Long, Slow March Toward Digital Mortgage Continues

PALM SPRINGS, CALIF.–The digital mortgage. We’ve been talking about its culmination for how long now?

To be fair, many eSolutions exist in the marketplace. Many lenders are doing at least one phase of an eMortgage, such as applications, disclosures, closings or secondary market eVaulting. Fannie Mae and Freddie Mac are buying eNotes; vendors have developed products for authentication, signatures, applications disclosure delivery, eVaults, recording and notarization. And the MERS eRegistry actively tracks ownership and transfer of those interests through eNotes.

Despite the talk, hurdles remain. Panelists here at the MBA Independent Mortgage Bankers Conference said lenders continue to struggle toward balancing technology with a positive customer experience.

Clara Shih, co-founder of Hearsay Social, San Francisco, a popular speaker at MBA conferences, preaches about the increased sophistication of tech-savvy consumers.

“Today’s consumers are becoming omni-digital–using all sorts of social media–and the mortgage industry must adapt,” Shih said. “This industry has to move from the old style, cold-calling, etc. to the omni-channel. The industry today is more buyer driven, digital and multichannel. A person who is shopping for a mortgage online is going to look you up, Google you, reference-check to make sure you are legit before they decide to do business with you.”

Social media, Shih said, has become the number one activity of Americans. “People spend more time online, across all generations, than they do anything else, including watching TV shows,” she said. “Eighty-seven percent of Millennials say they have their smartphone with them at every moment of waking and sleeping–even in the shower. The average American spends six hours a day on social media activities. And the higher the net worth, the more time they spend on social, mobile and digital.”

Today’s customers, Shih said, are meticulous in their online research. If they get a referral for a mortgage loan originator, they research–and validate.

“This is where the customer decides whether or not to move forward with the referral,” Shih said. “They want to know, ‘is the loan originator researchable? Is she on LinkedIn? Does she know anything about the housing market in Denver? The company has to have a website, of course, but each loan originator must have one, too. If you as a loan originator do not have a footprint online, then they’re not going to trust you.”

Today’s borrowers also want a mix of digital (multi-channel) and traditional, Shih said. “When the originator reaches out, it could be by email or phone, but increasingly it might be through a LinkedIn message,” she said. “Your LOs don’t know how the customer is going to reach out, so you have to be ready on multiple channels. And it’s not just about being on Google; it’s the opportunity to engage digitally across the lifecycle. Referrals; birthdays, anniversaries; It’s an opportunity to engage as part of the human relationship dynamic.”

For lenders, finding that balance between high-tech and high-touch represents a moving target. For every Quicken Loans that has seemingly perfected the digital/personal balance, there are a half-dozen other companies trying to strike a balance among technology, customer service and profitability.

“We all know that buying a mortgage is not like buying a box of Kleenex from Amazon,” said Nathaniel Sokoll-Ward, head of product with Roostify Inc., San Francisco. “It’s more complicated, more regulated. But for the customer, the expectations are very similar.”

“We don’t want to lose that belly-to-belly customer experience,” said Lizzie Garner, executive vice president with Guaranteed Rate, Chicago. “What we wanted to do is enhance the customer experience.”

“Having better technology becomes a self-fulfilling prophecy,” said Nima Ghamsari, CEO and co-founder of Blend, San Francisco. “We’re not replacing staff; we’re augmenting their ability to work with customers.”

Add compliance to the mix. “Use of data in general have enabled us to figure out the best way to achieve compliance,” Garner said. “It enabled us to analyze data at a more granular level. We also have a huge goal of driving down the time it takes to complete the application process. Data enabled us to see where the roadblocks were being created in the process and allow us to devise ways to work through it.”

“The consumer will often guide you as to what is working and what isn’t,” Ghamsari said. The exhaust trail that customers leave has been very helpful in our ability to develop solutions.”

Roostify launched its first data collection product three years ago, Sokoll-Ward noted. “If you have a goal of a 10-day close, you need to have the data to do that right now,” he said.

So…if lenders like data, and customers like data, and regulators like data, what’s taking so long? “There are many barriers, perceived or real,” said Clinton Rockwell, partner with BuckleySandler, Los Angeles.

Ghamsari cited compatibility (does it match up with my LOS, for example), compliance and “analysis paralysis” as three major barriers. He said there must be better and more uniform ways to assess these risks to achieve widespread adoption.

“The paralysis is misguided,” Ghamsari said. “The risk is actually very low of testing out systems; don’t think of it as a massive investment that could become obsolete tomorrow.”

“Start somewhere,” Garner said. “We rolled out a lot of flip charts and analysis before we realized that we had to start somewhere in the process.”

“You can contain risks,” Ghamsari added.

“In many ways, we are inventing a future that, five years from now, will probably look quite quaint,” Sokoll-Ward said. “Customers still aren’t tuned into the digital mortgages. When I tell people what I do at Roostify, they say, ‘Oh, just like Quicken Mortgage.’ Well, no. But the customer will ultimately drive the process.”