Antifragile: Surviving vs. Thriving as a Mortgage Lender in the Digital Mortgage Era

If the last few months have taught folks in the mortgage lending industry anything, it is that change happens fast. 

Lenders were hit with an unprecedented set of circumstances which forced them to adapt, QUICKLY.

Rewind to January when mortgage lenders were grappling with how best to take advantage of low rates and a strong job market. Now, some lenders are barely staying afloat and just focusing on riding it out and surviving. There are a lot of factors that contribute to whether a lender is going to thrive or just survive, and I’m sure there have been a ton of “hindsight is 20/20” conversations happening, but how can the industry actually use this event to improve outcomes moving forward?

Setting yourself up for success starts with making your organization antifragile.

Coined by author Nassim Nicholas Taleb, Antifragility is a “property of systems that increase in capability to thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures.” 

What this means is that stress (change) makes you better not worse. Just like when we lift weights and damage our muscles to eventually build them stronger.

We’ve seen this happening in spades over the past few months. The mortgage lenders who could handle the stress, and keep loans moving despite the challenges of Covid-19, were actually able to win more business and GAIN market share, not lose it. Borrowers who have been pursuing a loan with a lender who couldn’t adapt (i.e. the loan is stuck in their pipeline), will likely switch to a lender where the loans are moving more efficiently.

Lenders that were already investing in a digital mortgage experience across the entire organization and partnering with modern technology vendors could react with more confidence and speed, compared to lenders that had never even experimented with digital closings before, for example.

Reggora has also seen this play out within the appraisal space. We’ve found that our clients who have embraced tech and innovation have thrived compared to lenders who are still stuck using legacy platforms that can’t adapt to the changing situation as quickly. Reggora was able to accommodate the Covid-19 related appraisal flexibilities and had a virtual inspection tool ready to go right away to reflect the new demands created by social distancing. Our customers’ pipelines didn’t get clogged up from appraisals, and one lender who had implemented right before the pandemic said, “We could not have added Reggora at a better time with the refi boom. It was amazing. I don’t know if we could have gotten all of the orders in and accepted without it.”

Lesson learned right? 

Unfortunately (or fortunately) this isn’t a “ you live and you learn” type of scenario, it’s really just getting started. If anything, Covid-19 has accelerated the Digital Mortgage transformation and has made technology changes more important than ever. 

First we saw remote online notarization legislation get expedited, and now the genie is out of the bottle.

I can pretty confidently say that we are going to see a dramatic acceleration in appraisal modernization over the next few years. This is probably true across the industry as well as in other segments. 

Over the next 2-3 years (and maybe even sooner) there is going to be a clear differentiation between the Thrivers (lenders who work with the best in class, agile, modern technology providers) and the Survivors (those who work with big legacy vendors and let inertia stifle their customer journey). 

No one knows exactly what the future is going to look like, but by making your organization antifragile through working with agile partners, any lender can Thrive in the digital mortgage era.

Are your vendors continuously improving their product?

Do you trust them to have the vision and capacity to keep up with the future of mortgage?

Will they still be around when the future is here?

These are the questions that the Thrivers sleep well with at night, knowing that the answer is yes.

Want to see how the digital mortgage can benefit your firm? Download our white paper on the path to appraisal modernization to see how we got here, where we're going, and the benefits in store for lenders.