Financial technology is transforming the mortgage industry by making the origination process more convenient and secure for borrowers.
As more lenders begin to offer fintech solutions to consumers, data suggests that borrowers are now closing on homes faster than they were in previous years.
LendingTree’s most recent home buying survey revealed that the average closing time for the typical American homebuyer fell by 11 days in 2019. This comes as no surprise as the rate has been steadily declining since 2017.
Among many other compelling factors, like reduced closing costs, this increased rate of production has influenced lenders like BOK Financial, Navy Federal Credit Union, Citizens Bank, U.S. Bank, and many others to join the fintech wave.
In recent months, all of those lenders (and many more) have rolled out digital mortgage platforms. The appeal of going digital is at least twofold for these lenders. First, it's what customers are demanding and expecting. Many of today's borrowers want simplicity and speed. What they don't want is to be faxing documents back and forth.
Second, there are benefits for the lender as well, namely increased speed to close and less potential for errors from manual data entry and the like.
In an interview with HousingWire, Marcus Humphrey, BOK Financial's senior vice president and director of digital home loan strategy, said fintech solutions are important to the industry because they provide borrowers with a digital experience.
“This is demonstrated many times over in how our customers want and enjoy doing business. We find that all of our customers want an omni-channel experience, meaning they can engage with us digitally, all while engaging with local market experts,” Humphrey said. “Our customers are doing business with other industries in a digital environment, and they now demand that same experience during a mortgage interaction.”
This demand led the company to partner with Roostify, a digital lending platform and HousingWire Tech100 winner as one of the top technology companies in the housing industry.
In 2018, BOK began using Roostify’s digital platform to provide its customers a secure way to upload, send and receive loan documents remotely.
“We take the mundane tasks from day-to-day work and automate those while allowing the lender to focus on the high value activities,” Roostify Chief Customer Officer Syed Ijaz said. “That’s what raises the customer satisfaction for borrowers.”
Ijaz is not wrong, as data indicates that customer satisfaction heightens when technology is involved in the closing process.
Another indication of the importance of technology came from Ellie Mae’s latest Origination Insight report, which shows that for April, the share of closed purchase loans rose to its highest level since the company began tracking originations.
Ellie Mae attributes this to the industry’s embrace of fintech solutions.
“We’re entering the peak summer home buying months and despite tight inventories, we expect to see a robust purchase market,” Ellie Mae President and CEO Jonathan Corr said “We’re also seeing our lenders’ time to close purchases decrease month over month as they leverage our true digital mortgage solutions for better efficiency.”
That holds true at BOK. In fact, Humphrey says that BOK’s time to close has improved as more of its borrowers forego the traditional lending process for a digital experience.
“Our platform connects to Roostify to get documents and data from our customers much faster, so our cycle times have reduced by 35% in just a year and a half,” Humphrey said.
Multiply similar results across the industry, and you have closing times coming down across the board. That's a far cry from just a few years ago when the industry was in a panic over rising closing times due to the implementation of Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule. Ah, the good ol' days.