Mortgage lenders should avoid ‘gotchas’ of old tech

Blog View: As we continue to work through the fall conference season, we see a lot of messages from people telling us they have something new to offer.

This caught our attention, and rightfully so. When it comes to mortgage technology, “old” is a trap that costs the lender’s business.

At our company, we’ve noticed that some companies are promoting new products when in reality they’re just updating their marketing materials.

Trying to compete in the buying money market without the latest tools is sure to frustrate borrowers and the real estate agents who represent them.

Our team was in Nashville last month for the Mortgage Bankers Association’s annual conference and expo, where we hosted a roundtable where industry leaders came together to discuss what the industry is doing for borrowers and our business referral partners. new demand.

New needs are best met—and often only through new tools.

We spoke with industry leaders about what staking technologies they would like to see and what they plan to do with the systems they invest in.

Three key concepts emerged from this conversation.

It’s about the experience

The main reason lenders are adopting new loan origination tools today is that the expectations of today’s borrowers cannot be met using older technology. There is so much friction in the process that consumers are now so spoiled by Big Tech that they see friction as an affront to the individual. They are not wrong.

Leaders have long known they needed to improve the borrower experience. The mortgage industry has made impressive strides in this direction over the past few years. But the margin of error is very low. Borrowers don’t put up with a bad experience. They will just go to another lender.

They won’t be the only ones heading to the exit. In the buying money market, it is real estate brokers who drive most of the mortgage business. They won’t work with lenders who don’t have the ability to provide a great borrower experience. Why do they do this?

Of course, it’s also important that technology meets the needs of lenders’ own personnel. Much of the technology deployed over the past few years has been designed to improve the borrower experience, which is good. But older technology does nothing to improve the experience for the employees that lenders rely on to process and close loans.

Newer technologies provide a better user experience. It can make the team more efficient. And, perhaps most importantly, it helps lenders attract new employees. At a time when recruiting great talent has never been more challenging, lenders cannot continue to run their businesses on outdated technology.

it’s about innovation

But it’s not just about the experience. It also involves the ability to create new experiences that allow lenders to issue loans faster and at lower costs. In a rapidly changing business, this can be challenging. Less than a year ago, lenders could barely keep up with the influx of loans. Today, forecasts suggest that business will shrink by half by the end of next year.

Responding to change requires access to the latest technology and partners who are inclined to innovate. When lenders are required to sign long-term contracts with technology providers, it removes any incentive for suppliers to have to renew their sold tools. Entering into a long-term contract pretty much guarantees that the lender will be in trouble in 5 to 10 years as the product ages.

The results are clearly visible in today’s industry, where some large legacy technology providers continue to offer the same old tools, despite lenders desperate for better tools.

But it’s not just the innovation capabilities of the technology partners themselves that matter. Other third-party technology developers are creating new tools all the time. But lenders won’t get these benefits if core system developers don’t allow lenders to connect in an easy and affordable way.

They will be stuck in the past, using outdated tools.

It’s about flexibility

Much of the innovation needed to remain competitive in the mortgage business takes place outside the IT department, much of which is in the development of new loan programs. Offering something new, even an old product, in a new way can attract the attention of borrowers and their agents and win more business for lenders.

But that’s not possible with older tools that don’t provide lenders with the flexibility they need.

Every lender is different, from the products they offer, to the regions they compete in, to how they staff. Mortgage leaders need the flexibility to create their own workflows so they can send certain loan products to certain paths, removing friction, speeding up the origination process and reducing costs. Old tools don’t allow this.

Old technology is a trap that traps lenders in the past while competitors move forward. It’s even more dangerous because lenders often can’t tell by looking at marketing materials whether they’re considering outdated tools that have disappointed borrowers and their real estate agents for years.

The way to avoid this trap is to ask for the best new tools, work with technology partners with a history of innovation, and push internal teams to get the most out of every new technology implemented.

Joe Camieri is Executive Vice President of Sales and Strategy at Mortgage Cadence.

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