Mortgage lenders everywhere are upgrading to e-mortgage capabilities, which means they are moving away from the traditional paper-based processes of the past and converting over to all-digital processes.
That means lenders are increasingly investing in new technologies – for example, many now have online portals through which borrowers can learn about the mortgage process, shop for the best loan, submit an application and, in most cases, learn whether they are pre-approved in just a matter of minutes or hours. Facilitating this “instant” pre-approval process are advanced technologies, including automated underwriting and automated income and asset verification.
Mortgage lenders are investing in these new technologies because they know that today’s younger home buyers want a fast and simple online mortgage experience, regardless of which device they are using.
Q: Online loan programs, such as Quicken Loans’ Rocket Mortgage and BeSmartee, have garnered a lot of attention for moving loans from application to underwriting in a matter of hours. Why are these programs resonating with lenders – and how receptive have consumers been to them?
Cook: For lenders, the key to profitability and market share is being able to minimize the time from when a borrower expresses interest in a loan to locking the customer in with an approval and offer. Digital mortgage channels such as Quicken’s Rocket Mortgage and BeSmartee represent the transformation in mortgage we are witnessing. With these channels, lenders have the opportunity to meet borrowers where they are located – meaning, a customer can sit in a Realtor’s office or wait for a brew at his or her coffee shop and apply for a loan rather than sit at a desktop at home after the excitement of the property has waned. The idea is to allow lenders to become omnipresent, in a way, while providing services consumers expect 24 hours a day, seven days a week.
Q: Once a borrower applies for a loan via a consumer-direct point-of-sale (POS), how do the POS software and the loan origination system (LOS) work together to expedite the processing, underwriting and verification process?
Cook: The POS and LOS work together to expedite the processing, underwriting and verification through the automation of data. With Fannie Mae’s Day 1 Certainty program driving incentive at the investor level, lenders are able to eliminate a significant amount of manual processes using automated data verification services, allowing underwriting decisions to be made much faster and with greater reliability.
By enabling data verification services to be initiated and completed by the borrower on his or her own, the POS transfers efficiency directly into the LOS by way of tight integration with these verification services.
Q: What should lenders look for when building an online consumer-direct loan channel?
Cook: Lenders must be sure that the integrity of the data flowing between the POS and the LOS is airtight. There cannot be any discrepancy in the loan application, data verification, loan pricing, and especially, closing cost fees between the POS and the LOS, or a lender is going to be in a whole lot of compliance pain.
Closing costs are, by far, the most finicky and troublesome aspect of data integrity, so lenders need to pay more attention in this area. The other aspect of consumer-direct lending is maintaining a focus on borrower and loan officer expectations. They are the primary consumers of POS systems – and their feedback is essential to the success of any consumer-direct or digital lending effort.
Q: What is LendingQB doing to help lenders implement consumer-direct lending?
Cook: LendingQB’s API model provides lenders with the flexibility to select the POS solution that works best for them. That is the notion behind our best-of-breed approach. We’re not in a position to tell lenders what POS solution to use because the consumer-direct business proposition is still unproven. No one has it figured out yet.
In our view, the most prudent thing to do is give our lenders the opportunity to be creative and try what works best for them right now. It may be one of the vendors we have integrated with, it may be building one completely from scratch, or it may be something that hasn’t even been invented yet. Our role as the LOS platform provider is to provide technology that makes it easier and less expensive for lenders to carry out their POS strategy. An open architecture API provides fertile ground for lenders to be as innovative as they want to be.
- To learn more about LendingQB, contact Linn Cook.