Where does the mortgage industry really stand with digital mortgages?

Frank Fiore, President at TMC preferred partner matchbox & Ignite shares his thoughts on the digital mortgage "revolution", where he sees the industry on its journey and areas that lenders should be looking at as they develop their digital mortgage strategies. 

Digital Mortgage Revolution…Really???

As we settle back into our desks this week, fresh back from the MBA Technology conference, companies are managing the balance between shrinking profits, reduced margins, and implementing a digital mortgage strategy. After meeting with multiple clients last week and over the past month, companies are starting to (or struggling to) implement their Digital Mortgage strategy. We have heard for a few years now that this Digital Mortgage process is real and coming and, in some cases, has been termed a Revolution and a new age of Mortgage Lending. This innovation that has infiltrated the Mortgage Market in the past few years has been exciting and will appeal to those elusive millennials when they decide to become homeowners.  To call this a revolution is a stretch and, for me, we have a way to go before I would say it is here to stay. If you have doubts, I will attempt to lay out my case for more needed work on the Digital Mortgage front. Here are some views that have been compiled over the first quarter:

Where is your Digital Mortgage Help Desk?
Many feel these Digital Offerings are set and forget, however they are anything but systematized. Between assisting Clients, Loan Originators, and possibly Processors; you need a team of people to support your digital technology offering. Depending on the choice of platforms, there are user names, potentially multiple passwords, and just explaining basic functionality for these systems. If your objective is to capture those millennials, there is another harsh reality: 1) they are only going to give you one shot to get this right and 2) they are going to access your platform while out to dinner on Saturday night with a friend, who tells them about this great new app, and when it does not work your chances of getting them back will drop dramatically without a good technical support process.

Are your Digital Mortgage loans closing any quicker? 
There has been no pure evidence that has proven in a busy market this is true. Yes, there has been some data that points to a shorter life-cycle in February, but where are those loans going to be in June and July in the height of the season. If your process slots a digital loan in the same Underwriting bin as your other loans, how are your Digital Mortgage loans going to perform better? The Digital Mortgage process does not end when the application is complete and docs are received. It begins then and many are missing this. Your Digital Mortgage workflow is one that must start with the application and end at the closing table. What happens in between should be a streamlined, efficient, validation and confirmation process.

Has your Processing Strategy changed?
Some feel that the Digital Mortgage strategy should ease the Loan Originators role in the process. I tend to disagree and feel that when implemented correctly, the Processing role should experience the biggest change with a Digital Mortgage implementation. If your offering, can access and possibly verify the majority of your borrower's documentation, then the Processor's responsibilities are dramatically reduced. If you have your Order Desk as part of the Processing department, then the point is even more convincing. The Processing role is one of the most varied within companies. It is often inconsistent and the execution of tasks come in varying levels. A good Digital Mortgage strategy should allow companies to improve their Processing workflow, turn times, and overall cost.

Has your Secondary Execution improved?
Part of the Digital Mortgage vision is to have Digital loans that are cleaner, close faster, and cost less to produce. In terms of decreasing cost, Secondary should be looked to as a main player in reducing the cost at the loan level. A good digital loan should come in with most of the information validated and locked without need to extend or re-locked. Once items are validated, your Secondary hedge cost should be locked-in and reliable for the estimated execution period.  We have not encountered a company that is looking at Secondary as part of their Digital Mortgage strategy. If these loans are to perform as advertised, Secondary profits should be increasing or Digital Mortgage loans monitored at a minimum.

Have you incorporated you DM strategy into Training and Marketing? 
Like most topics these days, when you dig -own into your staff and discuss your company's Digital Mortgage strategy, you will get varying opinions. Some will love, some will hate, and most will not care or see a difference. A good Digital Mortgage strategy must include an internal marketing strategy.  You team must understand why it is being implemented and what the anticipated benefits are for them and the company. A memo or e-mail is not adequate to gain understanding on your Digital Mortgage strategy and its implementation. The investment of time to demonstrate the vision behind your strategy and positive impact will affect its success.
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The Digital Mortgage "revolution" is exciting and has potential for greatness within the industry. A true revolution does not start and end on the front lines.  It is an end to end strategy in which the whole team understands the mission and provides a beneficial improvement to the company for years to come. We continue to see an unbalanced level of attention being placed on the front-end process, with no attention being paid to the other key parts needed to make your Digital Mortgage strategy successful. Our team at matchbox is skilled at helping you set up your other areas to match your front-end process. As the weather turns, and volumes start to grow, your Digital Mortgage strategy needs to keep pace to make your investment pay off.

The matchbox & Ignite teams are in the development lab improving their current tools for 2018. To learn more, contact Frank Fiore.