Expert: Waiting for HMDA data for business decisions is too late

Why data is crucial to staying ahead of the game

Many lenders utilize data from the Home Mortgage Disclosure Act to determine changes or a direction needed for their company, but according to one expert, waiting for this data may be too late.

“For too long, many lenders have waited for the release of HMDA data to determine if their efforts to improve CRA lending have worked,” said Bernard Nossuli, iEmergent chief operating officer and 2018 HousingWire Insider. “This wait is too late.”

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“I continue to be motivated by the challenge of helping lenders take advantage of how their markets are changing,” Nossuli said. “Our company, iEmergent, definitely offers something new and unique to the industry and we’ve seen first-hand how powerful our data and tools are for the lenders who use them correctly.”

“This is extremely rewarding, however, it can be equally frustrating to see others continue on a strategic path that results in the same profitability problems that it seems have always been lenders’ biggest challenge,” he said.

HousingWire sat down with Nossuli to find out how data is a driving force to helping mortgage lenders stay ahead of the game.

HousingWire: How is access to data important for mortgage lenders?

Bernard Nossuli: The one thing that lenders can depend on is that homeowner markets will always be changing – which, in turn, means that lenders will need to adjust their strategies as that occurs. Because the market dynamics are so complex and vary so widely from market to market, lenders need information, past, current and future, to make sure that they have and continue to make the best possible decisions for their businesses. Using only intuition in a rapidly changing environment typically results in many costly mistakes.

HW: Give an example of how analyzing data has helped lenders make decisions for their company.

BN: Growth: Our data on future mortgage opportunity is used to guide lenders’ decisions about whether they should grow – and, if so, where?  Without quantitative data about how much opportunity will be in a particular market, lenders can’t make an informed decision about whether growing into a new geography or rolling out a new product or opening a new branch will be worth the investment. So, lenders use our mortgage forecasts to answer that question.

Profitability: Lenders’ bottom lines are threatened by increasing loan origination sales costs.  Lenders can use our data to decrease turnover and improve their MLOs’ productivity. Lenders use data to set revenue targets that are based on what a market’s opportunity will be, rather than what it was last year, and then they right-size their salesforce accordingly instead of hiring and firing in a knee-jerk reaction in response to market shifts.

Compliance: For too long, many lenders have waited for the release of HMDA data to determine if their efforts to improve CRA lending have worked. This wait is too late. Many lenders are now using our census-tract and borrower-income-specific forecasts to set CRA goals and develop strategies that are looking ahead. They also identify their gaps in advance, which gives them ample time to fix them. It’s similar with lending to under-served and minority borrowers. Data can reveal where they are not connecting with diverse markets. After they know this, however, they use local-market-level detail to craft really innovative and targeted sales and recruiting strategies.

HW: As the market grows more competitive and originations drop, how can lenders utilize data sets to stay ahead of the game?

BN: The good news is that purchase originations aren’t dropping – their growth will be fueled over the next five to 10 years by the formation of new households. To stay ahead of the game, though, lenders must recognize that the purchase opportunity is changing rather than shrinking. Lenders have to change, too, and data should be the foundation of how, and where, to change. For the next decade, the lenders that have progressive and informed strategies for connecting with first-time homebuyers, minority borrowers, Millennials and other emerging markets will be the ones that continue to take share from those that continue to operate, year over year, the same way they have for decades.

Don’t forget to nominate this year’s Insiders here. Nominations close June 28, 2019.

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