a new home, a new life: improving the borrower experience

7/26/2019 A New Home, A New Life: Improving the borrower experience

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A New Home, A New LifeImprovingTheBorrowerExperience


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John stands on the sidewalk admiring the home he just

put an offer on. He imagines the life he will build here

friends over for cookouts, maybe starting a family,

putting down roots in a community. And then he thinks

about the hoops hes jumping through trying to line up

the financing. Forms, applications, find and scan stacks

of financial statements, more forms. Suddenly, movingback in with Mom and Dad seems like a good idea after

all.

A loan should be an exciting part of reaching the

dream of owning a home. Or at least, not the confusing,

complex and irritating process that it is today.

Thetruth is, buying a new home is a majormilestone in a consumers life. Lenders realize this

on some level and have long referenced this in their

marketing material, but have traditionally been less

able to focus on the consumers experience during

the loan manufacturing process. With a minefield

of investor and regulator rules to traverse, making

sure that the consumer is enjoying the process

has traditionally been relegated to a much lower

priority.

That has changed, in large part due to regulatory

pressure from the industrys newest overseer,

but also because competitive pressures in a

consolidating industry and a rising purchase market

are driving lenders to focus more on the borrowers

experience. Today, lenders are very interested in

delivering a great experience to their borrowers.

They realize that there are many advantages to

doing so that go well beyond the mitigation of

noncompliance risk.

But how exactly can lenders ensure that borrowers

find the loan origination process just as exciting

as putting the key into the front door of their new

home? It starts with a better understanding of what

impacts the borrowers overall experience.

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WHAT IMPACTSTheBorrowersExperience

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Todays consumers expect an intuitive,

simplified loan application process.

-Deloitte

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Thereare many things that can make a person regretstarting the loan origination process, but they pretty

much all fall into one of four major categories.

Through our eDisclosure work, weve

found that consumers are most satisfied

when they can move through the process

quickly and without confusion. They

want to feel like they are in control of

the information flow and they can be if

the documents are delivered quickly,

accurately and electronically.

AsDeloitte pointed out in a recentwhite paper, todays consumers expect

an intuitive, simplified loan application

process, whether it is delivered in person

or over the Internet.1They want to

understand it or, as one of our clients once

said of our process, to make buying a

home seem as simple as buying a car.

Its important that the customer feels in

control and informed of what is going

on in the home buying process. That

often means delivering information in the

manner in which the consumer wants to

receive it.2 Connecting easily and offering

an open line of communication with

borrowers is an excellent way to make this

an exciting time in their lives instead of a

confusing, stressful mess.

1. Level of overal l confusion with the mortgage loan process

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Errors on mortgage documents erode the con-

sumers faith in the lender they have chosen. In

the past, this happened most frequently at theclosing table and there was some question in the

borrowers mind as to whether the lender or the

closing agent was at fault. Both parties tended to

hide behind this fact. The overall risk of losing the

deal was low because the borrower, after weeks of

hard work, was within sight of the goal. They rarely

walked away from the table, even though they were

rarely delighted with the process.

Today, new TRID rules require the lender toprovide information to the borrower much soonerin the process, giving them plenty of time to deter-

mine whether their chosen lender can get it right

or not. Consequently, the need for accuracy in the

mortgage documents provided to the consumer

has never been higher. Failure to deliver accuracy

is already resulting in lost deals. Accuracy is one

step toward trust and is vital if the lender hopes to

create an exceptional borrower experience.3

While its true that Millennials are more likely to

live in the online world and take interacting with

electronic systems as a matter of course, they

also demand a high level of data security from

the vendors they work with. Failure to meet these

requirements will cost lenders more than the

current deal as those borrowers will spread the

news of any failure far and wide.

Of course, its not just borrowers who arepaying attention to the way lenders secure

the information they collect from consumers.

The CFPB is also watching closely and non-

compliance comes with a heavy price.

2. C onfidence in their lender and the accuracy of mortgage documents

3. Confidence in the security of their personal financial data

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Ultimately, this is the home loan borrowers biggest concern. They know

they must have financing arranged and ready to be delivered in advance

of the contract date or they run the risk of losing the new home. In marketswhere inventory is low and buyer demand is high, speed to close becomes

critically important. We list it last, but really speed is one of the consumers

primary concerns, if not their highest.

Inour experience, the faster the mortgage loan processmoves, the happier the borrower will be. Coming back to

the borrower for additional information or to gather updatedinformation slows down the loan process and irritates

consumers. Collecting the wrong information or, worse, losing

information already collected can lead to losing a deal. In the

end, borrowers dont care about the technology the lender

uses, the partners it chooses or the forms they have to sign,

as long as the loan gets done in time.

4. Speed to close

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Deliveringanexcellentborrowerexperience

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Make it simple, clean, and tech-driven

for a differentiated experience.

-PricewaterhouseCoopers

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Nowthat we know what consumers are looking for, and the sectionabove comes from decades of experience supporting lenders in this

area, what must the industry do to make good on this promise? Lendershave the capacity to deliver excellent borrower experiences today, but it

requires them to make the right decisions about the LOS and document

management technology they employ, the processes they follow and the

partners they choose. Here are some suggestions for delivering the kind

of experience your borrower is hoping to receive.

Studies have shown that keeping your processes electronic willspeed up your loan process, reduce your errors and increase

customer satisfaction.4Technology that can enable a smooth loan

origination process is available now. Seek it out. Weve spent decades

developing the technologies we offer the industry today and our

dynamic loan documents, electronic document delivery and e-signing

capabilities are more than sufficient to meet the needs of todays

lenders and consumers.

TODAY,there is no real alternative to having good document

management technology as compliance with federal, stateand local regulations as well as investor requirements will slow

the entire mortgage loan process to a crawl without the right

automation. Furthermore, full compliance is virtually impossible

without document management automation. There is no better

way to frustrate the borrower.

The technology lenders choose must, first and foremost, speed up

their processes. It must also ensure accuracy wherever possible

and reduce the manual work that leads to human error. A side

benefit of using the right loan document tech tools is that it will

free up employees to hold borrowers hands, handle qualityassurance, and advance the business in many other ways. When

lenders have confidence in the systems they use, it frees them up

to use their resources to better serve their customers.

In what is still one of the best white papers on the topic,

PricewaterhouseCoopers wrote, Lenders have the opportunity

to make the mortgage process more convenient and efficient

for borrowersmake it simple, clean, and tech-driven for a

differentiated experience.5This has never been more true.

1. Choose document management technologies that enable paperless lending


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One easy win in this area is the eDisclosure process.6We haveworked very hard over the years to help lenders deliver a premium

experience through the delivery of electronic disclosures. When used,

it builds confidence on the part of the borrower from the first moment

they interact with our software. The system allows borrowers to see

the documents they have been given, which ones they have signedand when, and which ones still need to be signed. Our experience

clearly indicates that electronic signatures create a better borrower

experience.

When lenders take the time to train their borrowers from the beginning to accept,

process and execute mortgage documents electronically it speeds up the entire

process. As the next generation comes of age, this is becoming easier to do, asthey were raised online and already possess the skillset required. For more mature

borrowers, a bit of hand holding in the beginning will pay big dividends as the deal

progresses to the close.

Most loan document management providers claim to offer a seamless integration

with the lenders LOS, but few actually offer it. Find out what support exists within

the document providers shop specifically allocated to make sure its software

works with that provided by your LOS provider. There should be a complete team

available to handle integration issues with your current LOS provider.

Forincreased data security, make sure that your document vendor isonly holding onto the borrowers data long enough to do its work and

then purging it out of their systems. That information is all safely tucked

away inside the LOS; the document vendor shouldnt need it.

But a tight integration does more than just provide a seamless borrower

experience and data security. It can also provide event triggers that can

be used by the lenders LOS automation to trigger workflow events.

2. Encourage employees and borr owers to execute electr onical ly

3. Integrate mortgage loan documents tightly with your LOS for two-way data transfer.

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This is currently one of the most exciting opportunities available to lenders that

work with the right document provider. There is a wealth of information capturedduring the document delivery and signing processes. When this information comes

back into the LOS through a seamless connection, it can trigger workflows that

save time, improve efficiency and increase overall customer satisfaction.

Themost important of these data elements will tell thelender when the borrower looked at the documents, how

long they spent reviewing them and when they were

executed. With this information, building data-driven workflow

automation is much easier. There are too many benefits to

this to go into in this paper as it deserves its own treatment,but suffice it to say that data driven events will be the

standard in the near future.

Knowing in advance that the document provider can provide

fully compliant loan documents will help the lender avoid the

temptation to order or develop custom documentation for

new loan programs. This is one of the most serious mistakes

a lender can make as it is often unnecessary and almost

always opens the lender up to increased risk.

Lenders are encouraged to spend sufficient time upfront to fully vet

their document provider. The lender must know and feel comfortable

with how the documents are generated, secure in the knowledge

that they are exactly what the investor hopes to see and that they

meet all regulatory compliance requirements. Without this very high

degree of confidence in the lenders current document provider, the

lender must conclude that they have chosen the wrong partner.

4. Use loan document management system to builid a data-driven workflow in the LOS.

5. Work with a document vendor that can provide fully compliant loan document sets.

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Finally,lenders should take care to workwith a vendor partner that can provide fully

ADA compliant documents. While its not

particularly common that lenders must meet

the special needs of disabled borrowers, when

it is necessary it is required by law that they do

so. This can be challenging for lenders who are

not already working with a document vendor

that can provide documentation in a fully ADA

compliant manner

The recommendation is to work with a mortgage

document vendor that already has the right set of

documents for the loan programs the lender is selling

or who can create them dynamically to meet the exact

requirements of any new loan program. This is easier if the

document vendor already has existing relationships with

the investors the lender plans to sell to.

In our own shop, we have expended a great deal of

energy to build relationships with investors on the backend for the various programs they are offering lenders.

By coordinating with investors in advance, we can be

sure -- and by extension the lender can be sure -- that the

documents will meet the investors needs.

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Summary

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Anew home truly is the beginning of a new life forthe homebuyer. It should start out on a very positive

note. If it does, the lender will benefit in many

ways, including more repeat and referral business,

positive testimonials for the marketing department,

a generally more efficient and profitable operationand lower overall compliance risk. Following the

suggestions outlined in this white paper is a path to

that outcome.

By taking these recommendations to

heart, lenders can meet the needs of

todays borrowers and improve overallcustomer satisfaction.

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1 Monson, So, Rossiter and Chu, Retail Lending 3.0, Boosting productivity andimproving the customer experience, Deloitte, 2012.http://www2.deloitte.com/content/dam/Deloitte/tw/Documents/strategy/tw_strategy02.

pdf

2 Feingold, Jean, Meeting Customers Where Tey Are, ABA Banking Journal, Aug. 25,2015. http://bankingjournal.aba.com/2015/08/meeting-customers-where-they-are/

3 Balakrishnan, Ramani, Enhancing Customer Experience in the Mortgage Market,AA Consultancy Services, 2015 http://www.tcs.com/SiteCollectionDocuments/White-Papers/BPS-Enhancing-Customer-Experience-Mortgage-Market-0815-1.pdf

4 Mortgage Customer Satisfaction Increases as Lenders Adopt New echnology,Improve Efficiency, J.D. Power, Nov. 16, 2015 http://www.jdpower.com/press-

releases/2015-us-primary-mortgage-origination-satisfaction-study

5 DAlessandro, Paul and Hernandez, Roberto, Lock in Loyalty, Coming to termswith the new borrowers needs, 2013. https://www.pwc.com/us/en/advisory/customer-impact/assets/mortgage-lending-customer-insights-us-experience-radar-2013.pdf

6 Skiles, Dan. E-Delivery, Are You Doing Your Part for Your Clients, TinkAdvisor,June 26, 2012. http://www.thinkadvisor.com/2012/06/26/e-deliveryare-you-doing-your-part-for-your-clients?slreturn=1464217716

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