Homebuyers often find the mortgage process chaotic. It’s time to stop accepting this as normal—for their benefit, and yours.
Full disclosure: I’ve never bought a house. I’m a mid-20s renting gal who recently moved into an urban paradise where trendy cafes and cute boutiques abound. I’m the millennial cliché realtors and lenders are waiting on to take the next step in life—to stop wasting money on rent and buy a house already.
That said, I do have a unique perspective, as a marketer for a mortgage technology company, in scrutinizing the inner workings of mortgage origination. And let me tell you, it is terrifying.
You know the movie “Sharknado,” where sharks that are on fire fall from the sky? From the homebuyer’s perspective, that’s about how the mortgage process feels.
That ‘s not to say mortgage professionals aren’t doing their jobs correctly. If nothing else, while researching the loan industry, I have gained a healthy respect for the amount of effort and focus that realtors, lenders, title agents, loan officers and others must apply to make people’s homeownership dreams come true.
Personally, I would have torn my hair out and binged on chocolate after a day of dealing with just the regulatory side of the industry—like TRID violations, the Closing Disclosure three-day rule, zero tolerances, and all the other minutiae that make up a compliant loan.
No, I’m not saying it’s the lender, or the loan officer, or realtor’s fault for a homebuyer’s Sharknado experience. And while some don’t follow best practices, this is not where the problem begins.
The problem starts with chaos and unpredictability in the mortgage process itself.
Let me illustrate with a real life example of a first-time homebuyer (and ATS Secured employee) who recently bought a house. (So you know I didn’t just make up a scenario to sell our software.)
An employee’s first-time homebuying experience:
“It went rather rapidly. I had a good loan officer and realtor, but just as easily they could not have been and I would have been screwed over. We just started signing things. And they said, “Yeah, you can read it, but it’s 30 pages of legalese.” I mostly placed all the trust in the realtor, assuming he knew what he was doing.
“I didn’t have enough information to ask the right questions. Looking back with the knowledge I now know from working at ATS, I don’t know if they checked the title insurance; hopefully it’s OK or the bank wouldn’t have given me the loan. They were all very clear that I could ask any questions, but I didn’t know what to ask. I was just excited to get the house and focused on that.
“Also, the home inspector didn’t tell me the roof was double layered. The home insurance people said they can’t do insurance on double-layered roofs, so I had to go through a different insurance company. That was one thing I felt the home inspector should have told me. It wasn’t made clear to me, at any rate.”
This scenario sounds like the mortgage team did a good job of being available and moving the loan along. It sounds like they knew what they were doing and did it correctly. But the theme that surfaces in his story is: I didn’t have enough information to ask the right questions.
Many mortgage professionals accept this as “just the way the system works.” I mean, sharks falling from the sky is not supposed to be accepted as normal. That’s just not a good sign.
If you’re reading this, you probably already follow best practices, read up on industry regulations and do your absolute best for the homebuyer. You are the Chuck Norris of Lenders or Realtors, charging into the fray of education on pre-approvals vs. pre-qualifications, helping homebuyers understand why they need two months of bank statements while keeping them updated on the necessary information and when it is needed.
But I’m sure you know of industry professionals who are reactive instead of proactive, who generally do not keep the homebuyer informed. These experiences make homebuyers feel like anything could happen, and they would just have to deal with it. Sorry, not sorry.
My point is not that some mortgage professionals are good and others are bad. My point is that the mortgage process shouldn’t be this chaotic, complicated and confusing in the first place. We need to stop accepting a system where chaos and disorder are expected.
Regulators are on the lookout for bad customer experiences.
“Okay,” you might be thinking. “It’s not as terrible as all that. It’s really just first-time homebuyers who get confused. The second time around, they know what they’re doing. There’s no point in changing the entire system for someone who’s going to come back to refinance or buy a second house anyway.”
You sure you want to go with that ideology?
The Consumer Financial Protection Bureau (CFPB) has become quite aggressive in the last few years, leveraging huge fines against companies some thought were too big to regulate.
Take a look at banking giant Wells Fargo’s recent fiasco over fake accounts. Senator Elizabeth Warren, who orchestrated the creation of the CFPB, said to the CEO of Wells’ face that he should be investigated, fined and imprisoned for the aggressive cross-selling tactics he encouraged.
It’s looking more and more like the CFPB’s focus is keeping the consumer protected and informed, no matter the cost. If they think your practices have been unfair or deceptive, you are going to get audited and most likely fined. Since first-time homebuyers can be easily confused and overwhelmed, the CFPB may very well scrutinize every aspect of a loan and how it was handled, should your company be audited.
And so, it is in your best interest to act in the first-time homebuyer’s best interest. The mortgage industry as a whole needs to reject chaos as the norm and ask: “How can we best keep the homebuyer informed?”
I’m so glad you asked.
ATS Secured has re-imagined the mortgage process.
We don’t just aim to keep the homebuyer informed, but the entire mortgage team.
We do this by first verifying, or proving, that individuals on the mortgage file are who they say they are. Then we do further vetting, if necessary, to prove they are accountable professionals.
We also connect the lender’s LOS to the title agent, the realtor, and any other organization or individual that touches the loan file, resulting in ONE mortgage file that the homebuyer—and all professionals on the file, and auditors—can easily see. Necessary documents and any other sensitive data is placed in this secure environment, where appropriate and vetted people have constant access.
This way, everyone involved with the loan can see where it’s at in the process, who is waiting on who and for what, and securely request specific criteria to move forward. Explanations can be added to any complicated information, to put the homebuyer at ease.
These are just a few of the functions ATS Secured has put into place to make the whole mortgage process more secure, simple and compliant.