Banks and credit unions are expecting an increase in their online mortgage application volume, and are beefing up technology capabilities to handle the increase, according to a survey commissioned by a developer of mortgage application software. Mortgagebot, a suburban Milwaukee, Wis.-based developer of mortgage automation software systems for banks and credit unions, commissioned the Long Island, NY-based Lieberman Research Group to conduct interviews of 330 financial institutions, primarily banks, but also a number of credit unions, gauging their expectations for online lending. According to the survey, 18% of mortgage lenders offer so-called "smart" Web-based mortgage application services. The survey defines "smart” software products as those that are interactive mortgage-application systems that are a fully transactional, Web-based solution that intelligently guides borrowers through the application, adjusting the questions for applicants according to responses. Of the remaining companies that current do not offer the service, 71% said they will adopt online mortgage application technology sometime in the future, while 14% said they would not. The remaining 15% responded they were unsure. The survey asked respondents if they were currently evaluating smart application technology. Of the 46% of lenders that said they were currently or planning to evaluate software options, 63% said they would finish their evaluations by the end of 2012. In addition, banks that responded expect online mortgage volume to increased by 225% by 2013, while credit unions — which already take a high percentage of mortgage applications online — expect volume to increase 55% during the same period. Lenders that already have smart application software in place said the main reason for doing so was to better serve customers, with other reasons including efficiency, the believe that online applications are the "wave of the future," and to increase volume or maintain a competitive edge. Banks that do not currently offer online applications, and do not want to, cited security concerns for both the application process and the safety of borrower information as the primary deterrent of adopting the technology. Other reasons included regulatory and audit concerns, expense and budget constraints and the believe that borrowers would not use it or that the process was too impersonal for borrowers.

Write to Austin Kilgore.