“A digital signature and an electronic signing room are a far cry from your loan officer handing you the keys to your new home at the closing table.”
As I’m writing this, we are close to the New Year, which is always my time to predict what will happen in the arena of mortgage technology for the coming year. Below are a slew of technologies that have impacted, or may soon impact our industry. For each, I give a general overview of the solution, my opinion of where it’s headed, and a cold/hot rating.
ASP – Cool
Solutions that are ASP-based (Application Service Provider) will find a cool reception among mortgage origination companies. Perhaps their biggest weakness, is that they’ll never work on a portable laptop (at least not until we have high-speed, wireless Internet access). On the surface, the ASP model looks very intriguing, but look under the cover and you’ll see a long list of problems. An ASP solution will only be viable for a small minority of people in the industry. It will be the entrenched technology providers that will supply these systems, if they ever make sense. The many startups currently coming on-line will find high losses and lack of customer acceptance. Mortgage companies investing their staff into these solutions will find their experience troubling. However, it should be noted that many other ASP solutions should be hot. These include e-commerce solutions for wholesaler-to-broker communications, management reporting solutions, providing loan status to third parties and many others.
Broadband Access – Hot
We’ll see the majority of the mortgage industry adopt broadband access solutions to the Internet. This could be ISDN, DSL, Cable modems, T1, or even some of the new high-speed, wireless solutions. As we become far more reliant on the Internet for our day-to-day business, we need to ensure that our employees are operating at peak performance. You can’t expect a loan processor to use the Internet like it should be, when they’re communicating at 56kbps or less. If you aren’t using high-speed access today, you should be soon.
Digital Signatures – Cold
I find it hard to believe that a loan officer and Realtor are just going to tell their client to log-on and close on their house. This is the biggest purchase of a consumer’s life, and all those documents are daunting to say the least. A consumer will want their hand held as they pour through the 100-plus pages of a closing package. A digital signature and an electronic signing room are a far cry from your loan officer handing you the keys to your new home at the closing table. With that said, there are some uses for digital signatures. For home-equity loans and up-front disclosure packages, they could work great. Even refis could be handled this way. However, there’s still a major problem. Consumers will have to obtain a digital certificate, which still requires seeing a notary and completing a somewhat difficult process.
E-Lenders – Cool
I gave a speech at the Annual National Association of Mortgage Brokers (NAMB) conference about the demise of the dot-com e-lenders. I provided a long list of everything that was wrong with the model and why originators need not concern themselves with the then occurring onslaught of well-funded pure Internet lenders. Wow, did a lot of money get thrown away. There still isn’t much of a future for e-lenders. However, the online world may still take something from the average mortgage originator. Most susceptible are refinance loans, where large services may produce streamlined refinancing options from their websites. Consumers could simply go to their existing lenders’ site and answer just a few questions to have their rate lowered. Income from refinances is something most mortgage originators rely on today, but that could soon be lost. The majority of home-equity loans may also be sourced through the Internet in the future. The good news is that the vast majority of purchase transactions will continue to flow through local originators.
Electronic Document Delivery – Warm
While the signatures may not be digital, everything else will be. Sending documents through the Internet is a great way to make our industry more efficient. Already, many companies are doing this on a regular basis and you can expect it to go mainstream.
Electronic Transactions – Hot
Ordering credit reports electronically has been popular for many years. However, the other transactions, like appraisal, flood, and title orders have yet to gain widespread use. We are seeing a significant increase in the ordering of all types of services electronically. Eventually, like credit reports, electronic orders will become a defacto standard.
by Scott Cooley