Great eExpectations

Customer expectation drives customer satisfaction. A customer at McDonald’s is generally satisfied when they receive their order quickly with a fresh tasting hamburger or fries. If that same customer goes to a high-end steak house, just getting a passable meal quickly is not enough. The expectation is now for perfect service, high quality steak and a memorable setting.

For companies in the mortgage and real estate business, technology drives and permeates customer expectations. Homebuyers expect the convenience, customization, and speed that technology can provide.

The convenience of eCommerce and digital banking set the expectation that mortgage lenders can also support the convenience and flexibility of mobile and digital workflows. Lenders that meet these expectations will have satisfied customers and will continue to see their business grow. However, lenders that fail to meet customer expectations may fall behind. In short, customers now have great eExpectations when it comes to their mortgage loans.

Understanding Consumer eExpectations
Customers love the convenience of a digital mortgage transaction. A mortgage transaction is complex transaction that has traditionally required a ream of paper to consummate. From the borrowers’ perspective, they were required to complete, and sometimes mail, a paper application. Then they would be required to receive, review, sign, and mail paper disclosures to their lender. Then they were required to go to a settlement office and review and sign another ream of paper contracts and disclosures.

Digital enhancements to this process enable consumers to complete an application online, sometimes leveraging other data sources that can make the process far less lengthy and cumbersome. They can review and sign their digital disclosures on their smart phone, communicate with their loan originator through their method of choice (email, text, chat, voice), and ultimately digitally sign their closing documents at their convenience. In many cases, all of this can be done from the comfort of their own home. This is the consumer’s eExpectation of a convenient mortgage process.

Jim Morrison of the Doors famously sang in 1967, “we want the world, and we want it now.” Some things never change, and consumers still expect their transactions to be fast and easy. The structure of the mortgage transaction will probably never allow for an on-demand mortgage, but many lenders are making tremendous strides toward a speedy mortgage loan by digitizing their processes.

A credo of the digital mortgage movement has been to make each transaction as “e” (electronic) as it can be, certainly the digitization of your application, underwriting, closing, and settlement processes is the best way to make the mortgage lending process as speed “e” as it can be. Reducing the time from application to closing is a sure way to meet and exceed your customers’ eExpectations.

Digital mortgage processes also allow lenders to leverage data to customize the lending experience for their customers. The aggregation of data helps lenders offer personalized products and pricing options in transparent ways that benefit the consumer. This helps the borrower understand their options and feel like they are in control of the lending experience.

Even real estate companies are now making moves to create a digitized end-to-end home purchasing experience. The integration and flow of data between these systems help the customer have an integrated home purchase or refinance experience that meets their eExpectations and ultimately results in high levels of customer satisfaction.

When it comes to customer satisfaction with the mortgage lending process, meeting customer expectations is everything. The bar has been set very high by other industries that are meeting customer expectations by digitizing and optimizing their transaction resulting in high levels of customer satisfaction. Digitizing the mortgage process as much as possible and leveraging data integrations can result in a mortgage lending experience that meets customer eExpectations and delivers levels of convenience, speed and customization that cannot be achieved when relying on paper processes.

Investor eExpectations – GNMA Digital MBS
The digitization of Mortgage Backed Securities (MBS) also continues to move forward. The benefits of digital MBS processes will surely result in greater eExpectations from investors. In January, Ginnie Mae announced the issuance of the first MBS backed by digital pools consisting exclusively of eNotes. The aggregate value of the digital pools totaled approximately $24 million.

“The issuance of securities backed by Digital Pools validates the viability of the securitization model outlined in our Digital Collateral Program and sets the foundation for broader and more rapid adoption of digital mortgages,” Angel Hernandez, Ginnie Mae’s Director of Policy and Program Development, explained in a press release. “This event is the culmination of efforts by numerous internal and external stakeholders in our digital initiatives, including Issuers, Document Custodians, warehouse lenders, technology providers and other industry partners.”

Ginnie Mae’s Digital Collateral Program (DCP) is a feature of their greater MBS program. Its purpose is to create and issue GNMA guaranteed MBS that are backed exclusively by digital pools. Each loan included in the DCP results from an eClosing where an eNote is utilized. The program includes more than just eNotes, there are other distinguishing features that provide more flexibility with the collateral documents, allowing security instruments and other trailing documents to be digitally uploaded and transferred. This allows for much more efficiency in transfer as these documents do not have to be physically transported. It also allows other digital innovations to be utilized such as Remote Online Notarization.

The goal of the DCP is to extend full access to the benefits of digital mortgage technology to a greater percentage of industry loans, particularly loans insured by FHA and VA. The benefits include greater speed from application to collateralization across the transaction, less risk of errors in loan files or with signatures, increased security of borrower private information, and the ability to close loans in compliance with public health guidelines. The continued expansion of the digital mortgage ecosystem in the world of collateralization could also result in decreased costs and expanded access to credit. All of these benefits will only increase the acceleration towards the expansion of digital mortgages, and it might not be too long before investors of MBS experience the same eExpectations that we see on the origination side of the market.

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