Jennifer Henry of Equifax and Linn Cook of Lending QB on Streamlining the Lending Process
By MBA Insights Staff
February 4, 2019
Jennifer Henry is Vice President of Marketing for Equifax Mortgage Services. She is responsible for pricing, product management, product marketing, campaign management and mergers and acquisitions. Henry brings more than 20 years of experience to her position at Equifax, including operations, technology, marketing, sales, product management and mortgage loan quality and loan origination services. Linn Cook is Director of Sales for LendingQB, a digital mortgage solutions provider, where he manages all sales and business development activities. Cook brings nearly 20 years of experience in the mortgage technology industry.
MBA INSIGHTS: Overall, how well of a job has the industry done in leveraging technology to streamline the lending process up to this point? What's worked? What has not?
JENNIFER HENRY, EQUIFAX: I would say since the 2008 financial crisis, the industry has made great progress in leveraging technology to streamline the lending process. Most notably, government-sponsored Enterprises like Fannie Mae and Freddie Mac have pushed lenders to look beyond the credit score and incorporate additional data points such as income, asset and employment to better evaluate the borrower's true ability to pay earlier in the loan process. Likewise, automation has significantly expedited and streamlined the origination process itself.
LINN COOK, LENDINGQB: I agree with Jenn, we've witnessed the industry begin to engage in digital lending through greater research, selection and integration of technology solutions that bring lenders closer to a complete end-to-end digital lending experience. However, I tend to believe lenders are still too reliant on manual and paper processes, especially when it comes to the LOS. This is in part due to legacy systems that are unable to automatically underwrite loans, generate instant pricing or connect to third-party data provider services.
INSIGHTS: Why is integrating third-party provider data into the lending process a critical component of success in today's lending environment?
HENRY: Integrating third-party data into the lending process is critical for a number of reasons. Primarily, third-party data enables in many cases, instant access to borrower data in a secure environment. This means the borrower's expectation of same day--almost same minute--decisions regarding his/her application generally can be met and it dramatically reduces the amount of documentation required from a borrower. Also, the increase we're seeing in borrowers preferring to engage lenders through digital and mobile channels necessitates the need for information such as W-2, lines of investment accounts, bank statements, etc. to be verified through third-party integrations.
COOK: In the past, lenders built their companies based on three P's: people, processes and production. Technology was considered somewhat of a necessary evil, essentially for the sole purpose of generating documents. Today, this is no longer the case. Technology is relied upon as a means to gain a competitive advantage and reduce costs throughout the mortgage process. Now that a wide variety of services are available in a purely digital format, technology can be leveraged to completely automate processes and easily generate large sets of data for better insight on the way they operate. Greater interconnectivity between an LOS and third-party data providers allows lenders to be more responsive and adapt to changes in the mortgage lending environment quickly.
INSIGHTS: What key operational/infrastructure resources are required to successfully execute this lending process?
HENRY: As Linn stated, lenders today must have a streamlined, technology-enabled origination process in place that is ready to work with third-party providers, and most often, this means through the LOS and POS applications. Ensuring that the operational processes are enhanced to take advantage of the workflow innovation and reduced documentation benefits is also critical.
COOK: The LOS is the foundation upon which all operations stem from. As such, it should incorporate an open architecture API allowing for a better integration of third-party data providers. Just as importantly, the LOS should be configurable to facilitate further growth while exercising an ease-of-use for lenders to better carry out their strategies.
INSIGHTS: What has been the impact on lenders' profitability?
HENRY: Impact to profitability has been significant. As an example, our customer AmeriSave Mortgage Corp. has seen a 15 percent improvement in mortgage origination efficiency through its use of third-party income and employment verification (VOE/VOI) services, including The Work Number. They've also been able to shorten time to close by five days, which not only impacts their bottom line, but helps maintain a positive consumer experience as well.
COOK: For lenders, the key to profitability and market share is being able to minimize the time between a borrower first expressing interest in a loan to locking that customer in with an approval. In order to best capitalize on these opportunities, the appropriate technology must be in place. On a different note, our customer Oaktree Funding found that leveraging income verification tools led to new warranties on their loans from the GSE's, bringing a peace of mind that would otherwise not be possible. For a lender, that's an important advantage in a compressed market like the one we see today.
INSIGHTS: Do you anticipate more lenders leveraging these new data sources moving forward? Why?
HENRY: I do. As the mortgage market becomes more competitive, it forces lenders to maximize their advantages and there is proven benefit in leveraging third-party data integrations earlier in the process. The aim is to keep costs low, reduce the time needed to originate and better engage buyers within a smaller pool.
COOK: Yes--we can look at the enthusiasm we witnessed around the launch of Fannie Mae's Day 1 Certainty program, recently followed by the launch of a similar program from Freddie Mac. These programs signal the elimination of a host of manual processes through automated data verification. The same will be true as we move through 2019 and beyond and allow underwriting decisions to be made much faster--and with greater reliability.
INSIGHTS: What is the most important thing for lenders to focus on in order to find success in a compressed market like we see today?
HENRY: Lenders should focus on attracting and engaging the "mobile first" consumers, or "digital natives." This group is reshaping the way mortgages are originated and closed and lenders must be able to cater to their needs. Generally lenders need to ensure any prospective borrower is able to apply instantly online or on their smartphones without the hassle of providing traditional documentation like paystubs, bank statements and W-2 forms up front and have an approval decision with minutes, which is where the integration of third-party data will be critical.
COOK: Digital mortgage channels such as Quicken's Rocket Mortgage, Simple Nexus and Lender Price 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. Lenders looking to experience success should aim to become omnipresent, in a way, while providing services consumers now expect 24 hours a day, seven days a week.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com; or Michael Tucker, editorial manager, at firstname.lastname@example.org.)