The power of clarity, one of the beats to which the LodeStar brand marches, is never more pronounced than during the closing process of a mortgage transaction. Unfortunately, it’s usually the lack of clarity that lenders and title agents hear about from borrowers and REALTORS. As we drift deeper into a purchase market and further away from the more standardized refinance transaction, that’s never been more apparent.
We like to tell ourselves that, at the end of the day, when it comes to selecting a mortgage lender, the borrower is only truly moved by one factor: rate (or cost). An outstanding J.D. Power survey from the end of 2020 confirms this…to a degree. But that same survey goes on to note that “satisfaction in several critical client service attributes, such as loan processing time, ease of self-service interaction and helpfulness of customer service, has declined from a year ago.”
This has been true seemingly forever. Title agents complain that they receive key information for closing from the lenders and or consumers too late in the process. REALTORS and consumers complain that title agents either don’t return calls or don’t return them fast enough. Lenders complain that there’s no reason for a closing to take over 50 days on average, while all begrudgingly admit that the “3-Day “Closing Disclosure” Rule, mandated by TRID guidelines and theoretically supported by penalties for TRID violations, is routinely violated.
And borrowers and sellers alike complain that, so far, no one has really told them what the hell is going on with their transaction, or why.
None of this is new. But it’s about to become even more painful as lenders battle for market share in the purchase market. So why does the general issue of clarity remain so difficult to address? Some of it is the battle against deadlines and margin compression. Whether it’s lenders or title agencies, we’re all looking to cut turn times, reduce fall out and handle more and more volume with fewer and fewer people. The seemingly obvious answer would be technology, right? Yes.
The mortgage transaction is a complicated, heavily regulated transaction. There still isn’t (and may never be) a truly “cradle-to-grave” solution. Many of the technology developers established in the space design their products with a focus on one customer, who is usually just one of many entities involved in taking a mortgage to closing. Most of the time, these segmented technologies are great, but they’re designed as the “Alpha” in the tech stack. If there’s no integration or the primary systems of, say, an appraiser and a loan officer don’t work well together, we’ve just introduced manual labor, hacks, workarounds and silos—all best described as delay and inefficiency. That’s the enemy of clarity.
Our own primary product (for now) is a simple closing cost calculator. It’s one small part of the equation. And yet, it serves a mortgage compliance purpose (again, TRID guidelines) as well as a means of speeding the process and making the entire transaction a little clearer for borrowers. That little calculator saves lenders maybe minutes on a simple transaction, and maybe even hours in a complicated jurisdiction. But it all but eliminates curative, speeds the process and gives the borrower a much clearer idea of what she will really have to pay at the closing table. Even if it’s not perfect, that was the point of TRID, wasn’t it?
We’re certainly not advocating more TRID-like regulations. Far from it. The rule has many flaws. But we are suggesting, as we have before, that instead of bouncing from the tired excuse of being too busy during a high-volume, repurchase market to the tired excuse of lacking the funds for investment when volume dips, it’s time for more lenders to invest in bringing clarity to the mortgage transaction. Even if it’s one little investment (as long as it integrates well!) at a time.
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