Nate Johnson is the SVP—Mortgage Business Leader for SLK. Johnson oversees the mortgage practice for SLK, and manages client on-boarding, conceptualizes and designs new products, collaborates with operations, and works to grow the SLK porfoilo.
Johnson recently sat down and spoke to DS News about the future of technology in the mortgage space, its advancements, and what it all means for the mortgage realm moving forward.
What are some functions in the mortgage process that a person can do, that technology hasn’t caught up to yet?
In a word… trust. A mortgage professional can guide a loan through different phases of the origination process from application to document collection to fulfillment during processing. From the first time a borrower interacts with the lender, you can begin to lay a foundation for trust and preferably long-term relationship. Ellie Mae recently published a borrower insight survey that stated that almost half of borrowers would prefer to work directly with a person during the loan application. They also found that many of those people had abandoned online applications because they felt it was taking too long. Borrowers said they didn't feel it was personal and they weren't able to get a hundred percent of their questions answered. Many borrowers have doubts about the entire mortgage process, especially first-time home buyers. Many of the reservations and questions can easily be clarified over a call or an in-person meeting with a seasoned loan professional. Many of chat boxes and frequently asked question windows can give the borrower the information they are looking for, but it's the personal touch and guidance from a live person that can make the borrower feel more comfortable.
Are you seeing a generational gap for borrowers that want to use technology?
From our interaction with our clients, mortgage market analytics and talking with my peers throughout the business, we are seeing less of a gap that you would expect. There is research that shows that the Millennials, Gen-xers, and Baby Boomers all prefer in-person communication across all phases of the loan process. Ellie Mae’s research project also stated that almost eighty percent of Millennial and Gen-xers wanted to speak frequently with their lenders during their mortgage process. In comparison, Baby Boomers preference would be to meet with lenders less frequently. When it comes to automation, customer facing technology needs to be simplified. If you are a mortgage company or mortgage services provider like we are, use technology to automate some ancillary and rules based functions. Borrowers do want to have options for communication. Technology is great in augmenting the customers experience, but you don’t want to lose the human touch.
Will the mortgage process ever lose that personal touch and be replaced by technology?
I don’t think so, but you can’t look at it in a vacuum. Some borrowers are going to want high contact and some will not. I think the majority of closed loans will require a personal touch. Let’s talk about a family purchasing a home. The borrowers have already found a house, bid on the house and agreed to a price generally through a real estate agent, right? So they've been able to utilize technology and AI either online or on mobile applications to help them find that house. Now once that process has finished and they're under contract, the mortgage process ramps up and the loan is underwritten. There are more moving parts to the process and the fulfillment and closing of that loan, where I think they want a little bit more guidance from a mortgage professional. I prefer to have a real estate agent who has known that particular market for a long time, has a good reputation and will be honest and upfront with you on the properties that you are considering. Technology has moved us to a point where a potential homebuyer is able to look online for several different properties and get an idea what a neighborhood looks like. But there is still value in having professional guidance in both the real estate and mortgage part of the process.
Are there any upcoming trends or new advancements you're seeing in technology with mortgage processing?
Absolutely. For the decade you've been seeing companies trying to enhance customer satisfaction. Analytics and process engineering companies have been trying to improve productivity for banks and mortgage lenders. Technology has given borrowers more optics into where they are in the loan process. Much of the existing technology like optical character recognition (OCR) and intelligent character recognition (ICR) is being improved upon in order to process and manage large volumes of documents. These tools reduce the time and cost to originate a loan. We are seeing more and more online/mobile tools for borrower like automated mortgage and income calculators. Real-time notifications that simplify communication increases efficiency, keeps the borrowers updated and absolutely reduces the cycle time.
We are using automated loan origination checklists for many of our customers. We're using algorithms to help our clients reduce the time for an app to close. There is an influx of AI and machine learning that a lot of people are talking about, but not a lot of people have implemented yet. So I think that there's going to be gains in the future of efficiency and improved productivity.
How can loan offices better utilize technology to their advantage?
Continuing to increase and simplify communication channels with your client is going to be number one. Many times that is the biggest complaint that borrowers have with mortgage professionals; they don't know exactly where they are in the process. Utilizing technology to communicate, either by using a dashboard or a platform where your clients can go and see exactly where they are in the mortgage process, or by automated updates that go out in emails, texts or push notifications. This will cut down on a lot of the miscommunication and there will be better chance of the loan officer and their client being on the same page. So communication is number one. Number two is being able to reduce the amount of touches that the underwriter has to touch the loan. You can automate a lot of the ancillary orders, verifications and rules based functions in order to have a complete file faster. If an underwriter can review a loan one or two times as opposed to five or six, you can cut down on a lot of the static that can be in a mortgage file, keeping your underwriters happy. We do this through automation and process excellence. It has really helped our clients improve their efficiency and workflow to get loans closed faster.