5 lessons from Digital Mortgage 2020

While it wasn't set amongst the glitz and glamour of Las Vegas as originally planned, the 2020 Digital Mortgage Conference brought together folks from across the industry, who offered some key insights about what’s next for the field.

Packed with keynotes, panel discussions, product demonstrations and networking sessions within the lending technology universe, the virtual event provided attendees with a forum to discuss the myriad ways transactions are changing in light of COVID-19.

Included below are just a handful of takeaways from the conference.

If you're not investing in tech, it's too late
New products and legacy technologies typically mix like oil and water. That’s especially true in the current socially distant lending environment. Those putting resources into their tech stacks now are likely to reap the benefits in the future.

"Companies that delay making these investments, they're going to only get more expensive because they're not going to be able to compete against the folks that are making the investments right now, to automate the workforce, streamline the operations and provide a better digital experience," David Karandish, founder and CEO of Capacity, said in a panel at Digital Mortgage.

Giving borrowers the capabilities to e-sign, notarize and appraise remotely is not only preferred but needed for transactions to close safely during the pandemic, according to several panelists who spoke throughout the week.
AI can help lenders meet higher demand. But human interaction is still needed
With historically low interest rates driving loan demand sky high, leveraging artificial intelligence has helped companies become more efficient while increasing their volumes.

"It is a great liberator. You don't need to have a giant technology team," Andy Taylor, general manager of home at Credit Karma, said in a panel. "If you're able to use this technology on the front end, you can get great consumers just by pushing a button. It goes straight into your point of sale, it goes straight into your CRM."

The AI has been out there, it's just a matter of a lender figuring out where it's needed and how to utilize it, panelists said.

"And that's really without changing too much of your process," said Marc Bator, principal product manager at EXOS Close. "You use it in the best way possible to make you more efficient."

The advent of AI cut down costs, some of the meticulous manual jobs lenders deal with and can help with cybersecurity. However, keeping human touch in the industry is the superseding feeling among consumers. Homebuyers want to do things as efficiently as possible, but still want experts to help them when needed.

As Ginger Wilcox of Home Point Financial pointed out, "You can't ultimately automate care and concern for your customer."
More and more customers will be seeking a one-stop-shop
The mortgage process, as it stands, features many moving parts that don't always work in harmony. It can lead to a disjointed experience for both the lender and borrower.

Getting all the components from a single provider presents one remedy. Some companies have already started following this path and the coronavirus rushed others to adopt this blueprint.

"I think COVID accelerated the future by five years," Vishal Garg, CEO and founder of Better.com, said in a Digital Mortgage interview. "I think you can clearly see [lenders that used this plan getting more volume]. They're growing, 30%, 40% quarter-on-quarter. Old-school mortgage companies grow 1% a quarter. We were building the home transaction we wanted to have for ourselves and now everyone wants that. I think it's Darwinian. Those who do not adapt will have to make way for those who can. You can sugarcoat it all you want but like they said in Jurassic Park, 'life finds a way.'"

Given that it has taken many years for technology adoption to reach a critical mass in the industry, what continues to hold up faster development in this area? The commissioned mortgage salesperson could be the main hold up to more lenders following suit, Garg posited.

"Their average age is 57-to-65-years old, they're used to doing things a certain way and doing three or four transactions a month. Getting those people to change would require massive retraining of over 500,000 commissioned loan officers."

While companies move toward the all-in-one prototype as much as possible in the present, reaching that end goal could still be a few years away.

"I think in 2022, we'll see the first ever end-to-end true one-stop-shop where it's a fully digital realty transaction that happens via video, to the loan that's done entirely digitally from the data side, to the title, appraisal, the closing is done via video," Nima Ghamsari, Blend founder, said in a separate Digital Mortgage panel discussion. "I'm excited to read the case study from the first customer who gets that experience."
To uproot racial bias means changing the status quo
If 2020 taught us anything, it's that the systems and practices in every corner of society need to be revolutionized in order to remove the long baked in racial injustice.

Housing and lending are no exception, with histories of redlining, zoning and mortgage denial that hurt BIPOC communities. The onus to create change is on us now and better education would help get things started.

"Most people don't have a clear understanding of history. They're not actively racist but are born into a systematically racist society," Charlton McIlwain, vice provost for faculty engagement and development at New York University, said in a panel. "We're not going to get very far if we don't tackle this basic education issue that needs to begin early on but has to continue when people enter the workforce."

The Black homeownership rate just reached a 16-year high but still sits under 50% while the overall U.S. rate is about 68% and white homeownership nears 76%, according to the Census Bureau. Meanwhile, Black Americans face a 15.7% mortgage denial rate, compared to a national average of 9.3% and 8.7% for white applicants.

For companies that think technology will remove all racial bias, that technology can't just emulate current industry executions.

"If you are putting together a platform and you do not have this sense of historical knowledge about race and racism both in the technology but more in the mortgage industry, then this just seems like a benign thing and you're not realizing that what has been done is enabling a long history of bad actors and bad practices," McIlwain said.

Keynote speaker Ambassador Susan Rice also offered ideas for creating meaningful diversity, equity and inclusion in the corporate world, arguing that leaders must be measured on their success in fostering those goals, and that compensation should be tied to the success in doing so, in the same way that compensation is tied to performance in other areas.
Quicken Loans looks to Amazon as a model for growth
Bob Walters, president and COO of Quicken Loans, had a lot to say as the opening keynote to Digital Mortgage 2020.

Walters shared that Quicken's goal is to build its long term value by shaping the way lending is done. Business currently booms for lenders, but the industry runs cyclically. "It's like selling ice cream. When it's a 90-degree day you sell a lot, when its 40 degrees, cold and drizzling, you sell less," Walters said.

While stock prices and current valuations for the Rocket Companies IPO continue to rise, Walters says that revolutionary firms will win in the long run. He looks to Amazon as an archetype for Quicken's advancement and growth.

"We are looking at companies like that and building this digital platform," Walters said. "The innovation that'll come with how loans flow through the system, how technology interacts with people to speed up the process. Instead of a 30-day process, it should be a five-day process, maybe even a 24-hour process. That's where technology can take us. There is no reason it can't be done in 24 hours."
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