Automation is becoming a reality in every aspect of our lives, from refrigerators that order our groceries to self-driving cars to the digitization of our finances. We expect every experience involving technology to not only make our lives easier – saving us time and money – but also create opportunities to connect. How we finance the purchase of our homes is no different. So, as we seek to harness the efficiencies of automation in mortgage lending, let’s build a system that actually preserves the interactive human touch points crucial to a successful mortgage origination.
Buying a home is one of the biggest financial decisions and purchases we make in our lifetime. It’s also the most complex. Until now, deep technology has never really penetrated the mortgage industry, and so lenders aren’t able to provide a fully automated lending experience that today’s borrower wants, particularly on mobile. Bank statements, letters of explanation, credit reports, and verifications of employment all have to be painfully extracted from the borrower and a host of other entities. This culminates into eighty five percent of all mortgage files having between 400 and 2,000 pages of documents. For lenders, loan manufacturing is a process requiring up to 20 individuals working on any given file. The ultimate outcome is that it takes an average of 45 days to close a file, according to a recent Ellie Mae Origination Insight Report. Full digitization could reduce that to 22 days.
The digitization of data – pay stubs, bank information, credit scores and other loan elements – has only recently changed the way mortgages are done. Now completing an entire mortgage application on a mobile device in 20 minutes relying on up-to-date, verifiable data is possible. Soon, lenders will no longer need to spend the majority of their time checking and collating documents and manually processing files. As a result, increased automation promises to drive down origination costs – which currently stand at more than $7,000 for every loan – ease compliance, and allow lenders to offer consumers a delightful borrower experience and shorter time-to-close. Lenders will also gain unprecedented insight into their loan portfolios, something that has become possible in this new era of the data-driven mortgage.
Even with advances in mobile, digital technology and the desire of consumers for a frictionless, real-time consumer experience, buying a home is still about relationships. The mortgage ecosystem benefits from humans with the nuance and intuition to guide borrowers through a high-stakes and emotional purchase. Subtle and adaptive human minds are also necessary for identifying fraud as well as dealing with non-vanilla loans and edge cases.
In the end, the mortgage system emerging from this human-automation symbiosis should be designed to delight both borrowers and lenders. Automating the simple, repetitive tasks will free more elastic human skill for where it is truly needed, giving staff more time for higher-leverage work such as business development and tending to existing customers’ needs. Leaving the collating and copymaking to computers will strengthen the industry and liberate mortgage professionals to tend those supportive relationships American borrowers need most.