The mortgage process is usually a bitter experience for consumers because of heavy paperwork and multiple officials to consult before the transaction. Technology has made the process more customer-friendly and e-mortgage has emerged as a promising new option.
Conventional loan documentation today involves 2,000 pages and the production cost per loan stands at $6,769, making it almost prohibitive for lenders and borrowers. Digitized, automated, cloud-based loan mortgage servicing is gaining traction across lending firms.
The concept of e-mortgage has been around since the early 2000s. The Uniform Electronic Transactions Act and the legal acceptance of electronic signatures created impetus for the technology. But the real push has come after the financial recession of 2008, when the government introduced a slew of compliance standards for consumer protection.
Compliance standards like the Qualified Mortgage/Ability to Repay (QM/ATR), along with the Know Before You Owe standards, which must be adapted, has increased documentation costs. But automation today encompasses the whole gamut of prequalification, application, disclosure management, underwriting, processing, secondary market management, and closing. This has made electronic mortgage an attractive option.
E-mortgage ecosystem
E-mortgage involves technology solutions that seamlessly include all mortgage touch points. This includes electronic signatures, documentation, e-vaults, e-notaries, e-disclosures, electronic registration systems, e-registry and other e-commerce solutions. Implementation of industry standards for e-sign and UETA has accelerated the adoption of e-mortgage.
E-mortgage involves collaboration between internal and external participants including lenders, borrowers, closing agents, service providers, and investors. A customized mortgage servicing process should be able to share and access data through a single web-hosted electronic interface. Today, loan origination “software as a service” integrates multiple customer touch points including a web portal, CRM interface, documentation, and mobile apps facilitating customer interaction.
Smarter lenders with e-mortgage
The number-one reason for lenders to adopt e-mortgage is compliance and regulatory requirements, which have pushed up loan origination costs. The automated loan servicing option has increased operational efficiencies, reduced the costs incurred, and boosted productivity. Lenders have been freed of heavy paperwork and can focus on delivering better customer experiences. Lenders are also better prepared for market shifts and can use big data analytics to gain insights into customer behavior, competitors, and market requirements. Automation can reduce back-office data entry and errors by about 25%. There is better quality control and lenders can achieve faster cycle times in loan servicing.
Better borrower experience
Tech-savvy Millennials prefer online experiences. Software with a customer-friendly digital interface can enable easy access, transparency, and instant gratification for buyers. Consumers go online to shop for better rates and services. They want to submit applications online, upload electronically signed documents on secure platforms, and get real-time access to their loan statuses. Lenders who provide personalized recommendations, online customer support, and realtor recommendations are appreciated by consumers. E-mortgage solutions provide customized digital tools that deliver a complete customer experience.
Single stack driving borrower experience
Today, in spite of automation, specialist providers may handle individual processes. One company does the documentation, the other loan origination, and another loan pricing and so on. A single-stack concept, where there is vertical consolidation of the services, will be the driver for e-mortgages. A single-stack cloud-based digital platform can meet all the requirements in mortgage servicing and deliver a customized borrower experience.
Final thoughts
E-mortgage enables lenders to use digital technology to customize a customer-driven process. It uses data analytics to identify customer behaviors and emotional drivers to generate personalized recommendations for borrowers. It brings in different players under a single umbrella and makes mortgage servicing an efficient end-to-end process in spite of full compliance with regulations.
