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, less stressful 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, which we’re calling AUS-Neutral Design (#AND), 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. This workflow innovation can be expected to evolve quickly as lenders look at all available options to identify the best path for the borrower while reducing origination costs.
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.