People who have been in the mortgage industry for a long time, whether lenders, processors, real estate agents or brokers, investors or warehouse lenders, have been talking about automation. So what is happening in the loan industry in terms of automation? If there was some way to process a loan application, from soup to nuts, and make it available only online, and provide for approval through this magic process, some believe it would be the beginning of the end for the loan officer. We’re already seeing this type of process, of course with products such as Quicken Loans’ Rocket Mortgage. This isn’t a beat down on Rocket Mortgage.
The question is, however, will the machine replace me? Me being the loan officer, the person who now talks to the customer and arranges financing through the lender. Will they replace me? It’s the fear in my industry. One out of nine people work in the real estate related industries so this affects a lot of people. Many of the Silicon Valley startups that splash the Wall Street Journal headlines believe that loan officers, processors, underwriters will disappear. They point to a company such as Sofi. They’re a company that refinances your student debt. You go through Sofi, online or on your phone, and transfer the balance of your student loan from the institution where you got that loan, over to Sofi. They pay off the original note – just like it would be in a mortgage – except they give you a much lower interest rate. You, in turn, pay back Sofi. It’s all done without a representative. Just you and your phone, laptop or mobile device. No human face-to-face interaction.
That is the model, people say, that could be done with housing purchases and refinances; online mortgages. Again, Intuit is already in this market. Wells Fargo Bank also tried to get into the automated online mortgage business. They invested $500 million to find a solution. Seventy-three percent of home buyers surveyed by Wells Fargo, after using their online product, preferred to work with a human being while going through the process. That’s a huge percentage, 73%, which causes us to assume that there is no replacement for human-to-human contact, even in an area like mortgages or refinances. Even in this age of technology, most people of this generation, Millennials, want to talk to another human being when originating a loan.
There are three different ways by which technology and automation can aid in the loan process. And I think these are definitely ways to make the process better for both the borrower and the lender, and some of these are already in practice.
1) Digitization and documentation at the point of origination. Together with your loan officer, you meet to share the information pertinent to your application: W-2s, bank statements, credit information, all of this needs to be digitized from the moment the interview takes place. Many loan companies, ours included, are using mobile origination applications. Which means I can get you started on your loan with my smart phone. All the information needed can be input by either scanning or typing into the app. This mobile technology allows for origination and information needed being input on form 1003. This would, best case scenario, happen at an in person meeting with the loan officer so that all the details are included. Still, the process can be done using a login password application.
2) Automating error-prone manual tasks. Input of information should be automated. Perhaps, you want to know what the neighborhood is like where you’ll living, or what your neighbor’s house sold for back in 2004. There are a lot of title companies that have this information. If you’re in the industry you can get a hold of it. It would be good to have access to this information and be able to search for things particular to your needs and automatically import them into the loan application, eliminating human error. Integration software is available and there are tools that the loan originator will use to make the process better, easier, faster and with less errors.
3) Centralizing communication. i.e. everybody gets to see what everybody else is doing, unless of course there’s a need for privacy. In order to streamline all these processes the automated software would allow for the integration of communication, across all barriers, languages and cultures.
It depends on the company you are working with, but all of these augment human to human contact. Automation, when used together with your loan officer, will provide the best communication and give you the best possible service with up-to-date technology driven solutions.