By: Dan Green, "Seeds of Digital Change in the Real Estate Market," for Progress in Lending
Remember the days when stacks of paper, numerous phone calls, and “snail mail” made up the heart of the mortgage process? Yes, we are referring to those days in the not-so-distant past before the technology revolution made the all-digital mortgage a possibility. As we’ve seen, this technology revolution took the mortgage industry by storm, drastically improving day-to-day operations and increasing efficiency. A similar technological future awaits the home seeking process. As this future reveals itself, it is in our best interest as lenders to remain up to date with these changes to foster collaboration with real estate agents. Advanced planning and networking now will lead to a natural pipeline of referrals, allowing our future origination business to grow in unprecedented ways.
The initial stages of searching for a home have become almost exclusively digital, activating yet another technological revolution. Logically, the initial home buying effort begins with a simple online search to gauge market availability and pricing while also honing in on certain types of homes or neighborhoods. According to a recent report, about 90% of prospective home buyers use some type of online search in their home buying process. As millennials continue to make up more and more of the first time home buying population, the use of internet throughout the process will only increase.
As a result of this increase, home buying technology must continue to improve as well. Outside of current online listings and search functionality, there is limited digital capability to make an offer on – and ultimately purchase – a home online. Fortunately, seeds of change are already being planted through a few digital real estate companies that offer the capability to search, list, sell, and buy properties completely online. Similar to the all-digital mortgage where lenders and borrowers are notified of status updates through loan origination software, so too will home buyers and sellers make and receive offers and updates simultaneously. At first glance, it may seem like these digital changes eliminate the need for real estate agents altogether. Quite the contrary. Traditionally, the agent has handled the networking, contracts, and negotiation that are involved in the home buying process. Although many of these components will likely be handled digitally in the future, it is in the best interest of lenders, and borrowers, to continue partnering with real estate agents for a couple of reasons.
Networking Requires People. First, very few, if any, prospective home buyers want to buy a house sight unseen, so the agent becomes an important local resource in setting up showings. In addition to traditional showings, agents may also have the networking connections to point interested buyers in the direction of properties that would otherwise not be considered. Next, community appeal is a vital factor. Conversations with real estate agents can shed light on the unique local flair of an area, and help match the desires of the borrower with a fitting community. Realtors® may also use their local connections to recommend good inspectors, contractors, and other key individuals involved in the purchase of a home.
Digital Savviness Isn’t for Everyone. Additionally, depending on how comfortable the buyer/seller are with the online tools, the agent may be called upon to use their knowledge and expertise to perform the online negotiations and contractual components on their client’s behalf. Ultimately, this makes the process easier for both buyers and sellers, as well as ensures compliance from a legal standpoint. Thus, just as the role of the loan officer progressed with the all-digital mortgage, so too will the role of the real estate agent transform according to shifting digital demands. The future belongs to agents who are willing to adapt to these demands and take on more of a specialized, hybrid role within the industry.
What does all of this mean for lenders? Having a strong network of real estate agents will always be a sure way to increase origination business. Despite changes in the home buying process, agents will still spend more time with the home buyer than any other party. If you have the trust of the real estate agent, you’re more likely to win the trust (and business) of the home buyer.
As the real estate market begins to perfect and streamline this new process of buying a home, the logical next step is to integrate the mortgage process with the digital purchase of the home. Think of the visibility and brand awareness that would come along with having your institution’s loan products displayed alongside a listing of the buyers’ dream home. Whether this be in the form of a partnership or direct integration with the real estate websites, there’s no doubt it would be advantageous to all parties involved. No matter what changes are thrown our way within the housing industry, there’s no doubt proper preparation and innovation are key to remaining ahead of the digital curve.
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.
By: Dan Green for CUInsight
My wife and I recently closed on our eighth (and hopefully last) home purchase. This purchase, combined with the places we’ve rented, brings our total address count to about fourteen in just thirty years. That’s more than enough for a lifetime!
While this may be our last home, it is probably not our final mortgage. Who knows, maybe rates will go silly low again, or maybe there is a reverse mortgage in our future. What I do know is getting a mortgage on our new home was far easier than securing financing on our first home. Far faster, too.
The media constantly talks about how arduous the process is, how much documentation is required, and how much time it will take. The first two are certainly true. Mortgages still require a lot of paperwork. No surprise there, good mortgages always have. The difference today? Most of the paperwork is virtual; neither borrower nor lender have to physically schlep piles of paper to properly document the debt. Sure, all the old documentation is still required, plus some new, but it is mostly all available electronically. Click a button here, virtually sign there, and voila. All required documents land in the lender’s lap electronically. Almost magic, and super quick.
Technology has absolutely made loan origination far easier and more accurate. I cannot say I miss filling out a paper 1003. Both time consuming and tedious, all those little boxes make IRS forms seem almost spacious and simple. We originated this latest loan online while we made dinner. The next morning, our loan officer emailed to let us know what documentation they would need. Our disclosures arrived via email that morning as well, ready for our electronic signatures. I tended to sign on my laptop. My wife preferred her iPad. We even signed a set of documents while out for dinner via our smartphones.
The change between the first time we took out a home loan and this most recent experience is dramatic. We used lots of REAL ink and postage stamps back then. Enough to make almost anyone gasp by today’s standards. The process has greatly simplified over time, though there is still room for improvement.
The closing took place on the exact date we chose. Unfortunately, it was not electronic. Real paper, real pens, and in a real closing office. Absolutely no different than 25 years ago. The fact is that lenders, settlement agents, notaries and borrowers all have access to eSign/eClose tools. Many are simply not leveraging the widely available technology just yet, though there are a few hearty lenders that regularly close electronically. However, they are few and far between.
It’s time to make the last act of the mortgage process as easy as the first. Closing our mortgage the way we opened it – over dinner using our smartphones – would have been the ideal way to potentially end our homebuying career. Looking to differentiate your mortgage offering? Give borrowers the option to eSign and eClose. It’s the next step in making the mortgage process even easier.
By: Mike Sorohan
MBA NewsLink recently posed questions to Trevor Gauthier, managing director of Accenture Mortgage Cadence, Denver.
Gauthier joined Accenture in 2013, leading development and execution of the company’s vision and short/long term strategies. He previously served as chief sales and marketing officer with Mortgage Cadence; his responsibilities included enterprise and mid-market software solutions sales, account management, development and execution of marketing and communication strategies, building cohesive and recognizable brands and recommending strategic approaches and executable plans to maximize sales activity and returns on investment. The company’s website is https://www.accenture.com/us-en/accenture-software-mortgage-cadence.aspx.
MBA NEWSLINK: Mortgage Cadence has had a very eventful two years since its acquisition by Accenture. What’s the ride been like?
TREVOR GAUTHIER: It’s been a great ride so far. While Mortgage Cadence has seen an eventful few years, nothing has been a surprise. It’s kind of been like a cross-country road trip. You know where you’re going, have the proper tools to get there and just enjoy the ride. I’ve worked with most of the executive team for many years. With their combined 200 years of mortgage experience and extensive backgrounds with the company, I knew I was starting on the right foot.
When I transitioned from leading Sales & Marketing to all of Accenture Mortgage Cadence, I went in with a realistic view of where the organization was and where it needed to go. This past year has proven to be transformational. We have substantially increased the size of our enterprise customer base, we have continued growth in the mid-markets, and we have significantly enhanced the Accenture Mortgage Cadence Cloud--all while taking on the single largest regulatory change the industry has ever seen. This is no small order, and I’m fortunate to have inherited a team of individuals and a technology platform that are both second-to-none.
NEWSLINK: What did Mortgage Cadence gain from its acquisition by Accenture? What did Accenture gain in return?
GAUTHIER: From the very beginning, Accenture saw that lenders using outdated technologies and/or multiple systems of record were struggling to keep pace with the changing mortgage landscape. When they met with Mortgage Cadence, it was immediately apparent there was an opportunity to help transform the mortgage industry by partnering together. Mortgage Cadence’s long tenure in the business, coupled with our advanced technology serving both the top 100 and the midmarket space really sealed the deal.
Being part of Accenture gives us access to world-class resources that best position us to be the last loan origination platform our customers ever need. Looking to the future, we will further advance our technology and bring on new solutions that help lower origination costs, while keeping stride with regulatory changes. We all know technology advances rapidly to keep up with the changing times. Accenture is extremely forward-looking and gives us the tools needed to make that happen. With mortgages trending all-digital, we already have clients using our technology to push those digital boundaries. The next step is moving all customers to the fully paperless mortgage.
The acquisition has felt much more like a partnership. Accenture saw the value not only in our technology but also in our people. They maintained our legacy staff and have since helped us double in size over the past two years. The growth has been phenomenal, and the talent among the team is extraordinary. The future is bright, and I couldn’t ask for a better partnership.
NEWSLINK: Is the Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure rule as intimidating as it seems?
GAUTHIER: The short answer: no. While the TILA-RESPA Integrated Disclosure rule is certainly complex in nature, the truth is that with the proper technology in place, proper training of staff and proper education for borrowers, this rule is manageable. For technology providers, the changes were sweeping, requiring months of planning and execution to complete. Most should already be rolling out compliant releases to their lenders. Assuming this is true, the burden of the change is largely off the shoulders of the lenders.
For us, we’ve spent the last year partnering with our customers to make sure they first understood the changes and second, made sure they were aware of the changes we were implementing. We’ve collected their input, incorporated those enhancements into the releases, and have since rolled out TRID-compliant versions of both of our LOS platforms. We plan to continue hosting our monthly webinars to inform lenders--both customers and non-customers--on ways to ensure success in the coming months.
NEWSLINK: TRID has been pushed backed until Oct. 3. What should lenders do with this extra two months to prepare?
GAUTHIER: The change in deadline is a huge benefit to lenders. Assuming their technology providers successfully deliver the system changes by the August 1 deadline, this leaves lenders with several months to test the enhancements, properly educate their loan officers and inform borrowers--all while working through any issues that arise. Lenders will most certainly be well-equipped to succeed come October.
NEWSLINK: You joined Mortgage Cadence as director of marketing and worked your way up. What have you learned, now that you’ve been managing director?
GAUTHIER: I’ve certainly learned a lot. The biggest lesson, though, is to learn as much, if not more, from an undesired outcome as you do from the good. Whether that be a conflict with a boss, a project gone south, or missing a personal goal, you will grow from these experiences if you look at them the right way. Don't give up; instead, use these as valuable learning experiences and be better for it. It's easy to be crippled by the fear of failure, but we will all fail at many points in our career. It's how you handle those failures that will determine your future success. Work hard. Seek to learn more. As long as you are doing this, opportunities you never expected to present themselves will surface.
This has been the motto of Accenture Mortgage Cadence, and it has led us to our most successful year as an organization. We’ve witnessed firsthand the devastation felt by our industry during and after the crash, but we've also witnessed the industry come back stronger than before. Although times were not always easy, we grew exponentially through those experiences, leading us to this unforgettable year.