By some estimates, half of the 1,200 malls in the U.S. will be gone by 2023. The reality is that a growing number of Americans prefer Amazon over a jaunt to the mall. According to a 2017 survey pub- lished by Statista, 40 percent of U.S. internet users bought something
online several times per month, and one-fifth bought goods or services weekly.
Every mortgage originator knows that the internet is changing the way they do
business. It already has. And things are just getting started. Will what’s happening to retail cause the same havoc for the mortgage industry? Rest assured, the
digital-savvy originator still has a place in this future.
It’s a safe assumption that any borrower today who contacts a mortgage originator has already done some research about the mortgage process online. They
may not know exactly how much they can afford, but they can find out what rates
are available and generally what they need to do to apply for a mortgage.
Their expectations are high. They have been conditioned to get what they need,
when they need it. That applies to practically everything — groceries, appliances,
a plumber, movies and games, Spanish lessons, legal advice, a date, a ride, a car,
you name it. Each of these things can be obtained immediately or almost immediately, except — you guessed it — a home or a mortgage.
Of course, most people don’t expect buying a home to be that easy. They do
expect it to be a lot easier than it was for their parents, however.
It wasn’t that long ago when only a real estate agent or an appraiser could tell
you how much your house was probably worth, because only they had access to
local sales data. Today, anyone can get a home value from a dozen different sources
in seconds, whether they are serious about refinancing their mortgage or not.
Borrowers can do much more than get a value, too. With the emergence of financial technology, software-as-a-service programs, homebuyers can go quite far
into the mortgage process before ever talking to a human being.
They can research and compare loan products, apply for a mortgage and sign
their application electronically. They can order their own credit and access their
income and assets online. They can even calculate fees, access automated underwriting tools, receive initial disclosures and sign them electronically. And they
can do it all in a matter of minutes.
While it’s true that many homebuyers do not prefer a do-it-yourself, or DIY,
mortgage experience like this, they are increasingly outnumbered by those who
do. The millennial generation entering the housing market today grew up with
no experience of life without the internet, and they are poised to drive homebuying for at least the next two decades. Generally speaking, they are not the type to
sit by the phone waiting for a mortgage originator to return their call.
In a DIY mortgage environment, it would seem that mortgage originators have
a very dim future ahead. But a closer look reveals that this is not necessarily the
case — and, in fact, the originator is just as important as ever.
In spite of the growing number of tools and resources consumers have to initiate the mortgage process on their own, and regardless of how simple and easy
the process is made to look online, getting a mortgage is still a relatively lengthy,
complicated process. Beyond being the most expensive commitment most
people will ever take on, a purchase loan or a refinance will have a long-lasting
financial impact on the borrower.
There are many different financing options to choose from and significant hurdles that every borrower needs to jump over in order to get a loan. Then there’s
the emotional roller coaster ride that almost every borrower goes through.
This means borrowers will still need human mortgage experts to guide them
through the process. In fact, even borrowers who choose a digital mortgage
experience still expect and ask for professional advice. The key for mortgage
originators is to augment the online services consumers expect by making sure
they can provide the same level of service offline.
In addition, many borrowers who start the homebuying process online are
doing so with their smartphones. Consequently, mortgage originators must have
the ability to engage and serve borrowers via mobile devices as well. In fact, it
should be a requirement of doing business.
Clients who choose to start the mortgage process online also need immediate
help when they get stuck, or else they are likely to throw up their hands and try
another lender. Mortgage originators need to be able to know when a borrower
is applying for a mortgage as well as the exact moment they run into trouble,
so they can intervene to make sure a prospect turns into a client.
For originators to retain a central role in the mortgage process, they need the
right technology. And the right technology, in this case, is a platform that is
available to and used by everyone involved in creating a mortgage — including
the lender, loan officer, underwriter and borrower.
In other words, the technology that originators use to manufacture loans
should be the same technology borrowers use to start the mortgage process.
It also should be the same technology that the originator uses to connect with
and serve borrowers through the mortgage process.
The problem right now is that most mortgage platforms can’t do this. These
platforms are not easily integrated with other applications, so the originator
cannot provide borrowers with a truly end-to-end digital mortgage experience.
Very often borrowers will submit required financial documents online, for example, but those documents do not make it into the actual loan file, so the originator has no way of knowing the information has been provided.
This puts the originator in the position of relying on the borrower for updates,
which from the borrower’s point of view can be pretty irritating: “The library can
By contrast, when all parties are using the same system, the paper shuffling is
eliminated. Clients send their necessary documents once, they are automatically
added to the loan file, and the originator sees them instantly. In fact, in such a
scenario, the originator is immediately notified every time a client does anything.
They can log into the platform and see exactly what shape the loan file is in and
what remains to be done. Borrowers see the same thing, too, providing both
parties with a totally transparent process.