This is the first article in our two-part series on the impacts of eClosing in a down market. Click here to read part one of this series.
Introduction
Though real estate cycles are inevitable, they are highly nuanced and driven by factors outside of a lender's control. Inflation, high interest rates, and low housing inventory are among the many factors that are impacting today’s market. With origination volumes at a record low, it is not surprising that lenders are hyper-focused on the impacts of margin compression, prompting lenders to take action to reduce costs and increase profit margins. In order to withstand market conditions, some lenders are choosing to reduce headcount or change their approach to residential mortgage lending altogether.
Many lenders, however, are using this time as an opportunity to prepare for the next upcycle, identifying strategies that will give them a competitive edge both now and when the market recovers. Invariably, that edge is about providing a modern, best-in-class customer experience to attract more borrowers, all while keeping costs low.
While there are countless approaches to cutting operating costs, few strategies are as effective at improving margins and generating new business as eClosing technology, and here’s why.
eClosing technology is proven to increase margins
Snapdocs recently partnered with 25 mortgage lenders and industry experts to validate the average savings lenders achieve with eClosing technology. Research found that lenders are saving as much as $500 per loan when digitizing the mortgage closing process.
Research also found that while any level of digitization offers lenders considerable benefits in terms of time and cost-savings, average gross savings dramatically increase as a loan gets more digitized. In other words, the more a lender invests in their eClose strategy, the more dramatic the ROI. To read the full research findings, download the Lender's Guide.
How eClosing technology supports your closing team
Consider the time-consuming tasks and processes involved in closing loans manually, including the “stare and compare” method of verifying documents, and the time spent shipping, receiving, sorting, and scanning completed closing packages. Research shows these manual pre- and post-closing tasks add an average of 45 minutes to the closing process. When considering the high volume of loans an originator processes annually, this time can represent hundreds, if not thousands, of wasted hours that closing teams could otherwise be spending on revenue-generating activities.
With eClosing technology, these highly error-prone tasks become digitized and automated, allowing lenders to close loans quickly, and ultimately originate more loans annually. Furthermore, it enables staff to focus their time and effort on other high-impact areas, including spending more time with borrowers to ensure a hassle-free and enjoyable experience throughout this life-changing milestone.
A better borrower experience
According to a recent borrower experience study, borrower satisfaction of the overall home-buying process is primarily influenced by their experience during the closing. This is why investing in borrower experience should remain a key component of a lender’s downmarket strategy.
Mike Seminari, Director of Customer Experience at STRATMOR Group, describes the value of investing in borrower experience when he says, “Excellence in the customer experience will be a huge competitive advantage for those willing to pursue it.” eClosing technology is one such strategy that has proven to positively influence borrower experience. In fact, Snapdocs lenders achieve an average 10 point increase in borrower Net Promoter Score (NPS) after implementing eClosing technology, which in turn directly impacts customer referral and retention rates.
How to prepare for success in the future
When the market is down, it is prudent for loan originators to prioritize investments that help them process loans faster, more efficiently, and at a higher profit. It is much easier to manage a digital transformation while volumes are low, allowing originators to focus on process improvements and borrower experience in preparation for the fast pace of a recovered market.
Many in the mortgage industry are doing just that - engaging in digital transformation now. In fact, roughly half of all mortgage lenders have already adopted some form of eClosing technology.
So, why are some lenders still challenged to adopt eClosing technology? For one, every mortgage transaction involves multiple parties, including the loan originator, underwriter, title company, settlement agent, secondary market participants, and more. Each party in the mortgage ecosystem must embrace the benefits of technology, and that isn’t possible for all. Further, plain and simple, people don’t love change.
Just like any other digital transformation effort, engaging your staff and partners to embrace change and finding active advocates to lead the way is key. The right eClosing partner can also help guide a lender, and their partners, to create and execute a successful, right-sized digital closing strategy and adoption plan.
As the mortgage industry's leading digital closing platform, Snapdocs has partnered with hundreds of lenders to achieve their eClosing goals. Our team of industry experts understands that each organization has unique needs, and have developed and implemented custom eClose strategies for lenders of every size. We believe in being the partner that stands in the trenches with our customers, ensuring each lender achieves their eClosing goals in support of their greater business strategies.
At Snapdocs, our mission is delivering the kind of modern, digital closing experience that gives your borrowers and staff the peace of mind they deserve.
