Anyone who has attempted to buy a home is all-too-aware that it is usually a painful and time-consuming process.
A new breed of startups are looking to change that by completely digitizing the mortgage experience and bringing the number of parties a customer interacts with down to the manageable number of one. We learnt more about the companies charting the path to this future during a panel discussion at LendIt, one of the largest fintech conferences in the U.S. focused on consumer and mortgage lending.
Here are the opinions of 5 top execs at said startups.
Simon Moir, General Manager, Digital Mortgage Services at eOriginal kicked off the discussion on the ideal digital mortgage experience. Unlike many other startups working on mortgage technology, eOriginal focuses on the experience of the customer from the time of signing through closing. This oft-overlooked piece is key to ensure a smooth process to the end, and allows eOriginal to partner with other front-end providers. Moir emphasized the consumer-first orientation of his company, which traditional Loan Origination Software companies find difficult due to the difference in incentives between the lending and closing teams. He added later that the digital mortgage process, which is traditionally thought of as a “millennial” solution, is really for everybody and maximizes ease and accuracy.
Nima Ghamsari, CEO of Blend explained that the needs of consumers and investors align – consumers want a better experience and investors want better data, and technology is the best way to satisfy both. Blend partners with lenders to provide a smooth digital mortgage application experience for borrowers across devices. He agreed with Moir on the need for an end-to-end digital experience, while acknowledging that this is still aspirational due to the number of intermediaries and the amount of money changing hands during the lending process.
Nick Stamos, CEO of Sindeo pointed out that the opportunity for technology companies is to provide the right financing solution for borrowers, whether that’s the right debt product or creative equity solutions. Sindeo is a marketplace with over 1,000 lender partnerships and looks to provide one stop shop for consumers. He emphasized that Sindeo looks to the experience they want to provide to the customer and builds around that, versus focusing on the pro processes like legacy financial institutions. Stamos added that it usually takes three to four years for traditional players to adopt new disclosures and regulations, while technology players can be more nimble, resulting in better compliance and governance.
Jeff Foster, CEO of Clara Lending explained that consumers demand same experience as Uber and/or Amazon. Jeff Foster was previously at the U.S. Treasury Department during the mortgage crisis, and left in 2010 to create Clara, a transparent and efficient digital mortgage platform. He highlighted the mismatch between consumer expectations and the timelines mandated by regulation: customers demand immediate information and then take time to assess options, however regulations such as TRID make it impossible to close a loan in less than eight days. He believes it’s of primary importance to collaborate with third party providers to address the fragmented nature of the current technology. Foster believes the stage of innovation past seamless origination is to build a vertically integrated operation including servicing and collections, in order to provide a truly “end-to-end” customer experience.
Joshua Tatum, director of business development mortgage at SoFi, emphasized the importance of building a community around borrowers and offering borrowers a broad array of products. SoFi began as a student loan lender and now uses student loans the entry point to other products including mortgages and personal loans. He outlined SoFi’s strategy of acquiring and engaging a consumer before they began the mortgage process, to move from a transactional relationship to a value-added one.
So what lies ahead?
All the panelists agreed that it was a matter of time before the mortgage process becomes fully automated, and technology would cease to be a differentiator. The keys to unlock the future seem to lie in delivering “better, faster, cheaper” loans to customers and passing the cost savings associated with automation on to the consumer. Ultimately, this would be a big win for borrowers and the true test of emergence from the "dark ages" of digital mortgages, so we’re watching this space with interest.