Even though the mortgage industry is finally stepping up and answering the call for more technology innovation in the space, a new survey from Fannie Mae on the pulse of the industry shows its not even close to where it needs to be on the tech side.

On the positive side is the motivation is definitely there, but will it take a game-changer like Uber to get there?

In a new in-depth study, Fannie Mae’s Economic & Strategic Research Group surveyed senior mortgage executives in May through its quarterly Mortgage Lender Sentiment Survey, revealing the true status of innovation in the industry.

To properly gauge the market, Fannie Mae surveyed a total of 191 senior executives, representing 169 lending institutions. Larger institutions made up 15% of responses, mid-sized institutions made up 16% to 35% and smaller institutions made up 65%.

Despite continuous calls for mortgage innovation, the survey found that 21% of the industry either “somewhat disagrees” or “strongly disagrees” that “the mortgage industry as a whole is innovating to drive the industry’s operational efficiency.”

These responses from lenders in the Fannie Mae survey help show what’s still blocking change.

  • “Really no big innovation in the overall process. Some things around the edges but still mainly a paper and process intensive industry.” – Larger Institution
  • “I think the system has made it too complicated for the average person to even understand the mortgage process. This was even before all the changes. The new changes made it worse. Plus the process takes too long.” – Smaller Institution
  • “There are too many regulatory roadblocks to common sense business process improvements.” – Mid-sized Institution
  •  “Lots of confusion about TRID requirements and what is acceptable. Difficult to set up processes if you don't know what the rules are....” – Larger Institution

The industry is adapting though, and on the other side of that 21%, approximately 79% of lenders do “strongly agree” or “somewhat agree” that “the mortgage industry as a whole is innovating to drive the industry’s operational efficiency.”

Their responses are lot more positive on the future of mortgage technology.

  • “There is a growing interest and support in a fully digital mortgage experience, including closing and funding.” – Smaller Institution
  • "I believe the industry is moving to simplifying a complex process for the consumer's benefit. Innovation as opposed to over regulation.” – Larger Institution
  • “I think advances are being made, but there needs to be a bigger push in the technology area - apps for devices, acceptance of e-signature and e-recordings.” – Smaller Institution

Nick Stamos, CEO and founder of Sindeo, a mortgage marketplace founded in 2013, recently explained the growing need of technology in HousingWire’s May magazine feature “Digital Disruption” saying, “Consumers in general, not just Millennials, are pushing the home financing industry to go digital because they have already experienced and have come to expect the ease of use and level of service that comes with 24/7 access  and a digital experience. Consumer expectations have been elevated because every other part of their lives have been made better through technology.”

It’s no longer a choice for lenders to adopt more technology. “For bank and nonbank lenders to increase loan origination volumes, they will need to better understand and anticipate the driver at the center of market change: digital-savvy borrowers,” Kelly Adkisson, a managing director for Accenture Credit Services, said in the piece.  

But according to the Fannie Mae survey, in order for some lenders to get to that place of change, it’s going to take a major disruptor, like Uber, to get there.  

To some though, the industry already had a small glimpse of a disruptor: Quicken Loans’ Rocket Mortgage.  

“Quicken's Rocket Mortgage is the perfect example. We may not be there yet but with innovators like Quicken we will be,” a larger institution said in the survey.

As a refresher, Quicken Loans aired its first-ever Super Bowl commercial this year, locking in 60-second TV spot, which showcased Rocket Mortgage, the fully online mortgage application process.

America, however, was not a fan; cue headline risk.

After airing, viewers took to Twitter in a panic, claiming that Rocket Mortgage will lead to a repeat of the housing crisis.

Despite the twitter frenzy, Rocket Mortgage Product Lead Regis Hadiaris commented on the situation later saying, “Following the airing of the ad, tens of thousands of Americans visited the site to learn more about Rocket Mortgage or start the loan process. Many were approved to refinance or buy a home.”

If another disruptor like Rocket Mortgage doesn’t happen, innovation isn’t lost.

Lenders cited the growing burden of regulation as just as much of a motivation to change.

After generating loan applications, regulatory compliance ranked as next top priority for lenders.

The survey found that lenders prioritize investing in general regulatory compliance to address pain points related to staying up to date with regulation changes and interpretation. Two-fifths of lenders say the primary goal to invest in this area is to increase automation.

 “Costs are skyrocketing due to increased regulatory burden, and the only solution is increased automation. The challenge is the pace of regulatory change makes it extremely difficult to effectively implement the needed technology,” a larger institution said in the survey on how the industry is innovating.

Even Quicken Loans, as a disruptor, said regulatory push is moving the mortgage innovation process along. “By importing and verifying important data, Rocket Mortgage makes the loan origination process safer. Instead of a client faxing in printed copies of statements that can be altered or forged, our system pulls the information in directly from trusted sources eliminating any potential for fraud,” Hadiaris said.

The industry is making progress though. At the Sage Summit annual conference this week, the software company announced a new partnership with U.S. Bank that could have an even deeper impact in moving the financial markets forward. U.S. Bank partnered with Sage to introduce its new product, AP Optimizer.