Josh Friend, founder and CEO of Insellerate, recently switched car insurance. He went to a website, put in his name and address, and within minutes, the site had pulled his details — the car, the drivers, his current coverage — as well as new insurance options and corresponding prices.
“With a few clicks I was insured; it was fantastic,” Friend says, adding that the mortgage industry has all that same information digitally on consumers, “we’ve just done a poor job in putting it all together.”
A lender originally, Friend founded Insellerate because he needed technology to manage client data — to automate communication with his customers and track that reach-out.
“It’s about the digitization of all the data to improve efficiencies. What we lack is a website that allows consumers to get a mortgage online, start to finish — like I did with my car insurance. Times have changed, and consumers have definitely changed.”
Mortgage technology platforms are rapidly evolving as the COVID-19 pandemic accelerates the shift to making the home-buying process fully digital. As the industry shows increasing dissatisfaction with technology platforms that are, in many cases, decades old, cutting-edge technology is becoming increasingly important as everyone strives to develop novel ways to engage with the market, streamline technology and ultimately give customers what they want.
The inescapable COVID effect
COVID-19 was a forcing function for digital transformation, not least of all because people got used to the at-home digitization of buying. They go online and get what they want, when they want it, from Amazon to Uber Eats. But for mortgages, “that definitely wasn’t the case — at least not across the industry,” says Brian Zitin, CEO of Reggora and co-founder of its software that streamlines the appraisal process, one of the main bottlenecks in the mortgage process.
“We’re delivering two-day appraisals through an Uber-style approach of matching the right appraiser to the right order at the right time,” he says, adding that this digitization of the existing business model is where mortgage technology is headed.
Spurred on by the impact of COVID, the industry realized the long-standing traditional model is limited, says Dominic Iannitti, president and CEO of DocMagic. His company offers e-closing software, which has been booming in popularity during the pandemic.
Clients and lenders are looking increasingly at how to improve their processes so the face-to-face requirement that’s a big part of the workflow is no longer necessary,” Iannitti says. “I don’t want to call it a renewed push, but we’re seeing a big push towards enhancing their technology stacks.”
While the majority of the players involved in a mortgage transaction are comfortable with the paper-based, linear process, the pandemic highlighted the fact that it’s ultimately slow and ineffective, Iannitti notes, and the record volume has pushed the industry further into tech territory. DocMagic has been fielding rising numbers of people looking to expand their technology and go entirely paperless as, facing a slight ebb in the number of transactions that have been rolling in, lenders can now take a breath, look at what they need to do to meet demand and get that ball rolling.
“Mortgage technology continues to be critical because it’s how lenders differentiate themselves; it’s how they improve their processes and their bottom line,” Iannitti says. “Technology enables them to handle a high volume of transactions effectively and not let anything fall through the cracks.”
At the end of the day, if you can’t operationally keep up with the demand, “you’re going to burst at the seams, have poor consumer experiences, not get referrals — and ultimately hurt your business,” says Zitin.
“It’s not just that tech-savvy lenders will be ahead of the rest — it’s pretty much a matter of survival to keep up with the digital transformation issues.”
More than the push of a button
Though a conservative approach to compliance has slowed uptake in the industry, technology is no doubt the key to facing new challenges and new consumer buying patterns, Friend says, predicting things will drastically change in the next five years.
“It’s been a challenge for the industry to evolve because of regulations and technology needs, but we’re selling a commodity, and there’s only so much time that’s going to be allowed to pass before we push the regulations and say it’s time to let consumers get mortgages easier,” he explains.
The last decade or so brought “the true introduction of any decent technology at all,” Zitin says, but now the larger trend in mortgage is the next-generation version with modern software development, application programming interfaces and the actual transformation of how these things happen in the real world. Fintech will continue to become the dominant force, “and we’re definitely going to see a transformation of the process,” Zitin says, adding that the industry is already seeing a divergence from the traditional mortgage process – for example, the blending of real estate agents and lenders.
“We’ll continue to see the digital transformation of pure technology and also the changing of some of these business models — which is what we’re doing specifically in appraisals by continuing to digitize the experience,” Zitin adds.
“We’re trying to push the envelope and rally the industry and regulators to align with that as well.”
Iannitti says in the past, DocMagic was more of a technology company in the sense that they would create something, make it as easy as pushing a button and then be done. But with the demand ramping up, they soon realized there’s a lot of strategy and technology planning that accompanied the adaption of their products, and that transition required expertise.
DocMagic established a dedicated e-close team “to hand-hold lenders uncomfortable with crossing that chasm to a paperless environment and advising them through that process,” Iannitti says, adding that kind of support for clients taking on new tech “is where the industry needs to go — and we’re committed to getting it there.”
He also predicts that as things continue to develop, lenders that are really looking at tech as a strategic move are concluding it makes a lot of sense to find a provider who offers “as much of the pie as possible in one fell swoop.”
On your marks
Inefficiencies in data and workflow are behind rising mortgage costs, and technology is going to change that, says Friend. The race is on to provide the perfect customer experience through technology that allows users to “communicate with you how they want to communicate with you, and you’re able to communicate with them when it’s important.” Enabling clients to get their own loan done with 10 button clicks and without ever having to talk to someone unless they prefer to is the holy grail.
“Last year, rates were so low you could essentially do everything wrong and still make as much money as you wanted, but that’s changed a bit now — if you want to continue to make money, you have to become more efficient,” Friend says, adding that if you do it well, the cost to produce will take a dive, you’ll make more money, which means you’ll be able to give consumers a better price, and retention rates — always a challenge in the industry — will go through the roof.
“That’s where the race is on — to be the person or tech company who provides that,” Friend says. “From the regulation and technology standpoints, we’re in a good spot right now where people want this and know it’s needed.”
This may be the year mortgage tech finally breaks through in a big way — which is why this industry research by Mortgage Professional America is so important.
To be considered for the 5-Star Mortgage Technology Provider Awards 2021, companies submitted their information, including the solutions they offer and the attributes that set them apart.
MPA’s editors and researchers spoke to originators and tech specialists across the country to help determine which companies were worthy of the recognition.