The borrower experience is important, and goes beyond the transaction itself. What should lenders do to enhance their business?
Providing mortgage loan origination technology for a significant portion of the home finance industry puts us in a good position to observe how lenders are evolving their businesses. With stressors like COVID, rising rates and the inventory crisis all bearing down on the industry, we would expect to see companies changing.
One change we are seeing now is consolidation. I’m not talking about the typical consolidation we see whenever we enter this part of the business cycle (lower originations due to rising rates or some other reason). It’s not just that successful mortgage originators are in the market to acquire other originators.
Today, we’re seeing a different kind of consolidation that isn’t just about growth, but also about the borrower experience.
At this point, no lender would be surprised to read about the importance of the consumer experience during the origination process. Especially in a purchase money market, profitability is directly correlated to how well the lender can keep the borrower satisfied until they get to the closing table.
With today’s borrowers applying with a number of lenders during the pre-qualification process, the one that best executes on the customer satisfaction mandate will be the one who wins the business.
Naturally, as lenders evolve, we’re seeing more leading companies considering the borrower’s experience with the company outside of the transaction itself or even tangential to it. That means that how the consumer is treated during the nurturing process, before a loan application has been completed, and how the borrower feels about the appraisal process become equally important.
As a result, we’re seeing companies acquiring firms that offer products and services all along the home finance value chain. A good example is mortgage originator GO Companies. This spring the company’s CEO Michael Isaacs announced plans to acquire equity stakes in insurance and real estate firms to create a new one-stop shop for homes.
Part of the firm’s plan seems to be providing more transparency into the deal to attract the consumer to look at and engage in other parts of the transaction that provide a higher yield. This is a concept that started years ago and is now moving online. We’re going to see more of this.
To be successful, this type of approach must go beyond just lending strategy. Just having all of the pieces available in one place won’t guarantee success, especially if you can’t manage all those parts effectively. Success has a lot to do with the tech stack employed, but also goes beyond that.
Expanding your business for a better customer experience makes a lot of sense as long as you don’t actually lose your focus on delivering that excellent borrower experience.
By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence
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