In the increasingly digital world, paper is becoming obsolete, replaced by cloud-based documents that can be shared and stored instantly. Mortgages are no exception, with a fully digital process glimmering on the horizon.
“I’m very excited about the acceleration of adoption, especially over the last year,” said Stanley Street, founder of Street Resource Group. “I have always looked at automation as a way to make the job easier and make customers happier.”
A self-taught programmer with a strong background in finance, Street has been on the forefront of the digital revolution since 1986, when he launched his Atlanta-based firm with a mission to serve community banks. In 1994, Street Resource Group introduced the Warehouse Loan System, completely automating the warehousing process and reducing per-transaction processing costs.
The technology particularly benefitted smaller banks, which were typically relying on a messy system of spreadsheets, phone calls and faxes to handle the warehouse sector. With WLS, regional bankers were able to complete a warehouse transaction in 20 minutes, rather than two days, and track the process seamlessly online.
Over the past few decades, Street Resource Group has continually improved the WLS technology, which now serves roughly 60% of warehouse lenders, 1,000 independent mortgage originators and 9,000 end users in the marketplace.
The next frontier is a completely digital mortgage from start to finish. Street acknowledged that it won’t be simple to coordinate so many vendors and business processes, but the industry advances a little closer to the goal every year.
Still, digital mortgages are unfamiliar to many, and even the meaning of the term is up for debate. At its most basic, an e-mortgage is just a loan that includes an electronic promissory note with an electronic signature, according to Street.
“Everything is secondary to the note,” Street said. “But digital mortgages also include uploading financial documents, electronic signing and closing documents. With Rocket Mortgage, SoFi and some of the other digital lenders, the front end is totally automated all the way through the approval process, but as soon as it closes, it goes back to paper. That’s not a truly whole digital mortgage. Most of the originators are missing a completely end-to-end paperless process. Our goal is to get there.”
Originators can prepare for the fully digital era by researching vendors and learning about digital front-end and digital back-end systems. Street stressed that it can take more than a year to evaluate and implement new technology – and each step on the digital path will have to be integrated with existing paper processes.
“You need to know the benefits of the components and set expectations with customers,” Street said. “I know there is not enough vendor performance history overall to provide a 100% comfort level to anyone in this business. There will be some hesitation. But the thing about digital mortgages is that it’s exciting to be on the forefront of developing the business processes for the industry as a whole, rather than specific investor or vendor processes.”
While all automation comes with some risk, Street said early adopters can reap benefits, particularly with millennial clients who consider paper “archaic and old school.”
“They want automation because they want an easy process,” Street said. “I think there is excitement there among the originators. The other thing in terms of warehouse lenders, the independent mortgage lenders are more likely to adopt than the big banks. They are nimbler about implementing technology.”
Street added that he’s confident fully digital mortgages will eventually become the norm, but cutting-edge technologies will never be able to replace the human touch.
“Mortgage originators at the core are sales people, and when it comes to mortgage lending, relationships still matter,” he said. “At the end of the day, automation is only a tool. How well you understand that tool and execute with it determines your success.”