One way to set yourself apart from your competitors is to develop an expertise in the mortgage technology trends impacting our industry. Lenders who can talk tech with prospects and clients strengthen their relationships and marketability.
Here are five emerging areas and some insights you can share with your clients.
Blockchain technology is essentially a database, but it stores data in “blocks,” which are then “chained” together in chronological order. Each block of data is set in code, so it can’t be modified. Blockchain data is also decentralized. When a transaction is initiated, information is transmitted to computers all around the world for verification.
In the mortgage industry, blockchain may help speed up applications, approvals, and settlements—largely because the relevant data is entered into the blockchain only one time in a location that all players can view at will. This eliminates the incessant sending and resending of documents when information is added or updated. Blockchain also improves the transparency and security of the data. Because information entered in blockchain is not editable once it’s entered, there is no chance of it being lost or altered.1,2,3
Bitcoin, which uses blockchain technology, are more than a decade old. However, because of their volatility, many big banks don’t recommend them as an investment. Even so, mortgage lenders may begin fielding questions from would-be homebuyers seeking to pay with this medium. Right now, it’s probably best for lenders to request that crypto-clients provide a 30- to 60-day transaction history of the account in question. Buyers will still need to convert their digital cash into U.S. dollars when it comes time to close.4,5
Consumers have been using e-signature technology for years, from confirming credit card purchases to agreeing to medical treatments. Its newest and most notable use in the mortgage industry is for e-notarization. Today’s lenders are wise to keep an eye on whether (and how) these regulations will continue to evolve. E-signing tools can come in handy for signing contracts, sharing documents, and securing approvals.6
Tech companies have benefitted from the digitization of just about everything, from education to finances. While most tech-savvy lenders are a few years away from being able to provide a fully digital mortgage, those who start offering more online options are likely to attract customers (this is especially true in millennial markets).
Fortunately for third-party lenders, many financial institutions who purchase their loans are investing in fintech that can benefit correspondent lenders, too. For example, Truist expanded its offerings of the Empower loan origination system (LOS), LendingSpace correspondent lending system, and MSP mortgage servicing platform. This may be a good time to double-check what your partners have been up to (or are planning for the future).7
5. Optical character recognition
In optical character recognition (OCR), documents are “read” by a computer. For correspondent lenders, the use of OCR can slash loan processing time in half. This tool can scan and organize documents from various sources, extract key data, and identify missing information—with greater accuracy. Eventually, it’s expected that OCR will become so reliable that it will eliminate the need for correspondent lenders to submit digital data such as the FNMA 3.2.6
These are just some of the mortgage technologies that are revolutionizing the way business will be conducted in the real estate industry in the future. To stay on top of the latest trends, you might want to set a weekly reminder on your phone or block out time on your online calendar to research what’s new and next.