MorLabs- Reinventing the Mortgage Lending Consumer Experience

There is no arguing that the expectations of today’s consumers have increased over the past several years, mostly based on marketplace offerings and digital experiences in other industries. This means that customers no longer view their experience in an industry-silo. Instead, they compare their experience to leading business organizations in other industries, disrupting the status quo.

Studies predict that by the year 2021, customer experience will overtake price and product as the number one brand differentiator. And as a result, almost nine-out-of-ten organizations expect to be competing primarily on the basis of customer experience.

Other studies show that only 22 percent of recent mortgage buyers report being fully engaged with their mortgage provider. 93 percent of engaged customers also will recommend their mortgage provider to others, compared with only 3 percent of actively disengaged customers. This means that mortgage provider that get CX right- through the thoughtful design and delivery of seamless customer engagement-create engaged customers who are more than twice as likely to return to the same institution when they need another mortgage.

The likely implication for the mortgage industry and its stakeholders (think real estate agents, mortgage brokers, lenders, aggregators, securitization institutions, etc.) is clear, that is, if they want to maintain loyalty among their current client bases, they must build an improved consumer experience and use it as a competitive differentiator. And also as more and more tech-conscious millennials join the real estate market, the mortgage companies will find themselves being judged more heavily on the basis of consumer experience and satisfaction.

A Look at the current Mortgage Lending Consumer Experience

Consumers report that getting a mortgage or dealing with their mortgage servicer is one of the most frustrating experiences they face. One of the challenges consumers face when applying for mortgage loans is the issue of time. From providing the same documentation more than once to answering the same question over and over, borrowers want a process that is transparent and well organized. Consumers expect a simplified application process. This also includes interpreting the underwriting guidelines to removes some of the mystery behind the mortgage application process and reducing the number of intermediaries involved in the loan application process.

Consumers expect total transparency and also be able to track their loan from start to finish. As a matter of fact, data shows that the time between application and approval as being the most stressful for borrowers. It normally takes 41 days to close a mortgage and that is according to a monthly survey of home loans from mortgage software provider Ellie Mae. Other challenges include the lack of trust especially due to errors in the paper-based documentation.

The successful lender in today’s digital age must recognize the need to reinvent the overall mortgage lending process, and give borrowers an experience that is seamless. While the interest rate and closing costs on loans are still primary considerations, the speed, simplicity, transparency and customer service of the entire process is important. In fact, the bridge between what the current business model used for mortgage banking can do and what consumers-all stakeholders really- require is getting wider and wider.

So the question is- how can the mortgage industry meet those consumers’ expectations and make the mortgage lending model more efficient? The answer is by leveraging emerging technologies like the blockchain technology.

Introducing MorLabs

It’s clear that consumer experience and satisfaction is a key driver of competitive success, and the long-term potential for consumers to participate directly in the “Mortgage Blockchain” holds promise for improving the overall mortgage industry outlook and as a result, the consumer’s experience. The potential for cost and cycle time reductions — ultimately benefits to the consumers — cannot be ignored. Here are some of the benefits of blockchain when it comes to improving the overall lending experience.

· Is it possible that borrowers would no longer send lenders their financial information? Let’s imagine that all the data was stored in a distributed ledger and borrower’s granted permission to mortgage companies to examine the data to make an offer. Well, the blockchain technology will reduce the time taken to process a loan as all lender staff and third-party providers will have access to the same data, eliminating repeat steps to check for valid data. And this will be a positive step towards providing a richer mortgage lending experience for consumers.

·The blockchain technology will remove intermediaries from transactions. Currently, the mortgage approval process can cost thousands of dollars before you even start paying for the loan itself. Systems that have centralised ledgers normally require the participation of a trusted third party to maintain a record of transactions between organisations. Through disintermediation, the blockchain technology will reduce the costs associated with processing files — whether the file is handled by a processor or underwriter or by a third-party provider. And this will be all good news for the consumer in terms of reduced costs.

The bottom line here is that blockchain technology is slowly but surely becoming a yardstick to evaluate new and innovative ways to handle mortgage processes and as a result provide a richer experience for consumers. One such project that is leveraging the blockchain technology in a bid to reinvent the mortgage lending consumer experience is the MorLabs project.

MorLabs is a next-generation blockchain-based mortgage technology platform for consumers, real estate agents, mortgage brokers, lenders, aggregators, and securitization institutions. The platform seeks to reduce the mortgage underwriting process from weeks to minutes, and as a result, undercutting the current ecosystem while saving originators, traders, and mortgage investors billions in opportunity costs and lost revenue.

MorLabs Blockchain Labs technology will be automated, accurate, fully compliant, secure, user-friendly and robust. The platform’s focus is to assist all participants in the U.S. residential mortgage industry utilizing a blockchain-based platform that ensures:

· Security, verification, and accountability of all mortgage-related documents and information.

· Faster + more robust + accurate underwriting engine which equals more mortgages and this means improved home ownership.

· Less document clutter which results to ease of application and faster closing times.

Thanks to the MorLabs blockchain-technology platform, the mortgage lending consumer experience will be defined by the following factors:

· One Application whereby home buyers will only need to authorize one application that can be accessed by multiple lenders.

· Underwriting Prowess that ensures ability to repay (ATR) the loan despite blemishes in credit.

· Speed to Closing and this means that the elimination of excess documentation and underwriting automation will significantly reduce the time to close.

· Cost Reduction whereby the ability to automatically pull the home buyers critical information once and store it for multiple lenders and aggregators will reduce costs for all homebuyers.

· Security and this means that all documents and information will be secured, verified, and accountable on the blockchain foundation.

Besides, MorLabs consists of a proven executive team with decades of experience in mortgage lending and technology having operated a mortgage technology company for over 10 years together.

Looking Ahead

Consumer experience — defined as the end-to-end interaction of a consumer with a company or product — has reached a level of paramount importance in recent years for businesses across industries and sectors. As a result, a borrower’s needs when seeking a mortgage loan are important and lenders need to understand these needs before proposing the right product that is tailored and personalized to each consumer.

The blockchain technology, in particular, will really help on this front as identification of key themes for transformation of the mortgage lending process including business value, IT simplification, or industrialization, and value levers such as cost reduction, operational efficiency, automation (think smart contracts), and standardization are all part of this nascent technology.

The point is that as the mortgage lending industry continues to work through a myriad of challenges, one truth is emerging clearly, that is, consumers will be won or lost based on how easy the mortgage lenders make it to engage with them.