Three Experts’ Opinions: What Is and Isn’t Working in the US Mortgage Industry

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During the recent HousingWire panel, How Leaders in Lending are Driving Results Through New Technology, three leaders in the mortgage space gathered to discuss cutting edge topics. In addition to diving into the current trends and highlighting the technology solutions that are driving results, Tata Consultancy Services Mortgage Practice Head Karthik Kumar, Vendor Surf Cofounder Scott Roller, and Capacity VP of Marketing Justin Schmidt provided their expertise on what they believe is working and not working in the mortgage industry.

Keep reading to explore these experts’ opinions on how to make the most of these unprecedented times.

What’s working: 

Adapting to the pandemic. 

If you watched the panel, there were quite a few areas that the mortgage industry is getting right. With the COVID-19 crises, every industry has had to adapt. In the mortgage industry, “the immediate support of government-sponsored enterprises (GSEs), flexibility on appraisals, and social distancing have worked well,” said Karthik. “In addition, the speed in which the underwriters have transitioned to remote work has been commendable.” Though the mortgage industry is not known to quickly accept technology, “it’s done a great job with the remote work situation due to excellent technology and network support,” Karthik added.

Welcoming new technology. 

From the fintech perspective, Scott shared that “the mortgage industry is embracing vendors faster than ever.” Because of the learning curve, “the mortgage industry has been known to be short on welcome mats.” But now that vendors are learning that the mortgage industry requires in-house expertise to navigate the “large, confusing legal, regulatory, and compliance gauntlet,” it’s easier for these vendors to get their foot in the door. Closing the gap on this curve has enabled lenders to experience ROI from these fintech tools. 

The use of big data and new technology is another win for the mortgage industry according to Scott. “AI, machine learning, and RPA have proven to be successful in other industries, and the mortgage industry is now using this tech to mine that data across the ecosystem.” With more data, lenders have access to more insight, which has enabled “data scientists and behavioral scientists to play a role in improved speed, quality, and customer satisfaction.”

Exploring automation.

Loan origination and servicing are rule-based processes that require a lot of manual steps. The lenders that have begun to automate steps in those processes are setting their teams up for success. “In the coming months as forbearance, defaults, and refinancing ramp up, being in a position to have your processes and business set up for automation will enable lenders to quickly deploy tech and see results,” said Justin.

What’s not working:

Meeting customer and borrower expectations.

The mortgage industry is document-centric and manual in nature. Karthik mentioned that the average loan includes 300-350 pages and there are outdated legacy systems that are monolithic and inflexible. “The industry isn’t looking at efficiently managing the back office,” explained Karthik. 

Because of that, customers aren’t happy with the experience they get when buying a loan. Karthik backed up his statements with a stat from a recent survey by J.D. Power, “70% of customers shared that they don’t have trust in servicers.” To add to that, Karthik compared the mortgage industry’s net promoter score (NPS) to other industries, “The NPS in the mortgage industry is at a 16, but 30-50 is average, and 44 is the median.”

Why is that, you may ask. “Fulfillment and servicing take too long compared to other services from different industries,” said Karthik. “Consumers are used to a simple process with a 24-hour turnaround but have to endure a 45-60 day turn around in the mortgage industry.” 

Heavy-lift implementations. 

When bringing on new technology, vendors need to improve how they outline the timeline and requirements for tech implementation. Lenders don’t always consider the work that goes into implementing tech across the organization or they don’t have necessary stakeholders at the table during implementation. “Many lenders don’t have an army to implement the tool that the vendors expect,” said Scott. “Because of that, lenders have begun looking for solutions that are more modular-based where you can plug and play. A la carte vs. one size fits all.”

By leaning into SaaS, cloud-based, and agile developments, lenders don’t have to bother with a large roll-out or pay for an entire tool for only using a feature or two. “We could be moving towards a buy-and-try environment where deployment cycles are quicker and easier,” said Scott. 

Answering borrowers’ questions. 

Another stat from a J.D. Power survey explains that more than three-fifths (62%) of customers visit their lender’s website as the first line of information, but only 28% say online is the most effective channel by which to resolve an issue. Among those who couldn’t resolve their issue on the lender’s website, 45% say the issue was resolved only after picking up the phone to speak with a representative. 

Justin pointed out the importance of digital-first communication with customers and borrowers. “Customers have way more questions and concerns when the unexpected happens, 2020 is a great example of that.”

Relying on your in-person staff to handle the repetitive and time-consuming tasks like answering phone calls is a recipe for disaster. “In addition to adopting technology that makes information accessible for your customers, you need technology that supports your team that answers the phone when and if the handoff happens,” shared Justin.  

Technology augments processes, which improves the level of customer service. “And when you provide better service, the NPS goes up and the churn goes down,” said Justin. 

Make sure to check out the recorded panel for more insight into what’s working and not working in the mortgage industry. 

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