Issue Seven: What’s on the mind of industry experts?
From time to time, Deeper Thoughts will sit down with some of our favorite industry thought leaders to get their insights on the trends affecting the mortgage industry. Today, we’re pleased to share our conversation with Matt Patterson, EVP Business Development for Draper and Kramer Mortgage Corp.
Thanks for joining us, Matt! It’s probably safe to say that much of the mortgage origination industry has been investing heavily in technology in the past two or three years. From what you’ve seen, where has the focus of that investment been?
The focus of technology use in the mortgage industry, as in many industries, has become increasing consumer access to a designated platform. Once the consumer realizes there’s a digital option, I think we’ve done a nice job enhancing the overall experience with speed and efficiency. All of this has the added benefit of cutting production costs for the lender. Over the past few years I have seen quite a few firms focus their investment on point of sale (POS) technology to increase speed of onboarding a potential borrower. This includes eSignature, upfront income verification and asset verification. This is furthered in the operational stage of the loan with processing advantages brought about by tax return calculation products, property inspection waivers, and asset updating tools.
I also think there’s another phase to this evolution. The undercurrent being created in this first wave (and will soon hit the marketplace) will lead to greater use of Artificial Intelligence (AI) to handle items in just seconds such as (1) rapid tax return calculations accomplished in less than a minute, (2) the matching of loan criteria applied for with investor specific guidelines, (3) validating quality control functions and (4) appraisal review leading to an auto-building for many of the underwriting conditions that today are handled by labor intensive time of the mortgage workforce. This leads to the auto building of closing packages for eSign and the delivery into the secondary markets. All of this will happen on an automated basis.
There may still be certain nuances that will require a personal touch, but many functions within the mortgage industry today can be mastered thru AI. Although it may initially be a challenge for many lenders to handle the up-front investment and cost integrations, the results, I think, will be well worth it in the long run.
Do you believe the mortgage industry, as a whole, is today more focused on streamlining the mortgage transaction from start to finish than it was, perhaps, five or ten years ago?
Streamlining the mortgage process has been an industry challenge since it came into existence. A few decades ago this challenge was met by building a team of capable employees to deliver to a set of standards. Then, in the late 1990s came the onset of AUS systems, which spurred a new mindset along the lines of “less documents may be better than more documents” based on statistical parameters.
This continued with mortgage industry evolving into more and diverse products. This was evidenced by the secondary markets providing products that allowed an overly flexible percentage of home mortgages with qualifications that history proved to be dangerous for our country and industry.
Of course, this brought about the housing bubble of the early years of the century and its burst around 2008. As our industry dug out of the aftermath of that burst, technology became a way to battle margin compression and production cost. That increased use of new technologies nicely married our need for more accurate systems, resulting in mortgage expansion with safety features built into the production stream.
Today, we’re on the precipice of a great new paradigm of loan obtainment and tech fulfillment. It will be an exciting next few years as the shift in loan sales and fulfillment will be challenged at its core with new tech fulfillment. The strong and insightful will be the winners.
Who, in your opinion, is driving the technology decisions when it comes to the production and settlement/closing process (as opposed to application and origination)?
Capitalism is almost always the driver for mortgage technology. Where a new technology or system can maximize new sales or cost savings, most executive decision makers don’t discriminate. Right now, there’s a growing opportunity for businesses of all sizes to seize market share and build origination momentum. If our industry can produce with speed and efficiency without losing sight of consumer needs, we will be in a strong place.
Unfortunately, any profitable venture also tends to be attractive to criminals and fraudsters. As the mortgage industry builds speed, accessibility and mobility into the transaction, it also opens new doors for loan fraud. The good news is that the vast majority of tech developers are aware of this, and most new technology is being designed with security in mind. In fact, fraud prevention is becoming its own industry in many ways!
Until Next Week,
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