Blockchain, machine learning, artificial intelligence, big data. The list of new technologies seems endless.
Some may dismiss these as “buzzwords,” but in residential mortgages, technology is changing every aspect of home lending at breakneck speed.
Even technology itself is evolving at seemingly unprecedented rates, making it increasingly difficult for lenders to keep up.
By using technology effectively, credit unions can wow their members while also reducing operational costs and improving compliance.
These are the three top technology developments and advancements trending in mortgage lending right now.
1. Borrower self-service channels
In today’s hyper-connected, instant-gratification-seeking world, consumers want access to your products and services at every moment, even when you’re not around to serve them.
In mortgage lending, it is not just about access but also providing valuable information and educational tools that allow consumers to do certain things on their own, without necessarily having to speak with someone.
For example, it’s Saturday night and one of your members wants to make an offer on a home before an open house on Sunday. She needs a preapproval letter to submit the offer, but your credit union is closed.
Why not let the member log into your online borrower portal, complete a pre-approval application, pull her credit, run the file through automated underwriting and, if the automated underwriting system returns an approval, automatically generate a preapproval letter?
This is one technology-driven strategy we are increasingly seeing deployed in mortgage lending at the point of sale.
2. Automated data collection & single source validation
Imagine if you could collect a borrower’s income, assets, credit, liabilities, employment, identity, and liens and judgments in just a few short steps.
Now you can because most of the data you need to complete a 1003 application is already available digitally. Instead of asking the borrower to enter the necessary data field by field, simply collecting the data in its digital form and back-filling the 1003 application would provide a much faster and more seamless experience for the member.
Now imagine if the data you collected from the borrower came directly from the source (i.e., a financial institution or the IRS), was protected from tampering, and could, therefore, automatically be validated.
This is exactly where the mortgage industry has been heading since Fannie Mae launched its Day 1 Certainty program in 2016.
Day 1 Certainty has many benefits for both borrowers and lenders, including less (or no) documentation, faster processing and underwriting times, and, specifically for lenders, lower costs and representation and warrant relief for validated components.
3. The digital mortgage ecosystem
It is not just the mortgage process that is being digitized, but also everything that touches it, such as homeowners’ and title insurance.
The entire ecosystem is undergoing a digital transformation, including the much-awaited electronic and/or hybrid closings, which are on-track to become standard industry practice soon.
So, how do you know if your mortgage program needs blockchain, machine learning, artificial intelligence or big data, and what is the best way to implement it?
As with any new technology, there are three ways to go: build, buy, or partner.
Many credit unions have found it to be cost-effective to partner with a mortgage technology startup. A partner can provide a comprehensive platform that keeps up with the latest technology advances while you focus on the member experience.
Success in today’s environment of constant change requires credit unions to use technology to differentiate the member experience while effectively managing internal operations.
What will you do to embrace these new technologies and position your credit union for continued success?
VALENTIN SAPORTAS is the CEO of MortgageHippo, an end-to-end digital mortgage platform. MortgageHippo is part of the CMFG Ventures portfolio.