Voices

Ex­plo­ration and adop­tion of new tech­nolo­gies is es­sen­tial for achiev­ing strate­gic goals and sat­is­fy­ing the needs and ex­pec­ta­tions of mort­gage bor­row­ers.

National Mortgage News - - Contents - By Andy Hig­gin­botham Andy Hig­gin­botham is SVP of strate­gic de­liv­ery in Fred­die Mac’s sin­gle-fam­ily busi­ness.

In­no­va­tion, dis­rup­tion, change — these words are not gen­er­ally as­so­ci­ated with the mort­gage in­dus­try. But in a dig­i­tal age where con­sumers’ ex­pec­ta­tions are shift­ing, that needs to change. The in­dus­try must pro­vide a faster, less pa­per-in­ten­sive process and give con­sumers more con­trol.

As edge tech­nolo­gies be­come in­creas­ingly main­stream, sev­eral well-funded tech­nol­ogy star­tups are en­ter­ing the mar­ket to en­able the elu­sive dig­i­tal mort­gage ex­pe­ri­ence. The names are now fa­mil­iar — LoanBeam, Cloud­virga, Blend, Roos­t­ify, Finic­ity, For­mFree, Ta­vant, Yodlee, Poin­tServ — to high­light just a few.

This dis­rup­tion is chal­leng­ing some long-stand­ing in­dus­try norms, and lenders on the fore­front of this trend stand to ben­e­fit from lower orig­i­na­tion costs, shorter cy­cle times and a bet­ter bor­rower ex­pe­ri­ence.

Sup­ply chain fric­tion and costly loan qual­ity and com­pli­ance ef­forts have con­trib­uted to a dra­matic in­crease in loan orig­i­na­tion costs. But mort­gages are man­u­fac­tured from the flow of data and funds, mak­ing them a prime tar­get for dig­i­tal au­to­ma­tion. See­ing an op­por­tu­nity, pri­vately funded fintech com­pa­nies have emerged to ac­cel­er­ate the evo­lu­tion of the data-driven, dig­i­tal mort­gage ex­pe­ri­ence.

Within the fintech space, there is a broad range of com­pa­nies with ideas to sup­port var­i­ous lender busi­ness mod­els and au­to­ma­tion needs. Some of these prod­ucts are de­signed to de­liver a col­lab­o­ra­tive bor­rower ex­pe­ri­ence, with an em­pha­sis on sup­port­ing the lender’s on­line and mo­bile chan­nels. Oth­ers func­tion pri­mar­ily as in­te­gra­tors of data and ser­vices across the mort­gage sup­ply chain, pro­vid­ing a one-stop shop while re­mov­ing the need for lenders to man­age mul­ti­ple ex­ter­nal in­te­gra­tions.

Col­lec­tively, they all elec­tron­i­cally cap­ture, or­ga­nize and present data drawn from trusted sources — and then link such data to un­der­writ­ing and other con­sumers of the data to drive au­to­mated work­flow and lender de­ci­sion­ing. The re­sult is a faster, pa­per­less, more ef­fi­cient process that de­liv­ers a vastly im­proved bor­rower ex­pe­ri­ence.

With dig­i­tal, real-time views of col­lat­eral and ca­pac­ity now en­abled, there is grow­ing aware­ness among lenders that they can ben­e­fit by gain­ing more vis­i­bil­ity into the in­vestor’s as­sess­ment of risk at the point of sale.

By ac­cess­ing the re­sults of both govern­ment-spon­sored en­ter­prises’ au­to­mated un­der­writ­ing sys­tems early in the process, lenders can get a clearer pic­ture of all the op­tions avail­able to them and to the bor­rower. And they can also max­i­mize loan fun­gi­bil­ity and sec­ondary mar­ket ex­e­cu­tion, and drive down their cy­cle times and costs.

This idea of run­ning both GSEs’ au­to­mated un­der­writ­ing sys­tems is an in­evitable work­flow in­no­va­tion. Un­til re­cently, it wasn’t pos­si­ble to do this ef­fi­ciently. But now there is an ex­pand­ing list of lenders and mort­gage tech­nol­ogy part­ners build­ing the first gen­er­a­tion of au­to­mated sys­tems to sup­port this con­cept. Fintech-driven in­no­va­tion is ushering the mort­gage in­dus­try into a new era. For lenders, ex­plo­ration and adop­tion of new tech­nolo­gies is im­per­a­tive for achiev­ing strate­gic goals and sat­is­fy­ing the needs and ex­pec­ta­tions of bor­row­ers.

Andy Hig­gin­botham

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