Mortgage executives appear to
In a survey of almost 200 senior industry leaders this year, the government-sponsored enterprise found that companies' experiences with technology service providers, or TSPs, met or exceeded expectations in most circumstances. But satisfaction and the value placed on certain tools varied greatly depending on their role in the mortgage cycle.
And despite the benefits delivered, leaders bemoaned the price of vendor tools and scarcity of choices. "In their comments, lenders expressed particular frustration with the rising cost of TSP solutions, which many believe is driven by a lack of competition," wrote Gregory Phillips and Hilary Hanel, both from Fannie Mae's digital management solutions.
Business leaders see the most value with TSPs in the early stages of the mortgage process. A loan-origination system was ranked as a must-have product by 91% of respondents, and such software was the most common vendor tool already in use at 94%. Point-of-sale systems were deemed critical by 72%, in the second spot behind LOS, and are currently in use at three-quarters of companies.
But some of the most common technology offerings were among the least likely to be considered critical tools among leaders surveyed.
Tools used to verify or validate borrower data, including assets and incomes, and credit reporting technology are in use at 87% and 84% of companies, making them the second and third most prevalent products. But while they were seen as valuable, they were considered critical must-have software by less than half of respondents at 35% and 41%, lagging several other software categories. Lenders also were less likely to see them delivering a high return on investment relative to expectations, with only 21% and 20% of executives sharing that opinion.
Similarly, appraisal technology exhibited the same trends, currently found at 83% of businesses, but only 32% calling it critical. Only 16% of companies said it brought them high ROI, the least among nine usage categories.
The divergence between the current levels of uptake for verification, credit reporting and appraisal software and where they place in importance within the home lending industry points to a difference in technology wish lists versus current development. While lenders and vendors are consistently coming up with ways to tap into artificial intelligence in the newest tech offerings, much of the growth and investment has come
When selecting technology service providers, product cost came in as the most important factor, followed by functionality and integration capabilities.
"Many of the lenders surveyed mentioned that they would like to see more competition in the TSP marketplace to help alleviate some of these costs, but they also acknowledged that the barriers to entry in the technology space are often high," Phillips and Hanel said.
Mortgage executives said there were too few technology competitors in the LOS and borrower data verification space, particularly. Some indicated that the resulting higher costs of originating loans required them to increase charges to their clients.
In the fourth quarter last year, mortgage production costs driven by increased expenses
But even if more technology providers were available, lenders surveyed by Fannie Mae said the cost of integration with a new partner may make switching too burdensome.
On the other end, POS and appraisal were two segments of the industry with enough or too many vendors, they said.
Other data from the research showed the lowest rate of technology adoption within data analytics and the eClosing space, both currently in use at less than half of mortgage companies. The two categories were also the least likely to be called critical to mortgage operations, and each delivered a high return on investment for only an approximate quarter of home lending leaders.
