July 6, 2016 Although studies show that technology has become a priority for the mortgage industry, usage is not rising as quickly as one would expect. While certain technology and tools tailored to the needs of the mortgage industry already exist, the mindset and comfort level of lenders and investors must catch up to the reality of where the industry is heading if they want to remain competitive.
If for no other reason than to rein in ballooning expenses, adopting technology where relevant can have a double-positive effect.
According to a study by the Stratmor Group published in March 2016, the TILA-RESPA Integrated Disclosures alone has increased mortgage lender origination cost by nearly $210 per loan. This increase is due in large part to the additional compliance staff lenders have added. Another study, conducted by Accenture and released in August 2015, explains that between 1980 and 2000 there were approximately 86 million millennials born in the U.S. alone. Unlike previous generations, millennials rely more on technology for everything from grocery shopping to interactions with financial institutions. National Mortgage News’ report "Mortgages 2016: Customer Service, Tech Top Industry’s Agenda" states that 34% of the lenders and servicers would change their strategy to pursue millennial customers. This number increased from 27% in 2015.Taking these data together, the next step seems clear. While some lenders are already rethinking the customer experience to include mobile options, increase the use of automation and embrace e-docs, broad acceptance is still elusive.
Ongoing and escalating regulatory changes have been the catalyst for originators re-evaluating and streamlining their processes to be more cost-effective. Automation can have a positive effect on customer satisfaction, from bringing about more effective communication, to eliminating potential fees as a result of noncompliance and drastically decreasing the possibility of a default or the need for a loan buyback. Providing automated information in a timely manner could also decrease the chances of a customer defaulting on their payment.