The Digital Mortgage

Mike Cass

Digital In Duluth: I’ve been inundated lately by loan officers and emails and flyers talking about their “digital mortgage” and not really sure why I should care? Can you talk me through that just a bit?

Cass: Oh boy! This is a big topic to tackle. Let’s begin with the definition of a word that is hard to say 10 times fast … digitalization:

dig·i·ti·za·tion

dijədəˈzāSH(ə)n/

Conversion of analog information in any form (text, photographs, voice, etc.) to digital form with suitable electronic devices (such as a scanner or specialized computer chips) so that the information can be processed, stored, and transmitted through digital circuits, equipment, and networks.

The digitization of the world will be looked upon in time as truly revolutionary, as impactful in many ways as the Steam Age, advent of railroads, mass production, the Information Age, etc. The end result of this shift in technology has led to an explosion of goods and services … taxis competing with Uber, cryptocurrencies like bitcoin, crowdfunding services, digital payment services such as Paypal, etc. It’s all about finding a better way and optimization of resources.

So what has that got to do with mortgages? While the conversion to digital has already impacted the rest of the world in many ways (Uber got started over seven years ago!) it is just now entering the mortgage world in earnest and the pace will increase rapidly in the months and years ahead, so be prepared!

The article (link below) highlights some ways you will see a difference – much of the changes driven by the acceptance of the new technology by mortgage giants Fannie Mae and Freddie Mac.

  • Better borrower experience – With digitized information for things like payroll, banking statements, credit, tax forms, and other required information can be pre-filled for more streamlined processing.
  • Increased transparency – Better access to lender systems which store and transmit data via portals specifically to service borrowers and their REALTORS.
  • More painless process – Quicker delivery of loan approvals and closings with less paperwork pain as you will see more automated collection of income and assets and waiving of the traditional appraisal processes.
  • Digital compliance – The federal regulations requires much of both lenders and borrowers to properly adhere to responsible lending practices and provide borrowers with increased disclosure early in the loan process. Technology helps make great strides in automatically triggering the generation of electronic disclosures.
  • Big-time savings – The bottom line to the conversion to a digital mortgage is that it optimizes service to the homebuyer and reduces expenses to the lender at the same time. The average cost of originating a mortgage loan is over $8,000 … with much of that expense taken up by manual and repetitive tasks that are in turn passed on to the homebuyer. The digital mortgage processes offer great savings to the lenders which are in turn passed on to the homebuyer.

Wondering when this will impact you in real estate? Just look in the rearview mirror as it’s already here! The link below walks through what’s trending in real estate and you’ll see a common theme related to digitalization … mobile apps, drones, going paperless, etc..

It’s a digital world, so look for resources to help get on board or be left behind!


Mike Cass invites you to submit your questions to be addressed in future columns. Questions may be edited for space or clarity. Send your questions to mcass@resultsmortgage.com. Mike Cass has served in various mortgage roles including loan origination, loan processing, underwriting, closing, post-closing and finance. He draws on these experiences as president of Results Mortgage LLC, a Twin Cities based lender.