Back to the Future of Lending

By: Paul Wetzel, "Back to the Future of Lending," for CMBA News

The year was 1985. As the DeLorean flew its way into the year 2015, we got a “sneak peek” at what was to come 30 years into the future. With technology gaining momentum unlike anything previously seen with the rollout of personal computers, the internet and cell phones, the future was open to wild interpretation. In the film “Back to the Future”, they ran with this idea, and what we got was extraordinary. Flying cars, hover boards, and self-lacing shoes were all prominently featured in the film. While these concepts may not have come to fruition, many others did.

One example: conference TVs were added as another ambitious example of the potential future of technology. In this case, the film got it right. Not only is video conferencing technology a common aspect of our everyday lives, we can even take video calls from our cell phones.

What can be learned from this ironically timeless movie? Technology continues to accelerate at an increasingly fast pace. For over the past 30 years, the sky has been the limit for technology companies, and the future continues to look bright. For the mortgage industry, the acceleration in mortgage technology has really only taken shape over the past 15 to 20 years. What was once an industry run largely on paper has slowly transitioned into one run on cloud-based, rules-driven technologies.

Such an advancement has been nothing short of remarkable for the industry. An original focus on gaining greater productivity and ensuring compliance is now delivering very real benefits to borrowers. With such tech-savvy consumers, lenders realize they must continue to use ever-advancing technology to make borrowers’ lives easier; if they do not, the consumers will go elsewhere.

The industry has been buzzing over the Millennial generation for the past couple of years. There is no question that this market segment will ultimately dominate the industry, but many Millennials are not yet ready to buy homes. Lenders and vendors alike must stay vigilant as they prepare for this new wave in lending.

The question becomes: Where should lenders start in dealing with Millennials?
There are two simple answers to this complex question.

First, lenders must work towards creating internal processes that allow them to be as streamlined as possible. Tomorrow’s borrowers require speed and responsiveness. By educating staff, creating integrated connections with ancillary services to the core system, and creating rules-driven workflow, lenders can improve productivity. By taking a fresh look at this now that we are post TILA RESPA, lenders can see their cost-to-close decrease, their throughput increase, and overall business operations improve. Creating and/or revisiting stale metrics designed to track improvements over time will also help track performance and define real benchmarks for future enhancements.

Second, lenders must partner with technology providers that are both forward-looking and stable. Longevity in such a tumultuous industry shows which vendors have been able to keep pace with the times. While most vendors have slowed their focus on borrower-facing technologies in order to comply with regulations – most recently TILA RESPA – we are entering a time that will separate those vendors that are just surviving from those who are thriving. Refocusing development efforts on key initiatives that prepare lenders for the future generation of borrowers will shape the future of the mortgage industry. Take this time to reevaluate your current technology partners, ask for their roadmap, and ask yourself if they have taken your feedback into consideration over the years. A true vendor should ultimately be a partner, working in collaboration to help shape the future of the technology.

We are in a truly transformational era in the mortgage industry. Coming out of period of intense industry regulation and entering uncharted territory can leave the industry wondering what is to come. Fortunately for lenders, it is no secret where the next wave of borrowers is coming from. Finding the right technology to catapult lenders into the future is critical to success. Lenders should work to define business goals now, track to those goals, and ultimately work toward a leadership role in the next 10 years of mortgage lending.