It’s never been clearer that there’s been a major pivot in the race to achieve the best hard money lending experience. It is clear the Digital Mortgage experience is more important than ever to lenders’ and loan officers’ production, profit and customer satisfaction. I recently joined Brian Boike, VP of Product Management at Simplifile, to speak at a California Mortgage Association Seminar in Las Vegas to discuss “How E Can You Be” in Hard Money Lending.
While many define a Digital Mortgage today as the front-end Point of Sale system, a true Digital Mortgage is a loan that gets processed electronically during all phases – application, processing, underwriting, closing, and post-closing. This Blog is the first of a 2-part series on “How E Can You Be” and the Digital Mortgage. I will discuss the promises of a Digital Mortgage in Hard Money Lending in Part 1 while Part 2 next month will provide some specific examples of steps a lender can take on their Journey to a Digital Mortgage.
Loan volumes for Conventional Lenders dwarf the amount of Hard Money Loans originated, however many of the same principles for automation apply across both the Conventional and Hard Money Landscapes. Hard Money lenders are adjusting to operating in a fast-changing landscape that is more complex than ever. Technological advances, rising borrower expectations and the transformation of operations and compliance controls dominate the hard money lending environment. Customer Demand for improved speed, ease of use and predictability is driving the digitization of the hard money/private money lending industry.
A lender can embark on their Digital Mortgage journey whether they use a monolithic lending system or a loosely coupled network of systems and applications. The process starts with focusing on the Borrower Experience. Borrowers are looking for a more intelligent mortgage experience and research shows that digital experiences are influencing how people manage and make decisions about borrowing. These demands for real-time customer experiences will increasingly drive innovation, and those lenders who are best equipped to become–and remain–market leaders will be those most comfortable with evolving technology and implementing incremental change. It is all about creating that new and differentiated mortgage experience.
In the unique and scenario driven world of Hard Money, why does a Digital Mortgage matter? Well, the promises of a Digital Mortgage are just too tough to pass up: Reduced friction and time to close, reduced rekeying of data, mobile access, increased control, speed, transparency and efficiency are all available benefits. New Hard Money competitors including Wall St. Institutions, FinTech Companies and Non-QM lenders are forcing lenders to change and reimagine their workflow.
Against the background of declining revenue, compressed margins and an increase in competition, Hard Money originators must identify new ways to attract potential borrowers, differentiate themselves and create a simple and streamlined experience. Hard Money Originators are looking for ways to sustain profitable growth and create a market advantage. By moving towards a Digital Mortgage, lenders can increase asset quality, remove processing time, cost and uncertainty from the process while creating a more engaging and predictive customer experience. It is one of our Private Money Industries greatest challenges, the need to invest in technology weighed against the need to invest in people and having the time to change old habits to forge new efficiencies. A true digital mortgage experience will not only simplify the application process, but also shorten time-to-close and give borrowers faster access to all the information they want, every step of the way.