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Mortgage lending built for speed

Jan 6, 2021 / Consumer Banking

As mortgage lenders strive to keep pace with the growing swell of refinance and purchase activity driven by historically low interest rates, technology is taking on unprecedented importance.

Before the pandemic, many lenders were interested in a more digitized mortgage process – they recognized that technology could help them close loans faster, increase operational efficiencies and margins, and improve the borrower experience. Current economic and market conditions have accelerated the need for these automated solutions. These digital solutions are quickly becoming table stakes in the increasingly competitive mortgage marketplace.

The best tech-enabled mortgage services go well beyond mobile and online application to include digitized appraisal, title and closing services. Although much of the industry currently enables consumers to apply for mortgage loans electronically, subsequent activity is often taken offline and into a more traditional and time-consuming process. While that may have been acceptable to homebuyers back when it was the only game in town, consumers expect more advanced options today. They’re seeking a fast, easy, seamless experience that meets their needs while respecting their personal space.

Social-distancing guidelines have created a need for virtual closings. Even before COVID-19 emerged, consumers expressed a desire for e-closing. A survey recently conducted by Javelin Strategy and Research at the request of ServiceLink found that one of consumers’ chief complaints about the mortgage process was the number of physical forms that must be signed at closing.

The survey also found that:

  • 89 percent of consumers agreed that e-signatures are easy and convenient
  • 88 percent agreed that e-signatures save time in large transactions like obtaining a mortgage
  • 79 percent expressed interest in using e-signatures specifically for mortgage applications

This interest in e-signings has evolved into genuine demand for virtual closings as social distancing has become our reality.

As millennials establish themselves as the primary market for mortgages, expectations for speed, control and transparency continue to rise. Millennials have taken hands-on control of virtually every aspect of their lives using technology; they expect no less from their mortgage experience.

“Consumers see how other industries are using technology to radically simplify the purchase experience, even for high-ticket items,” says Kiran Vattem, executive vice president and chief digital and technology officer at ServiceLink. “In the market for a Tesla? You can customize, order and finance your car, and have it delivered to your home within three weeks. Or pick one from inventory and get it in four days. Consumers want buying or refinancing a home to be just as fast and painless.”

The sheer volume of refinances and purchases puts great demand on lenders. As activity mounts, mortgage lenders are racing against the clock to lock buyers in and process their loans.

Fortunately for lenders, they don’t have to invest tremendous amounts of financial or human capital in technology development and implementation to get up to speed quickly. Tech-focused settlement service partners specialize in digital mortgage solutions that remove pain points and friction for consumers.

For example, consumer-facing scheduling technology automates the appraisal and closing processes to trim days off the loan cycle while delivering convenience and transparency to the borrower. Where appraisers and closing agents previously spent days emailing or playing phone tag with homebuyers or their agents to schedule appointments, easy-to-use apps now enable the borrower to select from available agents, dates and times, and immediately schedule appointments. Appraisers’ and closing agents’ time can be allocated more efficiently, too.

Virtual home inspections also offer a cutting-edge opportunity for digitization and modernization. Lenders can use self-inspection applications, which in some cases include geo-fencing and room identification to prevent fraud, to streamline a variety of lending and servicing processes, including home-equity lending and portfolio management.

Some closing applications also include virtual signing to address social distancing concerns. Agent and borrower meet through a video session and use remote online notarization in which the borrower e-signs and the notary e-notarizes the closing documents.

Lenders have a huge opportunity to operate more efficiently and profitably, and to create a differentiated consumer experience by fully digitizing their mortgage process. The key is identifying a settlement service partner with solutions that fulfill customer needs and enhance mortgage delivery.

Dave Steinmetz is division president for originations services at ServiceLink.

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