Technology

Why it’s time for the mortgage industry to take technology seriously

Digitizing a Form 1003 is not enough for the 21st-century consumer

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If you’re in the real estate industry, I’m sure you’ve heard this statistic many times: More thanĀ 90 percent of homebuyers now start their search online. And it’s not just homes they’re searching the Web for; it’s also mortgages and just about everything else that has to do with their home purchase.

Although we’ve seen a lot of consumer-focused innovation in online real estate, little has helped borrowers navigate what is probably the most important financial transaction they’ll ever make — getting a mortgage. Let’s take a quick look at the state of technology adoption in the mortgage industry.

Online, the industry is dominated by lead aggregators that collect just a few pieces of borrower information and then punt the borrower off to one of their lenders. At which point the mortgage process becomes traditional and inefficient (think fax, phone and lots of paper).

Apart from the online lead aggregators, most lender websites today have an electronic version of the industry standard application (Form 1003), but digitizing a 1003 is not enough for the 21st-century consumer. In fact, simply digitizing a 1003 might even be a disservice to borrowers, who are then left to complete the mortgage application without proper guidance.

Then there are the new loan origination systems that are popping up in Silicon Valley and elsewhere. Most of these technologies, however, are designed to be used primarily — if not exclusively — by mortgage loan officers, loan processors and other mortgage professionals.

But what about the user? Why is the consumer getting left behind in this new wave of innovation in the industry? There is a new consumer revolution going on — where new technologies are shedding light on complicated processes and bringing them out of obscurity for the lay consumer — and it appears to be excluding the mortgage industry.

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Sure, getting a mortgage is a complicated financial transaction with imperative decisions the borrower needs to make at every turn of the process. With that said, however, technological advancement and consumer behavior are at a point today where this change is not only possible but necessary and expected. Today’s consumers expect well-designed and highly functional products that empower them to accomplish quite a lot on their own.

There are countless examples of other industries that have successfully used technology to provide great user experiences and better balance the information asymmetry between consumers and industry professionals — all while making their industry even more profitable. Isn’t it time for the mortgage industry to catch up?

Valentin Saportas is a corporate finance attorney turned technology entrepreneur. He is the co-founder and CEO of MortgageHippo, a mortgage technology company that partners with mortgage lenders, real estate companies and financial institutions to provide better online experiences to borrowers.

Email Valentin Saportas.