The 'e' in eMortgage Doesn't Stand for 'Easy'
By Matt Slonaker
March 4, 2019
Matt Slonaker is Senior Vice President is Head of Enterprise Solutions Sales with WFG National Title Insurance Co., Portland, Ore.
We've seen the mortgage industry embrace the concept of the digital mortgage over the past two or three years, with many lenders implementing new systems to that end. To date, the message from most eMortgage evangelists has really been little more than "Go digital--it helps your margins; aids compliance and improves consumer experience!" That's been enough for many, and we're now finally crossing the adoption threshold for the digital transaction.
However, somewhere along the way, it became apparent to most that adopting an eMortgage technology is by no means a quick or simple process. With technology improving by the nanosecond, and without a long history by which to judge the various systems and products available, how is the lender (or vendor) to decide which is a flash-in-the-pan and which is the keeper? If you are still in the process of selecting (or, unfortunately, replacing) the technology that will take your brand into the digital era, here are a few things to keep in mind.
Did You Do your Due Diligence?
Of course, our first tip is an easy one and can be applied to just about any strategic endeavor. Nonetheless, it's imperative. We've seen a handful of occasions where a business has selected the first technology it has vetted...and for all the wrong reasons.
Step one should start with a good, hard, objective look at your existing systems and processes. What can they do and where are they weak? Will the eMortgage technology you add to your process integrate seamlessly with the tools your professionals have been working with every day, or will there need to be extensive custom integrations and "bolt-ons" just to make the new tech work?
Speaking of existing systems, what of your existing team? Will your loan officers, specialists, underwriters, vendor managers and the like adjust to the new technology with minimal disruption? Is there buy-in for the new tools? This is not to suggest that each new adopter of eMortgage technology should take a vote among employees as to whether or not they wish to move forward. But it's important to know your team and what to expect as they adjust to the new system.
Finally, a detailed timeline is in order. Although you should be ready for some unexpected delays, your tech provider should be prepared to clearly and specifically outline how the implementation should be expected to proceed. Which of your existing processes or technologies will be disrupted and will that disruption impact your bottom line? If so, how much and for how long? While the long-term results should make some temporary pain worth the investment, there's no reason you should be surprised by those pain points.
Another consideration we often see overlooked is how well a new technology integrates with a lender's partners--especially on the eClosing side. It's likely that a good chunk of your purchase volume is going through a handful of vendors during the title, valuation and settlement phases. Are they ready to adapt to your new technology? Are they able to? Even if your implementation is smooth internally, a poor fit with existing partners could spell disaster for your transactions--and for longer than you might think. Be sure to plan ahead in conjunction with your key vendors.
Finally, be sure to assess your tech provider as a vendor in addition to evaluating its product. What's its track record for support? Will the developer have people and trainers on site at implementation and beyond, if necessary? What's the company's history? Will they be around when you need a Version 2.0 down the road? Your technology developer will be vital long after implementation is over. Be sure they can provide the support you will need.
Look Beyond Tomorrow with Your Tech Plan
You might be surprised how many eMortgage systems have been implemented solely with the idea of solving a single challenge. Adopting an eMortgage platform is much bigger than changing tools. It's a change of business model.
Accordingly, you need to be a bit of a visionary and a bit of a fortune teller when you choose today's technology. We know that the volatility gripping the mortgage industry recently isn't likely to abate any time soon. GSE reform (and standards); new technology; adoption of the eVault and eNote; and the overall posture of the secondary market will undoubtedly have an impact on the originator's (and vendor's) process. How flexible is the system in which you're investing? Will it be capable of adapting as the world of technology advances around you? Will it be scalable the next time we see a seismic shift in the marketplace? What is your strategic objective for going digital? Are you addressing a single, temporary challenge? Will your investment still be useful if/when that's solved? Will it even be relevant in three years? Your technology strategy must be more specific than "everyone else is doing it," or a generalized version of "cut costs." HOW specifically will the new system cut costs...and by how much?
Adopting the digital mortgage process is a global, not local, decision for your business. The impact will be long-lasting. As you make the decision, it will be essential to understand the secondary impact the technology has on peripheral departments, future decisions and even your business model. The mindset of the people helping to make the decision must be global to truly make it work.
You Don't Have to Be Alone in the Process
This should be intuitive, as most decision-makers employ this advice in making other major decisions. However, for some reason, we've seen some technology selected and implemented in record time, with seemingly little scrutiny on how the system would fit down the road. It starts with your technology developer. Most developers tend to be proactive and offer resources about what the best fit might be for you. As you might imagine, however, the expertise will be a bit biased, so take in what they offer, but keep a bit of healthy skepticism.
As you disrupt your business model in the process of going digital, remember that you probably have a vendor or partner which has worked with other businesses like yours and seen them go through the process as well. Get their input! Ask what worked...and what didn't. Similarly, talk to your peers, employees and almost anyone who has some experience in the process. Every little bit of information can help you avoid making a costly mistake.
Finally, it's optimal to have a CIO or top technology and systems decision-maker (or decision-makers) in house long before you select the technology. Find someone who has successfully done this before, if possible. That experience could save you thousands, or more. If you can't find or don't have the capability to have that experience in-house, consider a consultant. But, just as you should with the technology, be sure to kick the tires thoroughly before you make your choice.
The process of going digital is no longer optional. The eMortgage is quickly becoming the norm for mortgage lending. But it's not a race to get it done. The wrong technology or the wrong fit could lead to quite a bit of prolonged pain and, eventually, additional costs to fix or even replace the original, knee-jerk decision. A thorough and well-informed technology strategy, however, can bring the kind of long-term benefits that have long been promised.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com; or Michael Tucker, editorial manager, at firstname.lastname@example.org.)