Digital transformation in the mortgage lending space is happening right now and faster than ever before. At the Mortgage Bankers Association MISMO Spring Summit, Qualia hosted an interactive, virtual roundtable to discuss the pace of digital innovation.
Qualia Account Director, Ty Cieloha, was joined by Jonathan Kearns, VP of Product Development at MISMO, to lead an open discussion on digital advancement across the mortgage lifecycle. The participants discussed the ubiquity of point of sale technology and why advancing digital capabilities to include eClosings will require tight alignment with title partners.
In a post-TRID World, are lenders and title companies working better together?
The roundtable started with a virtual poll for the participants, which asked, “what portions of the loan process has your firm digitized?” Unsurprisingly, the application process was the most-selected choice. “Point of sale is pretty much a commodity [among lenders] at this point,” Cieloha said.
Meanwhile, the pre-closing process was the least-selected choice. “When TRID happened, we thought there would be more automation during the pre-closing process with closing disclosure collaboration; however, that’s one of the biggest challenges left in the market,” Cieloha said. After TRID, many technology vendors created collaboration portals for title companies and lenders to automate closing disclosures and fees. “The challenge was that the settlement agents weren’t adopting that technology, and a lot of lenders ended up scrapping the technology and going back to email,” he said.
As lenders reverted back to what they were familiar with, the issues around collaboration persisted. “The question now is how to continue the great [digital] point of sale experience all the way through closing,” Cieloha said. The answer lies in technology adoption on both the lender and title side.
Technology adoption (not investment) is impeding digital closing advancement
According to research from STRATMOR, 43% of lenders in 2020 had some form of eClosing capabilities, yet the net adoption rate for this technology among lenders, settlement agents, and borrowers was only 16%. “A lot of lenders have been implementing eClosing technology, but adoption has been a challenge because it’s a complex process with a lot of players involved,” Cieloha said.
One participant said a key challenge is the number of different platforms title companies are expected to adopt. Cieloha agreed, adding, “We refer to this as portal fatigue for settlement agents. When they are working with a number of different lenders, they may have to log in to 5, 10, or 15 different portal technologies.”
Another participant noted that the number of portals reflects the overall digital transformation happening in the industry. “As digital transformation matures, perhaps [the number of technologies] will consolidate to a few big players who have economies of scale.”
An inevitable shift toward greater digital collaboration and eClosings
Kearns likened digital transformation and eClosing adoption to generational seatbelt use in cars. What one generation saw as unnecessary, the next generation viewed as life-saving. Several participants agreed, with one noting that “the next generation won’t tolerate paper. It’s a ways off, but it’s inevitable. It’s up to us now to help make that transition and make sure it’s done right.”
Another participant agreed that “now” is the time to make the shift toward eClosings. “We’re making so much advancement on the credit side that loans will be approved in a matter of days. If we don’t have eClosing, we’ll have a bunch of approved loans that we can’t close on. [Without eClose] we’re ultimately stalling liquidity.”
