I’ve often written here about a need for greater clarity in the mortgage transaction. After all, providing a fresh dose of clarity to the mortgage industry was a hug part of why we started LodeStar, and it remains a pillar for our vision. And many in the mortgage space have been working hard to make the experience more transparent—not only for consumers but for all the parties involved in such an incredibly collaborative process.
We still have some distance to go. It still takes 48 days to close a mortgage. Almost seven weeks. We live in a world where one can purchase something on Amazon and have it on their doorstep before the day is over. We can buy cars or take out personal and student loans in amounts that even rival the amounts of mortgages, all in a matter of hours or days. And yet, it still takes, on average, about a month and a half to go from sales contract to keys. A lot of that comes from poor communication, disjointed processes and chokepoints in the workflow. A lack of systemic clarity.
To some degree, the localized nature of real property will always mean some degree of legal complexity at the state or county levels. We may never get to a fully digitized, nearly instantaneous mortgage process. And that’s not necessarily a bad thing. One of the biggest misconceptions about the Millennial generation just coming into its homebuying days is that we want everything on an iPhone or a tablet. Nonsense. We want human experts we can trust… and understand. We just don’t want to have to manually sign forty pages written in Old English. We don’t understand why it takes three weeks to get an appraisal, and another week or two for the lender or title company to realize it happened.
The substantial pivot we’re seeing in the mortgage market right now may provide us a new opportunity to accelerate the long, slow march to a more transparent and clearer process. Unfortunately, the mass layoffs hitting the mortgage world are having a very real impact on real people who work here, although I’ve argued again and again that effective technology could help limit such things when the market does change.
The silver lining in all this is its impact upon mindset. Times of change and adjustment are the exact moments in history when decision-makers who are flexible, innovative and open-minded have their biggest impact. We’ve already seen significant spikes in adoption of first, LOS or POS technology and, now, a drive towards automating more and more of the “back-end” of the operation. As lenders scrutinize their operations and become more willing to make strategic changes to the way they do business, now is exactly the sort of period in time that lenders could make transparency to clients, partners and consumers (and, indirectly, even to regulators) a major priority. At the very least, it’s a likely byproduct of moving away from data entry or Excel spreadsheets toward imbedded, integrated systems.
The coming months will undoubtedly be challenging. The minds of most in our industry are on sustaining revenue and making it through to the next volume spike. That’s quite understandable. But this may also be a watershed moment in the history of our space. We may well witness history…and a process made clearer for all. Let’s hope so.
We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and “A Tale of Two Mortgages: an original webcomic for the mortgage industry, presented by LodeStar.”
As always, your feedback is welcomed and appreciated!
Read our CEO Jim Paolino’s Deeper Thoughts and get the latest mortgage industry news.