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   ARTICLE   |   From Scotsman Guide Residential Edition   |   January 2018

The Era of the Digital Originator

Human interaction is still necessary, but technology can aid the mortgage process

r_2018-01_hoffman-decatur_spotLending institutions in the United States have been providing money for personal necessity since 1781. Initially, these institutions solicited and sold loans directly to consumers. As lending and mortgage industries further developed, however, the industry witnessed the onset of a lending intermediary — the mortgage originator. In the United States, originators became the largest sellers of mortgages, surpassing direct sales, because originators offer a unique point of connection between lenders and consumers.

Historically the mortgage originator’s distinctive human connection with consumers and lenders has been a critical component that greatly contributed to the success, persistence and growth of the lending industry. Consumers seek originators because they can easily communicate directly with them. By working with many different lenders and understanding borrowers’ specific criteria and circumstances, originators match consumers to loans with options and terms that best match their needs.

Often originators can find financing for otherwise difficult deals by using their knowledge about the different lending institutions and loan options. Originators also established business and personal connections that allow them swift access to lenders. There is no denying that the human connection originators provide is an advantage to both consumers and lenders.

Digital originators

Large mortgage companies are now working to develop a fully automated mortgage-originator software robot that would essentially computerize the process. Such a transformation in this industry is neither unprecedented nor unachievable. In 2016, Habito, a mortgage company based in the United Kingdom, launched one of the world’s first digital originators.

Habito promotes the fact that this digital-mortgage adviser allows borrowers to input mortgage requests from any device at any time, without needing to speak with a human originator. The company further highlights that within 10 minutes, the potential borrower will receive a response that will include information about the most suitable type of mortgage.

This type of interaction is in stark contrast to the historical person-to-person originator interaction, which also commonly takes much more time. Despite the lack of human contact, Habito’s digital-mortgage adviser appears to have merit, particularly with the ability to increase accessibility and efficiency in the mortgage origination process.

To fully utilize digital technology in mortgage originating, however, there needs to be further development in the area of artificial intelligence (AI), specifically with regard to everyday scenarios facing originators. Most technology available now, for instance, does not allow the digital originator to form a judgment-basis for choosing one lender or loan product over another to fit the borrower’s specific circumstances.

Human originators can make educated judgment calls regarding which loan products might provide the best terms for a particular borrower. They do this based upon years of experience and previous dealings with lenders. Digital originators, on the other hand, are designed to be free of such biases when identifying potential lenders, even where recognizing and working with such biases would be beneficial for both consumers and lenders.

Artificial intelligence is being developed to bring a human element to digital mortgages to help customers feel connected with the originator. Notably, some mortgage companies are using software that tailors the language in e-mails based on information gathered about the personality of the consumer and using “lingo” particularly geared toward the borrowers being sent the e-mail. If a potential borrower is a sports fanatic, for example, the e-mail might use sports analogies. That being said, there could still be a human element missing.

Many mortgage originators also are utilizing marketing-automation software.

The innovators of automation must continue to solve for the personal touch. Specifically, they need to find a way to provide borrowers the ability to have live discussions with originators about their particular circumstances, which provides assurance and a sense of trust in their originator’s knowledge, expertise and ability.

Perhaps AI will become so advanced that a software robot will be able to establish these characteristics. Until such leaps and bounds in technology are made, however, it will be extremely difficult for borrowers to evaluate, understand or place trust in a machine originator simply because it allows for ease of use as well as efficiency in process — and ultimately an increase in company revenues.

The human element

Although there are opportunities for tremendous technological advances in mortgage origination in the near future, the industry is not yet ready for full automation. Personalized e-mails, texts and responses to customers can simulate the human element, but they do not yet replace the personal connection and face-to-face component.

Automation and implementation of AI has not yet been able to provide what a human can do — not just by establishing a human touch — but by utilizing intuition and knowledge about companies and potential “best fit” loans based on past transactions. Can automation address the human element of originators who have worked with a company for years and understand its operations so well that they can quickly identify and target lenders that will offer the “best fit” mortgage products?

Comparing prices and terms is one thing, but human perception, intuition and experience is another. Building such vast knowledge and complicated judgement into an automated system is not yet possible given the current confines of AI.

Current digital options

Until a human-element component is developed within automation, the intermediary stage is to combine the digital component with the human touch. Perhaps this means there will be automated segments of the process that either parallel human interactions or involve a human component later in the process. Could a digital originator “Jane” later turn into a human “Jane” once the consumer reaches a particular stage?

Given the current drawbacks and confines associated with implementing a fully automated digital originator, some large financial institutions are beginning to use digital-mortgage lending. Such programs promote efficiency among human originators, but because they are not fully automated, still allow the consumer to interact with a person.

In June 2017, for example, financial-services company Morgan Stanley announced development of a new digital-mortgage application tool. Instead of replacing human originators, these assistance tools will be used to increase the volume of residential loans by allowing clients to access rate estimates, upload documents and apply for loans online.

This new digital-mortgage process is adapted from a version of Zelle, a tool created by the collective efforts of Bank of America, JP Morgan, Wells Fargo and other large banking institutions to process mobile mortgage payments. Morgan Stanley also partnered with Twillo to provide secure text messages between borrowers and originators.

Many mortgage originators also are utilizing marketing-automation software such as Salesforce, Surefire and Infusionsoft. Salesforce, which is used across many industries, helps originators track leads, follow up with clients, review notes and correspondence, and deliver marketing.

Surefire, by Top of Mind Networks, alerts originators to loan opportunities that exist among consumers currently in their database. These automatic alerts notify originators if past clients put their homes on the market or would benefit from refinancing.

Infusionsoft helps originators keep in touch with past customers through automated communication options, including personalized e-mail and mail communications and automated social media posts. These tools and other software programs have proven very helpful and are used by most large mortgage companies.

•  •  •

Considering the availability of automated tools and current advancements in digital-origination tools coupled with the drawbacks and limitations of a fully automated originator, the best solution for mortgage companies today appears to be implementing a process that includes both digital and human elements. The retention of human originators paired with the development of existing technology to produce a digital-mortgage process seems to be the best of both worlds. This pairs the convenience and automated efficiency of digital-mortgage applications with the judgment, knowledge, and human interaction of a human originator.


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