The Digital POS Movement

The digital mortgage revolution resulted in a mad rush to mortgage websites and online 1003 applications. But lenders struggled to turn their new website visitors into borrowers. That’s where a digital POS factors in: A POS makes buying a mortgage like ordering a product off an ecommerce platform, at least the good ones do. With a digital POS application, mortgage companies can close more loans faster at a lower cost than traditional loan origination.

E-commerce volume increased nearly 12% y/o/y from 2016 to 2017. Expect for that same trend to follow people shopping for mortgages. According to a study by the National Association of Realtors, 44% of all homebuyers began their search online. 95% went online to gather information at some point, including 99% of Millennials and 77% of Silent Generationers. Digital home searching generated tangible results, spurring 76% of Millennials to drive by a home because they saw an online advertisement. Although the data indicates that digital is vital to capturing homebuyers of all ages, the data also demonstrates that capturing the Millennial buyer provides the most robust and lucrative opportunity for lenders.

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Millennials make up about one-fourth of the US population, signifying a 77-million-person opportunity for the mortgage industry. According to Inc. Magazine, Millennials make up 66% of first-time homebuyers and 66% of them plan to buy a home in the next 5 years. As of 2017, Nielsen estimated that Millennials wield more than $1 trillion in annual buying power. The October 2017 composite forecast of Fannie Mae, Freddie Mac, and the Mortgage Bankers Association for 2017 mortgage origination volume reaches approximately $1.8 trillion. If Millennials compose 50% of this mortgage volume, and two-thirds of them apply online via digital applications, that represents $600 billion in digital mortgage origination. This number is massive. Better yet, it’s conservative.

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Digital POS’s further impacts lenders by streamlining the loan origination process and mitigating the slowing effect of regulatory compliance. The loan origination process always stood as a long, arduous, drawn-out series of sending documents for verification, waiting to receive them back, and then reeling in borrowers to sign and approve each step of the process. Then came 2008. When the mortgage market collapsed, lawmakers dropped a bomb packed with regulations and compliance standards like Dodd-Frank, RESPA, TILA, and CFPB. According to the Mortgage Bankers Association, between 2010 and 2017, mortgages took 70% longer to close and origination costs skyrocketed 80% as the burden of regulatory compliance grew.

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But technology is turning the tides. According to a November 2017 article in The Mortgage Reports, mortgage closures averaged 43 days, down from 51 days earlier in the year — a near 16% decrease with no help from decreased regulation. With today’s most advanced digital POS, lenders need not send documents to various verifiers and wait days on end to receive confirmation. Seamless data integrations and automations engineered into digital POS’s shave days off of loan origination timeframes. As integrations and automation speed up loan processes, it also cuts costs and leads to more closed loans.

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