Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Craig Crabtree, senior vice president and general manager of Equifax Mortgage Services, to talk about why the right workflow is so important in gaining efficiencies.
Q. When you look at the mortgage industry today, what progress have we, as an industry, made in adopting automation to gain efficiencies?
A. One of the biggest advancements in loan origination automation in the last few years was the announcement Fannie Mae made last October regarding its latest version of Desktop Underwriter. The new industry standard is now their Day 1 Certainty program which automates the process for income, employment and asset validation. It uses third-party data to reduce the need for borrowers to provide paper documentation and for lenders to collect it.
The industry is now considerably more efficient and has become a lot closer to a truly paperless mortgage, removing the requirement for the consumer to spend time collecting and submitting documentation. It is truly a leap in the right direction in creating a significantly improved consumer experience, and allows the lender to increase the speed of the loan origination process.
Q. When it comes to a digital mortgage experience, many lenders understand the importance of having the right tools but neglect the importance of the right workflow. What part do you think workflow plays in a successful digital mortgage process?
A. As in life, you can have the best tools in your garage, but if you don’t know how to use them properly, what efficiencies do you gain? It’s the same for the digital mortgage experience, you can create efficiencies through automation, but you first have to understand a) what do lenders and customers need to reduce friction and then b) how do you develop an optimal workflow to address those pain points?
Let’s look at the home-buying experience. Historically, the mortgage lending process has been reactionary: consumers decide they want to buy a house, speak with a real estate agent, who in turn, may direct them to a lender. But thanks to the combination of predictive analytics and mobile technology, we’re moving closer and closer to operating in an environment that allows borrowers to walk into a house, submit the loan application instantly without mountains of paperwork and close, often within two weeks.
You have to identify and create the right flow to meet the customer needs and then deploy the right tools to execute. The “optimal” digital mortgage process is still evolving, and frankly, I don’t believe any one provider has the secret sauce, but there are a host of technology companies focused on taking the digital mortgage to the next level.
There won’t necessarily be one among them that is better, per se, but that’s not necessarily a bad thing. Having an abundance of providers will only accelerate the transition to the next generation workflows.
Within the next couple of years, we will likely see these efficiencies integrate deeper into the industry and trickle down into the way lenders operate in all forms of origination, perhaps even to the point that drives nearly half of all first mortgages.
Q. How can lenders benefit by using Verification Solutions from Equifax?
A. As a market leader in verification data, Equifax is the first designated provider to meet all Day 1 Certainty requirements through its full suite of eligible verifications. This includes instant income and employment verifications from The Work Number, our database of millions of employment records that come straight from the employer.
In addition to The Work Number, we have a manual verification solution – so if the borrower’s employment data isn’t available on The Work Number, we have a team that will call on the employer to complete the verification on behalf of the lender. In addition to that, our 4506-T solution is also included in the Day 1 Certainty program.
And finally, so Equifax could truly be a one-stop-shop for Day 1 Certainty, we joined forces with FormFree to officially provide verification of assets through their AccountChek solution, which is also part of the Fannie Mae program.
By leveraging the Equifax verification data as part of the Day 1 Initiative, lenders realize operational efficiencies with faster access to data and simplified vendor management through a single provider.
Additionally, potential instances of income fraud are minimized, and the borrower experience is improved in a couple of ways. The first being a paper-free process, i.e. reducing collect paystubs, W2s and bank statements. Secondly, origination timelines are shortened, production is increased per capita, and the consumer doesn’t feel like they have been asked for the same document three or four times.
Q. How does that lender benefit also make the experience better for consumers?
A. Most consumers, especially Millennials, want a smooth and frictionless process that minimizes the burden of searching and collecting documentation to obtain a mortgage loan. A consumer can now apply for a mortgage loan, submit minimal documentation, and get approved within minutes. The mortgage ecosystem is finally beginning to understand that with the advancement of technology, consumers can now fully realize the benefit of automation and digitalization.
Q. What do you see as the next step in the mortgage industry’s evolution to automation?
A. You can’t talk about the future without addressing the mobile experience. Mobile is here and is expected by consumers when they engage with a financial institution.
However, mobile – i.e. access to the loan application on any device — has now become table stakes. The true next step in developing the optimal loan process is workflow, leveraging all available tools to drive efficiencies, but understanding that each consumer is different.
A self-employed mortgage applicant is very different from a W2 simple income wage earner – and the workflow of the future will leverage the right levels of automation to access data that will unlock the most efficient path for every scenario, and in every origination channel.
We will see over the next few years that automation will drive workflow changes in retail, consumer direct and third party origination, as it already has in the online origination space.