While the mortgage industry heads in a digital direction, homebuyers are still expecting a more electronic experience during the mortgage process, which would also stand to benefit lenders.
When borrowers take their first steps toward homeownership, they preselect potential homes online, e-sign their offers and can engage in bidding wars entirely from their phones. But this almost completely digital experience comes to a "screeching halt" at the mortgage process, explained Michael Fratantoni, chief economist and SVP of research and industry technology at the Mortgage Bankers Association.
For lenders, digital support can assist business in three areas: cost, quality and speed, he said.
The cost for lenders to originate a mortgage has nearly doubled in price from 2008, but tech support through automation can help reduce those costs. Quicker closing times through a streamlined process can also help lower origination costs.
Among reasons holding back digital progression in the mortgage space is the disconnect between technology vendors and mortgage lenders.
"Tech vendors have different ideas that may not work for any particular lender," Fratantoni said.
Additionally, aligning several different parties involved in the mortgage process — from real estate agents and lenders, to local county recorders and the government-sponsored enterprises — makes tech-forward steps a challenge.
While the mortgage industry has lagged historically in technology, experts agree that it should serve a purpose in solving a pain point during the mortgage process, rather than just developing new technology for the sake of generating it.
An industry goal in alleviating these pain points heavily involves a simplified mortgage experience for consumers. But, the problem with solving consumer issues through new tech is that it also develops a myriad of compliance concerns that need to be addressed on the back end, according to Steve Wymer, global communications and policy executive at Nextdoor.
Despite these hurdles, the industry is still making digital strides. With Bank of America's launch of its Digital Mortgage Experience, the bank joins Quicken Loans, Lenda, Social Finance and others offering a mostly digital mortgage, with the trend likely to continue.
Fratantoni and Wymer were among panelists speaking on mortgage industry digitization and home buying trends at Bank of America Tower in New York Tuesday.