Many people consider buying a home to be one of the biggest financial commitments they will ever make. There are many different steps involved in the mortgage process including planning, disclosing financial information, submitting documents to your lender, and having ongoing communication between you (the borrower) and your lender. Because of this, having trust with lenders is important to provide consumers with confidence in their lending experience.
Recent events involving the investigation of the Plaza Home Mortgage data breach have brought further light onto the importance of trust and information management in the mortgage industry. Although each situation will be unique to the individuals involved, the impact of issues related to financial institutions generates more discussion around trust, transparency, customer confidence, and how sensitive information should be handled in a responsible manner.
As part of applying for a mortgage, individuals must provide a significant amount of personal and financial information to the lender. Lenders utilize this data to analyze mortgage applications, authenticate your ID, determine an applicant’s credit worthiness and establish eligibility for the numerous loan programs that may be available to you.
The Information Required During Mortgage Applications
Often, mortgage companies require documents that allow them to assess the borrower’s financial situation.
In addition, depending on which loan program you’re applying for, they’ll request:
- Employment Information
- Income Verification
- Tax Returns
- Bank Statements
- ID
- Credit Report
- Real Estate documents related to any property they are using as collateral.
The above-mentioned documents will usually contain sensitive personal and financial information; therefore, borrowers expect lenders to appropriately protect the privacy of all the documents collected during the application process (see below).
How Transparency Improves Borrowers' Experience
Applying for a home mortgage can be confusing – especially for those who are doing it for the first time. Clear communication from lenders during the mortgage application process will help alleviate some of the anxiety associated with applying for a home loan / mortgage.
Examples of transparent communication from lenders could include:
1. Clearly explain the loan features/terms
2. Provide regular communication updates throughout the mortgage application process
3. Identify all lender's fees and closing costs
4. Answer borrower questions in a timely manner
5. Provide educational resources regarding mortgage options
When borrowers know what to expect, they will be more prepared to make good financial decisions.
The Importance of Long Term Customer Relationships
Most people don’t apply for a mortgage and then never contact the lender after closing – it is common for borrowers to maintain a relationship with the lender over time through:
- loan servicing,
- refinancing,
- future purchases of other homes.
Due to these long-term, ongoing relationships, many lenders invest the time to build long-term, trusting, respectful relationships with borrowers through consistent service, accountability, and customer service.
With that being said, customers generally appreciate lenders who are:
- Professional
- Dependable
- Accessible
- Transparent
- Committed to Customer Service
Technology's Growing Role in Mortgage Lending
Lately, digital transformation in the mortgage market has been overwhelming. Many mortgage lenders are currently offering online applications, the ability to upload documents digitally, electronic signatures, and every mortgage lender now has a customer portal to help expedite the mortgage process for their borrowers.
These different technologies sometimes help eliminate a lot of inefficiencies between all parties involved in the mortgage process, and they also allow borrowers to easily monitor the status of their mortgage application and communicate with their respective loan officers.
However, with this increased use of digital solutions also comes an increased awareness about the need to manage sensitive information responsibly and maintain customer trust when using online solutions.
What Is Next?
As technology continues to change the mortgage industry, we can all assume that when evaluating a mortgage provider, consumers will continue to emphasize the importance of trust, convenience, and transparency. In exploring efficient digital solutions to fulfill their borrowing needs, there is reasonable evidence that borrowers will also expect that the handling of their personal and confidential information will be done appropriately.
Companies that are successful at communicating effectively with their customers and educating them throughout the process of the mortgage transaction and being a responsible steward of their private and confidential information typically find themselves in a position to build long-lasting relationships with their respective borrowers.
Ultimately, trust will continue to be one of the most valuable assets owned by all parties involved with mortgage lending. No matter if an individual is purchasing their first home, refinancing their current mortgage, or making a future investment with the mortgage industry, a borrower’s confidence in the mortgage process will continue to heavily impact their respective customer experience.
