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Lopez: Technology ‘Powerful Foundation’ for Real Estate Finance Solutions
LOS ANGELES–Mortgage Bankers Association Chairman Elect Rodrigo Lopez, CMB, said to survive and grow in today’s technologically advanced world and the complex regulatory environment, real estate finance leaders must make greater investments in technology.
“Real estate finance professionals are looking for new opportunities, protection from risk and more efficient operation procedures,” Lopez said here yesterday at the MBA National Technology in Mortgage Banking Conference. “We need effective solutions to bring even better service to consumers. Just like every good building must have a strong foundation, so must our businesses. Technology is our powerful foundation. It is the infrastructure upon which we should invest to keep the industry moving forward, but also moving together.”
Lopez, executive chairman of Northmarq Capital Finance, Omaha, Neb., told more than 1,000 conference attendees that the real estate finance industry–residential, commercial and multifamily–three main issues:
–Finding new opportunities for growing their business, communicating with consumers and reaching new customers;
–Protecting their companies, partners and customers from risk; and
–Complying with regulatory standards effectively, but also efficiently, so as not to disrupt customer service.
“From each of these perspectives, technology has been a major part of any discussion,” Lopez said, “and begs the following questions: How can we serve our customers better? How can we reach more consumers with our message? How can we attract and retain new employees? And can our internal operations run more efficiently for our business and our customers?”
To accomplish this, Lopez said, information management and information technology must be owned at the C-suite level. “A culture of technology must start with the CEO if it is to truly be incorporated throughout the company,” he said. “CEOs should be intentional and deliberate in their strategic thinking by integrating technology with operations, risk management and customer service.”
A company’s technology and management staffs have a duty to each other, Lopez said. “CEOs have a duty to fully include technology at the most senior level of the organization and technology experts have a duty to communicate precisely and effectively at that level,” he said.
A culture that supports the importance of technology also includes a culture of diversity, Lopez noted. “Building diversity within our operations, starting at the C-suite level, can also help us grow our business,” he said. “MBA has been talking about diversifying our industry to better reflect our customers. Diversifying our workforce also brings more strategic vision to our businesses and allows for better decision making. Cultural diversity can lead to broader ideas and greater success. MBA believes diversity should be incorporated into every aspect of the real estate finance business.”
Lopez noted that while the mortgage industry as a whole has made progress in optimizing technology, many in the business have a long way to go. “With consumers using hand-held devices for everyday life activities, the mortgage industry has been making incredible strides toward fully electronic mortgage transactions,” he said. “We now have online mortgages, e-closing capabilities, digital prequalification and personalized video disclosures. Each of these complies with regulatory standards. Technology has also improved settlement and title services.”
But if the industry continues to go digital with customer service products, “we should also embrace social media as a way to communicate with consumers,” Lopez said. “Some MBA members have propelled themselves into social media while others still have reservations. This is understandable. In some ways–social media is still the great unknown. But if the industry does not learn and take advantage of social media’s usefulness, we could miss out on a great number of new customers.”
Advancements and improvements go beyond the buying process, Lopez said. “Servicing is a complex business, even more so in this post-financial crisis world,” he said. “While we are nearing the end of the effects of the economic downturn, we recognize that some consumers are still struggling. To better serve consumers who may find themselves in trouble, technology brought advancements in call processing solutions for borrowers even before regulations were in place. The common thread throughout these enhanced components is improved customer service. Everything we do should be seen through that lens.”
With opportunity also comes risk–cost risk and data security risk, Lopez said, which, if not paid attention to, lead to reputational risk. “We cannot let these risks limit our opportunities. Finding the right and responsible balance of embracing new technology with protection from these risks is key to our success,” he said.
Advancements in database technology, use of social media, email, Intranet, cloud technology makes businesses run smoother, but, they also provide a target-rich environment for hackers, Lopez said.
“Very often it is not the lender information they are seeking,” Lopez said. “Just think about how much personal information borrowers provide lenders to finance their homes. Beginning with the prequalification stage, all the way through servicing, consider how many businesses, vendors, partners, and people have a borrower’s information. Each step provides a window of opportunity for hackers.”
Bad guys are seeking new ways of getting into lender systems looking for the weakest links. “Unfortunately, that makes the mid-size to small lenders the most vulnerable as they work to update their systems,” Lopez said. “Many do not have the expertise or breadth of resources to protect their data properly. Should security systems fail, this could lead to reputational and branding risks that many smaller lenders simply cannot afford. It could even put them out of business. That is why lenders often look to vendor partners for solving their cyber security needs.”
Consumer demand and cyber security are not the only drivers for lenders to update their technology systems, Lopez said, noting profound changes in the political arena, with new TILA/RESPA Integrated Disclosure rules and new Home Mortgage Disclosure Act regulations.
“For both these rules, should the data or information be incorrect or bear the slightest mistake, there is also litigation risk,” Lopez said. “Lenders are held to a very high standard. They rely on their vendors to help them get this right, so your partnership is more important than ever.”