December 2016 - Getting Serious About Diversity

TheMReport — News and strategies for the evolving mortgage marketplace.

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32 | TH E M R EP O RT FEATURE Many industry experts expect a fully digital mortgage experience to become a reality in the near future Origination Automation A pplying for a mortgage can be a time consuming and cumbersome process, filled with loads of documentation at every stage of the process. Industry regulatory regimes require mort - gage firms to track all docu- ments that must be signed and filed by specific deadlines. This naturally creates a major barrier for minority and low-income borrowers who may not have the additional time and focus to meet these deadlines. Fortunately, technology is be - ginning to speed up and simplify the entire mortgage loan process. Third-party FinTech platforms, like Blend, as well as in-house solutions like those at SoFi and Quicken Loans, can digitize, stan - dardize, and automate each step. "Americans want a seamless, transparent mortgage experience," said Michael Tannenbaum , SVP, Mortgage at SoFi. "As both online and mobile platforms continue to improve, the process will become increasingly streamlined for both consumers and lenders." Equal Access through Technology A long with an improved origination experience, new lending programs are working to better tailor their services to minority and low income communities who do not fit the "normal" borrower model. Tech - nology is allowing for lenders to better understand and track smaller, underserved communi- ties and, as a result, push away from the one-size-fits-all model. Fannie Mae recently launched their new HomeReady program, which works to customize the loan process to fit the needs of these unique minority groups. The program allows for prospec - tive buyers to pay only a 3-percent down payment up front, which can significantly help those who are earning but currently lack the wealth for a normal down pay- ment. The program also allows for applicants to count income from those who won't actually be the borrower—something that's partic - ularly useful for multi-generational households where the children and grandparents contribute to the household income. This allows for the defined borrower to utilize the incomes from the extended family that will be liv - ing in the new home. Programs like HomeReady are taking major steps forward in breaking the traditional lending model and working with the cultural norms of minority com - munities to find the appropriate program. These programs rely heavily on analytical and mobile technology to better understand the needs of these groups and ac - cess them in new ways. A New Look at Financial Health I n recent years, new financial technology groups have been focusing on finding new ways to examine a person's financial situation. These groups are trying to push away from the traditional method of checking single credit scores and push - ing for a more holistic map of a person's financial health. BluePrint by the Homeownership Preservation Foundation (HPF), for example, is a free mobile app that con - nects the financial coach with the borrower to better manage their finances. With the app, the coach and borrower can establish clear goals and develop a long- term plan to improving overall financial health, as well as track their progress and address any unforeseen problems that occur. Tools like BluePrint allow for counseling and financial education to no longer be limited to the pre- approval stages of borrowing. The coach can now remain in contact with the borrower throughout the entire life of the loan and address any problems when they arise, rather than passively waiting for the fallout to occur. As technology continues to improve the credit counseling space, a new era will begin where one-time counseling is replaced by all-the-time counseling. Even outside of the borrow - ing realm, other tools like Mint and CreditKarma have helped consumers better track and man- age their financial health with ease. These platforms utilize real-time data of the user's income versus spending habits to provide financial guidance to make smart decisions. The ability to provide this data on multiple platforms, from mobile to desktop, allows for a level of accessibility that makes improving one's financial health a reasonable goal regardless of economic status. Sustainable Success I n recent years, new technologies have also impacted the bor- rower's experience throughout the entire life of the loan, which can significantly help those under- served groups who may struggle with continually paying off their balances. Several financial groups have begun improving different areas of the borrower's experience, from making loan payments to refinancing. EarnUp, for example, offers a mobile, automated payment plat - form that automatically syncs pay- ments with the borrower's income schedule to help them budget and accelerate their loan payments. It essentially takes the thought out of paying off debts, allowing consum- ers to focus on other important areas of their lives. These platforms can also have tremendous benefits for the loan servicer by increasing autopay us- age, decreasing delinquencies, and providing predictive insights into borrower-payment issues. This translates to a huge risk removal for the servicer, allowing them to be more open to making the efforts to earn minority and low income communities' business. A number of other technology groups are also tackling different areas as well. Groups like Sindeo and SoFi are working to modern- ize the refinancing model, while groups like Digit has begun to help people better save by under- standing their spending habits. It is encouraging to see new finan- cial tech groups work to tackle serious issues that affect all levels of the population, regardless of economic level. A Long Road Ahead D espite these major advances in mortgage technology, there still remain significant challenges to providing equal homeownership for minority communities. There are still many systemic problems that require larger solutions and changes in policy, but we are moving in the right direction. The potential for technological solutions to transform the lives of millions of Americans as they attain and more importantly, sustain homeownership, is an exciting prospect to many. This is only the beginning, as government, nonprofit, and pri - vate sector groups are all begin- ning to understand the need to embrace the potentials of technol- ogy to transform consumers' lives. As Don Curtis, board mem- ber of the California Mortgage Bankers Association put it: "For the mortgage industry to continue to grow and thrive, it must adapt to modern technology and connect with consumers on their level. Technology will help the industry reach home buyers at all income levels through high levels of per - sonalization and automation." MATTHEW COOPER is the CEO and Co-Founder of Earnup, an intelligent loan automation platform. Prior to this, he has spent his career with leading investment firms including Clearlake Capital Group, NCB Capital, and McKinsey & Company. Cooper is also a national advocate for diversity and inclusion. BEST IN ORIGINATION Waterstone Mortgage Corporation

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