PERSON OF THE WEEK: Ask any residential mortgage lender, and chances are they will tell you that the COVID-19 crisis was a watershed moment in terms of putting digital mortgage technology to the test.
When the crisis first hit in February, mortgage lenders that had not yet adopted robust and fully functional digital lending platforms were suddenly in a challenging situation: How would they be able to attract new business, meet with prospects, and originate and close loans using outdated or deficient digital infrastructure?
Ten months into the crisis, some lenders are still investing in new software and systems – whether core or peripheral – as they react to an evolving situation. Somewhat ironically, their goal is the same as it was pre-crisis: to enable a fully digital mortgage process in order to gain back-office efficiencies and deliver a fast and convenient customer experience. Only now, all of this is on a fast-track: The proper technology was needed yesterday.
Recently, MortgageOrb interviewed Tedd Smith, co-founder and CEO for FirstClose, who offered some tips on what mortgage lenders should be considering when shopping for digital mortgage solutions in the current environment.
Q: What needs to be on a lender’s radar when it comes to streamlining the borrower experience?
Smith: The primary driver that needs to be on a lender’s radar when it comes to streamlining the borrower experience is the speed at which the borrower receives information and full transparency in the lending process.
Lenders need a digital lending platform that provides the borrower with real-time information and the much-needed transparency they crave to close their loan as fast as possible.
Using just a name and address, borrowers are now able to receive the value of their home from the lender’s underwriting perspective, automatically calculate their outstanding balances and receive the amount of money the lender is willing to lend.
With just a few additional pieces of data, borrowers can now receive an instant loan decision within about 30 seconds.
From there, communication between lender and borrower, around the additional information needed to close, is key. Our platform automates every aspect of the lending process and includes a borrower and lender portal that enables the seamless transfer of data, docs and communication in order to close and fund the loan in the most seamless and direct way possible.
Q: Digital transformation is not a new concept to the financial industry. What is new now and what must lenders know in order to make the transformation smooth?
Smith: Lenders must be willing to embrace the digital transformation era, but they do not have to compromise risk. There are so many automated tools and services available to lenders today, and many use them independently, but lenders must be willing to embrace automating the entire journey from “Hello” to “Here’s your Money” in a fraction of the time it used to take.
Lenders can close loans within just a few days, but they need to embrace the digital transformation era in a way that creates an experience they would want – less work, less time and minimal information and interaction.
Lenders should be more transparent about the information they need and/or are able to obtain from public data sources as well as private data and micro-service sources, in automated ways on the borrower’s behalf.
Q: How has the current state of the industry and the race to implement technology affected the cost for lenders?
Smith: The cost of sourcing, underwriting, closing and funding a loan has come way down with the advancements in automated underwriting tools, automated settlement services and point-of-sale digital lending platforms. Lenders, now more than ever, have the opportunity to leverage technology to reduce their costs and create a user experience for their borrowers that is vastly superior to traditional application, underwriting and funding protocols.
Technology can give borrowers the responsibility of entering application data. It can also provide available instant equity reports and instant flood, title, valuation services and income verification.
Q: What should lenders look for now in a business partner to help reach their technology goals?
Smith: Lenders should look for a business partner that can provide a front-end loan application and an end-to-end digital lending platform that enables borrowers to interact with it in a way that automates nearly every aspect of the process while receiving real time responses and full transparency along the way.
Q: What is the most important lesson learned during the COVID-19 crisis that will help lenders positively move forward?
Smith: The most important lesson learned during the COVID-19 crisis is the realization and acceptance of the technology available that can help lenders give control to borrowers, allowing them to provide everything needed to close a loan from home without the need for face to face interaction. Everything a borrower needs to provide, receive and sign, can all be done in a fraction of the time it used to take with pre-COVID-19 methodologies.