Consumer demand for mortgages soared during the COVID-19 epidemic due to low interest rates and affordability. In an effort to combat inflation, the Federal Reserve increased interest rates in recent months, having a notable impact on loan origination volume. Lenders now enter a purchase market where they have less authority over which settlement agencies they work with. As a result, they have less control over the closing experience. 

With total loan volume on the decline, competition for new business is fiercer than ever. Lenders are discovering that improving the borrower experience is now a must for gaining new business from word-of-mouth clients or from past borrowers returning for new loans. 

New research, commissioned by Qualia, suggests that a smooth, on-time closing experience is essential to improve the borrower experience. Heather Siegel, Qualia’s Lender Account Director, spoke about how lenders can provide this optimal closing process at the Great River MBA conference in Memphis.

Why must lenders enhance the closing experience?

Qualia’s Homebuyer Sentiment Index revealed three crucial factors homebuyers value when considering whether they would work with a lender again:

  • How well the lender helped them through the closing
  • Quick response times
  • On-time closing

These responses indicate that the closing experience is vital for repeat and return borrower business. 

To better understand how the closing process affects mortgage lenders, Qualia commissioned the STRATMOR Group to conduct a survey with mortgage lenders regarding how they work with settlement agencies and the impact of those processes. In this survey, 98% of lenders agreed that coordination with settlement agents is important to the borrower experience.

Borrowers clearly anticipate better closing experiences; however, lenders can’t deliver an optimal experience on their own—they must also rely on their settlement agency to deliver on-time and error-free closings. The Qualia and STRATMOR survey found that this relationship is currently an area of opportunity for lenders to massively improve the borrower experience.

What’s limiting the closing experience now?

The Qualia and STRATMOR study found that nearly one in four of lenders work with more than 100 title companies a month. This number will likely increase in a purchase market where lenders have almost no control over settlement partner selection. Working with more settlement agencies equates to greater inconsistencies and a lack of standardization in the closing process which can put closing timelines at risk. 

Additionally, nearly a quarter of the surveyed lenders report exchanging more than 30 emails and phone calls per loan with settlement agents. This means lenders may exchange thousands of emails and phone calls with their numerous settlement partners in any given month.

This begs the question: why are lenders exchanging so many emails and phone conversations with their settlement partners when automated technologies exist to streamline coordination?

The survey found that while lenders are adopting tools like LOS integrations, settlement agency portals, and other technology to coordinate, email is still the most prevalent tool. This data may indicate that lenders are using automated tools to a degree before relying on email or phone calls to fill any communication gaps that the tool doesn’t address. Alternatively, this data may indicate that settlement partners aren’t adopting technology tools (or vice versa), therefore lenders are reverting to familiar methods like email for coordination.

Utilizing emails and phone calls for back-and-forth exchange creates a lot of manual work and increases the potential for errors. It also poses a significant security risk lenders and settlement agents can’t afford to take.

What can be done to strengthen the lender-title relationship for a better closing experience?

In the age of digitalization, the answer is simple: connectivity.

Digitalization has ramped up with settlement agents and lenders thanks to the adoption of automation which has accelerated globally since 2020. However, despite all this technology adoption, settlement agents and mortgage providers still work in silos—meaning settlement software doesn’t “speak” to lender software and vice versa.

This lack of integration means lenders have limited to no visibility into the closing process. The blind spot puts lenders at a disadvantage when it comes to things like keeping borrowers updated about closing status. To get answers, lenders take a manual approach. The process that then ensues (emails and phone calls) is ripe for error, and vulnerable to phishing attacks and fraud.

The time spent manually gathering commitments, responses to fees and CD reviews, et cetera, means many hours lost to a laborious process. This can cause unexpected delays in closing—not to mention, it’s a time-consuming process for staff that can result in employee burnout. 

Automation can help to reduce fatigue for employees. To effectively automate the lender-settlement experience, software must enable both parties to remain in their core systems to exchange information and collaborate.

How is Qualia Connect improving lender-title relationships?

Qualia’s unique offering to mortgage lenders is a direct connection to the system of record most widely adopted by title companies in U.S.—Qualia Core. Our suite of products is designed to enable lenders and other participants in the transaction, including other technology point solutions, to finally be able to plug into the settlement ecosystem. 

Qualia Connect allows the lender to remain in their LOS while the title company remains in their core system for true adoption and efficiency on both sides. 

Interested in learning more about Qualia Connect? Click below to get in touch with one of our product specialists.

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