March/April 2024 Edition

United In The Cloud: Creating A More Complete Borrower Journey

There’s something about bridges that captures the imagination. After all, a bridge is more than a physical structure. Ultimately, it’s a means of connecting people, communities and ideas. Unfortunately, the mortgage industry is where Isaac Newton’s famous quote too often rings true: “We build too many walls and not enough bridges.”

For lenders that retain their own loans, there are few walls bigger than the one that separates the origination and servicing sides of their business. However, a new type of bridge promises to obliterate this wall for good. And you won’t find it on land or sea, but in the cloud.

The Need for Cohesion

For most lender-servicers, the journey from origination to servicing is already a fragmented one. Traditionally, each business functioned as separate entities, each with its own data, processes, and customer interactions. This lack of cohesion not only complicates internal operations, but also detracts from the borrower’s experience, creating hurdles in a path that should ideally be seamless for the consumer.

A significant contributor to these challenges is the longstanding divide between legacy origination and servicing technology. Firms developed most of these solutions before the advent of cloud computing, so they are very difficult to integrate. Certainly, there have been efforts to bridge this gap by incorporating servicing functions into LOS software—and vice versa. Yet these attempts typically fall short due to the limitations of outdated software.

Therein lies the wall, which keeps borrowers from receiving a smooth, consistent journey between the time they apply for a mortgage and pay it off, and keeps organizations from realizing their full potential. It’s a major reason why costs for both originating and servicing loans have continued to rise, as evidenced by the MBA’s independent mortgage banker surveys. And these costs are likely to increase further, given looming uncertainty in the housing market.

With interest rates predicted to decrease by the end of the year, the potential for increased refinancing activity could lead to early payoffs as well as capacity issues for first mortgages. Meanwhile, the recent rise in early-stage loan delinquencies is slowly making the job of assisting distressed borrowers a costly affair. Yet, with the advent of new cloud-native technologies, a better way is finally emerging.

A New Path Comes to Light

In recent years, digital mortgage technologies built expressly in the cloud have revolutionized the mortgage landscape. With minimal IT investment, mortgage lenders, banks and credit unions have automated dozens of loan origination functions and provided borrowers with a smoother application process. And now, the same type of technology is being offered for mortgage servicing functions through the same cloud ecosystem—thus creating our metaphorical bridge.

This means lenders now have access to integrated platforms that automate both origination and servicing functions while providing a seamless flow of data between both operations. This newfound unity also creates a consolidated source of truth, empowering lenders to harness origination data to refine the servicing phase and have greater influence over the collective customer journey.

The benefits of this unified approach are manifold. Lenders can now onboard loans to their servicing portfolios much faster and more seamlessly. Advanced document management tools and customizable borrower portals provide consumers a more personalized touch, reinforcing the lender-borrower relationship. The transition to such cloud-based ecosystems also democratizes digital technology within the industry by enabling community banks, IMBs, and credit unions, once constrained by resource limitations, to retain and service loans, and deepen their customer relationships.

The essence of this digital bridge lies in cloud-native architecture, which is characterized by its adaptability and scalability. By leveraging this architecture, lenders can respond dynamically to market fluctuations and borrower needs, ensuring that their operations are as resilient as they are efficient. And by adopting both point-of-sale, loan production and servicing technology in the same cloud environment, lenders can automate a plethora of tasks, reduce manual labor, and focus on value-added interactions with borrowers. Until recently, however, this type of innovation existed only in theory—until we built it ourselves.

Creating Our Own Blueprint

Earlier this year, we launched the Blue Sage Digital Servicing Platform, an interim servicing solution that enables lenders to seamlessly onboard loans for servicing after closing them. While the platform was built in the same cloud environment as our Digital Lending Platform, the Digital Servicing Platform is LOS-agnostic—meaning lenders can adopt it no matter what loan origination system they use. This ensures that lenders, irrespective of their current technology stack, can harness the platform’s capabilities to enhance their servicing operations. Its API-driven architecture promotes a fluid exchange of data, allowing for real-time updates, consistent information flow throughout the loan process, and enhanced process efficiency.

When combined with our LOS and our other solutions, however, the Digital Servicing Platform shows how a unified ecosystem can efficiently bridge the origination and servicing phases and set new standards of performance for the industry. By leveraging the same reliable and advanced technology that characterizes all Blue Sage products, it also delivers a modern, browser-accessible system that enhances the experience for both lenders and borrowers, while safeguarding compliance across all state and federal regulatory levels.

We’re also currently developing a full servicing version of the Digital Servicing Platform that will include additional features, including investor reporting and default management, ensuring our system evolves in tandem with lenders’ growing demands and the ever-changing industry landscape. Even in its initial form, however, the platform shows how lender-services no longer need to rely on disparate systems for different sides of their business. Instead, they can opt for a cohesive, all-encompassing approach that streamlines operations, enhances compliance, and ultimately creates more satisfied borrowers.

As the mortgage industry continues to evolve, digital, cloud-native platforms like the Digital Servicing Platform are certain to play a crucial role in shaping its trajectory. By breaking down walls and fostering more interconnected, efficient, and borrower-centric mortgage processes, they enable lenders to not just adapt to change but to drive it, crafting a bridge to a mortgage banking future that is as innovative as it is resilient.