PERSON OF THE WEEK: Timothy Stern is president of VidVerify, a company that aims to make video a part of the mortgage process. MortgageOrb recently interviewed Stern to learn more about how incorporating video into the mortgage process can help improve borrower understanding while helping mortgage lenders maintain compliance.
Q: What are the advantages of making video a standard part of the mortgage process?
Stern: First, mortgage companies can standardize what is communicated to the borrower and be confident that the customer is getting the information he needs. Second, it simplifies the process for both the mortgage company and the borrowers. No more relying on complicated, confusing disclosures. Borrowers can get their disclosures and then follow along with a video that explains what they are looking at. Third, in the event of a dispute in which a borrower claims he wasn't told key information about his loan, the mortgage company has a full audit trail and evidence of what was said, when it was said and how it was said.
Q: Would you say that video content, if done well, actually helps borrowers understand the mortgage process better than if they read disclosures and other documents? Does it aid in comprehension? Would you say that video content is, in general, complementary to the other types of borrower education?
Stern: No question video is superior to written disclosures alone. The mortgage process is complicated. Borrowers will go through the mortgage process only a few times in their lives, so they shouldn't be expected to understand the details. Studies show that comprehension is vastly improved by using video over solely written explanations, and it is a very useful tool in conjunction with person-to-person communication.
Q: Tell us how your company goes about producing its videos. Is it, in effect, a library of videos, each geared for a different loan product? How long are the videos, and what are the production values? Who develops the content, and how do you test it?
Stern: We take great pride in the content and production of our videos. We worked with leading law firms and compliance professionals to develop the content. All of our videos have been fully vetted and approved by legal counsel for compliance. We used professional actors and production staff to ensure a quality viewing experience.
The videos vary in length from 30 seconds to around five minutes. On average, they run around two minutes. We know the average attention span is no longer than five minutes, so we want to keep them short. We also have functionality that allows the loan officer to send custom videos, so they can offer specific details or answer questions for each unique borrower. Importantly, before the video is sent to the borrower, it can be reviewed and approved by the compliance department.
Q: Does the video content need to be updated as regulations, policies and processes change?
Stern: No question. We are putting the finishing touches on our new TILA-RESPA Integrated Disclosure videos to replace the current good faith estimate, truth in lending and closing videos. We stay in touch with all of the changes in the regulatory environment to ensure we keep our library updated. We also know that products will evolve, and we will update our product library as new products are introduced.
Q: How do you verify that a borrower has watched a video? What about the fact that borrowers can simply click ‘play’ and then walk away from the video?
Stern: Our site is secured with individual usernames and passwords – so we know when borrowers log in and what they do when they are on the system. Although a video must be watched in its entirety to move from the ‘essential videos’ section to the ‘viewed videos’ section, behind the scenes we are monitoring everything borrowers do, including when they watch only a portion of a video.
Our reporting feature gives the mortgage company insight into exactly what each borrower has watched. Regarding the "walk the dog" issue when a borrower will click play and then go and walk the dog without watching the video, we have to remember that the borrowers have a responsibility to learn critical information. It would be hard for a borrower to argue that he wasn't told something when he actively tried to avoid learning it.
Q: How are you getting lenders to realize that video is a better way of educating millennials and future borrowers about the mortgage process? How has the uptake been so far?
Stern: Millennials are doing a good job of helping lenders realize this themselves. Millennials want information in non-traditional ways – when they want it and how they want it – and that is what mortgage companies are having a difficult time adjusting to. Fortunately, we have seen a great response from mortgage companies, consumers and regulators about what we are doing.