Chris Meade of Lender Close: The Right Stuff–How the Right Technology Can Unlock Real Estate and Home Equity Lending
For community lenders, real estate and home equity lending presents a timely opportunity to add volume and compete in an increasingly competitive environment, and technology can help them excel. By offering home equity and real estate products, local lenders can diversify their portfolio, as well as differentiate themselves from the competition. No longer are lenders competing just with another financial institution a few doors down. The competition now spans nationally and includes an explosion of fintechs looking to compete for business in neighborhoods across the U.S. Technology can help lenders streamline the origination process and stand out among competition with products and services that help their borrowers tap into their home’s equity to consolidate debt or make home improvements at low rates.
However, when determining the most appropriate technology, community lenders are prone to unknowingly find themselves wanting a quick fix to a symptom instead of addressing the core issue. For example, a lender that seeks a platform to improve its application-to-close rate for real estate and home equity loans may not realize that its loan officers are slowed by the rekeying of applicant information in disparate systems. Investing in the right technology has a multitude of benefits that can only be unlocked when the principal problem is identified first. Because lenders are too close to the problem, it can often go unnoticed.
Once the issue is pinpointed and a solution is identified with the help of a fintech partner, the work still is not done. Many community lenders have top-tier technology at their fingertips but do not use the technology effectively as they never received a consultation on best practices or discussed lessons learned. The result is a problem that continues to fester.
Using technology that addresses the core problem with the proper guidance from a partner that has embarked on similar initiatives is where the true transformation happens. The right technology for the right problem can have rippling effects for a lender, and more importantly, the borrowers.
Here are a few things to consider when selecting the right technology:
- Look for technology that can improve efficiency in more than one area of the process. With a comprehensive solution that solves for more than one inefficiency in the process, community lenders see a significant difference in speed and accuracy throughout the entire undertaking. Features to consider include: a single-access point to multiple services and reports, a simplified log-in and order process, reduction of duplicative typing, centralized support and training and enhanced automation.
- Consider technology that can create a more consistent process for lenders and borrowers. With a clearer view of the overall process, lenders are better equipped to educate borrowers on what is going to happen at each step of the timeline, reducing uncertainty and increasing borrower confidence. In addition, this improved consistency helps with employee training as common questions are more easily answered.
- Find technology that can expedite turn-times, which is key for retention. If a borrower is informed that their current lender takes 30 days to fund a loan, they will be much more likely to explore alternatives than if they were told that it would be cleared to close in only 10 days. Focusing on borrower retention is now more important than ever, and technology creates efficiencies that enable loan officers to complete files faster with fewer back-office interactions, freeing them up to provide higher-touch service for their borrowers. This added time can be used by loan officers to be more consultative about a specific loan or the borrower’s financial health.
- The extra time that technology saves can be conveyed in marketing promotions that will attract new borrowers. Because lenders can rest assured that their loan officer will be able to keep up with the added volume, there is potential to highlight a quick turnaround through marketing to a borrower who may otherwise have been considering a competitor. In addition, it does not take long for fast turn-times and world-class borrower experience to be reflected in online reviews and word of mouth.
The future lies at the intersection of local lending relationships and cutting-edge technology. Local lenders can partner with technology providers in the effort to build lasting, trusted relationships with borrowers. These partnerships will give lenders confidence in their offerings and services as they lean on their fintech partner for fast and efficient technology. Together, community lenders and fintechs can create a better borrower experience through the right technology that specifically solves problems and helps them to act on the ripe opportunities of home equity lending.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)
