Here are couple of notes from a National Mortgage News on Consumer-Direct Lenders and Mortgage Innovation
And with some estimates indicating that more than half of homebuyers complete their mortgage applications online, a growing number of established traditional lenders are looking to reshape their businesses by replicating the most popular features of the consumer-direct channel.
Now, experts say several market factors — including the shift to purchase-driven originations, the growing number of millennial buyers, and new, complex regulations that demand increased technology adoption to maintain compliance — may create a perfect storm for digitally-focused lenders.
The biggest driver of these changes, Emerson said, is consumers' growing desire for online engagement during the origination process.
But after years of low interest rates and high refinancing volume, the origination mix across the industry is expected to shift predominately toward purchase lending. The challenge for online lenders will be to demonstrate to borrowers — as well as their real estate agents — that they offer the same, or better, level of customer service that a retail loan officer can provide face-to-face.
Emerson said technology can help bridge the gaps. He said Quicken Loans' origination mix has changed along with the market (though they do not release origination numbers), and to accommodate this change they developed a system that allows real estate agents "unprecedented access to their clients' loan information so they can simply log in to a portal and know exactly where the loan is in the origination process."
This type of transparency is what Keith Luedeman was aiming for when he founded goodmortgage.com in 1999. He said purchases have been increasing "steadily over the past year," and now make up 50% of his business.
"For purchase customers, the key is staying in touch over time and being ready to move quickly to approve when they find a home," he said. "Our technology allows us to do so in a seamless and coordinated way that customers seem to appreciate.
"The evolution — or maybe the revolution — is not over yet," he said, adding that he thinks that the rise of smartphones and tablets will mean even more changes in the near future. "I could even see how the Apple Watch could send alerts out during the process."
"If you think through those old days, you look through the phonebooks, you call a couple of lenders, you make an appointment with your spouse and you take time off work," he said, adding that his company offers customers a less stressful and time-consuming experience than traditional mortgages.
This ease of lending is exactly what customers are looking for when they turn to online lending, said Emerson. In the fast-moving market, how quickly a lender can move the borrower through an application may be the difference between getting a return customer and losing a sale.
Quicken Loans closes the majority of its loans in 30 days, quicker than traditional retail lenders, particularly given the heightened regulatory environment for mortgage lenders. Quicken is now the second-largest mortgage lender in the United States, closing $140 billion in mortgage volume in 2013-2014 — more than four times its volume from 2011.