The Digital Mortgage is Here: Part I

An industry steeped in structure and security is on the brink of transformational change. The factors needed to make a true digital mortgage (from application to close) a reality are accessible and organizations buzz about their ability to support the workflow. Yet we aren’t seeing widespread adoption or scale.

What is happening in the mortgage industry and what does it mean for you? In this educational blog series, we will dive into an ecosystem that is primed for change, the promises of change agents, and all the asterisks that complicate our shared transformation.

The Catalysts

It’s no secret that the real estate finance business needs to be accelerated. Let’s address the factors that add pressure and make the need for a solution all the more urgent.

Legal Frameworks

Regulations and legislation combine to set the stage for digital workflows:

• e-Signatures are increasingly prevalent during application, initial disclosure, and escrow opening package stages

• Case law supporting eNote legal enforceability in 2016 (Buckley Sandler Article)

• Strong GSE support for eMortgages/eNotes (Fannie Mae online resources and Freddie Mac online resources) going so far as to create approved vendor lists (Fannie Mae and Freddie Mac)

• Utilization of In-Person Electronic Notary (eNotary) and Remote Notary (rNotary) laws (ALTA Article, National Notary Association White Paper, NASS Guiding Principles for Remote Notarization Standards)

Loan Processing Costs

Expenses in the mortgage banking industry are on the rise, increasing urgency for efficient processes:

• Loan processing costs are rising dramatically (up 50% since 2013 to almost $9K per loan in 2017 according to MBA)

• Implementing TRID and other regulations have been time-consuming and costly, while upcoming HMDA regulations will continue to burden organizations

Borrower Expectations

We live in an on-demand culture, meaning heightened expectations and lessened patience.

• Convenience and easy-of-use are paramount for all consumers

• Millennials will find brands that meet their needs and 66% expect real-time responses and interactions. (Salesforce)

• These expectations are supported by industry data that states borrowers with a digital experience (application through closing) have a higher Net Promotor Score (NPS) – likely resulting in repeat business

This confluence of factors provides a unique opportunity to deliver on the promise of a true, end-to-end digital mortgage through the closing table experience, while solving for the consumer and profitability demands of our industry.

In our next post, we take a look at those solutions and their role in evolving this industry.