Three years after the financial meltdown, housing prices are still in free fall while foreclosures keep rising. Many American homeowners, burned by the home-buying system, are defaulting on their mortgages, taking the hit to their credit rating and walking away from homes that may have lost more than two-thirds of their value.
So, how did we get here? No matter where you put the blame–whether it’s on the banks, mortgage brokers, or buyers–part of the problem is the whole home-buying process. It’s complex, confusing, and emotionally overwhelming.
But buying a home doesn’t have to be so hard. Last December, the newly formed Consumer Financial Protection Bureau (CFPB) and its new head, Elizabeth Warren, decided they would try to make things easier.
Drawing together experts from behavioral economics, public policy, linguistics, and design, the CFPB held a symposium focused on redesigning the mortgage disclosure form (MDF). Along with other innovation firms, they invited Continuum, to take up the challenge of making an easier-to-use version of the document that banks use to communicate to prospective home buyers the terms of their mortgages.
For those of us who were designers in the room, this was a dream come true: Here was a chance to remake a tool that plays a vital role in the lives of hundreds of thousands of people every year. But what happened that day turned out to be much more than streamlining a critical form in the home-buying process. Even much more than the redesign of a vital “touch point” within the larger “user experience.” What happened was that the symposium’s attendees discovered just how radical a solution Design Thinking could offer–not only to the problem of a broken mortgage process, but to public policy at its highest levels.
Getting the Basics Right
Before showing up for the symposium, the Continuum team tackled the homework that each of the attendees had been assigned: to design a shopping form for individuals to select the right loan.
It didn’t take long for us to identify a set of design principles that would make the form significantly more usable:
Speak the language that people understand: Translate financial units and concepts into terms that click with the consumer’s mental model.
Keep vocabulary clear and consistent: Make sure your words mean the same thing in every place they appear.
Pare down to the data that matters: Cut out the information aimed at the bank; leave in only what the consumer needs.
Make it easy to grasp: Use engaging visual cues that can shortcut the process of understanding.
But we soon realized that the look of the form was a small part of what mattered–and that a graphic redesign would only take us so far. So we stepped back from the form itself to see better the situation surrounding it–aiming to understand the part the form plays in the dynamic of people’s lives.
What we discovered was that people can only make a wise decision about mortgages by holding their loan offers next to a clear view of their budget. So we incorporated this side-by-side perspective into the form–by adding a simplified calculator with inputs for monthly income and expenses and an output that compared the different loan offers in an easy-to-read affordability index.
Fixing the Bigger Problem
“You just don’t interact with the form that much; it’s a back-of-house document trying to become a front-of-house document; banks and lawyers understand it but regular people don’t.”–Ken, areal-estate lawyer
We brought the same approach to the conference, where the challenge on the table was redesigning the Mortgage Disclosure Form (MDF). As we moved deeper into the home-buying process, we started thinking in terms of a more fundamental overhaul: designing not only for the actual situation in which people use the form’s information, but for the drama which surrounds that scene. We needed to design the form for the sequence of moves that comes before and after applying for the mortgage and the emotional trajectory that people ride as they travel through it.
In other words, we recognized that we had in front of us a service design problem posing as a graphic design problem. A real solution would need to take account of the whole system of interactions in which the form played just a small part.
Streamlining the Surface; Redesigning the System
To tackle this deeper level of redesign, we zoomed out to see the ecosystem of interacting pressures and players that surrounds the MDF. We interviewed real estate brokers, lawyers and, of course, a number of people who had recently received a mortgage or refinanced their homes.
In the language of service design, we “mapped the customer journey”–aiming to capture the choreography that people travel as they move back and forth among a range of partners. As we looked more closely, we found that the actual process of getting a mortgage looks nothing like the straight line assumed by the step-by-step tools currently available to home buyers.
People often start with house hunting instead of budgeting; they fall in love with a home and then talk to a mortgage broker; they compare loans, put together a budget, and realize they can’t afford their dream home and start house hunting all over again with a better idea of what they can afford. And weaving through this network is a web of high-voltage emotions: familial obligations, attitudes, and values both explicit and deeply buried. It wasn’t just a functional problem we had to solve; we needed to take into account a mess of emotion and anxiety that rarely has anything to do with what’s rational.
These undercurrents of emotions were what we had to understand if we were going to redesign the MDF so it “clicked”–so that it integrated into the way people really behave and plugged into the motivations that power them through their ordinary days. We didn’t want to design a form that would be perfect in the abstract. We wanted to make one that would actually work inside the real lives of real people. In other words, we had to understand the shape of people’s needs in order to make the new MDF fit them.
As we expected, the stress levels involved in home buying matched the size of the price tag, which is several orders of magnitude bigger than any ordinary purchase. What surprised us was the discovery that the closing is not the most stressful point in the process. In fact, stress typically plateaus while buyers are waiting for the closing, so by the time they get to the MDF there’s not much left to worry about.
“They asked for another check four days before closing….It was like being pregnant–no way to back out now.”–Bryant, a first-time homebuyer
By stepping back from the original problem we had been given–redesigning the form–we started to understand how the moment of receiving the MDF fit within a much larger, much more complex array of interacting elements. And the kind of solution began to look less like improving typography and color and more like helping people make sense of all these elements in the context of their day-to-day lives.
From this perspective, a new set of design principles emerged:
1. Right Information
Focus on key information that is relevant to individuals and fits in the context of their day-to-day lives.
2. Right Timing
Make sure people get information when they can use it.
Introduce key components early, so that buyers will understand what they need to know before they’re too stressed out to make sense of new information.
Stage information delivery to fit the rhythm of their day-to-day.
3. Trusted Guides
Take some of the decision-making out of the buyers’ hands, and shift it to sources they can rely on.
Create the right context for human interactions.
Designing the Future
The challenge we had been given–get the look of the form right–had turned into something very different: get the story of the home buyer right. To solve the problem at this deeper level, we would need to remake the users’ experience, so that people could move smoothly, calmly, and wisely through each of the moments that make up the home-buying process.
Seen from a service design perspective, the mortgage process reveals itself to be much more than a simple transfer of information from bank to buyer. It’s a drama–a sequence of interactions between various players, each acting within specific scenarios and for particular reasons that gives each of these interactions its own emotional tenor. Within this context, the mortgage disclosure form is almost like a prop and the only way to remake it is to first understand what function it’s being used for. We need to understand what happens before and after it, to give the form its correct context.
This kind of reframing, this habit of stepping back to see the human context of a problem, needs to become a regular habit as we reimagine human systems. If we’re going to “win the future”–and take up President Obama’s challenge to out-innovate the rest of the world–we’ll need to move beyond a use of design to handle aesthetic problems and tap into the power of design to solve for meaning.
The symposium took place at the Treasury on December 6, 2010. Continuum participated in the second panel “Communications in Context” and also facilitated a discussion in the last session around designing a Shopping Form. The symposium’s focus was to inform the creation of a new integrated form that combines the Good Faith Estimate (from HUD) and the TIL disclosure (from the Federal Reserve Board). However, the symposium was not solely focused on the forms, but on the wider concepts we should consider as we approach integration of the forms and improving them so they are meaningful to consumers. The CFPB is currently working on the integration of the forms.