Why digitizing the mortgage process is critical to survival in 2021

PEX Network caught up with Katherine Campbell, chief digital officer at residential mortgage banker Assurance Financial, who received the 2020 Housing Wire Tech Trendsetter award for her work to establish an online end-to-end mortgage in the consumer market. Ahead of her session at PEX Live: Digital Mortgage Process 2021, taking place online on February 16, 2021, Campbell discusses her success in digitizing the mortgage process at her organization and offers advice for mortgage professionals looking to adopt new technologies.

PEX Network: You were the first person to establish a two-way integration between systems to avoid customers dealing with multiple technologies, for which you received an award. Could you tell us more about how you helped Assurance Financial implement and adopt more than 14 technologies in that process?

Katherine Campbell: To give a brief background, I was working in technology in San Francisco for 20 years in the early days of the dotcom revolution. We watched a number of industries evolve into creating very successful user interfaces (UI), and then ultimately expand to the user experience (UX). One key example being instead of customers just going online and buying a plane ticket, when travel evolved to an online entity, customers could suddenly have a seamless integration between a booking website and an airline, and tickets could be sent to their phones.

At that stage, the mortgage industry had not reached this level of great UX, but we certainly knew from a UI perspective that there had to be a better solution. In 2018 our fax machine was still very busy so it was relatively clear that the industry needed to evolve. We did not really have to invent the capabilities of technology, we just needed to make them applicable to the mortgage industry.

Applying for a mortgage online, even from a mobile phone, is a very seamless experience, but I knew from the beginning that there was no real foundation beyond that stage. Even if we could get borrowers to input all of their data and log into bank accounts from our application, which is a big trust challenge for consumers still, to continue the relay of documentation through the application, there was still a lot left to do with it. There were still a lot of gaps in the journey of both the borrowers and the loan officers before we could call it a digital mortgage.

We saw the need to communicate better with the borrower through this process. That required an integration into our marketing automation system, which we needed to adopt. There are a number of different types of debt alerts and equity opportunities in our database and we needed to feed them from an alert system to the loan officer, from a marketing automation system out to the borrower, into a point of sale system and then into all of the applications that go beyond. The mortgage application became a critical integration between all systems.

PEX Network: Why is it important for organizations to digitize the mortgage process?

KC: There are two reasons here, and one has certainly been accelerated by the Covid-19 pandemic for the survival of the mortgage industry. Have a look at Rocket Mortgage, a service provided by Quicken Loans, the number one mortgage company in the country, certainly in Louisiana, which is where the bulk of our business comes from. We at Assurance Financial have six brick-and-mortar branches in Louisiana, a state that we have been operating in for 19 years, and yet Quicken Loans is the number one lender without a single brick-and-mortar branch in the state. That is because the consumer is largely ready and we knew we needed to go digital to survive.

The other thing is the needs and demands of the borrowers. Millennials are expected to be the largest generation to purchase homes this year. In 2021 there will be no tolerance for outdated systems, and the need to go digital is mandated by the market, borrowers are ready for it, as is proven by Rocket Mortgage. Going digital on the mortgage process was an easy investment to make for us because we did not need to change the market’s behavior, it was already going that way, and now we cannot survive without being digital.

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PEX Network: What are your recommendations for other organizations who want to adopt technology to optimize their mortgage processes?

KC: I think this is a really important question. What usually happens is that the different teams in a mortgage provider all have a different opinion about the tools and processes they want, in an atmosphere where everyone is anxious to implement technology. More than five billion dollars was invested into fintech last year, and these organizations have to sell a product to mortgage companies to try to gain market share. It is easy for the head of compliance in a mortgage company to see such a product and decide to implement it, without knowing that the operations department has adopted a different tool with the same capabilities. This is when you start to find redundancy.

One of my recommendations is to have a plan and to get the group of executives together. That is exactly what I did at Assurance Financial, I created a task force that was formed from the top executives in the company. At first the response was that I was the technology person and responsible for implementing the technology the organization needed.

However, it was really important that they understood they were not necessarily making decisions on application programming interface (API) capabilities and integrations. They also needed to understand what the tools were offering, the full end-to-end solution that followed both the needs of the customer's journey and the loan officers.

A lot of the time organizations end up using about five per cent of the capabilities of the technology they have adopted and it becomes a very expensive project without experiencing all the benefits. It is really important to have someone in charge of the contract who understands the capabilities of the technologies, while including all the people involved in the project.

PEX Network: Could you please tell us the key takeaways of the session you will present at PEX Live: Digital Mortgage Process 2021?

KC: The first piece is about understanding the actual journey, so I will walk through what it is and the KPIs for this industry, which should be very similar across every single company.

Then I will discuss understanding the foundation technology that is needed for a full end-to-end integration of those tools, that makes every department, from marketing and automation all the way through to the secondary market to sell, understand how that platform should look.

I will then start to look at what I call micro integrations, which are very critical, but not necessarily as much as the platform itself. For example, if you get a borrower all the way through to the end of the mortgage and they have to sign it by hand to complete it, they are not going to refuse only because the last step is not digital. I will explain to the audience how to roll out these micro integrations to the teams.

Technology is still very scary for a lot of people and they adopt it at different pace from each other. You need to have a support team there when they are ready to ingest all of this information.

Finally, I will discuss ROI, how to look at some measurement KPIs, both pre and post technology, to start understanding what the investment return should be.

PEX Network: What do you expect to see in the mortgage space in the next few years?

KC: I would say over the next one to five years, we are going to be looking at an absolute total acceptance of E-notes and a complete, remote online notary so that we have a full E-closing. That has been an issue with not only acceptance from the investor side, but at the state level and even at the county level for whether or not that is allowed. I believe that by the end of next year we will see full acceptance and it will become normal practice.

From there, I think it is going to be really fascinating. We might see the actual exchange of both data and funding go through, perhaps blockchain or other forms of instant data verification, where we can pull in title and appraisal information and data. That is what is called immutable data, which means it is instantly known and unchangeable.

I think that we are going to start to see a much faster pace in the operations side from being able to achieve both funding loans as well as the front-end data, that would be very interesting to watch.