“As the century closed, the world became smaller. The public rapidly gained access to new and dramatically faster communication technologies. Entrepreneurs, able to draw on unprecedented scale economies, built vast empires. Great fortunes were made. The government demanded these powerful new monopolists be held accountable under antitrust law. Every day brought forth new technological advances to which the old business model seemed no longer to apply. Yet, somehow, the basic laws of economics continued to assert themselves. Those who mastered the laws survived in the new environment. Those who did not, failed.”
 

A prophecy for the next decade?   No, you have just read a description from Carl Shapiro and Hal Varian’s book “ Information Rules ” of what happened a hundred years ago when the twentieth century industrial giants emerged. It is a powerful reminder that technology may change, but simple underlying business and economic rules do not.

Here at the beginning of our own new century, mortgage originators are bombarded with claims of “revolution” and “change”. The future is here; the time is now…but does the product really live up to all the hype? Brokers and consumers will be the ultimate judges. Although even skeptics cannot deny the powerful change technology has brought and will continue to bring to our industry.

So how can we, as mortgage brokers, benefit from this transformational technology? The answer is simple: we must harness the power of technology to gain a competitive edge. Those who do, will succeed, and those who do not will fail.

Opportunity means increased profit

The old platform, or traditional method, required manuals, rate sheets, approval forms, log sheets, and a variety of other time constraints that extended service turnaround to hours if not days. But the old way of doing business is increasingly threatened by new technology like ours. Brokers and lenders using the new technology-based platforms are increasingly more efficient. They are able to save time and money for themselves and their customers.   More time means more business.   More business means more profit.
 

Industry slow to adapt

However, although we started out at a slower pace, our industry is quickly catching up. A variety of technology platforms are now available to brokers.   Yet, despite the array of options available, many brokers are hesitant to change their traditional ways. Fear of technology, high software costs, hesitation to change existing lender relationships – I’ve heard all the excuses. But hesitators be warned, as the old platform gives way to the new, the ability for brokers to “catch up” is quickly diminishing.   Net branching presents the ideal opportunity for brokers to catch up- quickly, inexpensively, and smartly.

By becoming a net branch, the broker has an opportunity to align with a larger, established organization. Benefits such as health insurance, retirement planning, accounting, payroll management, corporate discounts, customer service, eliminate many of the headaches faced by the characteristic small business owner. Yet, the net branch operator enjoys both the support of a large established organization and the freedom to run their own business.

This new automated platform is what will, indeed, revolutionize the mortgage business as we know it. The efficiencies that new technology is bringing to our industry means that mortgage originators using technology will gain a competitive edge over those that do not. While consumers can sort through hundreds of lenders’ offerings via consumer-focused Web sites, many brokers are still processing most of this data manually. The cumulative effect is that brokers who do not grasp these new opportunities are at risk of becoming extinct.
 

What the future holds

The passing of the e-signature bill was one step of many that are needed to revolutionize this industry. The speed of electronic data transmission and the universal medium of the Internet have combined to exchange data and information at a pace that was once inconceivable. In a matter of seconds, one person can now perform tasks that previously took eight different people several weeks to accomplish.

When associated businesses like city governments and title companies can deliver the same improvements, the entire industry and the dynamics associated with it will change.   At that point, we should be able to make phenomenal reductions in the transaction costs of buying a home. I envision that we will be able to reduce the transactional cost of buying a home by 30-40 percent and the turn-around time by 80 percent.

The efficiency and accuracy the Internet provides us will soon allow us the ability to approve customers in a matter of minutes. Eventually, our systems will be able to validate 90 percent of all information on a loan application, reducing inaccuracies so prevalent in our industry today.
 

Benefits for the net branch

Technology will also allow net branches to grow at a faster pace. The far-reaching capabilities of the Internet will enable us to expand customer reach and satisfaction to areas traditionally under-served. It will now be much easier to open low cost branches to serve inner city and remote locations for FHA loans.
 
 

Overall, brokers aligned with a net branch using a Web-based technology platform will benefit through increased efficiency, the ability to offer better customer service, realization of higher margins, and the capability to serve a broader market. Technology simply enables us to take advantage of a principle that makes good economic sense – offer better service at a lower cost to gain a competitive edge.

The future is here; the time is now for the mortgage industry and net branching. Those who take advantage of technology will not only survive- they will thrive in the new environment.

Andrew Warrick is President of Production at HomeLoan.com, Inc. and is responsible for developing and expanding iNet branches as well as all retail production. He brings over 17 years of mortgage banking experience to the company.   Andrew may be reached at www.homeloan.net or awarrick@homeloan.com , or 972-398-7772.