5 Ways to Benefit From New Mortgage Technology

by Steve CookOctober 4, 2017

No longer the “stuff of science fiction,” artificial intelligence (AI) is at the heart of a new wave of technology – transforming mortgage lending. Today, lenders are applying powerful new tools based on artificial intelligence and machine learning to make the process of underwriting and approving mortgages faster and more accurate. Access to massive sources of consumer behavior and transactional data on properties, plus the ability to process that, is helping lenders validate employment income, assets, and home values.

Machine learning is a type of artificial intelligence that provides computers with the ability to learn for themselves without being explicitly programmed. It is helping lenders predict consumer behavior and evaluate risk more accurately. Machine learning is also making online financial advice from lenders become more intuitive, individualized, accurate, and available 24/7.
Artificial Intelligence mortgage technology
Here are five ways you can benefit from the latest mortgage technology:

  1. Find a lender who “walks the walk.”

    Financial technology (fintech) is all the rage among mortgage marketers today, but some lenders are far ahead of others in creating and applying AI to their businesses. Size is no guarantee of AI sophistication; some of the most advanced lenders are small start-ups while some of the largest are slow to adapt. Do some research on AI and banking to find out which lenders are adopting the new technology and which are still talking about it.

  2. Cut the paperwork with electronic forms.

    The mortgage process is inherently document driven, with loan files that can easily exceed 500 pages. As the process becomes increasingly digitized, (bank account activity, credit information, tax forms, pay stubs, and other required information) more and more lenders arrange for borrowers to pre-fill online forms with data directly from each source. This streamlines the process for homebuyers and simplifies the collection and verification processes for loan officers. Because the data is independently verified from the source, lenders can quickly confirm the provided information is accurate and up-to-date, speeding up the review process.

  3. Insist on more transparency.

    Borrowers do not have access to information about their application and the status of their loan, so they must rely on loan officers to communicate documentation requirements and status updates. Some lenders allow prospective homebuyers to peek into the process, allowing them to see much of the same information that is available to loan officers in real-time. This limited level of transparency allows both parties to work in tandem, easing the minds of nervous borrowers and taking the pressure off of lenders to proactively share updates.

  4. Find a lender who will use technology to make it easier to reapply.

    Conditions in mortgage lending changes as well as peoples’ credit scores and debt-to-income levels. Lenders’ standards also change, like Fannie Mae’s recent decision to loosen its DTI requirements. A borrower who gets turned down in January may qualify in June. Lenders enabled with the new technology will have nearly everything they will need should a borrower re-apply. In fact, re-applications could become a major source of revenue for lenders empowered with AI.

  5. Look for a lender who will pass through some of their savings.

    It costs about $8,000 for a lender to complete each mortgage. A large part of that cost goes toward paying employees to complete manual, repetitive tasks like translating documentation requirements into emails and tracking requested, received and missing items on paper forms. These inefficiencies have been passed on to borrowers in the form of increased fees and other costs for years. With modern technology automating manual tasks, these costs fall significantly, potentially saving money for both the borrower and the lender.

Electronic Mortgage Application Form
From start to finish, it takes 40 days to complete the loan process. In a digital world, that seems like an eternity. Technology is bringing the mortgage process in line with modern standards and is providing borrowers with a faster, mobile experience. Today, most lenders aren’t yet there and only few can meet all the requirements above, but the playing field is changing quickly.

The new technology will put the ball in the borrower’s court. With automated paper-work, machine language driven underwriting, regulatory compliance made easier with automated documentation, and real transaction transparency, the pressure will be on borrowers to “self-serve” their mortgage applications. This will reduce approval time and increase accuracy, comforted by the knowledge that expert help will be only a click away.

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About The Author
Steve Cook
Steve Cook is editor and co-publisher of Real Estate Economy Watch. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.