The appearance and increasing acceptance of digital mortgages in recent years put pressure on traditional lenders to up their digital game. With significant capital reserves and highly skilled teams of software engineers at their disposal, most large lenders navigated this challenge with relative ease. A more difficult obstacle is improving the experience of closing on or refinancing a home, which is unnecessarily complicated and stressful for all parties involved.
Today’s savvy borrower can effortlessly shop around online for a trustworthy lender that offers fast turnaround times, low fees, and great service. To remain competitive, the nation’s established mortgage lenders are laser-focused on reducing timelines to ensure every dollar works to generate revenue and improve profit margins, while simultaneously passing savings – of both time and money – onto borrowers.
In other words, having achieved the instant mortgage, the U.S. residential real estate industry is in a race to the ultimate finish line – the instant closing. One of the largest lenders in the world is determined to stay ahead of the competition and understands that the key is a carefully curated combination of increasingly efficient processes enabled by bleeding-edge technology.
With mortgage interest rates near all-time lows and a wave of activity in the residential refinance market, the top five national lender prioritized identifying and implementing critical enhancements for the refinance origination process as a top three strategic initiative.
After an extensive assessment, the lender’s mortgage division found that even though only five percent of files require further attention, each of their existing title vendors applies the same cumbersome process to every file. They wanted to only touch loans with exceptions and get an instant clear-to-close on issue-free properties.
Further, they estimated that a mortgage refinance, where the property and owner remain the same and only the financials change, could take as little as 20 days to complete. For current customers, especially those with a mortgage from the lender, they felt it should be possible to reduce that to just 15 days.
Considering known limitations of its existing vendors and the significant investment and expertise it would take to streamline the refinancing process with internal resources alone, the lender decided to look for a long-term partner at the forefront of technological innovation.
Its mortgage division learned about InsureTech company States Title’s unique instant underwriting solution, which on average processes 80 percent of title transactions within a minute. They were also interested in the title company’s dual approach of optimizing century-plus old processes and using machine intelligence to automate what remains.
The lender immediately understood States Title was far ahead of other providers in terms of technology, innovation and talent, and the best potential partner to develop a bespoke turnkey solution that would allow it to deliver customers the best e-closing offering in 2021.
In April 2019, the top five national lender started a pilot with States Title in three key states. The company determined to allocate 25 percent of the volume in two of the three states, and up to 75 percent of the volume in the third. Using States Title’s secure API, the lender seamlessly integrated the solution directly into its existing systems, with zero downtime and no disruptions for its loan officers and processors.
By June, States Title had integrated order acceptance, document delivery and messaging with their Title Production System (TPS) and the lender’s in-house loan origination system (LOS). At the same time, the mortgage division partnered closely with States Title’s dedicated customer support team to align workflows and ensure smooth operations between the lender and title company.
The two teams quickly established a highly collaborative relationship and ensured feedback was being shared promptly and in both directions. This allowed everyone to focus on increasing operational efficiencies, reducing operational expenditures, and moving quickly towards the lender’s goal of a 20-day cycle for the majority of refinance transactions.
In January 2020, the top five national lender collected and analyzed the results of the 9-month pilot. For loans processed with States Title, the lender’s mortgage division was pleased to receive an instant clear-to-close for 84 percent of transactions.
Comparing the instant loans against the traditional loans, they saw:
By combining the States Title instant underwriting solution with vastly improved operations, the mortgage division also increased capacity per processor by nearly 20 percent. Most importantly, the lender achieved a 93 percent CSAT score across all files processed with States Title, which far surpasses the industry average of 77 percent, as well as most of the top five national lender’s closest competitors.
With such stellar results, the lender ranked States Title as a top three vendor. Its mortgage division decided to expand both the number of states and proportion of title and escrow transactions it processes with States Title in 2020. The lender expects to achieve a 20-day closing by the end of the year.