Technology May Be Home Lending Equalizer
Credit unions that want to remain competitive in housing finance over the next decade will likely have to confront the issue of how to add technology to their mortgage loan origination systems.
Mortgage issuers use loan origination systems to manage the loan process from the initial taking of the application through to the closing of the loan.
“In general the industry has moved the application process to the Internet very well,” said Robert Dorsa, president of the American Credit Union Mortgage Association. “Remember the stereotype of the member being able to apply for a mortgage from his kitchen at 3:00 [in the morning]? Where there has not been as much progress has been in the middle of the process, the work of collecting and verifying documents and all the other work of underwriting which has not moved online as quickly.”
Dorsa and other executives cite several industry and technical trends which are helping push the change.
First, there is a degree of technical inertia. Steadily, more processes across all industries are tending to move online to take advantage of improved finance and greater convenience. Technology changes to the mortgage industry are a just part of that trend.
Second, as seen in in other sectors, consumers have begun to demand improved technology when getting a mortgage as well.
The familiar process of having members fax or otherwise deliver documents to their credit union’s loan officer over a period of days or weeks is no longer acceptable to many consumers, Dorsa observed. As a result, credit unions will need to upgrade their technology to continue to be thought of as serious mortgage providers.
In addition, competitors such as Quicken Loans have largely made this shift and have begun to advertise the speed and relative ease of the mortgage issuing process – a process which many consumers have said they dislike and believe takes too long.
But once a credit union decided to upgrade its mortgage issuing technology, what’s the best way to do it? Essentially, there are two options, some leaders say. A credit union could keep the process in house with a loan origination system such as that offered by MortgageBot or Prime Alliance or, if they want to outsource the process, they could partner with for profit firm or mortgage issuing CUSO.
“Each of the approaches has its advantages and disadvantages,” Dorsa observed. “A lot depends on how much the credit union wants to put into and control the process but each approach can do the job,” he added.
Dan Green, executive vice president for credit union solutions for Prime Alliance, also thinks credit unions should remember the fundamentals of what attracts members even as they seek to update their technological ability.
Even though Prime Alliance offers a technology option, Green pointed out that just having the best technology is not going to be enough. Credit unions' reputations as secure, local and well-known institutions are what will initially draw members to their mortgage options, not the credit union’s level of technology. A credit union just needs to have enough technology to meet member expectations, Green observed, but it shouldn't have so little that it turns members away.
Adopting a loan origination system can help a credit union more effectively manage the regulatory burden that comes with mortgage issuing, Green said. Using a LOS can help credit unions standardize their regulatory compliance in a way that it might not be able to do without one, he added.
Matt Cotter, senior vice president of sales for MortgageBot largely agreed, particularly with the impact a good LOS can have on a credit union's regulatory compliance and on the percentage of mortgage loans that makes it through the process from the point of taking to the application to the closing.
Loan origination systems have been on Cotter's mind a good deal during the past few weeks. MortgageBot is owned by Davis and Henderson Corp., a Canadian financial services technology company headquartered in Toronto, Ontario, and D+H’s purchase of Avista Solutions Inc., a Charleston, S.C.-based firm which provided LOS software.
This means that MortgageBot has begun working with Avista to integrate the two firms’ systems to be able to provide a seamless mortgage origination process, Cotter explained, something that D+H CEO Gerrard Smith highlighted when the his firm bought Avista.
“With Avista, we’ve added an innovative, fast growing LOS business featuring proven capabilities that are highly synergistic to those we offer through Mortgagebot,” Smith said when the purchase was announced. “Together, we now support the entire mortgage origination process for U.S. lenders and provide customers with a comprehensive suite of products that enable efficient, effective growth from origination through to closing.”
At the bottom line, Dorsa and the executives agreed that the advance of technology has meant that credit unions have more capability to compete with larger mortgage issuers than they ever have before, but credit unions will have to deploy that technology or partner with a firm that will do so in order to take advantage of it.
A new application for the iPad promises to help mortgage issuing credit unions further speed up and streamline their mortgage loan origination process as a likely way to be more competitive.
The new features are an upgrade to LenderMobile+, the existing application offered by LenderMobile, a lending technology company headquartered in Burlingame, Calif.
A new imaging feature lets loan originators and borrowers take photos of documents with the iPad camera and add the images to loan files through cloud computing technology, the company said. In addition, the new loan notes feature lets users add notes to a loan file directly from their iPad.
The new feature will allow loan originators to take photos of key documents such as W-2 forms, tax returns, pay stubs and drivers licenses from anywhere and then add the image to the borrower's loan application which is resident on the credit union’s loan origination system. The new feature also allows the loan originator to cancel an image and re-take it if they don't like the first one.
Once added to a loan file on an iPad, the document photos in the LenderMobile+ app are then validated and processed in the LenderMobile computing cloud and can be sent to a lender’s LOS. With the app’s photo feature there is no need to scan, email or fax documents, the company noted.
The new LenderMobile+ loan notes feature enables loan originators to add notes to individual loan files. A loan notes form is available on the screen for each loan file where users can type and save their notes in a free form text.
“We’re making our iPad app more useful to users when originating mortgages,” said Iavor Boyanov, chief technology officer and co-founder of LenderMobile. “The new document photo feature is great for loan agents on the go who need copies of borrower loan information quickly to avoid any processing delays. And more and more loan agents requested the ability to write and add notes for particular loan files from their iPads, and we delivered.”