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InstaMortgage, a tech-driven mortgage lender licensed in 26 states, today announced that it has adopted technology provided by Finicity, a Mastercard company, to help consumers make smarter financial decisions through its safe and secure access to fast, high-quality, consumer-permissioned data verification during the mortgage lending process.

Finicity’s Mortgage Verification Services offer a digital-first, low-friction mortgage lending experience that can cut days off the mortgage process and cut costs to both lenders and borrowers. To learn more about streamlining your lending workflow, click here.

Read the full announcement here.

Buying a home in today’s market is challenging from start to finish for many consumers. Reduced supply, increased demand and competitive bidding wars riddle the path to homeownership. The struggle doesn’t end there, according to recent homebuyers who responded to Finicity’s 2021 Mortgage Survey, which is available now. 

Many are still struggling with the decades-old headache of collecting mountains of paper documentation for underwriting. This antiquated holdover from a bygone era continues to add unnecessary stress and anxiety to processing, underwriting and closing a mortgage.

To get a better understanding of what borrowers are going through in this white-hot market, Finicity surveyed over 1,000 consumers who have purchased or refinanced a home in the last year and compiled the insights into High Demand, Higher Hurdles in the Mortgage Market, which details these pain points and provides a window into how the mortgage lending industry can evolve to meet the shifting needs of today’s homebuyers and refinancers.

Big Opportunities for Change in the Mortgage Process

Many consumers approach their home purchase with excitement and, understandably, a bit of trepidation. But while today’s homebuyer grits their way through a challenging shopping and bidding environment, any excitement can quickly turn to angst when they are met with a cumbersome and laborious mortgage loan process.

Refining the mortgage process means identifying and removing pain points for homebuyers. Our survey uncovered that 89% of borrowers believe the loan application experience was as stressful if not more than the home buying experience itself. Eliminating friction during the mortgage process is a critical step in building loyalty and meeting the expectations of today’s homebuyer.

Many homebuyers were surprised to learn that physical documents still make up a large portion of mortgage documentation. Seventy-two percent of respondents were surprised or very surprised at the volume of paper that’s still used during the mortgage process. 

Going Digital Means Reduced Stress

The majority of today’s homebuyers are accustomed to navigating life digitally, and the mortgage experience should align with this.

Only 12% of respondents indicated that they were uncomfortable permissioning their personal financial data to a lender. Meeting consumers where they feel most comfortable helps save them time and reduces unnecessary stress. 

Borrowers who used digital mortgage verifications were less likely to say the loan process was the most stressful part of buying or refinancing a home, and 83% of respondents using digital verifications said their loan processing time was shorter than expected or met their expectations.

Embracing Change

For many industries, the COVID-19 pandemic has been the catalyst to transition to digital solutions. While the mortgage industry has started down this path as well, there is still work to be done. Reducing friction through digitization of manual loan documentation and minimizing the document-chasing between lender and borrower is a key component of this transformation.

Consumer-permissioned data delivered through our open banking platform allows for digital verifications throughout the mortgage process, significantly reducing the time it takes to close. In today’s mortgage landscape, this can mean the difference between consumers stepping into their dream home after a quick, seamless loan process, or losing out to a buyer who is using digital lending for a quick close.

The complete findings are now available in Finicity’s most recent mortgage survey, High Demand, Higher Hurdles in the Mortgage Market.

Finicity, a Mastercard company and leader in open banking solutions, today released its new report High Demand, Higher Hurdles in the Mortgage Market. The report reveals key findings around the issues consumers face during the mortgage process and how digital solutions are starting to provide relief. According to the report, 89% of respondents find the loan application was more stressful or as stressful as the home-buying experience.

Consumer-permissioned open banking solutions allow for digital verifications throughout the mortgage process, shaving days off the entire experience.

Read more here.

While digital experiences are rapidly becoming the norm for mortgage lending, the verification process has largely remained a manual, paper-driven process. Fortunately, this is changing.

Finicity, a Mastercard company, is the only authorized report supplier that offers a digital, single-vendor solution for assets, income, and employment authorized for representation and warranty relief through both Freddie Mac and Fannie Mae. By automating the asset and income verification process, providing transaction data for rent payment history and providing a 10-day pre-closing report, we can help you streamline the approval process and in turn even be a more inclusive lender. 

Approved by Freddie Mac and Fannie Mae 

Finicity is an authorized supplier for Freddie Mac’s Loan Product Advisor® AIM, which automates borrower assets, income, and employment assessment for lenders. By leveraging the expertise of third-party service providers, AIM helps to deliver a simpler, more efficient loan origination process.

Fannie Mae’s Desktop Underwriter® (DU®) validation service also accepts our mortgage verification services to independently validate borrower assets, income, and employment data—providing Day 1 Certainty® on validated loan components. By digitally validating secure third-party data through DU, you can help eliminate the paper chase and help get your borrowers approved quicker.

Rent payment history in credit decisioning

On September 18, Fannie Mae introduced the inclusion of rent payments in their automated mortgage credit decisioning process in DU. Fannie Mae identifies recurring rent payments in bank statements and transaction data as a factor which could deliver a more inclusive credit assessment. 

For first-time homebuyers who may have a limited credit history but a strong rent payment history, the enhancement creates new opportunities for homeownership while still promoting safe lending. Fannie Mae said 17% of applicants who have not owned a home in the last three years and who did not receive a favorable mortgage recommendation could have instead received an “approved” or “eligible” recommendation if their rental payment history had been considered.

To take advantage of the rent payment history feature, Finicity provides a Verification of Asset and Income (VOAI) report through its Mortgage Verification Service (MVS) that includes up to 24 months of transaction data that Fannie Mae can use to identify rent payment history and provide a more favorable credit assessment.

The VOAI report can be called with a direct API or is available currently in ICE Encompass and Encompass Consumer Connect, as well as the SimpleNexus mortgage point-of-sale (POS) platform. 

In addition to VOAI, we’re pleased to announce that we now offer Verification of Asset (VOA) as a standalone product. Lenders can utilize Finicity’s VOA report to provide 12 months of data and participate in Fannie Mae’s rent history assessment. Lenders have the freedom to access two and 12 months of data to satisfy their own underwriting requirements, while VOA automatically sends 12 months to Fannie Mae, keeping the file GSE-compliant. 

The VOA report is available via direct API connection or on most ecosystem platforms.

10-day pre-closing verification

Additionally, Finicity’s 10-day pre-closing reports provide just the right data GSEs need for 10-day verification of employment.

In adding a 10-day pre-closing report to our mortgage verification services, we have enabled lenders to receive only the data GSEs require for the 10-day verification. You can use these 10-day pre-closing reports to view just your borrower’s employment status rather than refreshing our current full reports that contain financial data. This minimizes the introduction of new income data or other redundant and unnecessary underwriting changes.

One of the reports available is the VOE Transactions report, which contains 120 days of refreshed transactions with dates and description but no amounts or totals so that income is not re-assessed. It shows the latest direct deposits in the income streams so that it can be determined that the borrower is still being paid on their regular cadence.

Another option is the VOE Payroll report. This contains only employment status—no income or other data—so lenders can see that the individual is still employed according to their payroll provider.

Our 10-day pre-closing reports are part of MVS at no extra charge and are currently only available for lenders connecting directly to Finicity.

These new reports could help you improve accuracy and simplify the process of verifying employment within ten days of closing, which is simplifying the loan origination process even further without increasing risk. Because these products are part of Finicity MVS, you would no longer have to call your borrower’s employers to get the information or manually ask for any extra interaction from the borrower.

How can you access these 10-day pre-closing reports?

To pull the VOE reports today, your team will need to code directly to the endpoints. You can find documentation here. As we integrate them further into LOS and POS platforms, they will be even easier for consumer loan officers to access. To see Finicity’s Mortgage Verification Services in action, request a demo here.

Institutions that leverage open banking technology in the process can minimize risk, reduce friction and speed up their services to consumers and businesses alike. That move toward greater efficiencies comes as end-users grant account permission during underwriting, which then can be used to expedite repayment, too.

In this video, Mastercard SVP of Open Banking Credit Services Lisa Kimball discusses:

Not every customer who walks through the door of your dealership on a sunny weekend afternoon can breeze through the auto financing process with no issues. This group could comprise as much as 18% of the borrowers who step into your dealership. In our quickly-evolving economy, many borrowers can have multiple sources of income, thin credit, or a compromised FICO profile. Verifying income with consumer-permissioned data is a digital solution that can help clear stips and smooth out those tricky loan approvals in real-time.

If you have a borrower sitting in your financing department, the team at your dealership has already invested time with them. They’ve shown them several vehicles, developed rapport, and maybe took a test drive. Don’t lose the sale just because the customer isn’t carrying a stack of freshly-printed pay stubs. Using Finicity Lend™’s income verification, the borrower permissions access to the data in their bank account, generating a verification of income (VOI) report. The results that are returned show a high level of accuracy in determining actual income. This low-friction experience cuts down total time spent on each loan application, finishing the verification process in real-time. The borrower doesn’t have to scramble to collect documentation from various sources just so they can leave with the car. 

Extend Credit With Confidence. Get More Approvals.

Tightened auto lending guidelines and a pandemic-influenced drop in consumer demand are causing a slump in subprime originations. When your customer falls in love with a car and is ready to buy, you don’t want limited lending options to cost you the sale. Traditional FICO models are a good start, but when credit scores aren’t enough to get the green light, Finicity Lend augments the credit decisioning with real-time income data that makes the credit decisioning process faster and more efficient for lenders. 

Today’s lending process is in the midst of a vast digital transformation, placing Finicity, a Mastercard company and its open banking technology at the forefront of this data revolution. 62 million Americans have a thin credit file, with only one to four tradelines listed. While they may be more than capable of financing a car, traditional credit scoring models could result in a denial of these applications. With Finicity Lend’s income verification, permissioned data access to their bank accounts gives a more robust picture of their actual financial health. The borrower can be issued a loan that they can be approved for and repay. Finicity’s open banking network covers 95% of direct deposit accounts in the United States, greatly increasing the number of buyers you can assist in buying a car. Accurate income data helps satisfy loan stipulations and lets buyers purchase a vehicle right away. 

Reducing Risk

When a borrower misrepresents their income, it’s nearly always to gain access to more credit than they can handle. 2020 was a record year for fraud in the auto industry, reaching a whopping $7.3 billion in losses. One of the biggest increases came in income and employment misrepresentation. With a 100% year-over-year jump in falsified incomes, one of the most important investments you can make is in prevention. Be sure that you have accurate data with Finicity Lend’s income verification. 

Higher Verification Success Rates Translates to Fewer Lost Sales

With the increased confidence and efficiency that comes with Finicity Lend’s income verification, good sales don’t walk out the door just because there’s not enough paperwork on hand. Verified, real-time data gets the sale closed. Over the course of a fiscal year, lost sales and fraud can cause extensive damage to your bottom line. Finicity income verification is fast and secure. The speed of the process means you can invest time and effort into higher-return work activity. This positive snowball effect can show up in the win column of your balance sheet. 

Our team will be attending the Auto Finance Summit in Las Vegas, October 27-29. To Learn more about Finicity’s income verification for auto, check out our overview or request an auto lending demo.

PYMNTS talked with Finicity CEO Steve Smith about open banking, open finance, data aggregation, where we’re headed with technologies and standards and how consumer-permissioned data is the future of lending.

Innovation is largely occurring differently in each fintech segment so the usefulness of a broad open banking platform to provide relevant, quality data across investing, budgeting and mortgage is becoming more and more important.

“We’re entering an age in which – through open banking – consumers are increasingly comfortable sharing their personal financial data with third parties. And amid that “gold rush,” a slew of companies have popped up (mostly fintechs), promising to upend financial services, though they tend to focus on segments of financial life – investing, let’s say, or mortgages, or high-yield savings accounts.”

Read the full article here.

Tomorrow’s lending experience runs on consumer-permissioned data. Credit scores and self-submitted details have provided a framework for easy personal lending and even some business loans, but tomorrow’s lending will utilize consumer-permissioned data. This data comes directly from bank accounts, and this process increases accuracy and  improves the experience for borrowers when used to augment credit scores and verify self-submitted information.

This transformation into consumer-permissioned data use in credit-decisioning is already happening today thanks to Finicity’s leading open banking data access connections direct to bank accounts. Where’s lending with data headed? How will it benefit lenders and consumers? Download our open banking lending infographic to learn more.

Introducing consumer-permissioned financial data from Finicity’s open banking platform to lending makes a difference in a number of ways.

This data allows for simple, personal experiences to capture customers and build trust. It also reduces friction and allows consumers to apply for loans across the devices they use.

One interaction with your borrower can tell a complete financial story using data from different accounts for real-time insights without needing to wait to confirm borrower-submitted details.

Empowering experiences provide direct benefits to the customer by allowing access to their  financial data, control over how it’s used, and the ability for them to benefit from its use, such as with obtaining a better loan product or lower interest rate. Additionally, this new innovative service  provides lenders a competitive edge. 

A more secure experience provides clear reasons for consumers to test the waters of new lenders or new products. Knowing your data is safe makes trying new lenders, partners, or products more likely providing a boost to innovative, new products by answering a big question for many people — security.

If you’re ready to explore how data can positively impact how you lend to your customers, sign up for a demo today.

Finicity’s open banking platform delivers consumer-permissioned data, the foundation of a more comprehensive, more accurate risk assessment. Lenders need to enhance their assessment capabilities in order to remedy these five problems in today’s credit decisioning market:

Download our 5 Key Problems in Credit Decisioning and How Open Banking Solves Them eBook to learn more.

Open banking data augments the foundation of credit histories and credit scores by providing real-time insights into cash flow, stable income and the actual room in someone’s monthly budget to afford a loan or a new purchase.

Millions of Americans have thin credit files meaning they don’t have enough data in the credit bureaus to even create a score. By looking at data from their bank account, lenders can determine if they are able to to pay back a loan based on income and expenses, not the lack of data.

Above all, consumer-permissioned data helps to empower consumers with control over their data, access to better financial products and a simple way to connect with fintech apps or financial services.

If you’re ready to learn how Finicity’s open banking platform can improve your credit decisioning experience for you and your borrowers, schedule a demo today.

While the chaos of 2020 wreaked havoc in many industries, the housing and mortgage markets boomed. Mortgage rates set 15 records in a single year as they dropped, encouraging equally record-breaking volume. In mid-December, mortgage applications were 26% higher than the previous year, while refinancing applications were up 105% from 2019. With rates still low, demand remains high, even with climbing costs and low inventory. On top of all the widespread adaptation required last year across the board, lenders have been sprinting to keep up with this high demand. The solution? Accelerated digitization of the lending process.

And artificial intelligence (AI) is opening the door to even more possibilities.

New Trends In The Mortgage Lending Market

Volume trends in the mortgage lending market are continuing in 2021. Bankrate reported that the slowdown usually experienced by the market in the winter was far less noticeable this year, which implies that the first quarters of ‘21 will continue to see high demand. 

Low rates haven’t been the only factor driving high mortgage lending volume. As social distancing became the norm across much of the economy, employees worked from home. And even as coronavirus cases dropped in some areas, many companies announced a transition to long-term and even permanent work-from-home. This transformation has encouraged some employees, who were previously restrained by a daily commute, to move into a new home. As Bankrate puts it, “demand is especially high in neighborhoods outside of downtown city cores, as increasing work from home and virtual learning requirements have driven many homeowners to favor space over on-the-doorstep amenities.”

High demand, for all its reasons, is butting up against rising costs and low inventory. Low rates appear to be sufficient to encourage continued sales, despite median home prices now rising above $340,000. This combination of factors means that we’re likely to see a competitive housing market persist over the coming months.

On top of factors driving high demand, other trends in the mortgage lending market are fostering change. For example, social distancing, quarantines, and lockdowns increased consumer adoption of digital and remote solutions. US ecommerce sales jumped 37% by Q3 2020. Utilization of telemedicine and remote diagnostics increased. Remote education relied on digital learning solutions, as well as virtual communication tools like Zoom. Consumers, especially digital natives, were already expecting and becoming accustomed to digital solutions in many industries. Why wouldn’t they expect the same in mortgage lending?

The Digital Mortgage: How Mortgage Companies Are Adapting

With demand and market competition so hot, lenders are looking for ways to streamline their processes and keep up with consumers and potential homebuyers. The solution? Digital adoption. 

In this high-demand mortgage lending market, mortgage companies may need one thing above all else: time. They need to cut cycle times, allowing for more loans to be processed. They need to save borrowers time to keep them satisfied. Traditional paper-based mortgage processes tend to take more time and involve more friction. Digital mortgages, on the other hand, streamline not only the mortgage application, but the entire lending process, removing high-friction back-and-forth with borrowers through digital verification solutions.

Digital verification solutions enable mortgage companies to adapt to high volumes and empower consumers along the way. Where paper-based verifications require borrowers to dig up old documents to verify creditworthiness, digital solutions powered by open banking, AI, and consumer-permissioned data, allow borrowers to quickly and securely share all the financial data necessary to get them a loan. Digital verifications enable mortgage lenders to automate and streamline workflows, all while delivering borrowers with a convenient, simple, digital-first experience. 

In addition to challenges revolving around time, today’s mortgage lenders are facing another issue in a physically-distanced world: trust. Borrowers are frequently navigating the mortgage application process or refinancing remotely, without meeting agents, sellers, buyers, and loan originators. Lenders can empower borrowers with a consumer-centric experience that enables them to control and benefit from their financial data. Layer that with secure, consumer-centric data sharing principles and protocols and lenders can build with borrowers valuable relationships founded on trust.

Some mortgage companies implement a digital solution here and there, but there’s a difference between doing digital and being digital. Any digital solution will of course help streamline processes and update workflows, but a completely digital workflow informed by a company-wide digital-first strategy enhances mortgage companies with consumer-first experiences that accelerate growth and increase ROI. 

Why High Demand For Mortgages Needs A Digital Mortgage Solution

Digital mortgage solutions streamline the verification process and, by extension, the entire origination process. That streamlining cuts time from the origination and leaves more time to process more loans. A necessity in today’s high-demand market. As Allen Taylor of Lending Times notes, leveraging digital solutions and AI models will “likely drive the greatest overall efficiencies, both reducing costs and boosting revenues. This enhanced efficiency can be used to drive competitive position and ultimately higher profits.”

As purchase volume and demand rises, so do chances of fraud and risk. Fortunately, digital mortgage solutions reduce fraud and overall risk by connecting directly to secure financial institutions and getting the most accurate data from the most reliable sources. 

How Digital Verification Is Facilitated By AI

The digital verification enabling streamlined digital mortgage owes part of its efficiency to artificial intelligence. This doesn’t mean that Watson or Alexa are performing your digital income verification. Instead, artificial intelligence leverages machine learning, deep learning, and neural networks to mimic human intelligence and predict, optimize, and automate tasks that were once performed manually. 

As IBM explains, “Perhaps the easiest way to think about artificial intelligence, machine learning, neural networks, and deep learning is to think of them like Russian nesting dolls. Each is essentially a component of the prior term.” In brief, fundamental terms, here’s more on each AI component:

In mortgage lending specifically, AI performs income, employment, and asset verification after a lender connects to a borrower’s bank accounts following a consumer permissioning experience. Once the consumer gives the borrower permission to access their financial data, that data enters the AI’s machine learning algorithm and the AI outputs information based on the task. For example, digital income verification involves the AI recognizing an income stream from financial transactions, and cleaning and categorizing data for a clear output that displays a borrower’s income situation.

Digital verification, powered by AI, automates what loan officers and underwriters once had to do manually. That automation enables lenders to, according to Forbes, “reduce underwriting overhead and delays, which increases profits per loan.” In fact, Fannie Mae has found that digital, AI solutions save up to 8 days for asset validation and up to 12 days for income and employment validation. Ultimately, AI-powered digital verification enhances the entire lending process, delivering a more streamlined experience for customers, and reducing risk while increasing ROI for lenders.

Finicity Can Help Your Mortgage Company Improve Their Process: Here’s How

Through our Finicity Lend solution set, we leverage AI capabilities to help lenders meet high demand. Our open banking platform, powered in part by artificial intelligence, identifies tradestreams in consumer-permissioned financial data and delivers cleaned data, ranked by confidence, in easy-to-read reports to lenders. Finicity Lend delivers valuable real-time data insights on:

These data solutions not only streamline the lending process and better enable lenders to meet high demand, but they also reduce risk and improve loans by enhancing decisioning. Finicity’s real-time data connections ensure high accuracy so that you get the clearest picture of a borrower’s financial situation. 

And in addition to the standard verification of income, employment, and assets, lenders can also get a more comprehensive view of a borrower with Cash Flow analytics. Cash Flow leverages artificial intelligence to identify tradestreams not traditionally considered in risk assessment, but that enhance a lender’s understanding of a borrower’s financial habits with a clear view of how money moves in and out of borrower accounts.

We want to make sure you get the most out of Finicity Lend and that your mortgage company can help its lending process reach its greatest potential. To that end, we offer best practices training to facilitate a smooth integration of Finicity solutions into mortgage platforms and an effective transition to a fully-digital mortgage process. We’re not just here to offer products; we’re here to be a resource so you can get the best results.

Artificial intelligence is helping lenders integrate digital mortgage solutions that don’t just meet high demand, but dominate it. With the all-star team-up of AI and open banking platforms, consumers can benefit from their financial data and increase their chances of getting a home loan, and lenders can enjoy enhanced decisioning and ROI, as well as an innovative workflow that hones their competitive edge. Don’t take our word for it. Check out Finicity Lend and see for yourself what AI can do for you.