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Mortgage bankers: Technology and TRID are barriers to future growth

Are loan origination systems up to the task of tackling heightened regulatory compliance and persistent financial challenges?

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Overcoming technology shortcomings and a still-struggling economy are top priorities this year as mortgage bankers look to expand their businesses and comply with new regulatory requirements.

That’s according to a recent survey conducted by Lenders One, a national alliance of independent mortgage bankers, correspondent lenders and suppliers of mortgage products and services.

The survey polled 100 Lenders One members at the organization’s conference in March. Respondents included mortgage banker members, preferred vendors and national program participants.

According to the survey, mortgage product innovation will fuel growth in the mortgage industry this year.

Other forces that will affect industry growth and profitability are continued increases in home values, the credit crunch that is pushing millennial buyers out of the market, lowering of acceptable down payment amounts and the impact of falling oil prices on regional economies.

Yet, despite an uptick in activity, homeowners are not having much success in their attempts to refinance their homes, according to the survey. Respondents said homeowners still lack confidence in both their near- and long-term financial situation and are concerned about their ability to pay their monthly bills, as well as for the initial costs of refinancing.

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Recognizing that millennials are the next major cohort of homebuyers entering the market, lenders believe there are three leading elements for attracting this new generation: new, more streamlined approaches to originating their loans; lower down payments; and more efficient loan processing, which leads to less paperwork.

Respondents recognize that process improvement is core to propelling growth and achieving compliance with the new regulations." - Lenders One CEO Jeff McGuiness

Forty-eight percent of respondents said more online and/or mobile access to track documentation for borrowers is the most important element to help streamline the loan life cycle process for customers this year.

This was followed by nearly 32 percent who cited improved electronic communication with borrowers as most important, and another 20 percent who identified easier preapproval for mortgages before house hunting.

However, the current loan origination process is sorely lacking in terms of its ability to attract or stay “in touch” with most borrowers and to complete and manage paperwork — and above all, to do all of that while complying with the slew of new regulations impacting the financial services industry, the survey respondents said.

In fact, more than 68 percent of mortgage banker respondents said the top challenge they face in preparing for the new TILA-RESPA Integrated Disclosure, or TRID, rule is the impact on processes and workflows that are now required to meet a three-business-day window for delivering a Loan Estimate to borrowers.

Mortgage bankers said they are also concerned about completing the new TRID forms themselves, and 44 percent said the technology necessary to manage quality control and stay compliant is the area of the loan origination process most in need of improvement.

But although technology investment is important, it won’t solve all of the problems facing mortgage bankers as they prepare for the Aug. 1 TRID implementation deadline, said Lenders One CEO Jeff McGuiness.

“Respondents also recognize that process improvement is core to propelling growth and achieving compliance with the new regulations,” he said.

Established in 2000, Lenders One has more than 280 lender members that originated $200 billion in mortgages last year. Lenders One is managed by Mortgage Partnership of America, a subsidiary of Altisource Portfolio Solutions SA.

Email Amy Swinderman.