Customers in the driver’s seat

Why most borrower portals don't work

For at least the last 10 years, the American home finance industry has realized that consumers want more control over the home finance transaction. They want to feel like they are driving the process, they want the ability to shop for a better deal, and they want to feel like they understand what’s going on. Unfortunately, for the last 10 years, and even beyond that, that hasn’t become the reality. There are a number of reasons for that.

First, we don’t build technology in a highly regulated industry that consumers can break. Giving borrowers access to a mobile app or a retail mortgage website is one thing, but a complete portal where they can drive the transaction? That takes the concept of consumer risk to an entirely different level. No lender I know would do that.

And it’s not like the consumer would really want us to do it. They say they want control of the mortgage lending transaction, but rarely does a borrower take an action on their own. They must generally be driven to the closing table with repeated attempts to gather the required documentation under the threat of a delayed closing. Giving consumers access to the machine that drives the transaction would likely turn the mortgage lending industry into a giant parking lot.

But, the customer is always right, as they say, and the drive to give consumers what they want and still react appropriately to the two problems above has resulted in a kind of Frankenstein technology that, in trying to serve both the consumer’s desire to drive the transaction and the industry’s desire to prevent problems and delays, has accomplished neither goal. In fact, the so-called “borrower-facing portals” in use today do little more than face the borrower. They certainly don’t put the borrower in control and they don’t build either credibility or that sense of satisfaction that borrowers seem to be seeking.

By all accounts, we can’t do it, but what if we could? What would we have to get right to make a real borrower-facing portal that worked? I’ve put some thought into that question and here is what I’ve come up with.

A MATTER OF TRUST

Put any piece of dangerous equipment in a person’s hands and ask them to start it up and you’re likely to quickly learn how much they trust you. We won’t do things that people tell us to do if we don’t trust them. We certainly won’t take actions that put us at risk. Can there be anything more risky for consumers, at least financially speaking, than the home mortgage transaction?

Any banker working today will admit that consumers don’t trust our industry today, if they ever did. And our new federal regulator isn’t doing anything to change that. Instead, the Consumer Financial Protection Bureau is making it easier than ever for consumers to go online and file a complaint against any lender for anything at all.

Trying to establish trust by putting a powerful consumer-facing portal into the hands of a prospective borrower and asking them to drive a transaction that will conclude with them over hundreds of thousands of dollars in debt over the next 30 years is crazy. It’s no wonder it’s never worked.

To make it work, we have to start by building borrower trust. It can be done. Look at today’s self-service tax preparation software. If there is anything in the financial world more complicated than the mortgage transaction, it would have to be taxes. Consumers know that if they mess this up, the IRS will come to their home, take all their stuff and throw them in jail. They’ve done it plenty of times in the past.

Despite this fear, somehow a number of different software providers managed to win the consumer’s trust, put the tool in their hands and then charged them to use it to file their taxes. How did they do it? That could be the subject of an entire feature story of it’s own, but at a minimum they proved they understood the business, they included plenty of video-based training within the product and they guaranteed the results. It worked.

ILLUSIONARY CONTROL WON’T WORK

If there is one rule for building trust, it’s to do what you say you’re going to do. We cannot continue to offer borrowers software that promises to put them in control when we know it won’t put them in control. Of course, we can’t put them in control because they don’t know how to exercise that control.

Borrower portals, which were originally designed to be technologies that put borrowers in control, really just became a stick for mortgage lenders that they could use to beat borrowers over the head. It didn’t work well. Borrowers were not fooled. They’re not fooled by any technology that pretends to put them in control and then is just used to order them around without having a human to explain why they’re being asked to deliver all that information.

Every single borrower portal that we’ve seen so far has basically shoved information out of the loan origination system up into some place in the cloud and then invited borrowers to come in and interact with it. The lender still tells them exactly what information they want, tells them when to deliver it, in what format and how, and then basically interrogates them if they don’t get it. We’re lying to borrowers about what this technology offers them. So how can we overcome this?

Instead of providing a system that pretends to allow borrowers to drive the mortgage transaction — something they are not trained to do, are afraid to do and most likely won’t ever do — why don’t we offer them a portal that lets them drive us? Our loan officers, underwriters and processors have years of experience. They do this work every day. Why can’t cloud-based, borrower-facing portals be used to give borrowers the ability to drive us?

Anyone who has ever worked a field with a horse-drawn plow — okay, maybe that’s no one who reads this publication — knows that the horse knows where it’s going. The driver doesn’t really do much driving. The same is true of our industry professionals. Letting the borrower have a few controls that help us stay focused on the tasks in front of us is a small switch, but it could lead to a very big change in customer satisfaction.

FAILURE TO DELIVER

And that’s really what the industry would have to focus on to make a workable borrower-facing portal. In the past, we were forced to focus on the mortgage product, the end result of the work of loan origination. That’s what regulators were watching and that’s what investors demanded. That hasn’t changed, but now we also have to pay attention to our borrowers and their satisfaction with the process.

Borrowers have not been satisfied by the experience offered by borrower portals in the past. The biggest reason for that is that loan officers who are supposed to use the portals were not taught how to use them. They didn’t follow up in a timely manner with the borrowers who used the portal. They didn’t stay in touch with their borrowers and answer their questions when they came up. They just basically hid behind the technology.

To make a portal that works, loan officers cannot be allowed to use it as a crutch, or a way to run more borrowers through the system faster with less effort. That kind of behavior will not lead to higher levels of customer satisfaction. On the contrary, it leaves borrowers with a bad taste in their mouth and a bad experience with their loan. It prevents them from taking the actions that can mean more business through referrals or repeat business in the future.

Even though there are valid reasons that consumer portals haven’t worked in the past, there are also plenty of reasons to believe that one could work in the future. In fact, there are no inherent barriers existing today that would keep a good portal system from working. All it requires is that the lender go to the trouble to explain what the portal does, how it works, and exactly how it gives the borrower control. If the borrower then experiences more control, the lender will have built trust and the first two obstacles will disappear.

Another reason for borrower dissatisfaction has to do with how the technology is used, and that’s simply a matter of rolling it out appropriately, demanding that loan officers and other personnel use the portal, and then teaching them to use it right. If they do, borrowers will get the information they need. They’ll feel like they’re in control of the transaction, and they’ll have much higher levels of customer satisfaction. The industry will also get a good product to push out into the secondary market.

The best news of all is that the technology exists today to make such a portal a reality and it’s being employed by forward-thinking loan officers and the banks they work for right now. You’ll know who they are by watching them grow. I expect they’ll outpace the rest in the year ahead. 

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