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How Using Third-Party Data Positively Impacts the Mortgage Industry

This piece originally appeared in the November 2021 edition of MReport, available here.

Amidst all the chaos of today’s world, the mortgage industry continues to remain relatively strong. With low interest rates, continued refinance volumes, demand for mortgages, and the rising number of mortgages coming out of forbearance, mortgage professionals are staying busy. While this is all certainly positive for the industry, it also represents challenges for those responsible for managing large volumes of applications, requests, and high customer expectations, ultimately stretching their operational capabilities.

To help alleviate some of these issues, mortgage professionals should focus on streamlining processes through automated technology and data-enabled solutions to sustain a more profitable business model and manage the shifts and demands of the marketplace. Part of this includes the ability to effectively leverage third-party data that helps provide instant access to borrower information within a secure environment, to help lenders make quicker, often same-day decisions.

This requires information such as pay stubs, lines of investment accounts, bank statements, and other details to be verified. It’s far more efficient to confirm the necessary information through third-party commercial data integrations. Having this information centralized and available electronically in one location not only helps reduce the amount of paperwork required but also can help reduce processing costs. It can drive workflow automation, help to boost efficiency, and free up internal resources to focus on closing more complex deals, with the potential to create more revenue for the organization.

Mortgage professionals that effectively leverage third-party data are positioned to more quickly and securely make lending decisions. Having access to the right third-party data can bring a higher degree of certainty to the process and can help yield fewer defaults over time. Lenders are often required to go beyond the standard credit score to include additional data such as income, asset, and employment information when evaluating potential creditworthiness of borrowers. Evaluating more data in a compressed time frame demands greater levels of automation on the lender side.

Fannie Mae announced earlier this year that mortgage servicers can use third-party vendors to verify the income and employment information the borrower provides in their application. While this flexibility will help mortgage servicers better process the expected influx of borrower requests as mortgages come out of forbearance, per the Fannie Mae Servicing Guide, servicers will still be responsible for the “security, accuracy, and integrity of the information obtained from the third-party verification vendor.”

This guidance provides servicers with a means of gaining better insight into their portfolios to combat issues ranging from mitigating delinquency risk, defaults, and foreclosures, as well as increasing efficiencies with nonperforming loans—all helping to improve overall profitability and predictability over time.

In today’s market, the most successful lenders and servicers are those that are able to best meet consumer expectations of speed and convenience and deliver on that in a way that creates a delightful customer experience, while not putting themselves at undue risk. Integrating the insights of third-party data can be a key step toward success.

About Author: Jennifer Henry

Jennifer Henry is VP of Strategy and Marketing with Equifax Mortgage & Housing Services. She is responsible for pricing, product management, product marketing, campaign management, and mergers and acquisitions. Henry brings more than 20 years’ experience to her position at Equifax, including operations, technology, marketing, sales, product management, mortgage loan quality, and loan origination services. Prior to her position at Equifax, she held leadership roles with First American Mortgage Solutions and Fannie Mae.
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