The mortgage industry has seen ever-changing legal and regulatory changes in the past decade. We are already over six months into 2019 and this year too is no different. Industry thought leaders are anticipating more developments and reforms to be on their way.
Mortgage lending companies are still experiencing challenges like high-interest rates, low loan volumes, increasing compliance costs, and rising operational costs. While they are trying to do their best to circumvent these challenges, the bigger one is still knocking on the door ‘The FinTech experience for homebuyers’. Many lenders and top tier banks are upgrading technology to match the homebuyer’s expectations. But the question of whether it is still enough remains unanswered. Based on the FinTech experience, non-banks are now taking over a significant part of market share compared to before. All mortgage lenders are in the process of understanding what their homebuyers want, especially the Millennials.
For millennials, the home buying experience is both a tough financial transaction and an emotional decision. With half of the home buyers in the U.S. being under the age of 36, they drive changes happening in the real estate space. They prefer their mortgage lenders to consult and advise them on the correct match of loan components. They also need their lenders to go to an extent to meet them halfway to match their expectations. The process of choosing a home to buy is much more agile and end to end for millennials than their parents’ generation. The older generations generally relied on real estate agents for their expertise. Now the millennials expect real estate agents to customize their services for each one of them.
Some must-haves for mortgage lenders to attract millennial homebuyers:
1. Invest in technology for seamless communication:
Millennials rely a lot on social media, mobile apps, digital financial transactions, and online research in the home buying process. Lenders need to invest in mobile platforms where the entire team involved in the home buying process can easily communicate with each other. Smoothly connecting the borrower with their loan officer from any location will speed up the load boarding process and simplify buying a house for millennials and all buyers. This way, borrowers can stay in touch with their loan officer for any critical questions and get them answered from anywhere. Millennials are looking for this easy access and are ready to rethink their decision based on this factor.
2. Integrate to automate the process workflow:
Mortgage lenders need to take efforts in integrating the loan boarding process into the mobile platform to improve quality, reduce manual effort, and shorten the closing cycle. Lenders need to integrate and streamline their operations to manage quality control, data integrity, data collection, and validation, pre-close and post-close audits, loan boarding, servicing, and exception handling. This implementation of automation will not only reduce the time to fund but will also significantly reduce the iterations for the borrowers. Minimizing the errors in the process and leading to greater customer satisfaction is a given. Over a period of time, lenders will get benefited from the cost to fund going down.
3. Pay as you go technology:
As a lender, it could be challenging to transgress from a traditional physical loan boarding experience to a digitally transformed one. It requires lenders to invest a significant amount in software development, technology integration, suitable workforce, and compliance. Choosing the right service provider to become your strategic partner in this goal could be a viable option. Many service providers now provide pay as you go technology. Where you pay for the loans you process from the platform, you choose to integrate with your operational systems. Service providers will take efforts to understand your process workflow, the backend technology you use and your clients’ requirements to give you a customized platform. Post integration, you can use it to process loans as per the requirement. It is now becoming the go-to option for mortgage lenders who are optimizing their costs and efforts.
Visionet provides VisiLoanReview (VLR), a cloud-based system that facilitates quality control and regulatory compliance. Monitors document-to-data integrity, performs special loan audits, facilitates loan boarding, and simplifies High-Cost Lending review and remediation. All data and documents related to pre- or post-funding production channels are carried through to loan boarding. Alternatively, you can board loans, run them through the VLR engine, identify and adjust any discrepancies, and then update the servicing system.
Thomas is a Real estate professional with over 25 years of experience in the mortgage banking and financial services sector specializing in client relationship management, business process management and digital technology sales within the mortgage originations and servicing space. He has additional experience in default mortgage servicing and commercial portfolio/asset management. He is a strategic thinker, the performance-driven leader with broad origination and servicing experience, excellent communication skills, and experience in strategic planning.