Historically low mortgage interest rates, and an unprecedented pandemic, has led to rapidly increasing prices, with existing home sales projected to reach an all-time high in 2021.
For TPO lenders, the ability to scale loan volume while maintaining a low cost of origination is key. However, legacy origination systems typically involve multiple, disconnected platforms making loan origination onerous for TPOs. These platforms often lack the digital capabilities that have become second nature for consumers in nearly all aspects of their lives, from banking to shopping.
To keep pace with rapidly changing market expectations, wholesale lenders need to upgrade their origination platforms and build end-to-end ecosystems using application programming interface (API) integrations to enable TPO lenders to originate any loan that they want quickly and cost-effectively.
Originating a home loan requires an enormous amount of data to be collected from consumers, title companies, closing companies, real estate agents, insurance companies and income and expense sources. This data comes in various forms — from documents to data sets, and in different formats and modes of delivery. The complexity of this data collection and assimilation combined with intricate functions like underwriting and regulatory compliance, which varies by geography, makes the process complicated, expensive and prone to errors.
Securing a home loan is often the largest financial transaction that consumers make, and the process is at best tricky to navigate. But new borrowers expect a seamless, rapid digital experience regardless of whether a transaction is fulfilled by a TPO or lender-direct.
Build or buy?
Working with mortgage lenders leads us to recommend two distinct strategies to modernize wholesale lending platforms and positively impact user experience, scale and flexibility.
- Buy it. The fastest way to success for small- and medium-sized lenders is often to license state-of-the-art origination platforms offered by new and innovative fintech companies. These platforms have the digital capabilities that consumers and other stakeholders need to originate and even service loans, including configurable, ready-to-deploy features for point of sale (POS) and loan origination systems (LOS.) Natively designed user interfaces and system integrations offer a superior customer experience using automation and personalization to streamline the process. This approach enables speed-to-market, complete flexibility and rapid scalability, so wholesale lenders can enable TPOs to complete the end-to-end loan process using a single platform.
- Build it. For lenders with large origination volumes and mature origination systems, building modern capabilities on top of existing origination platforms will lead to more successful outcomes. Lenders need to build/integrate consumer-facing digital features into existing platforms, such as document capture and management systems. Successful wholesale lending platforms need configurable and dynamic product and pricing components that enable instant and easy access to information, such as product availability and interest rates, critical to the origination process. Infusing artificial intelligence (AI) and machine learning into these platforms accelerates transactions using automation to resolve conditions or issues and improve decision-making to get loans closed. It is important to integrate data between the customer portal, where the lender provides data, and the POS, where the TPO enters data. Tight integration enables the loan process to seamlessly go from portal to POS to LOS where the loan is closed.
Regardless of which option lenders choose, having solutions in place that offer great user experiences and can scale quickly will help reduce the cost and speed of loan origination. In our experience, upgrading wholesale lender platforms to ensure that they include easy-to-use features that consumers expect enhances experience and drives web traffic. In addition, seamless integration with home buying ecosystems such as home search portals, title and closing processes benefits both TPOs and consumers by simplifying what is an inherently complex process.
What to look for in a TPO platform
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