FinTech: New Solutions for the Mortgage Industry in the Digital Age

By Eric Lapin

Corporate Development, Old Republic National Title Insurance Company

It's no secret the world around us is changing, with advances in technology leading the way. Discoveries of new tools and more efficient processes have propelled civilizations forward throughout human history. Our willingness to embrace new technologies and adapt to changing environments is critical to our survival, growth and prosperity. The mortgage industry is no exception.

Today's consumers want the ability to do business quickly and easily in a digital marketplace. That adds to the growing list of concerns for the mortgage industry. Financial technology, or FinTech, is a term for the collection of modern solutions that have the potential to meet the needs of all parties involved in the real estate transfer process. It refers to innovative digital solutions that maximize efficiencies in the delivery of financial services, from lending, borrowing, investing, banking, payments, portfolio management and more.

Gone are the days when prospective home buyers start their search in their newspaper's classified ads. According to a 2017 report by the National Association of REALTORS®, 95 percent of home buyers initiate their search online - that's up over 50 percent from the year before. Today's consumers use software, technology, apps and online tools for most day-to-day activities, and they're looking for the same simplicity and convenience when it comes to buying or selling a home, or refinancing a mortgage.

FinTech meets that need by offering products like eNotes, eVaults, and eRecords, and services like digital signing, eNotarization, remote online notaries and document providers. eClosing platforms combine some or all of these tools to create the most efficient closing experience possible. By streamlining the real estate transfer process, FinTech helps save time and money, while satisfying the industry's need for accurate and secure data exchanges.

For example, Old Republic Title's affiliate, Pavaso®, offers an eClosing platform that can deliver expedited closings, while providing transparency, education and information to everyone involved in the transaction. Originators enjoy:

  1. A standardized process for consistent closings - every time
  2. Flexible closing options: paper, hybrid, digital or eNote
  3. Use of any Title Production System or Loan Origination System
  4. Quick and accurate closing packages
  5. The ability to communicate and collaborate with secure data exchange
  6. Real-time status updates and built-in communication features, all in one location
  7. A completed document package and full audit log delivered moments after closing

While all this sounds great, it can be a little overwhelming. That's why FinTech offers new users the ability to ease into the digital revolution. Originators need not abandon traditional processes that work for their operations. However, using FinTech to launch new business lines can free them from the hassle and expense of continuing to use an antiquated mortgage loan servicing platform. FinTech meets Mortgage Industry Standards Maintenance Organization (MISMO) best practices, and offers servicers a cost-efficient way to provide accurate reporting and reduce operational costs throughout the mortgage lifecycle.

FinTech also offers a surprisingly human benefit. By creating a space where information is accessible and transparent, lines of communication are open, and real estate professionals are responsive to the needs of consumers, FinTech helps customers feel empowered and valued. Mortgage industry professionals can engage with customers and forge mutually beneficial relationships. For customers, that means personalized service. For mortgage professionals, that may translate into better customer retention, higher cross-selling potential, and ultimately, a healthier bottom line. 

There is some reluctance to embrace innovative financial technologies. Some fear they could put certain providers out of business, but I believe the opposite is true. Technologies like Blockchain, artificial intelligence, machine learning and advanced analytics are already facilitating the management of large volumes of historical data in real time. These technologies can increase efficiencies, and produce more accurate analytics and modeling within the mortgage industry. 

Others in the industry have been slow to adopt innovative technologies because of lagging technical advancements and regulatory clarity. Compared to other tech-friendly countries, the U.S. has been hesitant to make regulatory provisions that accommodate financial innovation programs. There have been spurts of support from the Bureau of Consumer Financial Protection, the U.S. Commodities Futures Trading Commission and Congress in recent years, but that momentum could soon change. 

Just last month (August 2018), the U.S. Dept. of the Treasury released a 222-page report emphasizing the country's need to adapt Fintech and other innovative financial technologies to compete on a global scale. According to an excerpt published in Forbes, "the United States risks losing out by failing to provide appropriate regulatory clarity and assurances, and remove unnecessary barriers to innovation." The report calls for more flexible regulation of innovative financial technologies, and challenges federal and state regulators to work closely with providers of these technologies to enhance efficiencies while protecting consumers. A paper just released by The Pew Charitable Trust echoes these recommendations.

In closing, FinTech has a lot to offer consumers and those in the mortgage industry. With federal pressure mounting to remove regulatory barriers, I believe it's only a matter of time before innovative financial technologies go mainstream. Early adopters of FinTech, like Old Republic Title and its customers, are already reaping its many benefits, with more industry leaders making the transition every day. 

 

These are the opinions of Eric Lapin and not necessarily reflective of Old Republic Title.

Eric has 24 years of experience in the mortgage industry, which includes origination through servicing, technology, innovation, data and analytics. He is a member of the MISMO Community of Practice for Blockchain Education Committee and a frequent speaker at industry events. Eric will be speaking about FinTech for Servicers at the upcoming Texas Mortgage Banker's Symposium.