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Mortgage Cadence's user conference, Ascent, aims to improve Borrower Experience with lenders & best-in-class service providers.

In April, a group of top lenders and best in class service providers from all over the country traveled to The Broadmoor in Colorado Springs to attend Mortgage Cadence’s annual user conference, Ascent, with the common goal of improving borrower experience. The three-day conference provided attendees with a variety of educational sessions, networking opportunities, and access to Mortgage Cadence staff. We were also sure to leave enough time for attendees to enjoy some Colorado craft beer while fly fishing amidst striking views of the Rocky Mountains.

The first full day of the conference focused on the hot topics impacting the industry today, including how to market to a new generation of homebuyers, GSE transformation, blockchain, and enabling a digital borrower journey. Highlights included Pamela Herrmann, VP of Marketing and Chief Storyteller at Mortgage Cadence, and Michael Malinowski, Accenture Thought Leadership Research Senior Principal, revealing the results of the 2018 Borrower Survey, a research project between Mortgage Cadence and Accenture. With a dynamic keynote presentation from Carla Harris, Vice Chairman of Wealth Management and Senior Client Advisor at Morgan Stanley, the audience was enlightened by her perspectives on the value of diversity in mind, experience, and ethnicity in the workplace.

Day two focused on Mortgage Cadence specific content, including the company’s next-generation plans and future product roadmap. While Loan Officers, System Administrators, and other key employees attended deep-dive sessions on the Enterprise Lending Center, Loan Fulfillment Center, Borrower Center, and Collaboration Center, Executive attendees participated in a full day mastermind facilitated by Accenture’s David Helin, Thought Leadership Research Director, addressing the latest research and discussing topics that matter most to the C-Suite.

All the sessions tied back to one underlying message: Higher profitability is tied to key people, fine-tuned process and the right technology working together to create a better borrower experience.

And the message seemed to hit home. One attendee said, “The content was very in tune with the challenges that we are facing in our company,” while another noted that the Executive Track “was a great foundation to building deeper relationships with my peers.”

The conference ended with a bang, literally, as the Denver Broncos drumline performed after the closing keynote.

Next year’s conference will be returning to The Broadmoor from May 14-16 where we’ll be celebrating Mortgage Cadence’s 20 year anniversary.

Improving the Borrower Experience through research and 3 key observations in lending.

Since 2016, Mortgage Cadence has been partnering with Accenture Research, polling American borrowers to determine what they were thinking, feeling and doing as they were moving through their mortgage application journey. In 2016, when we first asked borrowers to rate their borrower experience, more specifically their level of satisfaction with lenders, 45% said they were ‘very satisfied.’

Just two years later in 2018, that number declined to 39%, leaving a staggering 61% of borrowers who are, at the very best, indifferent about their lender’s performance. It’s safe to assume a low likelihood of future business, an online review, or a recommendation to a friend or family member with such a low satisfaction rate. In any commoditized market where customers are looking for the lowest rates and fees, there is only one thing that separates you from your competitors: the borrower experience your organization is delivering.

Most borrowers today aren’t loyal, and their indifference is preventing lenders from achieving real, sustainable growth. The barriers to a better borrower experience, such as a market transitioning to purchase-dominant and the complex regulatory environment, are real. Sales and revenue growth in your lending operations don’t happen without borrowers who are entrusting you to process their loan faster with less frustration. It’s good for them, and it’s good for your bottom line.

ONLY 25% OF BORROWERS ARE FULLY ENGAGED

At a local level, lenders can take comfort in the fact that customers feel better about the relationship they have with their lender. The 2018 Borrower Survey of more than 1,500 U.S. banking customers revealed that 25% obtained their mortgage from their primary financial institution. According to Accenture Research’s 2017 U.S. Mortgage Market Trends, small lenders have, in fact, become a dominant segment, increasing their market share from 19% in 2010 to 50% in 2016.

This suggests a combination of great marketing by small financial institutions, fully engaged customers who want to keep their business with an organization whose employees they know, like and trust and a great technology stack that creates a better borrower experience.

But any investment in your people, process or technology in order to gain market share has to begin with an understanding of the borrowers’ journey from start to finish. It’s through mapping each borrower touch point that you begin to identify where they may fall through a gap.

Explore objectively the mindset and actions of your borrower at each stage; specifically, what are they thinking, feeling and doing.

It is at this point of understanding that you can determine the best investments in people, process and technology that ultimately supports your organization’s strategy.

In the absence of a borrower journey, you’re bound to fall back on digital and automation investments that aren’t designed to be a substitute for the human-to-human connection. This may, in fact, be the cause for a 6% satisfaction drop in two years.

REPLACING HUMANS WITH TECHNOLOGY IS SHORT-SIGHTED

To be clear, 70% of borrowers surveyed don’t care about meeting you face-to-face, however, they do want consistent personalized communication from real humans that things are on track to close as scheduled.

A highly personalized borrower experience that is fast, simple, transparent and secure across all channels, both online and offline, is a universal want of all borrowers.

OBSERVATION #1

If you think you’ve won the borrowers’ business because you have their application in hand, that may not be the case. According to our 2018 Borrower Survey, 49% of borrowers applied to more than one lender, and of those who submitted applications to multiple lenders, 72% did so because they found a better price.

What do you do when half of your borrowers are continuing to shop for a better price after they apply with you? Anything less than high touch from the moment you receive their application to the moment their signature is on the closing documents puts you at risk of losing the loan, and the customer. If you’re not competing on service than you’re competing on price, plain and simple.

The real opportunity for sales and growth is by providing to a borrower the education, resources, hand-holding and assurance they need, want and frankly deserve as they embark on this highly emotional journey of home buying. This is, after all, the largest purchase of their life. If lenders fail to make immediate contact with the borrower and work immediately to develop rapport, relationship and trust, then the borrower may easily be plucked by your competitor, mid-transaction, who is doing just that, only much better and faster than you are.

And, since you don’t get paid until the loan closes, if you fail to nurture them at every touch point and guide them on the journey, you risk not just lost revenue, but the added investment of labor and technology costs that you’ve already put toward this application.

OBSERVATION #2

Today’s borrowers demand multiple online and offline channels to use however and whenever they choose. They demand the convenience of borrowing their way, whether it is in person, over the phone, through the Internet, or by using a mobile app. Borrowers want a lending experience that puts them in the driver’s seat.

But as much as borrowers want the convenience of multiple channels, they want something else even more — speed. They want an absolutely seamless experience across all touchpoints so that there are no delays and no surprises. In the study of 1,500 borrowers, 36% cited that it took over 24 hours for their application to be acknowledged as received by the lender.

Acknowledged… As in a simple automated message that confirms receipt of their application, and that someone will be in touch with them immediately to have a chat about their exciting plans to purchase a home.

Acknowledged… As in a telephone call from a friendly voice that congratulates them on completing the first step in a very exciting journey, and that you are there to support and guide them along.

So, when we assess the Borrower Journey Map to better understand what borrowers are thinking, feeling and doing at each touch point, it’s safe to conclude that what borrowers are thinking at this stage of exploring products and rates is, “I wonder who has the best rate?”

What they are feeling is confused on how to compare different products and prices. And in the absence of immediate guidance from a professional who is offering to partner with them, what they are doing is continuing to apply with multiple lenders.

If your people and process aren’t designed to immediately respond to an application, then you’re allowing the borrower to conclude that a relationship isn’t important to you. Conversely, when you respond quickly, provide education and nurture them, the borrower will no longer feel alone, and since feelings are the seeds of loyalty, it makes good business sense that you invest in training your people so that they can deliver an exceptional experience at every touch point, every time.

OBSERVATION #3

Digital channels are important to borrowers, and as mobile becomes more commonplace in all facets of banking, it will be essential for lenders to offer their customers a suite of digital lending channels that interact seamlessly with each other as well as with any offline channels.

If lenders want to realize cost savings through their digital channels, they will have to ensure that these channels are highly personalized and in parallel with a human-to-human connection to achieve true customer engagement.

As Mortgage Cadence and Accenture have consistently found in borrower studies, the simplicity borrowers are seeking extends all the way to the closing table where lenders are still not optimizing a safe and efficient piece of technology that is 100% designed to drive borrower satisfaction: eSign and eClose.

Give customers the choice. Although lenders may be anxious to provide customers the option of eClosing, the 2018 survey found that 74% of borrowers would be comfortable with closing with eSign.

Being borrower-centric means providing convenience and designing your solutions around their desires. By contrast, 61% of borrowers were instructed to wet sign their closing documentation, and 16% were instructed to sign both in person and electronically. There isn’t anything about those statistics that serve the satisfaction of a borrower.

INSPIRED LENDING

Borrowers are ready for more sophisticated digital transactions, but lenders are playing catch up in many cases. By taking steps to ensure the online borrower experience more closely resembles the human-to-human experience — meaning highly personalized — you’ll be delivering an experience that is easy, simple, transparent and maybe even fun. After all, this is an exciting time for the borrower. By playing a greater role in ensuring an exceptional borrower experience, lenders can then work toward upselling and cross selling into other products.

When it comes to technology and the mortgage industry, change is the name of the game. Technology has enabled automation, which has led to borrowers expecting around the clock accessibility.

On today’s episode of LendTech Live, Michael Hammond, President of Nexlevel Advisors, shares his depth of knowledge in the lending industry and details how exceeding the borrowers’ expectations is doable with the right strategy in place.

At Digital Mortgage 2017, over one thousand of the mortgage industry's most innovative executives gather to gauge which innovations drive the industry forward. After each round of demos, attendees vote for the solutions they think are most likely to succeed. Furthermore, with over 40 participating companies, Mortgage Cadence was designated as one of the top five "Best in Show" demos.

Watch the demo here.

By: Trevor Gauthier, "Lending Longevity," for Mortgage Banking Magazine

We all crave longevity in health, relationships and business. It's a desire fundamental to our most basic instincts, but making things last is easier said than done. This is true in life, and very true in the current mortgage origination world. With so many elements of the business undergoing rapid change, what can you do to increase your longevity as a mortgage lender?

By: Jake Petersen, "Industrialization of growing organizations," for CUInsight

Growth within any organization can be a benefit and a curse. As a company grows, it faces the challenge of on-boarding new employees while rising to the increased demands of a growing customer base. In any complex company, it is difficult to replicate the knowledge of your existing subject matter experts. Accenture Mortgage Cadence was founded on the principles of the manufacturing industry’s processes. Our product suite was architected to allow process automation, capitalizing on a division of labor to decrease not only cost, but the number of days to close a loan. Through our tremendous growth over the past several years, we are honing in on ways to increase scalability of internal resources. Read on to learn how you, too, can leverage this concept within your day-to-day processes.

There are many approaches to determine how to divide your labor force. One of the most efficient and effective ways to support organizational growth is to create a division of labor so new employees do not have to immediately become subject matter experts across all functional areas. At Accenture Mortgage Cadence, we utilize employee input, data, and logical functional areas to determine specializations. Our support/solutions team has been divided into functional areas in order to enhance our ability to work more closely with other internal teams to determine root cause of issues, provide more direct and informed feedback to functional areas, and to drive long-term change.

By: Sarah Volling for CBInsight

Mortgage lending productivity decreased in 2014. With refinance subsiding and purchase loans taking over, community banks are looking at ways to expand market share in order to see loan officer productivity (number of closed loans per employee) rise. This year we have provided a variety of tools including our Millennial Marketing Guide, ideas on reaching the investor market, and, this month, the results of our Realtor® survey. The real estate community is a fantastic catalyst as well as an essential market whenever purchase-lending dominates the market. They are every community banks’ secret weapon for increasing market share.

Some background. More than 1,099,102 individuals, the ranks of which have swelled by more than 10% since 2012, are now members of the National Association of Realtors® (NARs). While not a direct market for community banks, Realtors® can — and do — strengthen origination efforts. They are a catalyst, spending more time with homebuyers than any other party, they also have more influence on the entire real estate transaction than anyone else. Nurture relationships with real estate agents, and expect to see a steady supply of new loans rolling in. Sounds simple — most things do — though most things are often harder in practice. For a better understanding of what it takes to create relationships with real estate agents, we conducted a survey early this month. While responses are still coming in, the preliminary results are enlightening. Three themes are consistent in their responses:

Theme one – network. How community banks can establish or expand their Realtor® network is certainly up for debate. One fact, however, remains unwavering. Community banks must meet agents where they spend most of their time, and Realtors® must meet their potential homebuyers where they spend most of their time. We are in an all-digital age. Mortgages are trending to all-digital, and both Millennials and Baby Boomers are heading to the web daily. With 63% of real estate agents we surveyed using Facebook to connect with homebuyers and many expanding into other online outlets such as LinkedIn and Twitter, this is where community banks must also be. Connecting with Realtors® at the source is the first way to work with them to ‘catalyze’ originations.

Theme two – communicate. Real estate agents have the same goal as community banks — close the loan, and hand the customers the keys. This directly ties into the most profound reoccurring theme we saw in our survey. Across the board, communication ranked highest on why Realtors® would recommend a community bank to a customer and encourage them to keep coming back. While not always easy when times are stressful or a loan seems stuck in the origination cycle, the more proactive community banks are with their customers as the loan moves through the process, the better. Real estate agents also acknowledged that in this highly regulated industry, many factors can impact a loan’s ability to close on time. However, they want banks to be proactive with their communication as delays or red flags arise. For community banks, having systems in place that automatically notify customers as the loan moves through the process can save time across the board. By proactively sharing both good news and bad news, customers and Realtors® alike will feel at-ease.

Theme three – create loyalty. Once a community banks establishes their network of Realtors®, it’s important to maintain those relationships to keep agents coming back time and again. It’s worth noting that more than half of the Realtors® we surveyed said they’d recommended no more than one new community bank to their homebuyers in the past six months. Realtors® are loyal. Keep them happy, and they will keep coming back to you. As long as community banks stay proactive with their communication and treat Realtors® as peers, they will most certainly see their business flourish.

While there is no perfect formula for nurturing real estate agents, our survey does provide a glimpse into what makes them tick. By establishing a network of Realtors®, providing transparency and proactively communicating, the real estate community becomes an effective origination catalyst. The housing market is sure to get hotter; the absolute best way to increase productivity, reduce your cost-to-close, and build long-term, sustainable origination business is through relationships with those that influence the real estate financing decision. Not one has more influence than real estate agents. Start building those relationships today.

By: MortgageOrb, "Mandy Phillips: Integrated Disclosures Will Bring About ‘Philosophical Shift’"

PERSON OF THE WEEK: Amanda (Mandy) Phillips is legal and compliance senior executive for Accenture Mortgage Cadence. MortgageOrb recently interviewed Phillips to learn about how the company is helping lenders meet the upcoming deadline for the Consumer Financial Protection Bureau's (CFPB) new integrated disclosures and what they should be doing to prepare for implementation.

Q: First, tell us how you got started in the mortgage industry.

Phillips: I began at the very start of the mortgage process as a receptionist for a large, local mortgage bank. I knew absolutely nothing about real estate finance and didn't have a mortgage. This was during one of the refinance booms. There was a lot of activity in the office, and, even from the limited view of the front desk, it seemed very interesting.

The receptionist's desk was my first stop, though not for long. Processing, closing, funding, underwriting, practically every hands-on operations position followed. By the time I was done and headed to law school, I had changed companies a few times and gained a fairly broad and deep perspective on the hows and whys of making mortgage loans. It was a terrific experience – the sort everyone should have if they truly want to learn this or any business.

Mortgage lending, however, was not supposed to be in the cards after law school. At least, that wasn't the plan. But earning a law degree in 2008 was not the best timing. It was not a great time for new lawyers, so I went back to the mortgage company I worked for immediately prior to law school and, not too long after, took on a compliance role. The operations experience combined with my legal education proved invaluable. Although it may not have been the best time to be a new lawyer, it could not have been a better time to be a new mortgage compliance attorney.

Returning to mortgage lending after law school turned out to be a great decision. I've informally polled many of my colleagues. We all agree: There is something about mortgage lending that draws us in and keeps our interest. For me, it is the variety, the complexity and, now especially, being on the forefront of the largest regulatory changes in the history of the business. My present position as compliance lead for Accenture Mortgage Cadence offers one of those rare opportunities to help lenders across the country re-work their operations so they are lending in a compliant manner. Like I said, there's so much to real estate finance that it becomes an avocation as well as a career.

Q: The CFPB's new integrated disclosures and related rules go into effect on Aug. 1 – how much change will these new rules bring about?

Phillips: We are now seven months away from implementation of what is arguably the largest regulatory change in mortgage lending history. Everyone knows that particular headline, but what I think gets lost is that this is not simply the replacement of three legacy documents with two new disclosures. There is so much more to it than that. RESPA-TILA 2015 represents a significant philosophical shift far more significant than just the new disclosures.

Having to deliver the closing disclosure three days ahead of closing flips lending operations on its head. Some lenders do it today: Borrowers and closing agents, in some cases, receive closing packages even earlier than three days in advance. That's the exception rather than the rule, though. We are an industry used to – and comfortable with – just-in-time document delivery.

The regulation changes this, mostly because just-in-time can be a poor experience for the borrower. We know the documents intimately. Borrowers, who might close one or two mortgages in their lives, have either never seen a closing package or haven't seen one in so long that they've forgotten what it looks like and how to interact with it.

Consequently, the hypothesis is that borrowers feel neither informed nor empowered. It's a sound hypothesis. There is an additional happy consequence: There will be time to identify and fix errors before closing. As a result, loan quality should be higher, and efficiency should improve, as well.

Early delivery of the closing disclosure is one philosophical change. The other is preparation of the disclosure itself. Today, the HUD-1 form that the new closing disclosure replaces is usually prepared by the closing agent. Everyone supplies figures, and out pops the settlement statement. The regulation does not change this per se; the closing agent may prepare what becomes the closing disclosure, yet the lender is responsible for its accuracy and timely delivery to the consumer. This change raises the stakes for the lender and may very well result in their desire to control its preparation and delivery, a shift from today's practices.

Q: What steps should lenders be taking now in order to prepare for RESPA-TILA compliance?

Phillips: Three things should be taken in parallel, right now. First, technology built to adhere to the new rules is absolutely essential for compliance on Aug. 1. Better still, comprehensive all-in-one platforms should be the solution of choice. There are simply too many complexities in lending today – especially after Aug. 1 – to depend on tired integrations of disparate systems. Compliance under these circumstances will be difficult at best and simply not possible at worst. Migrating to a single platform designed to shepherd loans from origination through closing is the answer, and the time to make the move is now.

Second, make process modifications, once proper technology is in place. Delivering every closing disclosure three days ahead of closing is no small matter. The mortgage industry is not built to do this today, but it must be starting on Aug. 1. Once we're ready to make the required early delivery, the next process adaptation is fielding borrower questions. We get some, though not many, questions from the closing table today. After RESPA-TILA takes effect, we need to be prepared for many more in that three-day period before closing. Consumers will read their disclosures. They will be making phone calls or sending emails. Process updates will have to take this into consideration, too.

Now is also the time to determine the process for preparing the closing disclosure, which also has the potential to present major operational changes. One school of thought is to continue to have this document prepared by closing agents, as is the custom. The other school of thought is that, given the responsibility and the liability is now the lender's, preparation ought to take place in-house. This necessitates further changes to the closing process, another effort that should be taking place now.

Education is third, and there's plenty of educating to be done. The first and most obvious constituency is the mortgage team. Unquestionably every team member must thoroughly understand the regulation and be able to explain it. There will be many, many questions from all angles on Aug. 1. The manufacturing team has to understand the regulation, though everyone in the mortgage company should, too.

Customers need to be educated, too. First-time home buyers are easiest: They do not know what to expect, so the change in legacy disclosures will not come as a surprise. That does not eliminate the need to provide information. New homeowners have many questions, which include all there is to know about their mortgage.

Repeat customers, especially veteran buyers, may require the most education. The Good Faith Estimate, Truth in Lending and HUD-1 have been in use for as long as most lenders can remember. When they do not appear during the processing of their next mortgage, they will wonder why. They will also wonder why they got their closing information early, because most serial financers and re-financers do not expect to see anything until closing. I suspect they will be pleasantly surprised, though they will want to know more.

Now is also the time to begin working with Realtors and other participants in the real estate transaction, as well. Although the three-day advance closing disclosure delivery is a positive step, the flipside means no rush closings. Lenders will get phone calls asking for immediate closings after Aug. 1, just as they do today. The difference, on Aug. 2 and every day thereafter, is that it is simply not possible. Realtors, and all parties to the transaction, will have to adjust their expectations to accommodate this change.

Q: Any last thoughts?

Phillips: I am sure every lender says this, and it may be a cliché, yet this is a great time to be a lender. First-time home buyers, who stayed on the sidelines during the recession, are emerging. Repeat buyers are coming back, too, contemplating purchases they had put on hold. With new ways to lend and new borrowers to lend to, how could now not be a great time to be in the business?