Demographics Are Changing The Lending Landscape – Our Tips Can Help

Summary:

  • While Boomers were the primary target for lenders, the scale is shifting to Millennials who are now the largest population and home buying demographic.
  • Lenders must understand the drastic difference between Boomers and Millennials in order to cater to them.
  • Millennials depend on social proof to find a lender, putting more importance on experience and ease of the digital mortgage process.
  • RealKey’s automation, easy communication and document digitization are just some of the tools that Millennials require for their mortgage journey.

Power dynamic shifts are currently taking place in the real estate and mortgage lending industry. While the Boomer generation traditionally held the majority of real estate in the US, the pendulum is beginning to swing to Millennials, who since 2014 have been the largest home-owning demographic. As Millennials are becoming the new power homebuyers, MLOs must understand the drastic difference between the Boomers and Millennials preferred approach to the mortgage process. Adapting to these changes is pivotal for lenders that want to cater to Millennials, especially during the current downturn caused by increasing interest rates. 

                                      Who Are Baby Boomers                                                                                     Who Are Millennials

The Baby Boomer generation refers to people born 1946-1964, putting them at 57-75 years old. The post WWII period caused a spike in birth rates with 3-4 million babies being born each year during that period. The explosion of new babies became known as a “baby boom”, as there were 76 million babies born in the US during those 18 years. The Boomer generation remained the largest population until 2019. Millennials were born 1981-1996,  putting them at 26-41 years old. The majority are children of Baby Boomers, and since 2019 they are the largest living generation with approximately 80 million people today. It’s the first generation to grow in the internet age and have a heavy dependence on digital technology and apps. 

 

Characteristics

 

Boomers can be described as ”old school.” It’s a generation that values relationships along with personal and face-to-face connections. They have a strong sense of community and thrive in team environments. They were raised on the idea of the “American Dream” along with a loyal and strong work ethic. Boomers idealize stable careers, preferring to stay with one organization, and a “the good life” in the suburbs with a house and a family. While Millennials are considered individualistic and self entitled, they are extremely adaptable, as well as value transparency and education. They are technology obsessed, relying on smartphones and apps for everything. Millennials are “job hoppers,” meaning they are more likely to switch companies compared to earlier generations, and were a big part of the “Great Resignation” trend during the pandemic. Almost half of the population are anti American Dream believers due to financial instability, causing many to postpone marriages, having children, and buying homes.

 

Relationship with Technology 

 

Boomers are not digital natives. While they adopted digital tools, technology, and apps, it’s more for survival in today’s society. Although more Boomers started implementing these tools during the pandemic, they are not as comfortable as younger generations using it. 55% still prefer to do business and interact in person, making them less likely to see the internet as a positive for society. Millennials depend on technology for everything. From grocery shopping, to hailing an Uber/Lyft, donating to charity, to dating and breaking up. They value experiences, and have a strong need to publicize them on social media. They have been called the Head Down Generation for spending so much time staring down at their smartphone.

 

Income/Wealth

 

Since 2001, Boomers have owned more real estate than any generation and are 10 times wealthier than their children, holding 53.2% of wealth in America compared to 4.6% for Millennials.                                                                                                                                                                                                                                                                                                                                                    Millennials are considered the unluckiest generation having experienced the Dot-Com Bubble implosion, the 2008 Great Recession, and the Coronavirus pandemic. While the Millennials are the largest workforce, they are the least wealthy. Their wealth, however, more than doubled during the COVID-19 crisis. They are also beginning to inherit their deceasing Boomer parents’ wealth. 

 

How They Navigate Mortgages

 

Boomers depend on word of mouth and referrals to find a lender. They value personal relationships, preferring in-person connection, phone communication, and manually submitting paperwork. They are hesitant to wire funds online, sign documents electronically, and often do not know how to digitally submit paperwork. This  slows down the loan process, making it more tedious and error-prone.                                                                                                                                                                                                                                                                                                                                                                                                    Digital mortgages are the norm for Millennials. They start by researching and comparison shopping online before contacting a lender. Millennials want a digital first mortgage process with a seamless experience, as well as transparency about the process, pricing, and fees. They prefer and expect online communication and educational tools from MLO as well. The role of a lender is more of a concierge who steps-in to iron out hick-ups and answer questions. When looking for a lender, Millennials depend on social proof, prioritizing online reviews and social media presence. They value the personalized process and experience vs. establishing a connection and relationship with a lender. 

 

RealKey Can Cater To The Needs Of Millennial Mortgage Seekers

Although previously Millennials weren’t a focus for lenders, since 2014 they have been the largest and fastest growing home buying demographic. In fact, they made up 43% of home purchases in 2021, with that number expected to continue growing. As their wealth increases, Millennials are opting to purchase larger homes in the suburbs to start families, accommodate working from home, and move in their aging parents. 

In order to cater to this new power demographic, MLOs must move away from outdated and manual loan processes to offer the following tools that better serve the growing Millennial demographic:

Automation – Loan automation helps MLOs and closing teams move away from tedious, error-prone, and repetitive tasks to streamline the entire loan process. Approximately 60-70% of tasks in the lifecycle of a mortgage can be automated, shortening the loan processing cycle up to 50% by eliminating repetitive tasks and errors. RealKey’s software works seamlessly with existing point-of-sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience to lenders and their clients.  

Transparency & Education – RealKey’s technology allows lenders to be transparent and educate borrowers on the mortgage process. Automation gives a 360 degree view of the process from start to finish. It not only maps out the entire process, but helps understand the “why” behind every step in a transaction. RealKey syncs all the parties involved in the loan process providing a clear timeline, responsibilities, and deliverables. This transparency allows Millennial borrowers to understand exactly where they are in the process and what is required of them.

Communication – Loan originators can spend up to 75% of their day calling and emailing customers about missing information and paperwork. RealKey’s built-in chat feature streamlines communication for all parties, eliminating overwhelming emails and voicemails. It creates a centralized and singular communication tool among all parties involved based on their role. 

Document Digitization – RealKey eliminates painful submission processes by facilitating digital document collection. Data can be acquired directly via APIs or OCR as well as digital document submission and signing tools. The intelligent documentation gathering ensures that clients do not need to resubmit the same documents as well as ensuring underwriters get everything needed for a clean and fast approval. 

The mortgage lending industry is changing, and while Millennials are credited for changing the landscape, borrowers of all ages understand benefits and values of the digital mortgage process. Lenders must do what’s best for the customers and implement automation technology to provide better service, products, and improve on the overall experience.

RealKey is an innovative mortgage automation solution that can help lenders run and grow their business efficiently, while providing customers with the best experience. Contact us today for a demo and learn how RealKey can help you scale your business.

This Demographic Is Taking Over The Real Estate Market and Should Be Your Top Priority

Summary:

  • While Millennials were one of the most stereotyped generations, today they are the largest home-buying demographic.
  • Millennials are an important niche for lenders because they are at the top of their career, inheriting wealth, and buying overpriced properties.
  • Inheriting property creates a lot of complications for both successors and the mortgage originators who have to guide them through uncommon and complex processes, as well as   document requirements.
  • Realkey’s automation tools can help MLOs and loan processors better understand complicated products as well as tap into the unique and lucrative Millennial market.

Previously, Millennials were one of the most stereotyped and made-fun generations. They were considered entitled, self-absorbed, as well as obsessed with social media and overpriced avocado toast. While it’s easy to be distracted by silly memes, savvy MLOs are beginning to recognize that Millennials are becoming a powerful demographic that’s increasing their wealth, dominating the housing market, and beginning to inherit real estate from their families. This lucrative demographic does come with a price for lenders, who must adapt to their borrowing process, their needs, and have a deep understanding of how to navigate their complicated new wealth and inheritance dynamics to boost business.

Who Are Millennials 

Millennials, sometimes called Gen Y, are individuals born between 1981 and 1996, putting them at 26-41 years old. They are the largest living generation accounting for over ⅕ of the population with approximately 80 million people. Majority of them are children of Baby Boomers and are parents to Generation Alpha. Millennials are the first generation to grow up in the internet age and are heavily dependent on the internet, smartphones, and social media. They have been coined as the Head Down Generation for spending so much time staring down at their smartphone.

Unfortunately, Millennials are the unluckiest generation in US history because they experienced 3 economic downturns: the Dot-Com Bubble implosion, the 2008 Great Recession, and the Coronavirus pandemic. The 2008 crisis had an especially lasting impact. It erased a huge chunk of the labor market for newly-graduated Millennials strapped with huge student debt, as well as for older Millennials that were already in the labor market but lost their job. This drastically depleted their savings, increased debt, and forced many to postpone getting married, having children, and buying houses. Although Millennials were able to recuperate jobs 10 years later, they lost 13% of their earnings. Today, Millennials make up 35% of the US workforce, with that number expected to grow to 50% by 2025. 

Why Millennials Matter Today 

Although historically Millennials got the short end of the stick, even with the current pandemic, they are in a different career and wealth position for the following reasons:

Careers: The onset of the pandemic didn’t disrupt the jobs for Millennials compared to older generations. Being the original tech babies, they quickly adapted to working from home. Many  are also approaching the peak of their careers and earning potential. They are transitioning to higher-paying roles, starting their own businesses and consulting services.

Inheritance: Majority of Millennials are children of Baby Boomers, who since 2001 have owned the most real estate of any generation. Boomers are also 10 times wealthier than their children, holding 53.2% of wealth in America compared to 4.6% that of Millennials. Although they are the least wealthy demographic, their Boomer parents are at the age where they are passing away, leaving financial and real estate inheritance.

Real Estate: While the 2008 crisis disabled Millennials from purchasing property, the current pandemic has had a completely opposite outcome. Since 2014, they have been the largest share of homebuyers, making up 43% in 2021, increasing 16% from the previous year. Millennials are also buying larger and more expensive homes compared to older generations because they need extra space to create home offices and to start a family. The pandemic caused a new baby boom, changing the housing needs due to growing families. Many Millennials are also moving-in their aging parents to take care of them or to get help with the kids. Millennials, who previously were more interested in condos in metropolitan cities, are now opting for larger homes in the suburbs, away from expensive and crowded cities. Many prefer a quieter life with less crime and traffic, better public schools, but still close enough to the action. 

What This Means For Lenders

Millennials are nothing like the older generation. They are no longer overpaying for an avocado toast brunch, but instead for real estate. Boomers, due to lack of technology, depended on face-to-face relationships and phone communication, as well as manual and time-consuming processes. Their loan processes were more tedious, error-prone, and took longer to close. As the generation decreases, this way of doing business is becoming obsolete. Millennials depend on apps and technology for everything, including taking out a home loan. They are not interested in physically meeting with a lender, working with paper documents, and having to come to the office to sign paperwork. It’s a culture that values technology, convenience, efficiency, and transparency.

The Boomer demographic, which owns the majority of the real estate market, is “shrinking” and Millennials are inheriting their wealth and properties. While their assets are increasing, so are the headaches of figuring out how to manage the legalities of inherited properties, what to do with them, and how that might impact taking out a loan. 

Lenders that want to tap into the Millennial demographic must educate themselves and become experts  on the complexities of inheritance dynamics to better guide these borrowers through the loan process. As more Millennials are inheriting their Boomer parents’ wealth and properties, they must make difficult decisions of what to do with them. For many, inheriting a home comes with a lot of complications and coming into possession with a will, deed, or trust all have different protocols as well as legal and tax implications. 

Homes are not always inherited in ideal circumstances. If the bequeathed home hasn’t been paid off, the recipients must figure out if they inherited the actual loan or have to refinance. This requires a lot of “unusual” documentation as well as court certificates. Some successors do not qualify for a new loan, and must prove rental income or occupancy to improve their DTI (Debt-to-Income) ratios, which is not always easy. Knowing how to deal with title changes can also alleviate a lot of bureaucracy and red tape. 

Flipping, modernizing, or renting an inherited property creates a lot of challenges, such as complex loan products, guidelines, and documentation that many MLOs and processors are unfamiliar with. The decisions and legal issues can be overwhelming for the inheritors, and they oftentimes look to lenders to educate and guide them through the process.

RealKey Can Help 

RealKey’s loan automation technology can help MLOs and processing teams become experts in most complex and uncommon loans by helping understand difficult products and their requirements. This, inturn, helps lenders and brokers communicate better, qualify borrowers for a more diversified portfolio of loan products, and clearly explain their requirements.

Automation technology provides a lot of value for borrowers as well, making it easier to provide a more positive experience for them while navigating complicated loans. It provides clear instructions, transparency, and an overall understanding of the process and requirements by giving a 360 degree view of each transaction from start to finish. It not only maps out the entire process, but helps understand the “why” behind every step. From 1031 Exchanges to Rehab & Construction loans, RealKey can automate any product.  

RealKey’s automation tools can also help MLOs and closing teams better understand many 

RealKey is an innovative provider of digital mortgage technologies that fills gaps (LOSs, POSs, and AUSs) in order to streamline the mortgage process. The RealKey platform provides automated and intelligent collection of documents, review of data, and secure communications among all parties involved. These combined capabilities shorten the loan processing cycle by roughly 50%, giving MLOs time to close more complicated loans. RealKey’s software works seamlessly with existing point of sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience to lenders, brokers and their clients.  

Contact us today for a demo, and learn how RealKey can help you automate even the most difficult loans.

When It Rains, It Pours – Surviving In The New HIGH RATE Market 

Summary:

  • After almost two years of record-low mortgage rates, in March of 2022 the Fed raised interest rates, causing a sudden drop in purchases and refinances.
  • To survive the high interest market, MLOs must get out of their comfort zones and specialize in complicated loans. 
  • Targeting real estate agents, builders and being a part of the local community are some of the ways MLOs can find new referral streams.
  • Using RealKey’s automation technology and consulting services can help lenders be more efficient, learn about the latest technology and learn how to better sell and close complex products.

The last two and a half years have been a roller coaster full of steep ups and even steeper downs. The  COVID-19 pandemic brought on utter panic, food shortages, astronomical unemployment rate of nearly 9%, mortgage payment defaults, and full-blown global recession. To combat the sudden crisis, and minimize the downward spiral, the Fed stepped in reducing mortgage interest rates to the lowest in history. 

The all-time low interest rates caused an upward frenzy in the housing market and lending industries, which got flooded with home purchases, refinances, and new loan originators hoping to capitalize on the housing boom. From 2019 to 2020, the number of MLOs increased by over 11%  while active state MLO licenses increased 21% by the end of 2020. 

The boom was short-lived, and the lending industry has made a 180° turn two years later. Since the beginning of 2022, the interest rates have been increasing, causing a 14% and 68% drop in home purchases and refinances compared to last year. Even though the interest rates are increasing, the home purchase frenzy and high prices are continuing to grow due to low housing supply, high competition, and bidding wars among buyers.

The market volatility during the past 2+ years also impacted lenders. With the purchase market cooling off and refi business being wiped out, many lenders such as Wells Fargo, Chase, Better.com are undergoing massive layoffs. This leaves the remaining MLOs in a very difficult situation of survival of the fittest. Lenders can no longer wait for leads to come to them, but instead look for new referral sources and constantly reevaluate their business processes. In this new market, it is more important than ever to think outside the box, get out of comfort zones to create new ones, and streamline processes to find new borrowers.

Below are RealKey’s suggestions for MLOs to survive and grow their business in the new hyper competitive and high rate market:

Get Out Of Your Comfort Zone & Find New Referral Sources

Previously, MLOs depended on their personal circles and past borrowers to provide them with referrals. But, even referral streams need to be diversified. While it is important to nurture past and present clients, it is even more important to get out of one’s comfort zone to find new referral sources.

Here are a few ideas: 

Real Estate Agents: Agents have a direct relationship with homebuyers, and are a great source of referrals. Oftentimes, homebuyers ask their agents for MLO recommendations, or they have questions about different loan options that agents are unable to answer. Agents, who must maintain a good reputation, are more likely to refer buyers to lenders that are known to have good processes, close loans fast, and provide great customer service. 

Another way to win over agents is to do difficult loans that nobody wants, and do them well. Not all purchases are for luxurious properties with buyers that have everything in order. Some properties are complicated, other transactions include complex finances or credit, while others involve unique loan programs with stringent document requirements, and not all MLOs want to (or even know how to) deal with these loans. To test a new relationship, an agent might give an originator a few difficult loans. If an originator can close them fast, smoothly, and with transparency, an agent will be more likely to work with this mortgage loan originator in the future. Doing these tougher loans can also give an MLO a competitive advantage over lenders that simply don’t want to get their hands dirty.

Relocation Experts: Large corporations are constantly relocating top talent. While some organizations have internal departments as a part of their HR unit, others outsource to external firms. These relocation units often work with a select team of real estate agents and loan originators, which are a part of a stress-free relocation service for the employee. Researching and networking with HR departments and external relocation companies is another great source of referrals to help MLOs generate income.

Builders: The pandemic-induced low interest rates created a huge housing demand and deficit. Houses listed on the market were sold immediately with over 70% of properties going through bidding wars. The home shortage prompted builders to increase home production, with housing building permits increasing by 6.7% compared to the previous year. Establishing a relationship with home builders, who need pre-approved buyers, is a great way to get added to their lender list. Here is the top 100 US builder list for 2021 to help identify which organizations to target.

Tap Into Your Community: Partner with a local charity, volunteer at your kid’s school, join a neighborhood group. Being a part of the community is a great way to connect with other non-industry individuals, get to know them in a more informal setting, and to become a subject-matter expert for mortgage-related questions in order to establish trust and possible future business.

Automation, Automation and More Automation!

While automation is the industry standard in mortgage lending, we can’t stress enough how important it is for originators, closing teams, and borrowers. Approximately 60-70% of tasks in the lifecycle of a mortgage can be automated, shortening the loan processing cycle by up to 50% by eliminating repetitive tasks and errors for everyone. Automation technology also provides a lot of value for borrowers, making it much easier to provide a more positive experience for them. It provides clear instructions, transparency, and an overall understanding of the process and requirements. RealKey’s digital tools make the mortgage process more efficient to allow brokers and lenders to close more loans, faster, with less effort from start to finish, freeing up time to find new clients and grow their business.

Marketing automation is another great tool to help MLOs effortlessly manage and strengthen relationships with present and past borrowers, as well as relationships with leads and referrals. Marketing automation tools can be integrated with CRM to create customized marketing and communication campaigns. Although this can require a big upfront time investment, once everything is set up, it can be a self-functioning tool that frees up time to focus on other ways of scaling their business. 

Specialize In Niche & Complicated Loans

Not all loans and borrowers are created equal. Some lenders choose to specialize in higher-priced or easy-to-qualify loans while shunning complicated products such as FHA, Improvement or Rehab, Construction, BMRs, USDA, and VA loans. Specializing in these loans can help diversify a LO’s expertise and offering, especially during a difficult market.

With increasing interest rates, inflation, and overall global volatility, borrowers may need cash to consolidate debt or fulfill unexpected financial needs. Many opt for a HELOC or 2nd mortgage to get the cash injection because these products allow borrowers to maintain their current low rates from the pandemic, while accessing the capital in their homes. Knowing how to explain and quote both options for refinancing while providing borrowers with a clear understanding of the requirements, and processing the loan smoothly can be another advantage for an MLO during a high rate market.

Jumbo Loans, which can be more complicated due to the natural complexity of the buyers’ finances, are another product that lenders need to specialize in.Compared to last year, home prices have increased by 15% due to housing shortage and increased demands. This created an extremely competitive environment among buyers who got into a bidding war to get the property they want. Last year, more than 30% of homes sold for above asking price, making JUMBO loans more common than ever. By closing more JUMBO loans, MLOs can service refinances and referrals, as well as providing them a niche.

RealKey Can Help

Fintech and other digital tools are changing at the speed of light. It can feel like a full-time job to stay on top of new digital offerings and learn how to use them. By integrating RealKey into MLOs loan origination operations, mortgage teams not only get technology that enables them to streamline their processes, but also the ability to process the most difficult loans requiring more stringent documentation. RealKey’s automation tools can help MLOs and closing teams better understand difficult loan products and their requirements. This, inturn, helps lenders communicate better, qualify borrowers for a more diversified portfolio of loan products, and clearly explain their requirements.

As an added service, RealKey offers free consulting from the most experienced and highest producing experts in the mortgage industry. They stay up-to-date and share the most effective technologies and best practices to help new and seasoned mortgage teams easily scale and improve on their business, even during difficult times. The consulting service doesn’t end after a lender is onboarded, as the RealKey team is available to assist whatever technological and product-related questions may arise.

RealKey is an innovative mortgage automation solution that can help lenders run and grow their business efficiently while providing customers with the best experience. RealKey’s software works seamlessly with existing point of sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience and submit clean files for complex loans and to strictest lenders.

Contact us today for a demo, and learn how RealKey can help you scale your business.

Fear Not – Simple Tips To Leverage Automation As An Ally To Conquer The New Market 

Summary:

  • It’s important to view automation and technology as an ally and not competition.
  • Automation and AI have become mortgage tech buzzwords, making MLOs think they will be replaced.
  • Automation can be used to decrease tedious and repetitive tasks, build new income streams, and create marketing communication campaigns.
  • MLOs that adopt automation tools can strengthen their customer relationship and grow their referral business.

In the last 20 years, the mortgage lending industry has started undergoing a digital transformation, providing new tools for loan originators and closing teams. While some MLOs were quick to adopt technology to automate and grow their business, others have been slow and hesitant to take the leap.

Automation, artificial intelligence (AI), and machine learning (ML) are the new buzzwords thrown around to get lenders, processors, and underwriters on the technological bandwagon. But for many professionals, who don’t fully understand these tools, the terms conjure the feeling of a hostile robo-technological takeover that can make their job obsolete. The fear is understandable, as popular websites such as willrobotstakemyjob.com erroneously and unjustifiably claim that there is a 92% chance that automation will replace LOs.

What’s important to understand is that yes, mortgage technology is completely and positively impacting the lending industry. And no, originating and closing teams will not be replaced by technology, as they are vital and irreplaceable to the complex loan process and customers needs. 

Even if borrowers start the initial loan application process using a POS (Point-of-Sale), loan officers are the primary point of contact, helping borrowers smoothly navigate through the entire process. Technology should be viewed as a helping tool, or a complement, rather than a replacement for lenders and borrowers. Qualities such as critical decision-making, experience, relationships, or empathy cannot and never will be outsourced to automation and technology.

Below are 4 simple ways MLOs can leverage automation and other technologies to close loans faster, error free, and scale their business.

Process Automation

Automation serves everyone involved in each mortgage transaction, not just LOs, benefiting processors, underwriters, 3rd parties, and borrowers. It helps diminish manual, time-consuming, and error-prone steps, as well as serve as a project management tool for all parties involved in the loan closing process. 

Every new loan application can be viewed as a “project” with a unique process, where a loan originator “invites” different members of the closing team (such as processors, underwriters, borrowers, and 3rd parties) and assigns their respective tasks and deadlines. This way, everybody is synced and follows the correct process from day one, leading to cleaner loans, faster closings, and more earnings. Automation also provides transparency, where all parties clearly understand their deliverables, and can track the loan process. The borrowers also benefit from this because they get an entire process outline, key status updates, and understand every step of the approval process.

Automation also helps MLOs that focus on units over volume. With so many loan transactions happening simultaneously, it’s easy to get swamped and overwhelmed. However, automation can help close more loans faster and increase profits on each loan. According to the 2021 Annual Mortgage Banker Performance Report, per loan profits rose from $1470 in 2019 to $4202 in 2021. Although a lot of success is attributed to pandemic-related low interest rates, technology played an important role, as it decreased costs and improved efficiency of the loan process, while increasing per-employee loan production.

Lastly, the 2008 financial crisis triggered a huge commission rehaul. Previously, originators were able to negotiate their own earnings which could range from 2% to 5% of a loan value. However after the crisis, the commission structure was standardized at ~1%, putting everyone on the same playing field. For many, these changes drastically impacted their earnings. In order to earn what they used to, MLOs would have to close a lot more loans. With automation, they could do that by cutting down on manual and repetitive tasks and growing their business further by finding new clients. With rates increasing, and no reprieve in site, originators will need to differentiate and compete more than ever. Technology will play a crucial role in improving efficiency and productivity to gain access to the best products and preferred underwriting that provides a competitive advantage over those slower to adopt.

Strengthen New Referral Income Streams

Now that the housing market is slowing down due to increased interest rates, MLOs have to work harder to find new borrowers and referrals. Having a reputation for smooth and fast transactions from application to closing can help MLOs get new referral streams by growing and strengthening their partnerships with real estate agents. 

Real estate agents have direct relationships with buyers, who once they find a property, oftentimes ask around for a reputable lender. Word of mouth and referral business is the bread and butter for MLOs, and having a relationship with agents can be a new income stream. Real estate agents, who must maintain a good reputation, are more likely to refer buyers to lenders that are known to have good processes, close loans fast, and provide great customer service. 

Marketing & CRM Automation

MLOs not only originate and close loans, but also have to find new clients and maintain relationships with past ones in hopes of assisting them with future transactions or referral business. Lenders can leverage marketing CRM automation tools to maintain relationships with past borrowers as well as strengthen relationships with referral leads to keep them informed about market changes and refi opportunities. Although CRM tools do require a big upfront time investment to create customized marketing and communication campaigns, once programmed, it can be a self-functioning tool that frees up time to focus on other ways of scaling their business.

AI Tools

Artificial intelligence still has a lot of room for growth and development in mortgagetech. While many companies claim that they have sophisticated AI tools, the majority are simple search engines for guidelines or chatbot functions. RealKey is a step ahead, and has created an AI platform that not only automatically identifies requirements for the most complex transactions at the application, lender, and loan program level, but at the document level as well. This provides loan processors with clear guidance on what to look out for when reviewing collected documents and data. RealKey’s AI technology also leverages OCR text- recognition and APIs to automatically identify discrepancies and create re-conditions and new document requirements on the fly.

The Future Of A Loan Officer

With technological innovation in the lending industry, the role of an MLO will not become extinct, but rather move away from tedious and repetitive tasks to allow originators to focus more on problem solving, customer service personalization, and relationship building. Loan officers will become more valuable than ever because they will be able to focus on assisting their customers, and guide them through complexities during one of the most stressful times of their life. But in order to serve their customers better, MLOs must put their egos aside, get out of their comfort zones, and embrace technology. By letting automation handle the manual and time consuming tasks, LOs can allocate their time on what they do best–build relationships and drive long-term referral business.

RealKey is an innovative mortgage automation solution that can help lenders run and grow their business efficiently while providing customers with the best experience. The RealKey platform provides automated and intelligent collection of documents, review of data, and secure communications among all parties involved. These combined capabilities shorten the loan processing cycle by roughly 50%, giving MLOs time to close more loans and grow their business. RealKey’s software works seamlessly with existing point of sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience and submit clean files for complex loans and to strictest lenders. 

Contact us today for a demo, and learn how RealKey can help you scale your business.

Don’t Be A Selfish Lender – Check Your Ego, Read Our Study & Focus On The Borrower

Don’t Be A Selfish Lender – Check Your Ego, Read Our Study & Focus On The Borrower

Summary:

  • Some LOs avoid better loan products and lenders due to document requirements instead of providing borrowers with options, realistic expectations, and transparency.
  • Many MLOs get banned from top pricing lenders because underwriting and closing teams are unable to process or approve their messy or incomplete submissions.
  • Digital tools and automation help eliminate pain points of document collection, review, and submit cleaner files to top priced lenders.

A little history, the origins of mortgage lending in the US were opportunistic and a foreign concept until the 1930s. Mortgages were introduced by the insurance industry to take advantage of borrowers during the Great Depression. Lenders made money by collecting interest, fees, and owning properties that borrowers weren’t able to make payments on. The available loan products were favorable to insurance lenders and not borrowers who were limited to loan terms of 50% of the home’s market value with 3-5 year repayment terms and a balloon payment in the end.

This predatory behavior didn’t last long. In 1933 FDR became president and implemented financial reforms under the New Deal program. It included changes to mortgage lending, which by then claimed hundreds of thousands of foreclosed homes. The reform also introduced 15 and 30 year loan products which, this time, benefited the borrowers by allowing them to leverage smaller monthly payments to become homeowners. 

The mortgage lending industry came full circle when the 2008 financial crisis exposed unregulated, abusive, and unfair lending practices. Reputable financial institutions and lenders were accused of practicing predatory lending, using unfair and deceptive tactics to convince borrowers to choose loans that benefited the lender. Loan officers targeted vulnerable demographics who, lacking knowledge and understanding, took out loans with high interest rates, hidden (and high) fees, explosive ARMs, undisclosed terms, and penalties that led to debt, foreclosure, and bankruptcy. 

The crisis was a wake-up call for the mortgage industry, forcing it to tighten-up approval protocols, lending products, and unethical practices. Lenders such as Ameriquest, New Century Financial, and American Freedom Mortgage (among others) filed for bankruptcy and liquidated.

In the last 20 years, the mortgage industry also underwent a technological transformation. While mortgagetech did start gaining momentum in the early 2000s, many organizations and MLOs have been dragging their feet to incorporate the technology to help simplify tedious tasks and processes for their closing teams and borrowers.

All of these changes are a lot to digest for many seasoned MLOs, for whom dropping their egos and getting out of their comfort zones has been an uphill battle. During the last 2 years, lenders benefited from a purchase and refi boom caused by the pandemic. But, at the same time, many were caught off guard and unprepared to handle the new business, resorting to semi-predatory and selfish lending practices which prioritized their needs over their customers.

Unprepared LOs were simply moving too fast, using outdated tools, and submitting messy and incomplete files, which created static for closing teams and borrowers. Some MLOs were banned from top pricing lenders because closing teams couldnt process their paperwork. Others avoided better-priced lenders all together because of their strict requirements. This had a negative and unfair impact for the borrowers, making them unaware of better top pricing lenders and loan products for their home purchase loans or refinances.

A big part of the problem for MLOs is ignorance and more often than not, systematic laziness, ego, and lack of willingness to adopt new technologies. MLOs got bombarded with new business and selected products and processes that were better and less hassle for them. Many chose to submit loans to specific lenders that made the approval process easier rather than providing best products/pricing for their borrowers. Sadly, these were top lenders in the industry known for least effort for MLOs and closing teams. In the end, taking the easy route cost borrowers tens of thousands of dollars for the same rate but at other lenders. This behavior is a perfect example of MLOs doing what serves them rather than setting proper expectations, explaining qualifications and necessary documentation to get better products for the borrower. 

Now that the housing market is slowing down, it’s a pivotal time for mortgage professionals to reassess their processes, incorporate automation technology, and provide borrowers with the right products.

Here are some solutions that RealKey came up with to help MLOs gear up for the next upswing:

Get Rid Of The Ego & Be Open To Change

There is always something new to learn. Having the “I’m the best” mentality creates a liability for mortgage professionals by not being open to improved processes, technology, and tools that benefit both them and borrowers. In order to be a successful and client-centric originator, MLOs have to be open to change and strip themselves of outdated and non-serving point of views and methodologies. They must leave their comfort zones and learn how to work with technology, changing customer needs and demographics.

Put Customer As Priority

When a customer is looking for a loan, some are well-informed, knowing the exact product they want (and qualify for), with others starting from zero. While MLOs are sales people with a majority earning commission, their responsibility is to help borrowers choose the best product for their needs and manage the process from start to finish. A lender’s job is to find the best product for the customer while explaining its pros/cons and mapping out the requirements and qualifications. It’s a client-centric process and product. RealKey’s automation technology can help MLOs clearly and effectively communicate steps and requirements of different loan products while setting realistic expectations.

Implement Digital & Automation Tools

Today, digital and automation tools are the holy grail for MLOs. There is an overwhelming amount of POS, LOS, and AUS digital tools that help originators and closing teams streamline parts or a majority of  the origination and closing process. Approximately 60-70% of tasks in the lifecycle of a mortgage can be automated. RealKey’s digital tools make the process easier, more efficient, and less error prone for customers and closing teams.These tools also create cleaner and complete files to be submitted to “stricter” lenders with tougher documentation requirements.

Seek Help From Industry Experts

Fintech and other digital tools are changing at the speed of light. It can feel like a full-time job to stay on top of new digital offerings and learn how to use them. By integrating RealKey into MLOs loan origination operations, mortgage teams not only get technology that enables them to streamline their processes, but also live onboarding and training at no additional cost to ensure they fully understand how to use and maximize the platform. 

As an added service, RealKey offers free consulting from the most experienced and highest producing experts in the mortgage industry. They stay up-to-date and share the most effective technologies and best practices to help new and seasoned mortgage teams easily scale and improve on their business.

Leave

The 2008 financial crisis exposed lenders and organizations such as Ameriquest, Countrywide, and New Century Financial Corp for practicing predatory lending and subprime loan schemes. Interestingly, these financial institutions, long before the crisis, had a negative reputation. Ameriquest was known for churning their customers, and was coined as the “AQ Revolving Door,” by pressuring to take out a 2-Year ARM with a 3-year prepayment penalty. While this was the lowest rate in their limited product offerings, it resulted in constant refinances. Although many whistleblowers did come forward about being pressured to sell risky loans and to qualify borrowers for products they couldn’t afford, many of them did so for years before taking a stand.

Predatory behavior and working for toxic institutions is no longer acceptable. If a lending organization does not align with personal values and engages in unethical business practices, LEAVE, and find an organization that does.

Mortgage lending is a customer-centric industry, and MLOs must do what’s best for the borrower. In order to provide customers with the best service, product, and overall experience, lenders must check their egos and constantly reevaluate their tools, processes, and be open to better ones.

RealKey is an innovative mortgage automation solution that can help lenders run and grow their business efficiently while providing customers with the best experience. RealKey’s software works seamlessly with existing point of sale and loan origination systems to bring an end-to-end, fully digital mortgage processing experience and submit clean files for complex loans and to strictest lenders.

Contact us today for a demo, and learn how RealKey can help you scale your business.