The Digital Mortgage Process of Today and Tomorrow
Today, borrowers live in a connected world where a pizza ordered from Dominos is tracked in every stage from ordering to delivery, and they’ve come to expect the same from their business interactions. This culture shift has created an expectation amongst consumers that the mortgage industry needs to embrace an end-to-end digital mortgage.
What is a digital mortgage?
In its essence, a true digital mortgage is one that leverages technology to create an environment where a mortgage is produced, transferred, and stored without using a single piece of paper. There is no paper loan file, there is no loan officer, there is no closing agent. Every part of the process from application to servicing is handled digitally, whether it’s document collection using 3rd-party data aggregators (such as AccountChek), or the use of an eNotary during closing.
The purpose of the digital mortgage is simple – get rid of manual processes, eliminate paper, reduce labor costs, and simply give the borrower what they want (a mortgage to purchase a home) as fast as reasonably possible with as little human intervention as necessary.
What does the future look like for the digital mortgage?
There are some interesting and exciting new technologies being explored that will help make the production and servicing of mortgages more secure, efficient, and cost-effective. Blockchain technology has been hailed for a few years now as one future way mortgages will increasingly move into the digital world, with smart contracts and de-centralized ledgers making it faster, more secure, and more cost effective to transfer mortgages. More and more we are seeing large financial institutions partnering with data aggregators to make customer financial information more easily available in a secure manner that doesn’t expose borrower credentials.
These are fantastic developments that will serve to make the mortgage process better for lenders, consumers, investors, and servicers but they still fail to address the lack of trust, customer support, and easily accessible expertise that are inherent with a fully digital mortgage process. Mortgages are complicated, as is the complex web of regulations that dictate how they are created. For borrowers who don’t have an atypical loan profile, or maybe don’t fully understand their Loan Estimate, they have to turn to call center or live chat “experts” that they’ve never met for assistance.
Today’s digital mortgage
With the true digital mortgage failing to prove ready for mass adoption, the mortgage industry has begun to rapidly adopt consumer facing mortgage technologies that allow a loan officer or lender to provide many of the most important elements of a digital mortgage. When a lender leverages mortgage automation software, such as Floify, they are able to create that digital environment where a borrower can fill out an application online, have much of their documentation automatically aggregated direct from source, stay updated on loan progress through automated system notifications, and eSign their disclosures from their computer or smartphone.
Borrowers want more transparency, an efficient transaction, and the ability to conduct business on their terms when it’s most convenient. Lenders, on the other hand, want to reduce mortgage production costs and provide an experience that earns them the trust and repeat/referral business of their borrowers. The best way to accomplish all of these goals is to leverage digital mortgage technologies that can be combined with the knowledge of a skilled loan officer.