The general consensus regarding mortgage banking is that we allowed things to get too easy. The process became so streamlined that verification went by the wayside, that fogging a mirror could get you approved for a loan, and that property was assumed to be worth whatever someone was willing to pay for it. Oops.
Enter the backlash. If we aren’t careful, those who know little about the industry (but happen to run the country) would set us back into the 80s or worse. Think of how expensive it would be to originate a loan if you had to call every employer, bank, and creditor. Picture underwriters looking through all the paperwork by hand and making a decision. Then imagine dealing with the blowback when a tired underwriter makes a different decision on Monday than she would have on Friday — nothing to do with Fair Lending violation and everything to do with simply being human.
I can see a better way. Technology has injected a great deal of efficiency into mortgage lending — what about using it to prevent fraud while making loan approvals even faster? We already have automated real estate valuation (I know it has its limitations but improving it seems pretty doable). When I do my taxes with Turbotax it can access my W-2 information through my company’s payroll service — I don’t even have to type it in. The United States Bureau of Labor statistics provides exstensive income data for thousands of occupations in various regions of the country. Get the depository institutions on board for verifying assets and we should be good to go.
Imagine customers being able to complete a short form and having their income, home value, assets, and liabilities populate the application automatically, already verified, and getting an approval and rate guaranteed in a matter of minutes. Even stated income borrowers can be checked — lenders could automatically run applicants’ occupations against the BLS data and make sure that the income is within a normal range for that occupation. The vast majority of people are comfortable with shopping for and even applying for mortgages online according to Realty Times. With a little more work the system could become even more efficient than it is and lenders / investors could find themselves better protected too. Of course people won’t all fit the neat little box but by freeing up originators from routine data collection and verification those who need it can get better service. And minimizing losses due to fraud could keep rates down for everyone.
Pipe dream? Maybe, but back when the CEO’s biggest status symbol was that ginormous car phone did we really think that cells would get small enough to hang on a keychain and more powerful than the PCs we used back then? And that every 12-years-old would have one?
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