BY RICH SWERBINSKY, PRESIDENT & COO OF THE MORTGAGE COLLABORATIVE
Established in 2013, The Mortgage Collaborative (TMC) is a national cooperative network comprised of 241 best-in-class mortgage lending institutions across America. 59% of our member companies are independent mortgage bankers, 41% are banks or credit unions. We hand-selected 598 key leaders from our lender member network and asked them to let us take their collective pulse on the current state of the mortgage lending industry.
We took what we felt were the 40 most relevant pressing issues facing mortgage lenders and asked the survey respondents to tell us how important each issue was to them in their role with their company. Not very important, somewhat important, very important, or critically important.
“Retention of existing staff” came in as the #1 overall most critical issue and #2 was “enhancing customer experience at the point of sale”. A staggering 85.9% of TMC’s key leaders nationally classified the issue as either “very important” or “critically important”.
The term “point of sale” (POS) was non-existent in the mortgage industry a decade ago but now the acronym POS is as familiar to lenders as DTI, LTV, PMI, and CD. If you asked five mortgage lenders to give you the definition of point of sale, you’d likely get five different definitions. Let’s turn to the always reliable Investopedia for their definition:
Point of sale (POS), a critical piece of a point of purchase, refers to the place where a customer executes the payment for goods or services and where sales taxes may become payable. It can be in a physical store, where POS terminals and systems are used to process card payments or a virtual sales point such as a computer or mobile electronic device.
The point of sale for mortgage lenders used to be a desk in a bank branch or the office of a mortgage company, but boy has that changed. 61% of applications taken in 2020 were completely digital. Most in the industry point to Rocket Mortgage’s 2016 Super Bowl ad as the seminal moment for the digitization of the mortgage application. The commercial famously started with the line “Here’s what we were thinking: what if we did for mortgages what the internet did for buying music, plane tickets, and shoes?” and ended with the words “PUSH BUTTON GET MORTGAGE” strewn across viewers' TV screens.
Rocket Mortgage's 2016 Super Bowl ad was one of the tipping points in shifting the national conversation about digital mortgage applications.
While the immediate impact of that commercial is easy for industry veterans to remember, what’s harder to remember is the controversy that column sparked, causing many inside and outside the industry to associate it with the mortgage meltdown of 2007 and the financial crisis that followed.
No such crisis occurred. And less than two years later in January 2018, Rocket Mortgage became the largest mortgage lender in all of America.
In the mortgage industry, point of sale software allows customers to apply for a mortgage loan from their computer or mobile device, upload documents, track their loan progress, and communicate with their loan officer. Good POS platforms help reduce application fallout, the people that start an app online before giving up. They provide efficiencies for lenders by collecting all the documentation needed to start to process the loan towards an underwriting decision and speed up closing times, boosting customer and realtor satisfaction and reducing hedge costs.
All lenders have some sort of POS platform for customers to apply online and to submit up-front documentation, but our survey results clearly show that upgrading their current offering is top of mind with nearly all lenders across America. Many lenders are still using the POS that is a part of their loan origination system (LOS). Others may have made the wrong bet/decision on which POS platform they went to when they started to become prevalent 6-8 years ago. Some may be happy with their POS but want to provide a superior customer experience through more robust integrations with the LOS and other systems they use and institutions that pull in financial documentation for borrowers. Others may be happy with the computer interface of their POS but not the mobile.
Deciding on POS providers is even more critical is the belief of many leaders in the industry that the top POS platforms of today will become the best LOS systems of tomorrow. Some POS providers are now starting to move into the closing and settlement services space, making it hard to fathom that they don’t have designs on “filling in the middle” by developing a full end-to-end operating system. Leading POS provider Blend recently went public to the tune of a $4.2 BILLION valuation, meaning Wall Street is betting on Blend fulfilling more than just the front end of the digital mortgage process.
We’ve seen mortgage customers go from thinking “PUSH BUTTON GET MORTGAGE” was reckless to demanding the experience in just a few short years. The percentage of home buyers that will transact 100% digitally and demand a slick interface continues to rise each year.
And for mortgage lenders, the cost of being wrong in their decision on a POS provider is very high. Especially if you’ve already been wrong once. The time, money, and institutional bandwidth required to implement a POS are significant. And the criticality of the decision also does not allow for extreme patience, as most lenders view upgrading their tech stack as a race against time, with their larger competitors sitting on piles of cash from what’s likely to be back-to-back record origination years for the industry. And considerably greater internal resources to assess and develop emerging borrower-facing tools and technology.
TMC - Chief Operating Officer