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“Technology” is a Catch-All Word

Tech promises efficiency, but adoption, ROI, and borrower satisfaction tell a more complex story.

By Rob Chrisman, contributing writer, National Mortgage Professional

As people (both borrowers and lenders) continue to seek ways to improve life and their bottom lines, the mortgage industry has been one of the most prominent markets needing a technology-powered disruption. The internet is everywhere, and with its all-pervasive rise, mortgage providers (both lenders and vendors) have emerged with innovative ideas for making loans attractive to borrowers, thereby increasing competition, and driving down rates. It has had little or no impact on profitability, unfortunately. How do we make sense of it all?

As background, mortgage technology (“tech”) is the use of technologies to streamline and digitize mortgage operations. This includes using tech for loan origination and processing, appraisal management, and payments. Lenders seek to leverage the power of artificial intelligence (AI) and machine learning to simplify, automate, and optimize the entire mortgage process.

RPA (Robotic Processing Automation, or “bots”) is seeing an increased use in processing, but lenders must have the ability to maintain them, which will increase their ROI (Return On Investment). AI usage is increasing in a wide range of areas: document classification and reading, internal communication and guidelines, underwriting decisions, automating customer interaction, and targeting potential customers.

The press is enthralled with AI. It enables lenders and servicers to create new products, services, and processes to increase consumer access to mortgages, improve the mortgage banking process, and brush your teeth.

Okay, skip that last one. But banks, credit unions, independent mortgage banks, and brokers use mortgage technology to provide better customer experiences. There is mortgage lending software for both consumers and brokers, mobile app development and integration, online and mobile-based loan applications, and digital mortgage platforms. Tech, in theory, also allows the lenders and investors to reduce the time it takes to complete the lending process, increase efficiency, and reduce costs. In theory.

AI usage is increasing in a wide range of areas: document classification and reading, internal communication and guidelines, underwriting decisions, automating customer interaction, and targeting potential customers.

If handled appropriately, the perceived benefits of moving toward a more digital model include increased customer satisfaction, greater task numbers that are able to be completed, and workflow automation. Faster cycle times can be had, as well as enhanced productivity in fulfillment and LO productivity. Increased loan quality would be a nice benefit.

Efficiency and productivity enhancement, however, have overcome borrower satisfaction in terms of focus per a recent STRATMOR survey. It is not that borrower satisfaction has been forgotten, but some lenders say that through a focus on enhancing productivity, borrower satisfaction will increase over the long run. Lenders should realize that it is expensive to produce a loan.

Lenders also know that there are barriers to selecting, implementing, and accepting new technology. The cost and ROI, data security, and difficulty in having employees adapt to change are all considerations, as is the complexity of having employees manage new technology. Often there is a lack of internal adaptation to change, and lenders shouldn’t pay for anything that doesn’t add value. Lenders must drive adoption, and, in general, managing the whole “ecosystem” of mortgage technology is an entire discipline.

If handled appropriately, the perceived benefits of moving toward a more digital model include increased customer satisfaction, greater task numbers that are able to be completed, and workflow automation.

It would seem that the majority of technological advancements have been focused on the front end of the mortgage process: dealing with borrowers. But the biggest gains in digital capabilities are more widespread and help application, processing, and underwriting: Income data service (processing), online approval of applications, online disclosures (impacting applications), borrowers uploading documents (processing), and electronic notary services (closing).

But not all areas of a loan’s path through a lender are seeing more technology. Lenders have experienced a drop in pre-approval letters, appraisal data submission, LO web pages, income extraction, and other functions, possibly because of the cost of this technology. But this is not a trend. The cost is forcing the slowing down of these services, not the elimination of them. In other words, it becomes an “ROI versus cost” discussion. Reductions in tech typically don’t involve technology not working.

Yes, lenders adopt digital processes to support the application, processing, and funding of a loan. But the efforts are hardly uniform. Every lender has one LOS; it is rare to see two. Many lenders have multiple CRMs. Lenders have moved toward having borrowers “opting out” rather than “opting in.” In other words, a borrower has to elect not to use certain technology pieces, rather than opt to use them.

Mortgage bankers that can improve speed, accuracy, compliance, lower high costs, improve security, all the while dealing with large amounts of documentation and a complex process, will indeed survive and perhaps prosper.

The mortgage lending industry is highly competitive, with success often measured by surviving longer than your competitors. Mortgage bankers that can improve speed, accuracy, compliance, lower high costs, improve security, all the while dealing with large amounts of documentation and a complex process, will indeed survive and perhaps prosper. Easier said than done when it comes to a company’s tech stack.