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Instant mortgages: marketing tagline or reality?

A walk through the history of digital mortgages, plus a peek into the possible future

Instant mortgage approvals are one front of a three-front war for housing dominance I laid out to start 2020.

Now let’s go a level deeper.

Instant mortgages are the endgame of directly-connected consumer data, but who controls consumer data in the end: lenders or consumers? And how do we even define and market instant mortgages today? 

Most Digital Mortgage Definitions Are Wrong 

Before we define instant mortgage, we must correctly define digital mortgage. 

Julian Hebron,

The digital mortgage vision finally got on a modern path in 2012 when today’s point of sale (POS) leaders first got started. Lender tech vision up to that point was flawed because it mostly ignored customer experience.

For the next four years, endless bank/lender strategic planning (and media/conference chatter) focused on “Apply On The Phone!” customer experience.

Accordingly, most digital mortgage definitions emphasized modernizing loan applications with directly-connected consumer data but left out the rest of the loan process. 

This limited definition persists today because there are POS functionality or adoption gaps after the initial loan application. Some POS providers don’t power the post-application process – needs lists/conditions management, disclosures, e-signing, etc. And the ones that do struggle with lender adoption of this full-process functionality. 

So now, once and for all, let’s properly define the full vision of a digital mortgage: A digital mortgage enables customers and loan officers to run loans together from application to close from any device or location.

We all know how complicated it is to deliver this vision, but still, we all must push to articulate this vision in this single sentence I’m offering. 

This clarity of vision is critical to driving the adoption of functionality downstream from the loan application.

What Is An Instant Mortgage? 

So if our digital mortgage vision is for customers and loan officers to run loans together from application to closing from any device, then an instant mortgage just speeds up this vision.  

It all comes back to the data connections: an instant mortgage is the endgame of directly-connected consumer data.

Fannie Mae paved the way for this endgame when it launched Day One Certainty (D1C) in December 2016. This removed most lender risk previously associated with direct-connected customer income, employment and asset data. 

In the beginning, FormFree was the only D1C approved data-connection provider, but now the D1C approved vendor list is way longer.

While D1C lender risk relief focuses on direct-connected borrower income, employment, and asset data, lenders also need borrower identity, credit, and debts to approve loans – and data connections can also provide these instantly. 

So the concept – and certainly the marketing – of instant mortgages is already well underway. 

Instant Mortgage Marketing To Consumers & Lenders

On the consumer side, Quicken Loans launched Rocket Mortgage in November 2015 and took it mainstream with it’s “Push Button, Get Mortgage” campaign in February 2016.

“Push Button, Get Mortgage” is how the instant mortgage vision looks to consumers, and marketing matters because this consumer push launched Quicken Loans to the top of the industry. 

In 2019, Quicken Loans was America’s No. 1 retail mortgage originator with $142.8 billion funded loan volume in 2019, per Inside Mortgage Finance. Wells Fargo is number two with $94.25 billion in 2019 retail volume. 

On the lender/banker side, POS provider Blend launched One Tap Mortgage Pre-Approval in September 2019.

One Tap Mortgage Pre-Approval is the closest thing to how the instant mortgage vision looks to lenders today, and the instant mortgage vision will accelerate whether or not lenders agree with a certain POS provider’s marketing. 

Why? Because Quicken Loans and other companies with nine-figure consumer marketing budgets will continue training consumers to expect instant mortgages. 

Instant Mortgage Marketing vs. Reality

Now, it’s February 2020 and Apply On The Phone is a commodity because most lender or third-party software does a great job delivering this. 

Instant loan approvals are the next frontier, and an instant mortgage needs two things: 

  1. Six Direct Connections to all required borrower approval items: identity, credit, employment, income, assets, and debts. Even though we already have most of this today, it’s not yet “one tap” or “push button” seamless for the majority of customers. But lenders shouldn’t sleep on instant mortgage marketing while waiting for the functionality to get better and faster. You must market to the vision, because it’s happening with or without you. 
  1. Longer Duration of Connections: most data connections last 60 days, which is enough time to manage the app-to-close cycle for refis and certain purchases. When refis or purchases take longer, these connections can be refreshed. More below on permanent connections, which are one of the most exciting things about instant mortgages. 

Instant Mortgage Endgame: Consumers In Control  

If instant mortgages are the endgame of directly-connected consumer data, then what is the endgame of instant mortgages?

The answer lies in the duration of the data connections. If the connections were permanent instead of 60 days, then a borrower can be approved all the time. 

Banks and lenders salivate at the idea of having permanent real-time data feeds on customers so they can make offers on an ongoing basis. But consumers either already do or will eventually feel uneasy about a single institution having all their data connections. 

Today banks and lenders “own” income, asset, credit data on customers, but it’s finite. 

Will these direct-connections go from finite to permanent? Or will consumers own their data connections and only provide them to lenders with the best offers? 

I’ll go to the next level and answer these questions shortly. And I’ll also cover the property approval part of instant mortgages shortly. Stay tuned.  

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