The real estate market has been red-hot the past few years. But with an ongoing inventory shortage, soaring prices and higher interest rates, buyers are being squeezed on all sides — a combination that has led to a slowdown in new purchase and refinance originations.
This potential for fewer new loans means that mortgage originators and servicers must get the most out of their existing portfolios. It’s important for existing borrowers to have a good experience with both parties, since a happy borrower drives future purchase and refinance business for originators and servicers alike. Likewise, ensuring on-time payments can help originators qualify borrowers for these future loan scenarios.
Mobile payments are the final step in creating a modern, seamless mortgage servicing process.
A mobile-first payments strategy that connects with today’s digital-minded homebuyers can help by reducing delinquent payments while improving operational efficiency and straight-through processing. Here’s why this is a smart solution for today’s volatile market and beyond.
The digital revolution
More than ever, consumers conduct their lives from their cell phones. A Pew Research study found that 85% of Americans now own a smartphone, while 53% own a tablet, up considerably from shares of 35% and 10% a decade ago. Smartphone adoption is even higher (95%) among ages 49 and younger, and according to the National Association of Realtors, this is the demographic most likely to be financing their home purchase.
One way consumers seek to use smartphones to make their lives easier is through mobile bill payment. A 2021 PayNearMe study of more than 2,600 U.S. adults found that 69% would rather use digital-payment channels to pay their bills instead of paying by mail, phone or in person.
Of these channels, mobile apps proved most popular (75%), although 37% said they would be “likely” or “very likely” to pay using their digital wallet whenever possible. Among the youngest potential homebuyers (18- to 29-year-olds), 45% said it would be easier to pay using their Apple or Google digital wallets, 39% wanted mobile options like Venmo and PayPal, and 38% said they wanted the option to use different payment types from month to month.
Tech-savvy homebuyers want the convenience of mobile payments throughout the life of their mortgage. Loan servicers can meet this demand by connecting buyers with mobile-payment options for all mortgage-related payment scenarios. Already, nearly every component of loan origination has gone digital, from prequalification and application to underwriting and credit decisionmaking, so mobile payments are the final step in creating a modern, seamless mortgage servicing process.
For mortgage companies, this is a clear win-win: They gain another compelling selling point to attract new clients while homebuyers get the mobile-payment options they desire. But these aren’t the only upsides.
In the PayNearMe study, three in 10 respondents (regardless of age) indicated that mobile-payment options would help them pay their bills on time. For mortgage servicers, offering these choices to clients can remove payment obstacles and increase on-time payments.
More than half of adult consumers (53%) give themselves a grade of C or lower in handling bill-payment management details, such as knowing when bills are due, according to the study. Entering credit card or payment information, and remembering logins, passwords and account numbers, are the other most commonly cited reasons for why online bill payments are difficult.
Offering other mobile channels and payment types to remit mortgage payments can help address these difficulties. For instance, a payments platform provider can work with a servicer to enable Apple and Google wallets as mobile-payment channels, which allow clients to store their mortgage bill right in their digital wallet and pay from their smartphone.
The account can be updated regularly with information such as the amount due, the payment deadline and remaining balance. Consumers can enable push notifications to allow engagement communications from the servicer, such as billing reminders. Lenders or servicers also can schedule mortgage payment reminders by text or email, even embedding unique links to take clients right into the payment flow — no password or account numbers necessary. When bill payment is convenient and easy, consumers are more likely to pay on time.
Giving consumers the ability to make mobile payments boosts self-service and can reduce the number of customer service calls. People who use mobile-payment channels go right from their smartphone to their payment screen and complete the transaction in only a few clicks. And with the right payments platform, consumers can take advantage of “set it and forget it” automatic payment options that make their lives easier.
What about customers who are receiving paper statements? Loan servicers can still promote self-service payment options by adding a QR code to every statement. This allows borrowers to scan the code with their smartphone and be directed right into their payment flow. They can pay immediately with a few simple clicks.
For those who are accustomed to calling their servicer to pay by phone, customer service representatives can help change this behavior by sending a text or email with a link that will allow a one-time payment or the authentication of an agreed-upon autopay schedule. The agent can stay on the line to help guide the consumer through either option.
Offering this on-ramp to self-service mobile payments eventually takes pressure off customer service staff and allows them to spend their time addressing more complicated issues. They won’t have to complete phone-payment transactions or help clients remember basic billing information such as payment due dates and amounts due.
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As low housing inventory, soaring prices and rising interest rates put the squeeze on homebuyers, it’s important to reduce delinquent payments by making the mobile-payments process easy and frictionless. Loan servicers and originators benefit when borrowers pay successfully, on time and as independently as possible — and this benefits borrowers as well.
Choosing an experienced, modern payments platform provider is the first step in the process. The provider can help servicers build a mobile-equipped payments funnel so they can improve convenience and ease of payment, increase on-time payments, lower operating costs and build client satisfaction in the process. ●