Executives like Brian “Woody” White, chief information officer of HomeBridge Financial Services, Inc., are responsible for making the loan application process as simple, understandable, and efficient as possible for every borrower, including first-time buyers. Needless to say, this task is complicated by the need to comply with an extensive set of regulations and the necessity to secure sensitive personal data that applicants must disclose when seeking a mortgage.
Over the past couple of years, HomeBridge has devoted much effort to ensure processes and systems were compliant with new regulations designed by the federal government to prevent a housing meltdown akin to that of 2008–2009. The rules required the mortgage industry to extensively revamp workflow processes.
White and his team also spent a lot of time creating a richer, more secure way for customers to access loan-processing systems. This work is crucial because speed and convenience are critical competitive factors for financial services firms. Over the next several years, White foresees a revolution in the mortgage application and home-buying process that will boost speed and convenience to the point where it will astonish customers.
But a few years ago, before White could focus resources on next-generation customer service, he faced an urgent deadline. The mortgage application process was altered to better inform borrowers about mortgage terms and rules governing real estate lending. The industry had two years to comply with the regulations. For thirty years, two different regulatory acts—the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) —governed the mortgage business, and each act required separate forms. According to the Consumer Financial Protection Bureau, “the information on these forms [was] overlapping, and the language [was] inconsistent. Consumers often [found] the forms confusing, and lenders and settlement agents [found] the forms burdensome to provide and explain.”
New, simplified regulations that—among other tasks—consolidate disclosure information to one form, were announced in 2013 and went into effect two years later. Among the changes are new requirements regarding when certain information must be disclosed to borrowers. While this may not sound consequential to consumers or those outside the industry, the new rules prompted two years of extensive revisions to mortgage lenders’ workflows and the systems that support them, White says. “Everybody has been reprogramming systems to support RESPA/TILA,” he explains. “It is now an entirely re-architected process.”
White and his team worked closely with business departments to analyze the new workflow before making alterations on back-end systems. For example, certain documents, including those that used to be the responsibility of the mortgage broker, are now the responsibility of the lending institution. To support such changes, IT revised system workflow and automation to support the new RESPA/TILA guidelines and turnaround timelines. The RESPA/TILA effort was anticipated to be an “extensive change to processes that have been fixed for many years,” White says. “And while the technical changes were complex, we were able to deliver our new systems on time and remain compliant,” he says.
Because of the extensive amount of testing required, there had to be a strong partnership between the business and information technology to ensure there were no systemic glitches. Today, HomeBridge, much like all other financial services firms and the government, is in monitoring mode, examining the effects of the changes and the need for further tweaks.
Many hours were devoted to regulatory compliance development and some of HomeBridge’s innovation efforts had to move at a slower pace, White says. With RESPA/TILA largely in the rearview mirror, HomeBridge’s IT team has turned its attention to customer-facing systems—particularly in the form of “any device” access.
One of the strategic issues involved in that sort of access is how much information to provide customers on their smartphones. There is a generational divide on customer expectations regarding this issue. “We’re trying to strike a balance between serving the twentysomethings who want to do everything online or on their smartphones, to other more mature people like me who just want status updates on mobile devices and don’t find typing on tiny screens to be a simple process,” White says.
Deciding how much functionality should be included in the mobile experience is also influenced by corporate philosophy. “A lot of mortgage companies depend on people going online first. We’re different,” he explains. “While we fully support the digital experience, we have not abandoned the personal touch.” HomeBridge encourages first contact to a knowledgeable loan officer via a traditional phone conversation or in person by visiting one of their offices, he says.
Nevertheless, HomeBridge realizes that customers increasingly want the option to do more online. With highly personal data such as social security numbers and employment information part of the application criteria, mobile interactions carry significant risk. An outsourcing model with partner Ellie Mae hosting the loan origination system provides robust security. “Consumer data is not stored in our on-premises systems,” White points out. But rather, it resides on Ellie Mae’s back-end systems, with the mortgage systems services giant responsible for safeguarding data.
As a large cloud provider, Ellie Mae has invested heavily on security, much more than any typical company could afford. In addition, when mobile users enter information via the loan origination system, their data isn’t held in cache on their phones. So, if their phone is lost or stolen, that data can’t be found on the device. That configuration is a key feature of the company’s mobile security approach.
Looking to the future, White expects new technology to transform how people apply for mortgages and shop for homes. Advanced business rules engines and artificial intelligence, for instance, will make interacting with technology easier and provide a more personal online experience. Advanced AI interactive voice response technology—similar to Apple’s Siri and IBM’s Watson—will improve the interface for loan origination systems and transform natural language voice data input for consumers, upgrading the voice component of mobile and reducing the need to type on small screens as the only option.
“I think the future of the mortgage industry will be driven more around being process-less,” White says. That means going far beyond reducing paperwork to having much more of the experience automated and feeling more natural. For example, existing data like credit history, employment and income status, social media data, shopping data, insurance data, claims data, automated home valuation data, and community statistics will be used to create a sophisticated buyer profile. The personal profile could not only be used for rapid mortgage approval, but it could also be used by AI-equipped systems to compile a list of homes for sale suited to the buyer’s criteria, creating a streamlined digital home-buying experience.
“It will create a situation where a consumer only has to say, ‘I want to buy a home,’ and the analysis and aggregation of all the data creates a simple, instantaneous full mortgage approval,” he says. This is an area where IT can foster competitive advantage by devising systems that deliver the best home-buying experience. It’s a compelling vision—one that White is excited to pursue.