Lenders Digitize to Keep Up With Post-crisis Mortgage Demand

Lenders have been dealing with a swarm of confusion and volatility over the past few months. In April, mortgage applications dropped by 17.9%. Historic unemployment, stock market turmoil, and fear of uncertainty showered the lending market in stability issues. By May, the real estate market was paused. Homeowners were wary and the overall market stalled with fears of recession and hope of rapid V-shaped economic improvement.

Now, in August, the housing market has picked up the pace. But, despite more loans being issued, the market isn't "typical." COVID-19 accelerated changes to the global work dynamic and buyers are leaving the noise of large cities to find their oasis in the suburbs. For lenders, this swarm of borrowers is a blessing. After a year dealing with stimulus package chaos and uncertain housing market conditions, the surge in home interest is the kick many lenders need to keep operations steady.

But are you prepared to deal with the rush?

Human hands holding model of dream house

Understanding the Current Mortgage Landscape

The real estate landscape is undergoing an unprecedented surge during the midst of a recession. In 2018, there were 4.3 million remote workers. During COVID-19, a PWC survey showed that 97% of businesses are using remote work for most (or all) of their workers. 89% of businesses admit that these remote changes are likely to remain in the post-COVID environment. This isn't all too surprising. The rise of remote work has been heralded as game-changing for the past decade. But, sometimes, it takes crises to facilitate change.

As workers feel the shackles of location fall from their wrists, many are exploring real estate outside the hustle and bustle of the big city. Recent data shows real estate prices in San Francisco plummeting by 11.8%. Meanwhile, right across the street, suburbs in Oakland (+4.5%), Sacramento (+7.9%), and Bakersfield (+13.5%) are booming.

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This spells opportunity for lenders. With Fannie and Freddie's new "Adverse Market Refinance Fee" looming in the corner and another round of stimulus being shuffled into the market, most lenders are hungry to issue new mortgages to offset costs. But, how can your lending institution capture this renewed interest in loans? After all, lending institutions are battle-ready, and the faster you can verify, process, and distribute loans, the more liquidity you can secure to brace yourself for any potential post-crisis market frictions.

Taking Advantage of the Influx of Mortgage Applications

In the same way that COVID-19 is accelerating Industry 4.0, IoT, and remote work, lenders are under pressure to digitize archaic mortgage processing systems. In 2019, 56% of lenders admitted that they should be able to digest mortgage applications in a fully digital environment. Those internal conversations about future-ready architectures are being pushed to the water cooler during COVID-19. It's no longer about wishful thinking and mid-horizon planning; lenders are starting to digitize — today.

On the consumer-facing side, these changes are noticeable. Redfin saw a 494% increase in virtual home tours in March. Zillow admits that it's seen a massive spike in 3D home tours. And online mortgage applications grew at a staggering rate. But, behind the curtains, digitization is undergoing a revolution.

Digitally transformative efforts like streamlined application workflows and approvals and accounts payable automation are positioning themselves as an immediate differentiator between lenders. Make no mistake; we're well past long-term deployment plans. Digital transformation is happening today — not in a few years.

This is especially crucial in an ecosystem where lenders are battling for an influx in loan applications. Maximizing loan approval processes via back-end digitization can help you secure applications faster, validate them nearly immediately, and deliver those loans in an automated (or semi-automated) pipeline. And, when it comes to this post-crisis boom, this improved mortgage throughput is invaluable.

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The Power of DRS Imaging

In the past, lenders have deprioritized mortgage applications, especially in regard to tech investments. That's coming back to haunt them. The average time-to-cash stands at 40 days. Lenders who invested in mortgage digitization, see that drop to 18 days. When you extrapolate that across your entire institution, the results are staggering. According to McKinsey, lenders that invest in mortgage digitization processes can expect the "150 rule." That's a 50 percent improvement in time-to-cash, a 50 percent reduction in overall banking costs, and a 50 percent increase in customer satisfaction levels. McKinsey also noted some examples of banks that boosted their overall mortgage production (i.e., number of mortgages issued) by 30% simply by digitizing their mortgage application, validation, and approval process.

At DRS, we believe that digitization isn't only the future of lending; it's the now. If your lending institution wants to capitalize on revitalized property interest, maximizing your mortgage workflows is a surefire way to outpace your competitors and reclaim any capital losses from the past few months.

To facilitate this process, we offer out-of-the-box solutions for lenders ready to go digital without significant time barriers, including:

  • Digital mailrooms that digitize paper-based mortgages and feed them into your existing systems
  • Document imaging services that digitize paper-based applications
  • Streamlined BPO with best-in-class document storage and retrieval features
  • AP automation that maximizes backroom invoices and minimizes late fees
  • ECM for rapid eDiscovery, classification, and retrieval of digitized mortgages

Together, these solutions save time, money, and headaches across your mortgage pipeline. Our solutions interface with all major ERPs, MOPs, CIS systems, and accounting software. Once deployed, DRS digitizes paper mortgages, feeds those digital files into the appropriate systems, and tracks compliance with best-of-breed auditing across your digital architecture.

Don't Settle for the Scraps

As consumers grow hungry for property in the post-COVID ecosystem, your lending institution must be ready to capitalize on every mortgage-hungry applicant. COVID-19 has profoundly changed the lending landscape — accelerating the shift to digital transformation. End-to-end mortgage process digitization yields a 30% overall reduction in loan processing costs. Simultaneously, digitally transformed loan fulfillment frameworks facilitate speedier throughput, helping you capture more closed mortgages during this mid-crisis rush.

Are you ready to maximize your mortgage intake with industry-leading digitization and automation software? Contact us to learn more.