Residential Magazine

Market Pessimism Won’t Slow the Technology Wave

Mortgage companies are doubling down on digital tools to be more competitive

By Carlos Nodarse

Call a lender to ask about their use of technology and you’ll get a conversation something along these lines: Salesforce to track leads and contacts. Google Calendar for appointment reminders. Microsoft Word for drafting letters.

It only gets worse. Dropbox is used for attachments. Excel for budgeting. An electronic funds transfer site for payments. QuickBooks to pay investors and keep track of loans. Mortgage professionals at these companies spend their days juggling countless applications as they try to keep everything sorted.

Business cycles force leaders to think about resource allocation, and more businesses are looking to replace manual processes with automation.

This is time-consuming and inefficient. These programs work in individual silos; they have few functions that work together. Typing in the wrong number can mean overpaying an investor or undercollecting from a borrower. The use of siloed technology in the mortgage industry is more common than you might think.
But there are better ways. Platforms are here that house all these business functions in a single place. And even though the mortgage market is facing challenging conditions now, lenders and the originators who work with them will want to take a hard look at the tools they are using to accomplish everyday business tasks.

Productivity driver

Technology has been a leading driver of productivity growth over the past three decades and continues to evolve. As much as two-thirds of productivity growth over the next decade could come from the adoption of new digital technologies, according to the Brookings Institution, a Washington, D.C.-based public policy organization.
With interest rates rising, certain investors are fleeing to safer options. Fannie Mae expects U.S. home sales to slow by 7.4% in 2022 and by 9.7% in 2023. While there’s a clear shift in resource allocation, key themes are emerging that are leading companies to double down on their software development investments and build market-leading technology products.
First, lenders are starting to get more comfortable with technology and more malleable to changing their existing processes. Business cycles force leaders to think about resource allocation, and more businesses are looking to replace manual processes with automation.
Healthy businesses with higher profit margins will ride the tide through any economic pain and come out stronger. Think of businesses that spend time processing checks manually and maintaining stacks of paper documents. Private lending still includes a host of companies that use archaic processes, but competition is forcing lenders to adapt to change and become more efficient.
Technology can automate various transactional steps such as payment collection, sharing of account information and more. There’s a definite shift toward automating manual interactions while improving borrower and investor experience. Doing so limits costly mistakes. This is where the mortgage financing industry is headed.

Increasing efficiency

The mortgage industry has seen a shift in product mix to capture opportunities. While traditional lending products are facing headwinds, some unconventional products are riding on tailwinds. For instance, the share of borrowers who purchased a home using an adjustable-rate mortgage reached a 15-year high in 2022.
Loan products that tap into a home’s value, such as home equity loans or home equity lines of credit, are appealing to borrowers who may not want to sell their home. An all-in-one platform can help originators market these programs and identify opportunities as they arise.
At the same time, lenders are looking to consolidate their operations. Lenders interface with multiple service providers across the life cycle of a loan. Whether it is closing-document preparation, insurance purchasing, appraisal services, title services or something else, lenders are looking for a single platform that covers all services with a seamless experience.
Despite a lean business cycle, lenders are showing an appetite for deep service integration. These companies are looking for an end-to-end, web-based product that integrates all services into a seamless loan management cycle. Lenders are buying these products to become more efficient and more competitive. The flexibility of these products allows lenders to be more creative with their offerings and to react quickly to changes in the economy. The software must be designed from the ground up to handle these more complex, non-conventional loan transactions.
● ● ●
If there is one takeaway from all the pessimism in the market, it is the need for continuous investments in technology. The mortgage companies that succeed in this market will be the ones that conduct a serious review of their practices and invest in smart ways to be more competitive.
As science fiction writer Arthur C. Clarke once said, any sufficiently advanced technology is indistinguishable from magic. And that magic is already occurring. ●


  • Carlos Nodarse

    Carlos Nodarse is the CEO of Applied Business Software Inc. (ABS), a leader in mortgage servicing and origination software since 1978. Nodarse joined ABS in high school, provided customer service, and quickly learned what clients needed and wanted. Nodarse served as a lead developer at ABS for more than 30 years. His knowledge of the mortgage industry, mortgage funds and real estate lending, alongside his technical expertise, gave him the unique skills necessary to develop the company’s flagship product, The Mortgage Office, the most powerful software in today's private lending market.

You might also like...