The New Digital Mandate

Providing mortgage borrowers with a digital experience is no longer a competitive advantage but the new reality for mortgage lenders, according to the findings of a new study by STRATMOR Group, a leading mortgage advisory firm. 

In the January issue of its Insights Report, STRATMOR shares key findings from its 2018 Technology Insight Study. The study, which examines the wide range of system technologies that lenders are now using, found that more than three-quarters of mortgage lenders currently give borrowers the ability to sign disclosures online, while nearly as many lenders allow borrowers to upload documents and respond to loan conditions online.

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“Today’s borrowers expect a digital experience, and lenders that do not empower consumers to upload and execute loan documents online are not only in the minority, but are falling far behind their peers,” says Garth Graham, senior partner at STRATMOR Group. “Still, while lenders are deploying and utilizing digital capabilities on the front end of the origination process, there are great opportunities to gain efficiencies on the back end.”

Participants in the STRATMOR study included independent and bank-owned or -affiliated mortgage companies ranging in size from under $250 million in annual production to those that ranked among the 10 largest in the industry in total origination volume.  The study contains comprehensive mortgage technology data, analyzed and quantified by STRATMOR’s team of data experts.

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In the four years since STRATMOR first began its extensive technology survey, the primary driver of lenders’ technology investments has shifted from regulatory concerns to a focus on improving customer service, Graham says. “Today we have an environment that is about stealing market share and succeeding with the tougher purchase transactions,” he says. “Customer satisfaction and maintaining relationships have replaced regulatory mandates as the top concerns. That means meeting the needs of borrowers and referral sources.”  

Graham says that when considering new technology, most lenders don’t consider the impact it will have on their customers. “That’s a mistake,” he said. “Lenders need to measure borrower satisfaction at a deep level to quantify the impact that any technology will have on their customers. And they need to do so before making the investment in new technology.”

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STRATMOR’s Technology Insight Study is the only independent technology survey in the mortgage industry that gathers data on how lenders feel about their mortgage technology experience, capturing their experiences with their technology from lead generation through post-closing and delivery. 

“The study offers lenders much needed non-vendor-provided data on the technologies at work in the mortgage marketplace,” STRATMOR CEO Lisa Springer says. “This information is vital to lenders that are considering updating or changing an existing system to meet the needs of today’s borrowers.”

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Other key findings of the study include: 

>>76 percent of respondents provide the ability for borrowers to execute disclosures online compared to 61 percent in 2017. 

>>72 percent provide the ability for the borrower to upload documents and respond to conditions online.

>>72 percent of respondents use agency solutions for loan delivery data (ULDD) validation, compliance and loan salability.

>>Ellie Mae’s Encompass was the most used POS technology for the fourth year in a row, followed by Blend.

>>Only 18 percent of respondents said they do not use a company-sponsored lead management tool. The rest use one or more of 24 third-party systems sharing the CRM market, with Top of Mind, Salesforce and Velocify holding the top three spots.

>>Optimal Blue was the leading product and production engine (PPE) among respondents.

>>The study also found that among the different technologies that lenders use, lenders were most likely to stay with their current production pipeline hedging, LOS and PPE technologies rather than switching to competing products.  

“While lenders are generally satisfied with their LOS, we found that many will stay with a ‘good enough’ LOS because the cost of implementing a new solution is so high in terms of licensing, development and training, not to mention the intangible costs of employee resistance to change,” Graham says.