Q: Has technology improved the mortgage transaction process over the past five years? And on the flip side, has technology made things less efficient?
Patrick F. Stone: Yes, but we can still do a lot more. We’re still well behind many other industries when it comes to maximizing the benefits of technology.
Because we are such a segmented industry, it can be challenging to integrate or standardize all of the different technologies used today by Realtors, lenders, settlement agents and consumers. I suspect that it will take more than a little prodding to get us to that “cradle-to-grave” technology we’ve been talking about for years.
As to having a negative impact on technology, I don’t believe so at all. Technology is simply a tool. It will do as much or as little as the people using it allow it to do. If tech has made something less efficient, it’s probably because that business or person is using the wrong technology, or misusing it altogether.
Ultimately, technology has allowed increased productivity in all segments of the process, so we have to judge it as a meaningful positive.
Q: Can the TRID-related changes to the industry improve the transaction process, or will it make things worse?
Patrick F. Stone: Although it will certainly cause some difficulty in the initial weeks, I do think TRID will compel our industry to at least start to break through the silos that cause inefficiency, redundancy and overall wasted effort. It’s certainly going to force originators and settlement services firms to interact and collaborate more meaningfully and consistently. The initial emphasis on data exchange has already opened the door to significant conversations around integration and process improvement.
Perhaps the most important impact of TRID, which has received little or no notice, is the impact on the fall-out ratio. Nationally, it seems about 70% of all opened refinance orders close, and about 80% of all opened resale orders close. The Combined Disclosure and the timing and process involved will lower the fall out rate. Any additional benefit derived from technological integration should also positively impact the fall-out rate.
If at the end of the day, TRID results in a reduction in half of the “fall out” rate, all participants in the process could see up to a 10% increase in overall revenue with only about a 3.5% increase in expense.
Q: How has the mortgage industry embraced mobile technology? Is it doing a good job on this front, especially in regard to improving the transaction process?
Patrick F. Stone: No. For most participants, engaging in mobile and interactive technologies is still an opportunity, not a reality. There are few if any applications currently experiencing meaningful use, outside of property research and document execution being used by Realtors and consumers.
Most process technologies do not have any mobile applications, with only a handful of lenders and settlement agents experimenting with potential usage. WEST, a WFG subsidiary, is beta testing a mobile “consumer dashboard,” which will allow the buyer and seller to tract the status of their transaction on their smart phone, but outside of that, most mobile technology usage is still limited to the front end of the transaction.
Q: Of course, all technology is subject to cybersecurity concerns. How would you grade the industry’s response to cyber threats?
Patrick F. Stone: “A” for effort, but maybe a “C” for execution. Cybersecurity is a growing concern, but most people fail to realize that it is a dynamic threat – one that continues to evolve and grow, not a one- time “I have fixed the problem” type of challenge.
Those firms that believe they simply have to hit a certain threshold or target with their cybersecurity, or simply make a one-time upgrade of sorts, will be extremely vulnerable to future threats. It’s not enough to plug in a system or procedure and then walk away. Cybercriminals are always evolving; always improving their tools and methods. So, any business out there which believes it can simply plug in a security process and then ignore it will probably be in for a rude surprise down the road.
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.