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Process improvements are the next step
toward digital mortgage nirvana
The introduction of Fannie Mae’s Day 1 Certainty initiative this past
October provided what Fannie Mae Chief Executive Officer Timothy
J. Mayopoulos described in a press release as “a major step forward
in helping [lenders] transform the mortgage origination process.”
The initiative provides unparalleled access to income, asset and
employment validation, freedom from representations and warrants
on appraised values and enhanced waivers of property-inspection
requirements on refinances.
Compared to just a year ago, the level of automation and efficiency
in the mortgage-loan origination process has vastly improved and
is now far greater than the industry has ever seen. This is perhaps
nowhere more evident than in today’s digital mortgage process. And
yet, signing printed mortgage documents at the closing table is still
the norm and seems to require more paper than ever before. >>
Illustration by Dennis Wunsch
Vice president and vertical-marketing leader
Equifax Mortgage Services
BY SETH KRONEMEYER
View these articles and more at
“Online Lending Is the Future,”
“Technology Can’t Replace the Human Touch,”
“The Divine Promise of Paperless,”
Carlos Sa is the head of information technology for Mortgage
Network Inc., based in Danvers, Massachusetts, one of the
largest independent mortgage lenders in the Eastern United
States. Reach him at email@example.com.
DIY Lending Websites
Do-it-yourself digital mortgages can be job killers
or an originator’s best friend
By Carlos Sa
Robots have been showing up quite a bit in the news lately. Not the robots themselves, per se, but the steadily growing impact of robots on the global workforce.
Accounting and professional services company
PwC found that 38 percent of jobs in the U.S. will be
automated by the early 2030s and that 61 percent
of workers in the financial-services sector could be
replaced by machines. Of course, we’ve heard that
mortgage professionals will be replaced by technology for some time. These rumors have persisted even
while the strengthening economy and the current
regulatory environment have increased the size of
the industry workforce.
The latest culprits in this ongoing debate are
do-it-yourself, or DIY, mortgage websites, which let
borrowers submit basic key details about their financial profile and get preapproved for a mortgage loan
in minutes. When borrowers do the work themselves,
who needs a loan originator?
It is true that these tools can lighten the workload
of originators, as well as processors and assistants.
Eventually, taken to the extreme, such technology is
likely to reduce a mortgage company’s overall workforce. They probably do not spell doom for originators,
however. In fact, DIY websites may be an originator’s
Not for every borrower
Digital mortgages are a big deal because they make
getting a mortgage much simpler. The truth, however,
is that the mortgages aren’t simpler at all. Only the
process has been made easier — and only for borrowers for whom digital mortgages are a good fit.
A digital mortgage experience isn’t for everyone.
Even borrowers who enjoy doing things themselves
often end up needing extra help down the line. That’s
because there are a number of common hurdles to getting a mortgage — both expected and unexpected —
that a website alone cannot help borrowers overcome.
If a borrower with a not-so-great credit score is using
a self-service mortgage website, for example, the web
app may halt the preapproval process and refer that
borrower to an originator. This can be a good thing for
everyone. By asking additional questions, the originator could find out the borrower actually qualifies for a
mortgage because of other factors.
Of course, many consumers simply do not want
to get a mortgage without talking to someone.
Americans have been able to file their taxes online for
decades, yet a majority still choose not to. Homebuyers
who have questions about a mortgage generally won’t
want to ask a website. They want someone to talk to.
There’s no evidence that the majority of borrowers
Clean your plate
are suddenly going to switch to a DIY mortgage ser-
vice overnight, which means there still will be plenty
of work for originators to do. Of course, if you don’t
like doing all that paperwork, you may be glad a
borrower portal is handling it.
For years, loan originators have been responsible for
collecting all of a borrower’s financial information,
including bank statements, paychecks, tax returns and
more. Every year, the amount of information being collected seems to increase. But why is it the originator’s
job to collect this stuff anyway? Shouldn’t an originator’s job be to sell loans and help borrowers?
In this sense, the current wave of DIY mortgage websites is the best thing to happen to originators. These
sites enable borrowers to upload all of their financial
information themselves, or even allow their financial
data to be retrieved automatically and securely.
With new online tools, there really is no reason
for originators to be in the data-collection business.
Instead, their time is freed up to talk to clients, offer
strong counsel, help find the best possible loan product for each borrower’s individual goals and answer
any questions along the way.
The bottom line is that digital mortgage tools can
supplement an originator’s value. By taking work off
their plates, these DIY sites actually can help originators compete for more business.
Offer customers more
Although some borrowers will not be interested in
getting preapproved through a website, there is no
doubt many will be — and their numbers will continue to grow. This is especially true as more millennials enter the housing market. This group has spent
their entire adult lives buying, selling, communicating
and even meeting each other online.
Most banks no longer even require customers to
deposit checks in person, nor do most investment
brokerages require customers to buy stocks, bonds
and mutual funds that way. It’s simply too much of
an inconvenience to drive to those places to do business. Financial companies that don’t allow customers
to perform these actions online won’t survive because
someone else will offer this convenience.
Mortgage companies are no different now. As the
mortgage transaction becomes more transparent,
borrowers will feel more comfortable doing the work
themselves. Eventually originators will want to be able
to tell their borrowers that, yes, they can start the process online themselves. In fact, it will be considered an
advantage to work with a company that offers a self-driven option to borrowers.
We are already seeing evidence of this. During recruitment, the best-performing originators pay close
attention to a company’s technology. They want tools
that can make their jobs easier. Digital mortgage technologies do exactly that, because they can accelerate
and increase an originator’s ability to close loans.
n n n
Today, DIY mortgage technologies are not limited
to just the very large lenders. They are quite accessible to mid-sized mortgage companies with the time,
energy and resources to improve the borrower experience. To co-opt a phrase, digital mortgages are not
“rocket science.” But for the companies and originators who embrace them, they are likely to help business blast off. n