever.

– The first-time buyer boom hasn’t come yet because the average age of millennials is 29, whereas the average age of first-time buyers is 32.

– The first predominant factor for millennials when it comes to the mortgage process is for it to go faster.

– The second most important factor was for borrowing to be more personal. Many young buyers seek communication with people. Though it doesn’t have to be in person.

The Matter of Artificial Intelligence

– AI and blockchain could be the most prevalent technologies in the mortgage industry in the long run, says Steve Brown, a former futurist at Intel.

– There are already artificially intelligent mortgage applications but blockchain is going to take more time. Brown believe eventually it will lead to paperless mortgages

– The Emerging Technologies Panel claims that 72% have utilized voice tech such as Alexa or Siri, influenced greatly by higher-income households with children and younger consumers

– 32% of those using voice-tech do so as a means to ask a question in a search engine

– AI will be most commonly used to assist clients in inputting applications by phone or via computer microphone

– Business development manager jobs will be threatened because speech recognition will be able to assist brokers with answering guideline questions. Brokers and underwriters will call a phone number or live chat, then ask a question about policy, the system will access the answer via its knowledge base, and then will answer via Google Duplex quality language.

– The language will be so complex in Duplex that it will eventually call borrowers, appraisers, lawyers, and title companies to follow up during the mortgage process. Provided a borrower does not answer texts or emails, Duplex can inquire and touch base with clients.

– AI is concerning for many reasons and threatens the perspective and current careers of those in the mortgage industry.

What of Bots?

– Fannie Mae, the housing finance conglomerate, is in the midst of developing a legion of bots for pursuits such as optical character recognition (OCR).

– Lenders, as well as insurers, can apply the benefits of OCR as a replacement for workers who assess and check documents.

– OCR will scan documents automatically while basing the conditions of mortgage files on the contents of the aforementioned documents.

– This will greatly assist mortgage providers as they will use similar tech as a means to automate the review process of uploaded client documents while giving borrowers the most updated set of conditions via online portal instantaneously.

– Fraud cases will be greatly minimized with the leveraging of bots. PayPal, having almost fallen due to fraud, saw fraud detection decrease its fraud rate from 40% of transactions to below 3%.

Last but Not Least

 Customers prefer using the same loan officer. As a broker or lender, you need to ensure agent retention as much as client retention, because losing your best producers means you also won’t have your best lead generators

–  In most industries, it’s an outsider who makes a big change—not current leaders.

All in all, change is coming and it’s coming fast if it hasn’t happened already. And if you’re a lender or a broker and haven’t hopped on the digital train, you’re already behind.