October 25th, 2016 5:32 AM by Jackie A. Graves, President
One day soon, entire lending process will be
Many lenders have
already started the process of going digital. Why? As Roostify CEO
Rajesh Bhat put it in a message to HousingWire, “It’s what customers
On Monday, at the Mortgage
Bankers Association annual conference in Boston, several panelists
spoke on the topic at a session titled Overcoming the Final Hurdles to Digital
“More and more
transactions are moving online, and today's consumers - especially the
35-and-under set - take it as a given that they'll be able to transact online,”
Bhat told HousingWire.
But borrowers aren’t
the only ones who benefit from going digital. It can also be helpful for
lenders. Digital verification helps lenders make decisions quicker and based on
more accurate information.
significant time and effort versus manual, paper-based processing,” Bhat said.
Lenders get the documents they need faster, can process them faster, and are
less at risk for errors that can delay or derail a loan decision.
As of right now, while
many are entering the digital realm, the housing market could still be several
years off from going 100% digital.
“We do have a very
limited version of it due to the number of investors that accept it, the
providers who can participate and the number of counties and notaries
involved,” Joseph Tyrell, Ellie Mae executive vice president
of corporate strategy, said in an interview with HousingWire.
“So as an industry
we’re definitely progressing collectively to truly realize an e-mortgage,”
Tyrell said. “But it’s more than tech, it’s about collaboration.”
John Harrell, USAA
Bank vice president of mortgage pointed out other benefits to going
digital in an interview with HousingWire:
While Harrell points
out some reasons why lenders should look to going digital, there are some
factors that prevent that change from happening. Some of the hindrances he
pointed out include being stuck in legacy, retail business models and not
understanding digital or how to get started. Harrell also said that many banks
don’t get prioritized funding in their mortgage lending departments.
More simply put: change
is hard, according to Bhat.
Not only is it hard,
but the mortgage industry may not receive the same pressure to change as other
“Other tech companies
outside the mortgage space are forced to drive for innovation because of their
customers’ demand, but think about borrowers — they are only doing a
transaction once every four or five years, so lenders haven’t felt the pressure
from consumers like other parts of the industry,” Tyrell said at the session.
“But it’s something we
need to do to be ready — Millennial borrowers have different expectations of
what this experience will be like,” he said.
obstacles, however, there is hope for the future of digital mortgage. In fact,
Harrell expects to see mortgages go 100% digital in at least five years. Within
two to three years the majority of the process will be digital, he said in the
The key? The GSEs need
to adopt electronic documents and be able to securitize them, Harrell said.
After that, all counties across the U.S. will be able to handle digital
But is that the key?
Or is it rather, as Bhat predicts, a natural reaction as Millennials take over
the market? Or will it require a little of both? Either way, experts agree that
the market is moving towards being 100% digital.
“At some point - and
not THAT far off - there will be homebuyers who have never made a significant
purchase offline,” Bhat said.
At this point, lenders
simply need to take a step in the right direction, the panelists agreed. While
the system may not be perfect, an step towards going digital will benefit the
consumers and lenders alike.
“The mindset of
starting small and moving outwards is growing among lenders,” Blend CEO
Nima Ghamsari said.
By Kelsey Ramírez - To
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