A Critical Inflection Point

When you look at the 2017 J.D. Power U.S. Primary Mortgage Origination Satisfaction Study, it shows that 43 percent of mortgage customers applied digitally in 2017, compared to just 28 percent in 2016 – that’s a 15 percent increase on a nominal basis, but a 54 percent jump on a relative basis.

“We’re at a critical inflection point in the mortgage industry where new technology and the growing use of digital mortgage application channels has made it possible for the origination process to move more quickly; however, the customer is still the final judge of speed and quality,” said Craig Martin, director of the mortgage practice at J.D. Power, in a press release.

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So, what does this mean? It means that consumers’ preference for digital mortgages continues to grow, and that lenders need to adapt to maintain their top and bottom lines. It also means that lenders must provide the optimal digital mortgage experience, or borrowers will open up a new tab, scan Google for another lender, and find an easier way to get a mortgage. Configurability is a key factor to operating an optimal digital mortgage platform. Essentially, technology – software especially – must be customizable and adaptable, two key tenets of configurability.

Technology isn’t meant to completely overhaul business and make it unrecognizable. The right technology—configurable technology—plugs into lenders’ operations and augments their capabilities. This includes meeting operational requirements, satisfying borrower demands, and maintaining brand integrity.

The J.D. Power study also indicated that among other factors, trust in the brand of the lender plays an important role in attracting borrowers. Consistency plays a key role in branding.

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For instance, if a lender’s logo is black, blue, and grey, that lender’s website design should align with those colors. On a higher level, let’s say that lender specializes in VA loans. If that lender buys a cookie-cutter website, it might not be able to highlight its VA loans or separate it from other loan types like the rest of its marketing collateral does. Customizable websites allow the lender to add in factors like this, maintaining its brand integrity and satisfying its borrower base.

Digital point-of-sale (POS) applications are just as vital to maintaining brand consistency. Let’s say that lender’s website fulfills its role at marketing, and a website visitor decides to apply for a loan. The borrower clicks the “Apply Now” button, giving way to the POS application. If the software transition from website to POS isn’t smooth, then the website visitor’s transition to borrower might not happen. If the POS application isn’t customized, it might appear like a foreign site—not controlled by the lender—to the borrower. Mortgages require sensitive information, and borrowers don’t want to hand it over to just anyone or any application. Customization maintains trust. Trust maintains that borrowers complete digital applications.

Configurability also allows for lenders’ digital mortgage platform to sync with their existing operations and business needs. For instance, let’s say a lender already operates through a loan origination system, but plans to add a POS to its digital mortgage platform. That POS needs to integrate with the loan origination system to ensure that lenders enjoy the full benefits of digital mortgages—to ensure that processes get expedited and workflows get streamlined.

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If that lender operates in different states, its POS might require customizations to request additional information or provide different disclosures. Configurability makes sure that a borrower in New Jersey doesn’t read disclosures that are specific to Texas or Ohio, and vice versa.

If you’re investing in digital mortgage software, you should receive the software you want. Let’s say you have 10 key components you’re looking for in digital mortgage software, and you’re looking at two companies to provide a POS application. Company A satisfies 8 of your components, while Company B only satisfies 7. Company A does not have configurable software, while Company B does. Within a matter of weeks, Company B can develop its software to satisfy all 10 components – while Company A can’t.

And technology keeps changing. You might come up with new requirements. Company B, the configurable one, can adapt and change as your business needs change. Perhaps you open a branch near the coast, and need to integrate flood insurance information into your digital POS application. Configurable software allows developers to add in data-entry fields for flood insurance and integrate with new third parties. Digital POS’s request address information of the prospective home tied to the mortgage. When borrowers enter that information, the POS can integrate to third parties that verify the address location, and identify if that home will require flood insurance. This integration allows for flood insurance information to only appear when it’s required, maintaining the integrity of your digital mortgage while acquiring new business.

Something else that keeps changing: Compliance – one of the most crucial factors lenders worry about. Today, lenders can’t close loans—let alone operate—without compliance. Imagine that you invest thousands of dollars in manufacturing your digital mortgage platform and spend hundreds of hours training your employees, then the CFPB comes out with a new or changed regulation. If your software isn’t configurable, making this change may pose difficulties. If it is configurable, the pain is lessened. Moreover, chances are that your configurable technology provider emulates the software it produces – being cutting-edge, adaptable, and forecasting potential changes. Thus, they might have already anticipated this change, and are in position to make this adjustment as seamless as possible.

Perhaps the most critical factor to configurability entails the capability to integrate freely and seamlessly with third-parties. I mentioned loan origination systems earlier. Other third-parties include websites and content management systems, customer relationship management (CRM) systems, credit and data verifiers, banks and other financial institutions, and the IRS. Some companies fulfill a range of these needs, which make their integrations even more valuable.

Integrating to third parties expedites process, streamlines workflows, and reduces costs. Integrating with CRMs allows for loan officers to process leads and bolster marketing efforts. It also helps them maintain updated statuses with current prospects and borrowers. Integrations with credit and data verifiers ensure the secure collection of valid, compliant information from trusted third parties. Integrations with banks and other financial institutions plug asset and income information into borrowers’ applications. Borrowers no longer write—let alone type— line after line of information; they simply enter their account numbers and move onto the next part of the application. Originators and processors no longer need to request bank statements, wait to receive them, parse through them, mark red flags, contact the borrower, and snail mail the document back and forth to settle discrepancies. Integrations pull bank statements for originators. Automation helps processors parse through the statements with more ease. Digital POS’s provide a digital portal for loan officers and processor to settle discrepancies with borrowers with a few clicks of a mouse.

All of these integrations change – think about how often your smartphone updates itself. Lenders’ digital mortgage software needs to seamlessly adapt to integration partner updates. Let’s say the IRS conducts a regular software update. If a lender’s POS application doesn’t update along with it and the integration goes haywire, borrowers won’t be able to pull their tax information into the application. Now, the borrower will have to wait to enter that information at a later time, and the loan origination timeframe gets extended—the opposite of what digital mortgages are intended to do. Even worse, the borrower might get frustrated, abandon the application, and find another lender.

At WebMax, we configure our software to fit our clients’ needs. Whether it’s designing the front-end to fit branding guidelines, plugging into a third party’s API, or adapting to new regulations, we constantly innovate and design to ensure our clients remain on the cutting edge of the digital mortgage revolution.

A key integration for us is our bi-directional sync with Encompass, the loan origination system, which we achieved thanks to our configurability capabilities. This brings boosted efficiency and even smoother processes to loan origination workflows.

Digital POS’s and loan origination systems do not always employ two-way communication. We all know that just because a mortgage application is submitted, it does not mean that the application is complete. The borrower may re-enter to submit supplementary documents, add another bank account, or update some information. When the borrower updates his/her information in the POS application, his/her information may not get updated in the loan origination system. On the other hand, if a loan officer, processor, or underwriter updates information in the loan origination system, the POS might not receive that update.

The bi-directional sync with Encompass ensures that fluid, two-way communication exists between POS applications and the loan origination system. This makes sure that loan processes are accurate and functional, and that information is up-to-date and compliant.

“It is not the strongest or the most intelligent who will survive but those who can best manage change,” said Charles Darwin.

Technology may be powerful and game-changing. But if it isn’t adaptable—configurable—then it will not last the digital mortgage revolution.

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