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This work was originally published in the December 2022 edition M-report The magazine is now online.
Lenders have no shortage of options when it comes to mortgage technology. But many fail to realize the true potential of technology to reduce costs and make mortgage production more efficient.
Of course, creating a mortgage involves many processes and moving parts that must work in harmony to keep the transaction running smoothly. While there are end-to-end mortgage platforms on the market, there is no single technology he solution that can do everything a lender needs to do.
But the most powerful innovations happening in the industry today aren’t about specific technologies, they’re about how different technologies come together. And the cloud makes it possible.
Easy to integrate
If you’re a consumer of mortgage industry news, you’ve no doubt come across hundreds of press releases about integrations with various software providers and third-party products and services.
The common theme behind these announcements is pretty much the same. Combining two or more solutions simplifies the mortgage creation process and reduces costs.
But the reality is that most mortgage technology cannot be easily integrated with other software and systems. In fact, most lenders are already aware of this or have experienced this firsthand. Achieving integration usually requires a lot of work behind the scenes.
In recent years, this has started to change thanks to two major developments. The first was cloud computing. This gave the lender access to technology without having to maintain his own IT infrastructure or host on-premises software, which was a huge cost center. The second is the growing use of application programming interfaces (APIs) that enable cloud-based software providers to integrate their products and services more quickly and easily.
Simply put, cloud and cloud-hosted services such as Amazon Web Services (AWS) have made integration much easier. This is not just theory either.
More and more lenders are taking advantage of this trend to accelerate loan production and launch new product lines much more quickly than they could just a few years ago.
the lender uses
Earlier this year, I started talking to a lender. This lending company was fed up with legacy origination technology that had serious integration issues and was causing constant re-entry of data from one system to another. The lender was already on his cloud-based POS platform, but wanted to go one step further. In fact, lenders envisioned a complete roadmap of automation to increase productivity, improve workflow management and reduce cost per loan.
The lender’s goal was not just to make loans faster and more efficient. Previously focused on VA loans, but wanted to diversify business lines. The goal was to increase transaction volumes, but they needed technology that would allow them to quickly launch new lines of business to meet evolving borrower demands and stay ahead of the competition.
Ten years ago, this lender would have found it difficult, if not impossible, to realize their dreams. But today, they’ve found a browser-based, end-to-end mortgage lending system that allows them to be more productive and deliver a more satisfying mortgage experience to their customers.
Thanks to new API-enabled technologies built into the cloud and cloud service providers such as AWS, the platform has allowed lenders to automate many of the initiation and processing tasks such as hiring and asset verification.
The company has also enabled loan officers to access the platform from their mobile phones, which was previously not possible. Equally important, lenders’ operational staff love not having to re-enter information they’ve always done on the old platform.
faster and better
However, cloud-based integration does more than just turbocharge lenders’ production processes. It also improves all other aspects of your business. For example, when loan volumes began to plummet earlier this year, the default response from most lenders was
people go Such strategies inevitably lead to poor customer satisfaction. Because less people will help those who still want to borrow money to finance their home. In fact, lenders are originating loans less often, but with interest rates rising rapidly, they are putting more time and effort into each transaction.
The production efficiencies gained through cloud-based consolidation will help sidestep this predicament by allowing lenders to retain much-needed talented originators and staff to sustain manufacturing loans. help.
These innovations will also help with adoption. This is very important given the fact that many talented top producers are looking for lenders who can provide the kind of customer service that has led to their success.
In a tough market, good loan officers have no patience for lenders who can’t deliver behind the scenes. As the market changes, we inevitably see organizations move to those that can provide the backend support they need to deliver results.
platform issue
Remember that successful integration does not happen by chance. Just like every home needs a strong foundation, lenders need a sufficient, dynamic and flexible lending platform for their business to thrive. As such, we are beginning to see a major shift moving away from legacy platforms designed before cloud computing transformed the industry, to new digital browser-based systems that take advantage of the cloud and application programming interfaces.
With the old system, lenders had a very difficult time patching various software and third-party products and services. These “integrations” were not seamless. It took a lot of time, money and effort, and usually drained her IT budget from the lender. Even after spending considerable time and money, these integrations failed to deliver solid returns.In fact, they often cost more than they’re worth.
If something goes wrong (as it often does), the lender has to create multiple workarounds and someone has to re-enter the data into another system that would normally be automated. was.
Essentially, lenders were creating their own Frankenstein’s monster, locked in an endless cycle of maintenance and workarounds just to keep everything running.
But with the latest cloud-based technologies and APIs, more and more lenders are moving off this treadmill and making strides toward faster loan cycle times and lower costs. Cloud-based technology also enables you to operate more agilely, as your business can quickly pivot as the market evolves.
In fact, recently, several lenders we work with have used cloud-based digital mortgage platforms to add home equity products such as HELOCs that continue to attract borrower interest.
power of adaptability
The late Louisiana State University management professor Leon C. Megginson is known for having boiled down Darwinism to its essence, saying, “Neither the strongest nor the most intelligent species survive, but the most adaptable to change.” It is the most adaptable species.” In today’s rapidly evolving housing market, these words are worth considering.
The housing market today may be in trouble, but it is relatively certain that it will eventually recover. In that case, lenders that are best able to adapt to market changes, primarily through technological innovation, are likely to take the lead.
Because it has probably happened before. After the Great Recession, as several large banks exited the mortgage business, it was independent mortgage banks that began investing in new technology to create a faster and better customer experience. In doing so, they began gaining market share in trucks.
Today, most lenders are cutting staff and patiently waiting for the housing market to recover, but forward-thinking organizations are doing the same.
By investing in cloud-based digital technologies and API-driven integrations, they are better positioned to survive today’s tough housing market and prepare for future success. The question is, who is participating?
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