Digital Validation And The Human Connection: A Powerful Combination For Mortgage Lending

Credit unions can use their traditional member service strength as an advantage in the digital age.

 

By Fannie Mae

 

With constant online and mobile technology advancements, Americans rely on the internet for everything from data storage needs to banking.

But it’s not all digital all the time ― yet. Fannie Mae’s Q3 2017 Mortgage Lenders Sentiment Survey (MLSS) found that mortgage borrowers rate person-to-person forms of communication (like in-person, telephone, and individual emails) as highly as using online channels when interacting with their lenders. So while digital platforms have grown in functionality and popularity, many people still value a personalized approach when making the biggest financial commitments of their lives: buying or refinancing a home.

Navigating The Digital Mortgage Landscape

More than 90% of home buyers look for homes online, and most people are comfortable transacting financial business using modern technology. But the human connection is just as important to many of those same borrowers: mortgage executives reported that potential home buyers value regular follow-ups. Even though nine out of 10 borrowers are relying on their digital devices to support their home searches, that same percentage say they would use the phone or in-person channels during mortgage shopping in the future. Serving customers with just the right mix of digital efficiency and human connection in an omnichannel strategy can give mortgage lenders a competitive edge in today’s market.

Credit unions have a long history of personal connection and a keen focus on customer service. But even customers who crave a human connection are used to a digitally simplified life. The newest innovation in mortgage lending is digital validation of borrower income, assets, and employment using source data. Instead of having to collect and upload pay stubs, W2s, and bank statements, borrowers consent to digital verification.

The digital validation process is new for the industry and your borrowers. Be prepared to explain the process so they know what to expect. Employment and income can often be validated through compiled databases. Digital asset validation (typically through bank account data) involves the borrower entering their access credentials into a third-party system. Despite being relatively new, in a survey by Mortgage Cadence, 60% of respondents said they would share their credentials to allow automatic data aggregation for their mortgage application. Ask your authorized verification report vendor to direct you to information, such as fact sheets or videos on their website, to show borrowers how the process works and describe their information security measures.

Keeping your customers in-the-know as they navigate the digital experience can be a huge value-add. Stay by their sides as they discover that instead of spending hours ― or days ― searching for pay stubs and bank statements and then waiting days ― or weeks ― for traditional underwriting, they could be on their way to mortgage approval in minutes.

Lenders will incur some investment costs to implement digital data validation, but the benefits to both lenders and borrowers can be significant in terms of efficiency and customer experience. Lenders using Fannie Mae’s Desktop Underwriter (DU) validation service report cutting the time from loan application to final approval from an average of 50 days to as little as 25 days. While the numbers vary, we’re seeing:

  • 14% average reduction in the time from application to close when assets are validated through DU.
  • 17% average reduction in application to close time for loans with employment and/or income validated.

Not only do both lenders and borrowers have the potential to save time and money using an online mortgage application with digital validation, but borrowers will be happier, more informed customers, too. The Consumer Financial Protection Bureau found that borrowers understand the mortgage process better when it is done electronically, but Fannie Mae’s MLSS found that 90% of borrowers also expect to communicate with their lenders on the phone or in person. Today’s homebuyers are likely to prefer a lender that supports them with meaningful omnichannel communications throughout their home-buying journey.

The mortgage industry is still catching up to other sectors in the use of technology, but progress is escalating. Credit unions have a long history of a personalized approach to member service and may be uniquely positioned to capitalize on the new digital mortgage era by playing to those traditional strengths.

 

This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at ads@creditunions.com or 1-800-446-7453.

 

Nov. 13, 2017


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