Closing the Gap
Early adopters took digital mortgages from concept to reality. What will it take for everyone else to catch up?
It’s been nearly three years since a watershed moment propelled the concept of a digital mortgage into the public consciousness and sent the industry into a frenzy of innovation and investment.
That moment, a 60-second commercial during Super Bowl 50 for Quicken Loans’ Rocket Mortgage, asked the question, “What if we did for mortgages what the internet did for buying music, and plane tickets and shoes?”
“You would turn an intimidating process into an easy one.” While Rocket Mortgage was far from the industry’s first foray into online lending and paperless processing, something was different this time. In the aftermath of the Great Recession, massive regulatory changes upended how business was done. New processes and tools were needed to manage these compliance requirements. Everything else was an afterthought. As a result, an industry notorious for being technology laggards found itself even further behind.
But by the time 2016 rolled around, conditions were improving. Most of the new compliance requirements had been implemented and the “new normal” had set in. Lenders, and their technology vendors, finally had the time and money to invest in improving the borrower experience.
Practically everyone understood what a seamless, digital experience would mean for the industry. Getting there was the hard part. The four-part series that follows examines key digital mortgage developments and explores the untapped opportunities that remain.
While the embrace of digital mortgages has been swift among many early adopters, questions about value proposition and operational complexities continue to vex the broader industry.
Fannie Mae and Freddie Mac’s efforts to automate originations with third-party data may prove crucial as lenders continue to face pressure from rising costs and thinning margins. But while lenders may see the value of these initiatives, many are slow to commit.
Digital mortgages are great for the first 30 days of a borrower relationship, but what about the potentially 30 years after that? Or when a borrower comes on hard times? Embracing digital mortgages in servicing may prove valuable to borrowers and servicers alike.
Finally, as mortgages rapidly become more modern, compliance requirements aren’t moving quite as quickly. But recent efforts by the Treasury Department may soon open the door for improved dialogue between industry practioners and their regulators.