As a mortgage lender, you know that collecting appraisal fees can be challenging. You also understand that many borrowers are reluctant to pay by check or money order, preferring the convenience of using a credit card and paying online in today's digital world. So what's the best way to accept credit cards for appraisal payments at such a critical juncture in the mortgage process?
There are a few things to remember when accepting credit cards for appraisal fees. Let's dig into it.
First, you need to make sure you're using a secure payment gateway with point-to-point encryption (P2PE) to process credit cards. This maximizes security to minimize PCI scope.
Next, you need to audit your team's process. For example, are they collecting information over the phone and writing down the plain text credit card details onto pieces of paper - or storing the credit card information in a file within the eFolder or some other electronic document? These processes are compliance and data security red flags.
To enhance security, you want to ensure that you have a solution in place that will allow your borrowers to enter their own credit card information into a secure web page. By doing this, you can successfully collect the payment without ever having to possess their credit card details. Some payment solutions like PayPal offer a secure checkout page that you can link to from your website, allowing your customers to enter their credit card information and how much they would like to pay.
The challenge with this approach is that you rely on your customers to enter the correct dollar amount, and there is no integration with your core systems, creating an accounting and processing nightmare. And you can forget about this approach if you are originating in a state that requires using separate trust accounts to hold appraisal fees - it becomes nearly impossible to accurately perform the correct accounting without placing a heavy burden on your operations staff.
Something as simple as "accepting credit cards" quickly becomes a complex problem that needs to be well thought out to provide security, compliance, user experience, and processing efficiency.
So how do mature mortgage lenders handle the nuances of effectively and securely processing credit card appraisal payments?
These lenders either create or implement solutions that accomplish all five of these points:
SECURITY
- Protection for every transaction with secure tokenization of credit card payment details.
PROCESSING EFFICIENCY
- Has an API integration with their core Loan Origination System for borrower contact details, correct appraisal fee amounts, and automated receipt uploading.
USER EXPERIENCE
- Provides easy-to-use, one-time use links to the borrower to pay using either email or SMS.
REPORTING
- Delivers transaction-level reporting details that can be consumed by downstream business intelligence platforms.
ACCOUNTING
- Utilize a payment processor that supports using multiple accounts - an operating account and a trust account to hold appraisal payments to be paid to the appraiser.
Once you're ready to begin your credit card collection journey, be sure that your solution touches on the five best practices above - Security, Processing Efficiency, User Experience, and Accounting. Recognizing these points early in the process will make collecting your mortgage appraisals (and other upfront fees) much more manageable, and your investment in process change sustainable for the long term.
How LenderLogix Can Help
If you're looking to adopt a platform that meets the above needs, our Fee Chaser solution is worth checking out. Lending institutions that use Fee Chaser receive 94% of their payments within 24 hours and 60% within 5 minutes and claim to save anywhere from 15-20 minutes per file in operational time.
