With stay-at-home and shelter-in-place orders in effect in most of the country (and likely to stay active for several more weeks), buyer and seller expectations for mortgage lending have changed substantially from what they looked like at the start of the year.
While home sales and refinances are still happening, the many in-person activities that were traditionally part of the purchase process – from home tours to appraisals to notarizations to closings – have had to move online.
Many in the industry view the changes as a temporary response to unusual events, but they could signal a bigger shift in the way we handle mortgages in the years to come. If nothing else, the industry’s response to COVID-19 will affect what borrowers and sellers expect from the mortgage lending process in terms of efficiency, accessibility, and convenience. Here’s how.
The Last Major Shift in Borrower & Seller Expectations: Democratized Information Access
It’s worth noting that major shifts in borrower and seller expectations aren’t new for the mortgage industry.
The last one happened in the early 2000s with the founding of companies like Redfin (2004), Trulia (2004), and Zillow (2006). These companies published property images and information that was once only available to real estate agents (pricing, school district, building age, etc) online, thus making it available to anyone who cared to search.
This amounted to a huge shift in power in the real estate world: homebuyers no longer had to rely on real estate agents to connect them with properties on the market or provide them details on properties they liked. Imagine telling a homebuyer today that they had to go through a real estate agent to see listings – they’d likely be appalled at the idea.
But online listings weren’t the only change that shifted expectations.
Around this time, lenders started offering mortgage applications online as well, meaning borrowers could apply for loans without going into a bank branch or otherwise interacting with an Originator.
Buyers and seller alike began to expect to handle much of the home purchase or sale process online. And while more and more components of the mortgage lending and homebuying process have moved online in recent years, today’s borrowers still rely on face-to-face meetings with industry professionals to carry out key parts of their transactions (including open houses, inspections, appraisals, and notarizations).
Or at least borrowers relied on these face-to-face meetings until recently, when stay-at-home orders started preventing most of us from leaving the house.
Today: Tech Enables Remote Processes
Today, in a nation under lockdown, open houses are a no-go. Appraisers aren’t eager to enter strangers’ homes and in many cases may not be welcome. Neither buyers nor sellers want to meet anyone in person unless they absolutely have to.
This rapid change in circumstances has spurred an acceleration in innovation and adoption of mortgage and mortgage-adjacent technology that enables remote, borrower-directed processes. For example…
- Virtual home tours, which have been possible for years, are now replacing in-person walk-throughs in many cases. Realtor.com reports that sellers are offering live, one-on-one tours via FaceTime and similar apps and staging virtual open houses for groups with Zoom and Facebook.
- Digital appraisal apps are hitting the market. While existing solutions let homeowners self-service by scheduling a visit from the appraiser, digital appraisal technology goes a step further, letting homeowners actually take photos and upload them to a platform that lets the appraiser (who can collaborate in real time, at a distance) gather the information they need to do their work.
- E-notary services, which until recently largely required participating parties to be physically present in the same space, are now being enabled for remote notarizations, either via audio-video link, remote online notarization (RON), or similar technology. This lets buyers and sellers complete essential parts of the purchase transaction without worrying about spreading the virus.
These complement the digital processes already available on the lender’s side.
Originators and brokers powered with software that enables an end-to-end digital origination process via automated data pulls, loan comparison, product selection, and fee calculation can create underwriting-ready files from anywhere. This means that, even under stay-at-home orders, Originators and brokers can facilitate a mortgage loan to help customers achieve their dream of homeownership.
That’s crucial. Today’s reality is a reminder that the mortgage experience is only one part of the larger homebuying experience. And we’re learning that that experience is only possible when its component parts allow for flexibility when circumstances change.
The digital technology coming on the market and enjoying greater adoption since the start of stay-at-home orders is making it possible for homebuyers and sellers to self-serve and handle transactions remotely throughout the buying and selling process. This makes for a more convenient and accessible experience, which is something consumers are unlikely to want to sacrifice when the country returns to normal.
The good news is that these remote and self-serve technologies can also increase efficiency and reduce costs for vendors throughout the mortgage ecosystem.
Widespread Benefits Mean Borrowers & Sellers Will Push for a New Normal
The impact of COVID-19 is profound worldwide. While this crisis will eventually pass, it’s unrealistic to expect life to return to the old normal when it does. Inevitably, we’ll incorporate some of the practices we adopted during lockdown even when we’re able to congregate again. In the mortgage industry, borrower and seller self-service tools are bound to be among them, in part because the buyers and sellers of the future will expect the efficiency, convenience, and accessibility these tools offer.
By adopting this tech now, lenders will not only enable themselves to continue serving customers while the pandemic lasts but also position themselves to meet changed buyer and seller expectations and deliver more convenient and more efficient processes when the crisis is over.
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