Homebuyers are a highly diverse lot. From millennials with student loan debt and no credit history to retirees looking for investments, there are many types of borrowers that make up today’s housing market. For lenders this means that they not only must diversify their origination channels, but also make sure they offer a flexible, and seamless digital lending process that will attract borrowers across all generations.
HousingWire recently sat down with Joel Rickman, Senior VP of Verification Services at Equifax, to address the growing need for lenders to offer affordable financial services.
HousingWire: What current trends are you seeing in today’s borrowers and how has that evolved in recent years?
Joel Rickman: One of the most significant and transformational trends in lending is the call for the modernization and digitization of the mortgage loan process. Talks of a digital mortgage have been happening for years, but now more than ever. In a world accustomed to fast-paced interactions and transactions, borrowers expect a similar lending experience. Today’s borrowers demand faster decisions, greater transparency into credit decisions and the ability to prove they’re reliable — even when their traditional credit file may indicate otherwise. These are a lot of layers for lenders to take on. The good news is the technology and data needed to meet growing borrower expectations and stay on par with industry trends are already available.
HW: How can lenders work with today’s demographic of borrowers with low, or non-existent credit scores?
JR: As an industry, we’re already on track for better and more broad financial inclusion, serving a diverse mix of borrowers in a way that helps meet their unique circumstances. Lenders realize the value of seeing people for more than their credit score. Seeing borrowers’ circumstances for what they are — unique and credible in their own way — calls for an expanded field of vision. Lenders outside of mortgage have been using alternative data for thin file clients for years. We believe a similar approach in mortgage lending can potentially help millions of quality borrowers get approved for their home purchases. Leveraging multiple data sets, such as credit data layered with income and employment data, is good for borrowers and good for a lender’s business. This approach gives lenders a consistent and more comprehensive view of risk, helps them make more informed decisions and potentially approve more loans.
HW: What tools can lenders leverage to serve both the digital and traditional consumer?
JR: Whether a consumer is transacting in person, over the phone or online — they all have something in common. They prefer a hassle-free buying experience. Lenders should invest in solutions that help improve the borrowing experience for all customers. Establishing partnerships with third-party innovators like The Work Number from Equifax can offer automated data to help accelerate the application process. During the mortgage approval and underwriting journey, income and employment verification are generally required. The Work Number serves both the digital and traditional borrower by reducing the need for long, drawn-out paper-based processes or requests for sensitive banking log-in credentials. We are the largest commercial source for consolidated employment information. Our data is pulled directly from a borrower’s employer or payroll provider. Not every borrower will have a full digital portfolio of data. Still, by simplifying as many steps for as many borrowers as possible, we assist in driving borrower and lender efficiency.
HW: What exactly is The Work Number?
JR: With over 25 years of experience and commitment to the mortgage industry, The Work Number database is the largest commercial repository for consolidated income and employment data. We invest hundreds of millions of dollars annually into The Work Number to grow the database and help enable more access to credit. Our cloud-native solutions deliver a streamlined and improved borrower experience, all while meeting government-sponsored enterprise (GSE) requirements. Automated access to nearly 115 million active payroll records from over one million employers can help mortgage lenders gain valuable borrower insights in real-time. Adding this lens to loan origination can help increase lending opportunities — and heighten fiscal focus. Above all, it helps more people get into homes faster.
HW: How does The Work Number help mortgage lenders bridge the generational gap?
JR: It’s a competitive market out there. Lenders must stay relevant across all borrower generations. While most are demanding a fast, easy digital lending process – online – many still prefer a high-touch, personal process. In today’s market, the most successful lenders balance human touch with technology and meet borrower expectations of speed and convenience, all while delivering a positive customer experience. This requires the right technology solutions with a variety of delivery options. The Work Number can help balance the varying demands of each generation in the most efficient way possible.
The Work Number’s automated verifications present mortgage lenders with a broader perspective of creditworthiness in a secure and seamless manner. It’s adaptive nature serves even the most digital generations without impacting the offline customer experience.
The Work Number, by Equifax, can help lenders increase their financial inclusivity, and potentially their earnings.