Mortgage Technology in 2021 Beyond

Mortgage Technology in 2021 Beyond

By Michael Peretz | Capco

2020, the year of COVID and incredibly low interest rates, bolstered the concept that mortgage originators must be able to capitalize on market conditions very quickly. No single action can better prepare originators than improvements to their technology, specifically the speed at which an originator can manufacture a loan.

Seemingly a lifetime ago (February 2018), the New York Federal Reserve mentioned that “FinTech lenders adjust supply more elastically than other lenders….” This statement helps to form the conundrum that even the best traditional mortgage lenders find themselves in as they plan for 2021 and beyond. How does my organization react like a Fintech, provide white-glove service levels, and do both at a respectable profit?

While the answers are far from simple, a formula for success exists. Originators must first look at their existing processes at a granular a level as possible.

What do your existing technologies and people do? How do they do it? How well do they do it? How much time does it take? Finally, what are my company’s bench marks for all of those questions? Once those questions are answered, an originator can focus on specific problem areas.

Next, build the best process. Sounds too simple, but it is imperative that technology or resource changes be dependent on an optimized process flow. An optimized process flow includes the “happy path” as well as the contingent paths. It includes automated and manual controls. It shows the path of critical data elements and is understood by all key stakeholders, which becomes the sole source of truth as you look for technology to help solve inefficiencies.

Third, consider existing internal and external technologies that you are already using. How can those resources be better utilized? Great examples of this include maximizing the use of Freddie Mac’s Loan Advisor and Fannie Mae’s Mortgage Technology Platform. When Capco works with originators, we often see these products being under-utilized. Maximizing your existing technology stack and taking advantage of the strong GSE offerings is the best step to take before heading to the market for additional technology solutions.

Cast a broad net when looking for technology solutions. Discuss what has worked or not worked with industry peers. Many times, originators are pressed for time or feel compelled to use an incomplete solution. The time spent looking for, and potentially integrating multiple solutions, is worth it. Getting a working team from your organization to consider the costs both short and long-term, compliance, ROI, technology impact, potential obsolescence and many other factors will assure your organization has made the right technology solutions, both large and small.