Mobile technology is the future of mortgage finance, with a breadth of utilities and uses that will touch virtually every aspect of the industry.
Early adopters are using smartphones and of late, tablet computers, to improve efficiency and facilitate day-to-day tasks outside the office. Appraisers are trading in clipboards for iPads. Loan officers are spending more time out of the office, cultivating personal relationships with customers and building referral business. Using smartphones, field inspectors responsible for maintaining real estate owned properties are responding to work orders and property code problems faster than they ever have before.
The potential for a mobile mortgage industry doesn’t stop with industry professionals. Already, borrowers are searching for mortgage rates on websites optimized for viewing on a mobile device and even filling out mortgage applications on tablets. Those are just the beginning steps—and don’t even touch on the myriad opportunities that exist for mobile technology to revolutionize the real estate sales industry.
But the way mobile software is used in mortgage lending is very different than in other fields of financial services and banking. While industry participants have high hopes for mobile mortgage technology, many questions remain concerning how the power of this burgeoning innovation will be harnessed and implemented for industrywide adoption.
When Apple launched the App Store for the iPhone in 2008, mobile banking applications quickly joined the ranks of the now more than 400,000 software titles available for the iPhone, iPod Touch and iPad. The most basic tasks include letting borrowers check their account balance or find the nearest branch or ATM with the assistance of the device’s GPS hardware. Some lenders, like USAA Federal Savings Bank, have apps that even allow customers to deposit a check simply by taking a picture of it. That functionality empowers customers to control their banking experience however they choose.
But those sorts of functions have little crossover to mortgage lending. And other mortgage-specific functions, like rate search websites with screens designed for viewing on a handheld device, or a tablet-ready mortgage application, have a short shelf life for individual borrowers.
“Unlike checking your savings account balance every week for many years, with mobile rate search capability, it’s something you might do intensively for a few months, and not do it again for a few years,” explained Scott Happ, president and CEO of Mortgagebot, a Mequon, Wis.-based provider of Web-based point of sale and product pricing technology. “In the right environment, people can refinance their mortgage more than one time in a short period of time, but really, it’s more of a one-time use.”
In August 2010, Mortgagebot began offering its lender clients mobile-optimized websites loaded with relevant product and rate offerings and customized with the lender’s logos and branding. Instead of going down the route of mobile app development, Mortgagebot decided to design the websites that could be deployed faster to lenders.
“We wanted to find the common denominator of all the smartphone devices, and that’s the Web browser,” Happ said. “It allowed us to support the maximum number of devices in the shortest period of time.”
“An iPhone application would be great for iPhone users, but if I’m a bank of credit union with thousands of customers running on 10 different mobile devices, I want to be able to support all of them,” he added.
Michael Detwiler, CEO of technology vendor Mortgage Cadence in Denver, believes consumer-facing mobile tools for mortgage lending are a rudimentary use of the technology. “Consumers are going to want to do mortgage rate searches, but it’s not a wow factor.”
Rather, he sees mobile technology as the key to helping remove the human element out of mortgage processing—and a path to promote efficiency and accuracy in the origination business.
Reflecting on his childhood, Detwiler explained an important lesson he learned from his father, an original equipment manufacturer of imaging and printer supplies. OEMs are on the bottom of the manufacturing supply chain, a place where there’s no room for waste or inefficiency. Parts must be manufactured and sold as inexpensively as possible, but still with high quality if the OEM expects to make a profit.
“The less people touch the product, the lower the cost and the higher the quality,” Detwiler recounted his father teaching him. “When I look at mortgages, I think we’re manufacturing mortgages. The less people touch it and make subjective decisions about the data they’re analyzing, the lower the cost and the better the quality on the other end.”
In his father’s printing supply world, enterprise resource planning is the term used for manufacturers who build hard goods like printer cartridges and machine parts.
“Mortgage Cadence is an ERP platform for lending,” Detwiler said. “It’s supply chain management.”
Effective origination technology analyzes every input and output in the underwriting process and when something requires human action—like submitting a missing W-2 tax form, for example—the software immediately assigns that task to the appropriate person in a way that gets the decision made as quickly as possible. Detwiler said mobile technology can play a crucial role in creating that level of efficiency.
In the future Detwiler envisions for the mortgage industry, integrated origination and mobile technology could notify a loan officer of a missing W-2 via a mobile device.
With a quick click of a button or a swiping hand gesture, the loan officer would send an automatically generated notice to the borrower, asking for the form and providing an easy way to upload and send a digital copy of it back to the origination system—at which point the loan officer would receive another notice that the issue had been resolved.
“We need to use our ERP platform to better manage the supply chain,” Detwiler said. “That whole engine comes to a stop on the loan if you can’t get your W-2s to the right person.”
One segment of mortgage lending already successfully managing workflow with mobile technology is the appraisal industry. The Oklahoma City-based technology provider a la mode offers appraisal management software for lenders and appraisal management companies to order valuation reports, as well as technology for appraisers, like its document form-filling software, called WinTotal. Included in WinTotal is DaVinci Desktop, software for appraisers to draw digital sketches of properties.
In November 2009, a la mode launched a DaVinci iPhone app. In May 2010, just one month after Apple began selling the iPad, the company launched a second app designed specifically for the new tablet.
With the technology, appraisers are trading in clipboards for mobile devices to gathering field data and draw sketches of subject properties. The information is wirelessly transmitted back to the appraiser’s office computer and the information is automatically uploaded into WinTotal—eliminating the need for appraisers to handwrite notes and manually enter the data into the report generating software.
“The perfect storm arose with the iPhone. It’s super light, fits in a pocket, but it’s so powerful,” said Dustin Moore, a la mode’s president of real estate services. “The iPad was even better because it has the screen real estate you really need to do the data entry.”
“The sketching is insanely awesome when you have that much screen to work with,” he added.
In addition to the time saved by automatically transmitting notes from the DaVinci mobile app to WinTotal, the software has a series of menus called quick lists where appraisers can select preformatted choices for commonly needed information, like an air conditioning and heating unit. Rather than typing in the name of the specific system, appraisers simply chose it off of a list, selecting the correct choice with a simple tap of the touch screen.
The iPhone version of DaVinci lets users upload photos from the device to WinTotal. With the addition of cameras on the new iPad 2 (launching in March), a la mode hopes to add those same capabilities to the tablet app.
In addition, a la mode is in development of a DaVinci mobile app that can run on Android, the mobile operating system backed by technology giant Google.
While the price of a smartphone or tablet computer is far greater than a clipboard and year’s supply of pencils and paper, Moore said the efficiency and speed the mobile technology brings to appraisers has an associated cost saving easy for appraisers to measure.
“If I can save you an hour out of a four-hour report and boost your pay rate by 30%, then we actually put a dollar figure on that. Maybe that saves you $1,000 a month. Well, then you’ve paid for your hardware and your data plan and you’re still saving time,” Moore said.
The a la mode iPad app has been downloaded by more than 60,000 users and another 20,000 are using the iPhone version of DaVinci. If review on Apple’s App Store are any indication, the software has even found a following among nonappraisers, like do-it-yourselfers who want to sketch floor plans of their homes or other properties.
While appraisers are out in the field using iPads to generate valuation reports, field inspection contractors for the property preservation vendors of the REO space are using mobile technology to stay connected with and react quickly to urgent tasks. Safeguard Properties sends work orders to inspectors’ handheld devices. Armed with a list of jobs, the inspector can route the day’s trip using the smartphone’s GPS and mapping software. At the property, the inspector goes through a scripted workflow on the device, gathering information about the property’s condition, including taking photos. In the event that an inspector reports information that contradicts what Safeguard has in its property records—like whether the house has a garage—the inspector gets immediate feedback and a request to reconfirm the information, sometimes with photographic proof. While an inspector is driving to the next assignment, the smartphone can automatically transmit information and photos back to Safeguard’s case management system.
Safeguard was an early adopter of mobile technology and it was a huge leap when inspectors began using mobile technology eight years ago, said Jennifer Jozity, the Cleveland-based company’s director of inspections.
“Before that, it was the old school fax machine; we used to get paper results from inspectors and then key them into the system,” she said. “With the automation that we have with the inspectors, when they key in the results, it feeds directly into our system and shortens the amount of time it takes from the when the inspection is generated and when the results are sent back to the client.”
When a property needs urgent attention, Safeguard’s technology can assign emergency work orders that inspectors receive in the field, instead of having to wait for the inspector to get back to a desktop computer.
Other property preservation firms have either launched or are developing mobile technology of their own. Contractors at REO Allegiance are using the company’s iPhone app. The Bayonne, N.J.-based company has plans to roll out mobile technology for the REO asset managers and real estate agents that it works with, as well as similar technology across multiple mobile platforms, including for Android-powered devices.
“The client ultimately gets the information faster so that they can move forward in the process more quickly. With the iPhone application we are getting data from the field in real time and that helps us to give accurate and rapid responses to our clients,” said Lisa Sadoui, president and CEO of REO Allegiance.
Arguably one of the biggest unanswered questions about mobile mortgage technology is not only how originators will use devices and software in their day-to-day operations—but when will it reach widespread adoption.
Jeff Coward is vice president of mortgage and real estate lending at the Virginia Credit Union. The Richmond-based lender has seven branches and ATM locations around the state and employees six loan officers. Looking to improve efficiency and grow its origination business, the company is actively shopping for a new loan origination system. The process has served as further affirmation of his belief that mobile technology is the next big thing.
“It’s very important for mortgage lenders to adopt mobile because that’s how the technology is evolving,” he said. “Everybody wants to talk about loan officers using laptops, but the reality is an iPad can give you as much functionality as a laptop and doesn’t cost nearly as much.”
“Like a laptop, you don’t have to be tethered to a wire with an iPad, however, it’s more portable, easier to carry around and easy to put apps on it. That’s the way it’s going to go,” Coward added.
For a community-oriented lender like VACU, the level of customer service that loan officers provide is how it can differentiate itself from competitors, the large megabanks.
That means empowering loan officers to go out in the field to meet customers where they want, whether that’s at work, a neighborhood coffee shop or even an open house for a property on sale. And lenders realize that once a borrower chooses to do business with them, they need to give customers online tools so they can keep track of the mortgage application process.
In a climate where borrowers have essentially two mortgage options—a conforming loan sold to Fannie Mae or Freddie Mac or one backed by the Federal Housing Administration—customer service and speed are the value-add that differentiates lenders.
“I don’t see why a loan officer wouldn’t be able to sit down and take an application on an iPad,” said Coward. “And if the applicant has a mobile device, if they want to submit a loan application that way, they should be able to do it.”
The LOS platform developed by Hockessin, Del.-based PCLender.com can be accessed from tablet devices running on the Windows operating system. Cy Brinn, the company’s chief operating officer, expects that tablets running the Android operating system will be the long-term choice for tablet developers and the company is planning on releasing additional technology to run on those devices.
VACU’s loan officers currently have laptops that get replaced about every three years. In the next cycle, Coward said it’s likely the credit union will look at tablet devices not just for origination employees, but also for its executives and other managers. The devices are cheaper than laptop computers and don’t necessarily demand a cellular data service, particularly if the user is going to have regular access to broadband Wi-Fi connections.
“It makes a lot of sense to give this tool to a board member or executive that’s doing light spreadsheet work, e-mailing and reading and maybe even some document preparation, the iPad fits the bill,” he said.
Coward said the biggest hurdle lenders have to overcome with mobile technology is concerns about data security. For lenders to begin deploying loan officers and other employees in the field to use mobile devices in their interactions with customers, they have to be convinced that the sensitive data they are collecting is encrypted and secure, both for wireless transmissions and in case a device is stolen.
“It’s a matter of getting folks comfortable with the idea. When the iPad came out, people thought of them as toys. With the proliferation of apps on it, people are realizing that this thing has business capabilities,” he said.
“Once IT staffs start playing around with them and test them out and when customers like myself say to vendors, 'I want to have a mobile app for your POS system, build it,’ then mortgage departments like ours will see that this is something that will improve the experience for our members,” Coward added.
The earliest uses of LOS software on tablet hardware have come in the form of hosted technology accessible through Web browsers. But it’s conceivable that vendors could begin adapting the origination technology in an application format, either through consumer-facing app stores or with the enterprise licenses that companies like Apple issue for internal business software development.
Ultimately, the use of tablet devices could usher in greater adoption of paperless, electronically signed closing documents. A blog that studies the patent activity of Apple recently uncovered an application filed in 2008 for a stylus device for use on a touchscreen. Apple doesn’t currently offer a pen tool for the iPad, but the patent indicates it may be a future offering. That combination could be a catalyst for greater e-mortgage originations. It’s yet another hope that mortgage industry participants have for technology, said Jordan Brown, CEO of mortgage consultancy MarketWise Advisors.
The pluses of mobile technology are twofold. It’s much more interactive with the consumer, that’s sort of plus number one,” he said. “Plus number two is if we do it right, you can completely be e-enabled for an e-mortgage, with e-signing and e-documents and reviewing information in a clear way between the homeowner and the loan professional. Figuring out how to e-enable loan officers, that is the cutting edge.
