Just Digitize Everything

I remember the late 1990s when everyone wanted to do an eClosing pilot. Everyone thought that eMortgages would blow up and go mainstream faster than you can imagine. Well, here we are over 15 years later and today everyone is talking about the digital mortgage.

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Maybe I’m old school, but to me it doesn’t matter what you call it, just do it. Lenders have and should automate and/or digitize every-thing. It just makes sense.

Why does it make sense? First, because higher interest rates and a slowing of refinances as a result demand that lenders be as efficient as possible. And interestingly, the higher rates are not scaring away younger borrowers that want a more convenient, digital process.

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According to data compiled by Ellie Mae, conventional loans remained steady at 64 percent of all closed loans by this generation, while FHA mortgages stayed at 32 percent—a market share they have held since June. The average loan amount for loans closed by Millennial borrowers in August of 2017 was $185,919, which was a slight increase from August 2016’s average $184,113, despite the average 30-year note rate having increased to 4.211 percent from 3.706 percent last year.

In August 2017, the average Millennial primary borrower was a 29.4-year-old who took out a Conventional loan of $185,919 to purchase a home with an average appraised value of $223,882. This average homebuyer had a FICO score of 724, which helped them get a 30-year note rate of 4.211 percent, and they closed on their home in 44 days. The majority (64 percent) of primary borrowers were male.

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Additionally, more than half (52 percent) of borrowers were married.

Overall, Millennials were most likely to close loans for the purpose of purchasing a home (87 percent). Refinances accounted for 12 percent of loans closed by Millennials in August.

And guess what? These borrowers want convenience. So, going digital will both make the lender more efficient and help them reach new borrowers. Beyond these benefits, going digital will also allow lenders to prove their compliance with new rules and regulations that is just not possible in a paper world. I’ll say it again: Going digital makes sense.

Some lenders may wonder: How do I get started? Going digital is actually much easier these days as compared to the late 1990s.

Why do I say that it’ easier? Because technology vendors are launching new solutions literally every day to help lenders digitize. For example, Capsilon, a provider of cloud-based digital mortgage solutions for mortgage companies, unveiled its vision for the future of mortgage production and servicing with the launch of the Capsilon Digital Mortgage Platform, powered by Intelligent Process Automation.

The new Capsilon Digital Mortgage Platform doesn’t replace a loan origination system (LOS). Rather, it integrates with leading LOS’s and uses Intelligent Process Automation to automatically complete key steps throughout the mortgage production process, from the initial loan application to delivery to investors. Unlike Robotic Process Automation, which uses computer programs to mimic simple manual tasks, such as data entry, Intelligent Process Automation uses contextual artificial intelligence to understand which documents, data and rules are required to accomplish key tasks at every step of the mortgage production process, and automatically completes these steps. Human intervention is required only for items that fall outside of established parameters.

And lenders are responding. “UWM shares Capsilon’s vision of how the mortgage industry needs to transform,” said Mat Ishbia, president and CEO of United Wholesale Mortgage. “We’ve partnered with Capsilon for years and think their technology has been key to helping UWM become the #1 wholesale lender in America.”

“The Capsilon Digital Mortgage Platform transforms the speed, user experience, and economics of the mortgage process,” said Sanjeev Malaney, CEO of Capsilon. “By leveraging Intelligent Process Automation, the platform transforms existing mortgage production and servicing processes into a modern digital factory.”

The point that I’m trying to make is that embracing a more digital mortgage process makes sense and the barriers to adoption are becoming few and far between. The real question should be: Why wouldn’t you digitize?

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.