Technology, in many markets, is being embraced steadily.
There are endless tasks that used to take big meetings and hours of analog work to finish that have since been digitized for the better.
Depositing checks, scanning papers, doing taxes. All of these can practically be done from our phones now.
I’ve spoken at length already on the ways the mortgage industry is progressing and consolidating. Technology fits into these conversations in one way or another, but it’s not because it’s improving the process in any way.
By and large, mortgaging has been very slow to adopt new technology.
The situation is holding back the industry and doing potential homeowners no favors either. There are ways to fix the problem, but it’s going to shake things up along the way.
Mortgage lenders need to embrace the change.
A great deal of the holdback has been the sheer amount of personal data needed for the process of taking out a mortgage loan. Tax forms, pay stubs, and other financial forms are all major components of the system.
Unfortunately, it takes a substantial amount of work to get these all in order for a loan completion. It wastes time for the loan officer, banks and the consumer all at once. Worse than time is the actual costs that begin to pile up when the process takes so long and requires man-hours to complete.
There needs to be a large movement towards unified systems where all of this information can be compiled and transferred.
Right now, the application for mortgages themselves has a set format created by Fannie Mae, but virtually nothing else has an easily transferable, universally regulated format.
Think of the way TurboTax changed the game for personal tax filing. It’s a cinch to complete and it can save and transfer your data safely and easily. That’s the kind of tech the trade should be gravitating towards for internal processing. Assuming a safe and accessible format does get developed, it would very likely become government mandated down the line as well.
It’s a tall order, especially on the development end, and there’s no way that it’ll happen overnight. With time, however, it is absolutely possible. The way to achieve this is to partner with technology companies that share our vision and keep a collaborative spirit.
Right now, nobody owns more than 7% of the mortgage industry. As a matter of fact, most lenders own less than 1%. Where size advantages are concerned, there is no real downside in trying to work together and find a regulated way to manage customer data.
This kind of progression would lead to a strengthened, more cost-effective, industry. All mortgaging would benefit from not having to worry about adjusting and maintaining forms.
On a smaller scale, it may seem like I’m advocating to cut down loan officers to glorified application kiosks. This is not the case. Loan officers will still have to get the ball rolling for potential borrowers and they will still be the go-to for realtors.
Loan officers will become the quarterbacks of lending. Making sure the ball gets passed well to the next step. They will not necessarily have to walk it in for a touchdown themselves, but their role is still just as important.
Realtors would also have to accept a modified role in mortgaging with less control over the business flow, but will not lose any of their client-facing importance and will benefit from a more streamlined process as well.
I’m of the belief that mortgaging will always require a human touch to make sure that consumers feel actively taken care of.
Getting a new home or refinancing one you love is a powerful, exciting, scary moment — and overcorrecting to the point of trusting AI to handle the process from front-to-back would be a mistake.
At the end of the day, mortgaging has to adopt better technology to give borrowers a safer and simpler process. The less out-of-date the trade gets to be, the more comfortable potential homeowners will be attempting to enter the market.
Inspiration for the solution may come from another market like taxes, banking or commerce. That wouldn’t be a bad thing because those industries have had great success in creating more user-friendly, standardized operations.
Hopefully, rising interest rates, consolidation, and a slow-growing inventory will be a wakeup call for mortgaging. The industry cannot afford to be behind in technology when it is combating problems it has less control over.
The mortgage industry is ripe for positive change, it just has to learn how to help itself from within.