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   ARTICLE   |   From Scotsman Guide Residential Edition   |   November 2015

Technology Is Speeding Change

Regulations, product innovation and consumer preferences are accelerating innovation

The use of technology in the mortgage industry is accelerating rapidly. That change is manifested in three ongoing developments that will affect all mortgage originators. Those include increased regulatory pressure to apply more technology to the mortgage process; the improving tech tools and systems for automating the mortgage-lending process; and the growth of mobile commerce.

This past August, the Consumer Financial Protection Bureau (CFPB) released the results of an e-closing pilot program, which, along with a group of consumers, involved five vendors and seven lenders in the mortgage industry. The goal of the program was to determine if the increased use of technology in the mortgage-closing process could improve consumers’ understanding and engagement, and save time and money for all involved.

The CFPB reported that consumers participating in the pilot came away with a better understanding of the mortgage process, felt more empowered and also had positive perceptions about the efficiency of e-closings. Richard Cordray, director of the CFPB, said the expanded use of technology in the mortgage  business could become an increasingly important tool for improving the customer’s experience and making the mortgage process more efficient and profitable for lenders.

The new consumer-disclosure rules embodied in the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) Integrated Disclosure process, or TRID, that became effective this past October will accelerate numerous deadlines for mortgage originators.

The new regulations, to be enforced by the CFPB, will require mortgage professionals to process numbers sooner, populate forms with greater ease using technology, and to deploy new systems and procedures for improving accuracy. To accomplish this, originators will have to invest in enterprise resource-planning and customer-relationship management systems as well as new vendor tools, all aimed at streamlining their business operations.

Toward that goal, developing a single compliance interface that incorporates e-filing and e-recording technology would benefit the industry because it would require establishing one standard for approved data — for lenders, document venders, appraisers, closing agents and servicers.

Pursuing innovation

Many industry leaders years ago recommended creating a single national source for appraisal data that any lender could access. That led in 2011 to the introduction of the Uniform Collateral Data Portal — a single online interface that allows lenders to electronically submit, view and edit appraisal data for conventional mortgages that are delivered to Fannie Mae or Freddie Mac. It makes sense to expand this type of capability to all mortgage loans as well.

A single interface would eliminate issues with multiple e-mails, missed e-mails and e-mails that go back and forth with outdated or conflicting data, creating consumer confusion and stressful delays. Collaboration is essential to streamlining all processes. For example, if a single standardized portal for mortgage-insurance companies existed, loan officers could speed comparisons.

Other streamlining can be achieved with having one link to the Internal Revenue Service (IRS) for accessing consumer payroll and tax data. The goal is to eliminate time-consuming processes such as submitting a Form 4506 to the IRS to request the tax data — as opposed to gaining far-faster access to the relevant data online.

The industry is advancing toward an all-electronic mortgage process, with e-closings featuring e-notary services already allowed in some states. Online vendors are providing e-recording services for title insurance as well as for sharing and tracking documents — including electronically recording mortgage information at county offices.

Going mobile

From the consumer side of the equation, mortgage originators need to plan to take advantage of the growing move toward mobile platforms, which is being driven by millennials, the largest generational group in the country.

The millennials, born between the early 1980s and 2000, were raised with technology and many now are starting to buy their first homes. They use their smartphones to purchase everything, from take-out food to appliances and cars. They also use mobile search tools multiple times a day to compare prices, communicate, read news and share experiences.

Given this reality, mortgage originators need to optimize their websites for mobile transactions and provide applications that help consumers handle any transaction with greater ease, from the initial research on potential loan products, to applying for a loan, to making payments and handling other mortgage details. Some mortgage-industry vendors are now making available apps that educate consumers and facilitate mortgage transactions.

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The bottom line is that technology is enabling the mortgage industry to become faster and more accurate, to eliminate extra work by improving efficiency and to improve the overall customer experience. The industry has some time to go before it can offer a completely paperless mortgage experience, but it is clearly moving in that direction. 


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