Lenders capitalize on the digital push

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At the end of each year, it’s human nature to look back and see what went well, what didn’t, and what could be improved. But 2020 has not been an ordinary year, and the number of lessons lenders can potentially learn from the past nine
months alone would fill several books.

But if we learned anything last year, maybe it was that most lenders thought they were much further along on the path to creation.
a digital mortgage experience than they actually were. In fact, a lender’s holistic approach to technology has turned out to be a real one.
differentiator in how they were successful last year. This will likely be the case in 2021 as well. The key is to understand how.

Lessons learned
True, every lender has struggled to adjust to interest rates below 3% and the global pandemic. But their destinies have varied a lot.

Those who had the foresight to invest in more digital cloud-based technologies before the pandemic were in a much better position to handle the huge spike in borrowers looking to refinance, as well as to move their own businesses to a bankruptcy. remote working environment. Many others, however, were caught off guard. Those who found themselves in the latter group generally found it necessary to strengthen their sales and underwriting teams rather than upgrade their legacy technologies, which inevitably
impacted their profitability. Even with larger teams, however, many still struggle because they lack the ability to streamline workflows, increase efficiency, and reduce closing times, capabilities that come with it. more modern mortgage production platforms.

The shift to remote work when social distancing protocols took effect only made matters worse. When branches have closed and
borrowers could no longer meet with loan officers in person, many lenders had to scramble to adjust their operations and find
new ways to attract and maintain communication with borrowers.

While no one could have predicted what happened, the lenders tied to a central location were completely caught off guard.

Some lenders didn’t even have work-from-home procedures and tools to switch to distributed labor and had to implement them on the fly, while trying to keep up with the volume.

Hopefully by now every lender has a much better idea of ​​the value of cloud-based technologies that enable their teams to
work from home and allow borrowers to manage much of the mortgage process themselves, through online applications,
Hybrid or full eSignatures and eClosings. Because the need for these technologies will not go away when life returns to a certain sense of normalcy.

A permanent digital shift
It remains to be seen whether some lenders will revert to the same brick-and-mortar strategies of the pre-pandemic era. But what
It is clear that consumer behaviors have likely been permanently altered as a result of COVID-19.

To one degree or another, every American consumer relies more on technology and self-sufficiency in their daily life than they are.
never had before. It has affected many industries, not just the mortgage industry. For example, few consumers have used delivery
services such as DoorDash and Instacart before the pandemic.

Now it feels like everyone is using them. While the end of the pandemic may cause many consumers to return in person
eat and shop, these new digital businesses were already growing before the pandemic, and it’s hard to see that growth slowing down.

Most lenders have now realized that they will be much more dependent on digital technology in 2021 and beyond. Even without a pandemic, providing borrowers with automated self-service options has become increasingly important to mortgage lenders.

These options will become even more vital in 2021 as more millennials and even Gen Z consumers enter the housing market.
Lenders who have had the foresight to prioritize digital technology and borrower self-service as a long-term strategy two or three
years ago were better positioned to handle the extreme lending volumes that stumbled so many competitors. Their fortune has
has resonated with the rest of the industry – in fact, we are seeing more and more lenders looking to replace
their legacy mortgage software with digital technology like never before, having lived the flip side of not adopting them sooner.

The challenge, however, is figuring out which technology strategy is best. To answer this question, it’s helpful to look at emerging industry trends and the specific tools lenders will need to address them in the coming year.

For example, our own industry is likely to see more businesses entering the space that are only online and fully utilize
digital processes. We can also see more traditional banks and lenders taking a closer look at the rents they paid during the pandemic, when no one was using their facilities, and starting to consider a more distant model that will help their profitability.

For most lenders, it will be crucial to take advantage of mobile technology that provides loan officers with automated tasks, due date notifications, proactive needs lists and alerts on when to follow up. from borrowers.

This way, a lender’s sales team will be able to build relationships with their clients, wherever they are, and streamline the application process.

Self-service technology for borrowers that allows consumers to shop and apply for mortgages, electronic signature disclosures, submit loan documents online, and participate in hybrid or full electronic fences will also be more and more important. Over the past nine months, more and more people have learned about online closing procedures as well as remote online notarizations, which will eventually become the way of the future. However, when we get back to a normal working environment, most lenders will still need this field sales channel. We tell our own clients, because even though we are a technology company, it behooves us to view mortgages as a 360-degree experience. Some borrowers want their hand to be kept throughout the process, while others want to do the work themselves, and always will be. There’s no turning back to delivering a digital experience, but it’s also important to keep the personal touch in mind. Before the pandemic, artificial intelligence (AI) and machine learning were gaining a lot of attention, and it is inevitable that both technologies will continue to develop.

But lenders need to realize that using these tools effectively starts with having the right data. You won’t get effective AI and machine learning results unless you have a large enough data set to enable valid and predicted results. In many cases, lenders are sitting on 20 or 30 years of data. They are only now starting to see the value of data and the ability to use data analysis and modeling to predict things like borrower fallout and the risk of prepayment default.

Coming in 2021

While the ultimate impact of the pandemic remains to be seen, the big story for next year will surely be how it affected mortgage lending volumes and the economy in general. Hopefully this will improve our industry’s ability to prepare for future disasters or disruptions and lead to more time spent on risk analysis and assessment as part of internal strategy sessions.

The other big story is going to be what happens with interest rates and how lenders deal with a possible rate change.
environment. This discussion will focus on how to tap leads and build better and longer lasting relationships with borrowers, realtors, builders and other partners. I think we will also talk about what
regulatory changes have been made with the new presidential administration and how the role of the Consumer Financial Protection Bureau will change and what it will look like.

A year from now, lenders will also be reviewing the impact of the new Uniform Residential Loan Application Form (URLA) on their overall profitability.

Did the new form really help borrowers or lead to greater customer satisfaction? Greater employee satisfaction? I think we’ll learn that in the end the new form itself won’t have much of an impact, but how well the lenders have implemented the form to create more digital processes certainly will.

Ultimately, 2020 will be a pivotal year for mortgage lenders. It remains to be seen whether the events of the past 12 months will prove to be effective in inspiring long-term – and long-needed change. I hope it will, and I hope we never face another crisis like COVID19. But if lenders have ever wondered if digital technologies are really making a difference in their businesses, I doubt they still wonder.


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