As the year 2018 draws to a close, mortgage industry experts and pundits are busy analyzing the developments this year to forecast what lies ahead for the industry in 2019. While price escalation is likely to continue along with rise in demand, lenders will go the whole hog to embrace technology, on the one hand, and simplify loan fulfillment programs with flexible offerings, on the other, to move towards higher revenues.
The Transformation of AI from a Trend to Business standard
In 2019, AI is going to play a more dominant role than before. Lenders of all shapes and sizes will embrace AI to improve the efficiency of their loan approval process, keeping in mind the need for faster processing times and better quality. Additionally, lenders will bank heavily on its statistical model to gauge the ability of a borrower to repay a mortgage loan.
- Regular Users of AI in 2017 – 15% Regular Users of AI in 2019 – 23%
- Trial Users in 2017 – 14% Trial Users in 2019- 21%
- Users Contemplating using AI in 2017- 37% Users Contemplating using AI in 2019- 41%
- Not Using in 2017 – 35% Not Using in 2019 – 15%
Growth Towards a Complete Digital Model
The current business model of a standard mortgage loan approval process is still riddled with inefficiencies. How many times have you had to deal with numerous customer queries concerning just one main issue, the status of the loan approval? All of these redundant queries will be on their way out in 2019 when lenders will lenders in large numbers will embrace self-serve loan origination solutions.
Mortgage Digitization Steps:
- Self Service Web Portals to Help Customers Upload Documents and Manage Applications on Their Own
- Embrace Electronic Notarizations, Electronic Verification Of Borrower Information, Automated Document Validation Systems And E-Signature Systems
- Enable Mortgage E-closing for Execution of Closing Documents
- Optimize Self-Service for Mobile and Tablet users
- Optimize Content Heavily with Videos, Audios and Screenshots
Predominant use of Machine Learning
Machine learning will find many takers in 2019. The ability of this technology to learn a task and combine it with other tasks to complete a specific process will be put to good use by lenders who have been contemplating to use it in 2018. Besides helping processors and underwriters focus more time on higher-value activities to keep the mortgage loan process on track, machine learning biggest benefit will come in the form of uncovering hidden insights such as:
In 2019, Machine Learning will help a large number of lenders review information of the applicants who were previously denied loans for low credit score, high Loan-to-Value ratio, insufficient etc. If one of such factors in a potential borrowers improves, machine learning will help Loan officers go back to such an applicant and offer a new opportunity to apply.
Millions of Blacks, Asians and Hispanics have been excellent customers but have been unable to get mortgage loans for other reasons. This has been a huge missed business opportunity for lenders. In 2019, machine learning algorithms will effectively help lenders tap into this section. This will not only help melt decades of biases but will result in new revenue streams.
Smart Document Capture is Key
In 2018 automated document management tools have given lenders a strategic advantage over others. These tools leverage cutting edge technology such as OCR(optical character recognition) to validate the accuracy and quality of scanned loan documents. In 2019, doc management tools will become a norm in the industry.
- Smart document capture tools like EMA’s M-suite can boost the pace of the loan origination process by 40%
- These tools also reduce overhead costs and reduce your operational costs by close to 50%
- Msuite uses the most advanced OCR engine in the world. A tool of such remarkable potential assures 100% accuracy in document validation, classification and indexing
Multiple Loan Product Lending
Competition is going to be stiffer in 2019, and so lenders will compete to find a differentiator that resonates with consumers in multiple demographic segments. There will a significant rise in multiple loan products. Likewise there will be many new offerings in payment flexibility.
- In 2019, lenders will devise loan products for categories like:
- Millennials- 18-34 age group
- Upward and Onward GenXers- 35-54 age group
- Established Boomers – 55-72 age group
These upcoming trends are going to impact mortgage lending in 2019. Adapting to these changes at the will help you compete on an equal footing.