Mortgage lending is the provision of loans for real estate properties such as a house, commercial land, or a plot of land. In this arrangement, the borrower pays the lender in a series of regular payments, divided into principal and interest. In case the borrower fails to pay back the whole amount, the lenders hold the legal right to reclaim the property.
What makes Mortgage Lending better than a Home Loan?
Mortgage lending has a longer loan period, providing borrowers significant time to make payments. It is more secure than a home loan as it is backed by collateral. The security is attributed to stringent formalities and intensive documentation process. Furthermore, customers have the flexibility to choose from the different forms of mortgages available. In addition, mortgages offer the convenience of transferring Loan Against Property balance to another lender, to avail improved interest rates and terms.
Technologies leading in the Mortgage Lending Industry:
- Robotic Process Automation (RPA): This technology involves the allocation of robots for performing repetitive and time-consuming tasks such asfeeding the data into the system and auditing loan documents. This automation is beneficial as it enhances the accuracy of work, increases productivity, and leads to cost reduction.
- Mortgage Industry Cloud Platforms: This is a new category designed on the existing foundation of cloud services, to unite different services in one platform. The services are established as per the standards of the mortgage lending industry. This cloud platform prevents the migration of existing deployments to different data centers. Furthermore, the platform is gaining popularity as it streamlines the procedures of different industry partners.
- IDAs and Chatbots: Chatbots and Intelligent Digital Assistants (IDA)are expected to be one of the most impactful trends in the industry in the future. It makes use of natural language processing (NLP), which simulates meaningful human conversations and escalates the queries of the borrowers to the associated agents. Artificial intelligence (AI) comes into play in this technology.
- Assimilation of NFTs and blockchain: Non-fungible Tokens (NFTs) are a new wave in the mortgage lending industry. As they are unique identifiers and are non-transferrable, they offer a high level of security. Furthermore, the threat of frauds or manipulation is minimized with the support of blockchain. Tokenizing of mortgage increases the liquidity of assets and reduces the expenses of borrowers.
Analysis of the Competitive Landscape of the Industry:
Leading players in the mortgage lending industry have adopted several strategies to sustain the competitive landscape. These strategies include new product launches, mergers, partnerships, and collaborations. The major launches and acquisitions in the industry are:
- Temenos introduces an AI-powered Digital Mortgage solution for Rapid Lending
On May 2023, Temenos AG, a Switzerland-based banking software company, introduced a fully integrated mortgage solution. It consists of a smart decision engine, which is regulated by Explainable AI. The solution is known to lower the prevalence of delinquencies for lenders due to automated workflow. - AnnieMac acquires mortgage provider OVM Financial
AnnieMac Home Mortgage, a dba of American Neighborhood Mortgage Acceptance Company, LLC acquired Virginia-based OVM Financial on June 2023 to extend its presence in mid-Atlantic US. - Infosys and Better collaborate to launch AI-based Digital Mortgage White-labelled Platform
Infosys, an Indian IT MNC, collaborated with Better Home & Financing Holding Company, a New York based homeownership company on November 2023. The companies launched Mortgage as a Service (MaaS) to help the banks offer their customers hassle-free digital mortgage. This platform is considered to revolutionize the mortgage operations of banks and credit unions. - Ocrolus launches a Mortgage Dashboard
Ocrolus is a leader of document automation platform, which announced the launch of an elaborate dashboard for mortgage lending on September 2023. The dashboard holds the ability to automate income calculations for self-employed and traditional borrowers. This is anticipated to boost the lending decisions and reduce human errors. - Newrez forms Partnership with Georgia Legacy Group and Announces a new Joint Venture
On October 2023, Newrez LLC, a New York based mortgage servicer launched a new joint venture ‘Onward Home Mortgage’ in partnership with Georgia Legacy Group (GLG) of Keller Williams. This venture offers distinguished residential purchase mortgage lending services.
In conclusion, companies in the mortgage lending industry are poised to benefit from numerous technological advancements. These developments are boosting the efficiency of operations and smart digitalization of mortgage platforms are enabling their expansion on a global level. Furthermore, the AI-based applications are projected to drive the repetitive tasks, making the lending process quick and accurate.
Short Description:
The mortgage lending industry is a rapidly transforming sector, witnessing a shift from paperwork to digitalization &automation. The assimilation of technologies such as AI, blockchain, and data analytics holds the potential to transform the lending process. Furthermore, the long tenor and high security of mortgage is attracting customers, thereby propelling the need for developments. This, in turn, also helps ease the process.
Author’s Bio: Harshada Dive is a computer engineer by qualification. She has worked as a customer service associate for several years. As an Associate Content Writer, she loves to experiment with trending topics and develop her unique writing skills. When Harshada’s not writing, she likes gardening and listening to motivational podcasts.
