Although attendance was down at the Mortgage Bankers Association’s (MBA) Technology Solutions Conference earlier this month, attendees at the San Jose event were very bullish and upbeat on the outlook for technology and what it could deliver even in this difficult market.
The big push at many of the presentations was AI, bots and the potential of using data and analytics to drive operational efficiencies and reduce risk. Leveraging technology to augment human capital is clearly an appealing strategy—both short and long term—for many lenders who have been forced to reduce staff to match lower volume levels. The views expressed at the conference align with the findings of recent research conducted by Wolters Kluwer. Our survey asked 110 mortgage executives what they thought would drive operational efficiency in the future? More than 70% of the respondents pointed to technology as the driver versus additional hiring.
Attendees also emphasized the importance of integrating technology into leading industry platforms, and the advantage of doing more business with fewer partners that have the ability to deliver multiple solutions at scale.
Digital lending continued to be a hot topic at the conference. Interestingly, the discussions around digital lending and closings, now begin with the assumption that the borrowers want this modern, convenient experience. The debate now focuses on why the rest of the mortgage ecosystem is struggling to deliver it.
Getting started in digital
My colleague, Kevin Wilzbach participated on a blue-ribbon panel, moderated by Tim Renner of Falcon Capital Advisors, that covered a range of considerations in starting a digital lending program. Joining Kevin were subject matter experts from Freddie Mac, a leading document provider and a major lender that had recently completed a digital transformation.
The session covered a broad range of topics, including strategy, counterparty requirements, vendor selection, training, MERS registration and investor approvals.
Some of the points Kevin and his fellow panelists made:
- Digital lending is a very broad and all-encompassing concept. One that can be confusing in some respects, overwhelming in others.
- While the panel discussed end-to-end solutions, this is a process that can incur incrementally: It doesn’t have to happen all at once.
- The reality is that there will continue to be a need for disparate types of closings. A lender might implement RON, but then find that IPEN might work better for purchase closing ceremonies, for example.
- A lender needs to understand the readiness of it counterparties. Not every lender is selling directly to the GSE or pooling loans for Ginnie Mae. Many sell to aggregators and rely on warehouse lenders, and these two groups have been slow to accommodate digital assets. So, lenders need to understand who they are selling to (or maybe in the future).
- Similarly, they need to understand the readiness and acceptance of your settlement service providers, title companies and custodians. They will all be digital someday. Just some are ahead of others.
- In considering a closing platform, as part of a digital strategy, should it be a propriety platform or an open/agnostic one that can work with any settlement service provider or title company? This is an important factor in purchase environment, like the one we are in…because the lender no longer controls the title.
- A launch doesn’t have to occur after everything has been solved for in an entire digital lending plan. A launch can occur when the lender finishes an incremental deliverable. Think paper, then hybrid, then eNote, then RON. At each step, over time start small, measure, improve, & continue. Every finished piece or phase can and does produce a “win.”
The bottom line: Start what you can where you can.
