The Future of the Mortgage Industry: A Fintech Newscast Interview

We recently joined the hosts of Fintech Newscast to discuss where the mortgage industry stands today -- in our 2021 post-COVID world -- and what lies ahead. Anyone who has purchased a home knows that the entire process has been stuck in the stone ages, with endless stacks of paperwork and incredible amounts of wasted time. COVID exacerbated this even further, with in-person meetings and signings still required in most situations.

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There are dozens of industries that have seen a digital transformation over the past two decades. But thanks to outmoded regulations and a lack of innovation in the mortgage and loan industries, that has been nearly non-existent in real estate transactions (until now!). There is a notion in the industry that digitizing loans and mortgages is somehow less secure than the current process, which includes burdensome face-to-face meetings, numerous piles of paperwork, and unsecured emails to multiple people containing personal information.

In this post, we'll bust the myth surrounding the security of digital transactions, highlight the impact of COVID-19 on mortgage servicing, and discuss how Stavvy plans to disrupt the mortgage industry.

Myth Busting: Security, Fraud, and Compliance

There is still a pervasive myth that digitizing complex processes like mortgage transactions is inherently less safe than an “old school,” pen-and-paper approach. The truth is that, when done correctly, a paperless, digital transaction is far and away more secure. Easy access to historical data, video recordings, completely secure file transfers, full legal compliance -- these are all benefits that can only be realized with a purpose-built digital platform.

Today, lenders are sending enormous amounts of personal information to title companies and settlement agents in unsafe ways, potentially exposing clients’ sensitive information and opening the opportunity for fraud. For example, when a buyer is going through a mortgage transaction, the title company is communicating with an appraiser, a loan officer, someone in loan processing, and multiple other parties. Each department or contact is communicating in different ways (and with varying levels of security) and sensitive personal information is being shared through multiple contacts and emails. This leaves the buyer, along with anyone else involved in the transaction, exposed on multiple fronts and susceptible to fraud.

To solve these problems and prevent potential exposures of personal data, security has been the number one priority as we’ve built the Stavvy platform. We require two factor authentication, which verifies that a login attempt is legitimate. We store full video recordings of every transaction for easy reference for 10+ years, whether that’s 3 days or 3 years later. We enable banking professionals to pull up any document related to a transaction, reducing paperwork errors and saving the effort of coordination between different parties. This makes it inherently harder for fraudulent activity to occur and ensures personal information is safe in one centralized place, and accessible remotely.

The Impact of COVID-19 on Mortgage Servicing

Remote access has proved an invaluable asset during the COVID-19 pandemic, and, we think, will represent a flashpoint for the industry and regulations to more broadly enable fully digital transactions. In the midst of the pandemic, when meeting in-person was either infeasible or impossible for most consumers, Stavvy partnered with Flagstar Bank to provide remote loan modification services to their customers.

With Stavvy’s digital technology, customers are able to seek relief with their mortgage payments while also reducing errors in the signing process. Stavvy’s platform also enables FlagStar bank to walk customers through their loss mitigation process during difficult times brought on by the pandemic. What would usually be a 30 to 40 day process of sending a consumer a paper package with little post-it notes to sign here and date there, quickly became a process that takes roughly 24 hours. We’re looking forward to expanding this relationship and working with other banks and loan servicers to make consumers’ lives easier.

Crawl, Walk, Run: Disrupting the Mortgage Industry Requires the Right Approach

While the benefits of digitizing transactions were seen throughout the pandemic, the industry is still hesitant to shy away from their paper processes. Many banks and insurance companies have been slow to adopt new technologies and accept e-signatures. This is not surprising -- with the amount of capital involved with mortgage transactions, the heavy regulations around every step of the process, and the number of parties involved necessitates a purposeful approach.

At Stavvy, we view “incremental innovation” as the key. We can’t flip a switch and instantly digitize this type of transaction. We are working with industry leaders to teach them to crawl before they can walk, and then walk before they can run.

Where Stavvy is Going as a Company

The future is bright for Stavvy with our recent funding announcement and partnership with Flagstar. This past May, we announced a $40 million Series A funding round that will be used to expand the company’s aggressive hiring initiative to accelerate growth in digital solutions for banking and lending. This funding sets us up on the path to achieve our goal by expanding our team and building the technology necessary for a digital transformation. We are dedicated to modernizing this entire process and making life’s most important moments accessible to everyone.