Web3 Is The Future of Mobile Mortgages

For Lenders, It’s a Wake-Up Call

Until now, mortgage technology companies have been worried about lender pain points instead of the customers. The fact that the customer experience and complaints haven't changed much in 20 years is evidence of mortgage technology being focused in the wrong place. 

Lenders should be more concerned with delighting their customers with an ideal mobile experience. Steve Jobs said it best when he said that new customer experiences change markets—that’s why he helmed the most valuable company in the world; one that sold a complex product so easy to use it didn’t come with a user manual. 

In view of rising mortgage rates, lenders need two things to win the future: an Uber-like customer experience and low rates. Mobile is the only enabler of a new mortgage experience, and Web3 automation drives the ability to lower acquisition costs and offer lower rates. And considering where rates are headed, buyers will be ultra-rate conscious for the foreseeable future. 

With this in mind, it’s clear that we’re at an inflection point—some will fail while others scale, and those who leverage Web3 mobile will have staying power for decades–unlike most “digital” lenders today. After all, digital doesn’t equal a mobile mortgage experience. 

Looking ahead, advanced LOS automation enhanced with Web3 is already speeding up these processes–and with startling accuracy. It’s as if AI is the brain of a very smart robot, and a smart contract is the decision-making mechanism–the second key component for solid, reliable loan approvals. 

The Wrong Kind of Digital Mortgage

And so, you may ask, why isn’t the AI/blockchain combo everywhere? 

So far, the problem has been this: Attempting to redesign and repurpose the latest mortgage tech for today's mobile consumer is a lot like turning the Titanic or trying to turn a battleship into a speedboat. It’s easier to start from scratch by rethinking the entire thing. 

For the past 20 years, some technology companies have been trying to figure out how to automate loan origination, but the one thing they’ve never moved away from is the trust component placed on that human loan officer, along with the process dependency on the processor. It’s a point of contention with many banks.

The fear is that a lack of human review will increase the inherent risk one engages in when lending—i.e., if you disposition a file incorrectly or render an inaccurate decision of credit, there’s liability. Nobody wants to get stuck in an agreement that they don’t actually agree with, not to mention the monetary aspect of some mistakes.  

Ironically, the surest way you can actually lower that risk is to employ a smart contract at precise moments in the lifecycle of data that handle critical qualifying information that impact pricing. Blockchain has no human biases, no data misreads, and is fully encrypted before it’s ever executed. In fact, the blockchain itself doesn’t know what it’s looking at, as it’s buried in the strictest bank-level encryption.

Despite all the checks a file goes through prior to closing, human error is still the #1 cause of defects, cures, buybacks, and lender liability. This is where blockchain is different: you can trust it. Humans make mistakes, but in code we trust. 
Silicon Valley has a lot of smart software engineers with a lot of funding, but the question has to be asked, why hasn’t the industry been impacted with an Uber-like moment yet?  

The reason is two-fold: 1) Lender resistance to major change, which impacts the second reason, 2) Mortgage technology companies making software they can sell. This software is not innovative, which is what the industry and borrowers desperately need. This is also why the industry hasn’t been truly disrupted by mobile.

These brilliant engineers operate with the fear that they can’t be too different or else the lenders won’t use them. Even worse, they don’t intimately understand either the mortgage process or the borrower. They have no vision for changing the industry—they just want to alleviate aspects of the journey in order to make as much money as possible as quickly as possible for their VC backers.

Unified Tech Stack 

The mortgage app of the future is a single, unified tech stack oriented around the underwriter, not the loan officer and processor. No more independent point-of-sale and LOS. Each data touch point will be optimized around Web3 capabilities to automate data faster and better than a loan officer or a processor. 

With a Web3 enhanced LOS, cycle times are reduced, acquisition costs are lowered, and the most important person in the process—the underwriter—is given central status. 

The Hard Part

Mortgage professionals have been resistant to the very change that would cannibalize the industry, and who can blame them?

As with all advances in automation, there will be impacts to the industry as an estimated 70-80% of mortgage jobs get eliminated, much like robotics replaced the assembly line worker. 

The digital mortgage designs that are constructed with a loan officer and processor in mind are doomed for failure. In fact, the key to automating the origination process is to eliminate the historic dependency on the loan officer and the processor.

Very soon, the only two people needed to originate a mortgage will be an underwriter and a closer. 

Lenders using a loan officer and a processor will almost always be abandoned for the lower rate mobile option, the same way customers gravitate to Uber, Robinhood, Carvana, and many other apps. 

It’s a bittersweet loss because the current customer experience has been a bad tangle in many ways. Banks and lenders info dump with a barrage of emails and documents, creating confusing, stressful, and complex hassles for new buyers. Yes, there are good and bad loan officers. And yes, the good ones know how to manage your expectations and get your deal done—they also know the pitfalls and landmines and how to handle them. 

The trouble is—when it comes to loan officers you may not get a good one, and if you get a bad one, then what? You’re stuck.

Web3 is already here, and the more that lenders use it, the smarter these LOS’s will get—a rapid acceleration that will ultimately render the old model obsolete.   

It’s important to remember that 5 out of the top 10 lenders in America today were not around 10 years ago. Lenders ignoring this advanced LOS design with Web3 and a new mobile customer experience are the walking dead. They just don’t know it yet.