BLOG VIEW: The mortgage industry is at a tipping point in terms of technology adoption. Most lenders acknowledge the importance of adopting new technologies, however, many continue to piece-meal solutions together, adding new capabilities and features ad hoc instead of examining the full system. The end result for many lenders is a bunch of various technologies cobbled together with no real strategy, resulting in a Frankenstein-like, garbled platform.
The current market conditions are the perfect time for lenders to examine technology and invest in their infrastructure. Lenders have a unique opportunity during this slower season to re-examine their platfoms and invest in technologies that are scalable and agile will ensure lenders are positioned for success as the market begins to return to normal. Lenders that are truly innovating are the ones that are examining the entire platform together using technology as the foundation for the infrastructure.
The past few years have been an anomaly and what we are witnessing now is the market returning to normal. Mortgage bankers are still not using technology to the fullest. They should be using technology to automate more applications.
Connecting The Dots
Lenders are investing in technology, however, many report that the cost of origination remains high and they are not witnessing the lift promised by innovation. According to industry reports, the industry has reached an all-time high regarding the cost to originate loans – approximately $11K to originate a loan. This is crazy. Lenders are not ignorigin technology, quite the opposite, so why are they not seeing the return? The answer is that many are simply not connecting the dots. Despite the industry-wide adoption of technology, there remains a disconnect between the types of solutions being adopted versus the actual challenges and problems that need to be addressed in the lending cycle.
The industry, unfortunately, has a plethora of technology solutions being offered by organizations that have very little actual experience in the mortgage business. Lenders need to be diligent when partnering with technology providers to ensure those providers have a thorough understanding of the complex operational requirements and intricate nuances of the mortgage industry. In a highly regulated market such as the mortgage industry, it is imperative to partner with companies that have a solid track record of success and also have demonstrated their employees have the domain expertise required to recommend the best solutions for each unique lending operation.
Automation Accelerates Disruption
Automation is perhaps one of the best advancements that offer real, tangible results to lenders willing to embrace new technologies. One primary example of this disconnect is appraisal bias. This is not a new challenge, but rather one that has plagued the industry for many years and despite continued efforts by lenders to adopt technology to address this issue, most still come up short. In recent months, the true gravity of this problem has come to light and is clearly a problem that can no longer be ignored. emphasizes the gravity of the problem, stating that it cannot be ignored. However, she also highlights However, the current market conditions present lenders with yet another opportunity to combat a long-term challenge using automation, artificial intelligence (AI), and machine learning.
One of the current challenges facing appraisals is the barrier to entry. The profession is relatively unknown, and aspiring appraisers face significant hurdles. Appraisals are conducted in much the same way today as they’ve been done for the last 60 years. There has been significant progress, but there remains a long way to go. To truly address the appraisal bias challenges, automation needs to be leveraged to truly connect the various sources of data and miscellaneous information. Information is more readily accessible, and now with the right technology, it can be easily and automatically integrated.
It is going to be a tough time, but for those lenders that are steadfast, those that take this opportunity to invest in technology and automate systems will be successful. Automation enables lenders to do more with less and this is the time to examine current infrastructures and invest in new solutions that eliminate manual, cumbersome processes.
The market is cyclical and when it turns around, lenders need to be prepared. Lenders can’t keep doing the same things that they have done in the past – they must invest in technology that will scale and are agile enough to adjust to the ever-changing lending climate.
Shannon Johnson is touchless lending product manager at Tavant, while Dawn Svedberg is vice president, head of customer success and client partner at Tavant.