The battle for market share is nothing new in the mortgage lending business. However, as lending standards have become more stringent and home loan volumes have diminished since the housing market heyday, smart mortgage lenders are turning to data to obtain an advantage in this highly competitive market. Data is helping mortgage lenders in a multitude of ways, including:
• Originating more loans
• Increasing customer engagement
• Providing customer and market intelligence
• Driving high quality loans
• Obtaining recorded documents
Competitive mortgage lenders are using data insight throughout the mortgage process to increase their market share of new home loans while improving mortgage quality – an imperative for lenders in the post-boom mortgage market.
Lenders are increasingly using data to aid the loan origination process, both for current customers and non-customer prospects. At most banks and credit unions, loan officers are able to electronically pull up customer information including any product history with the institution before approaching a customer. But that only tells a part of the story, particularly when many customers keep accounts with other financial institutions. So, rather than going into a customer call with simply an address, name and a list of current financial products the customer has used, loan officers with data-savvy lenders are now supplied with property and borrower data which allows them to better understand the customer’s situation. With the name and address of a customer, a loan officer can view the subject property and surrounding area, current ownership and liens on the home if applicable, approximate property value, and recent sales in the area. This information prepares the loan officer to have a more effective conversation with a customer, and provides a higher likelihood of closing the loan.
Often it isn’t obvious when customers maintain deposits at one institution and obtain other services elsewhere. But it does matter to smart lenders who seek to increase the long-term value of that customer. And a search of the data will reveal this. Smart lenders are data mining their customer databases to help understand and increase their customer’s connection to the lending institution. Does the customer have a credit card? Checking account? Savings account? Certificate of deposit? Personal loan? Auto or home loan? The more points of connection between the customer and the banking institution, the stronger the relationship, and the more likely the customer will remain to save and borrow there. Many banks and credit unions strive to achieve at least three points of connection – in any form – to help ensure customer engagement or loyalty to the institution.
Savvy banks and credit unions are using this analysis to help increase their customers’ relationship with them. Customers with too few points of connection are flagged to receive marketing messages and promotions about products that could deepen their connection. Also, these customers are identified for further outreach. And when the customer calls or visits the retail branch, a representative will pull up the customer’s information on screen, mention that that they don’t have a credit card or loan and ask them if they would consider one at that time – potentially increasing their points of connection.
Once a bank or credit union has evaluated a customer’s engagement and identified that the customer does not have a home loan with the lender, it’s important that they take the next step to find out the lender that currently has their mortgage. This information as well as important facts about the type of mortgage and any other liens on the property, will provide a better understanding of the customer’s needs and current situation. This insight is available to lenders through two key methods: Using customers’ names and addresses, lenders can use a property information database to pull up mortgage information on each property, one by one, including the lien position of the mortgage and the type of loan (e.g., FHA, VA or conventional). Or they can work with a property data provider who will match and append the mortgage information and/or listing information to each and every customer. Through these methods, the lender can determine which customers may be candidates for a home equity loan or line of credit, or whether they may be ready to move to another property and be receptive to a future purchase loan. Lenders can also use these property research methods to market to non-customers in areas they wish to reach.
Once the mortgage information and/or listing information is obtained, an analyst or marketing representative can segment customers to receive specific marketing messages and to receive follow-up contact from a loan representative who will be apprised of the customer’s needs.
Originating high quality home loans begins with data. By verifying property, ownership and lien information at the earliest stages of the loan process, lenders can help increase loan quality, reduce wasted time, and speed the time to close. The use of an online property research database can give lenders the means to quickly verify property ownership, property characteristics and current liens, and pull recorded documents as needed. It is also helpful for lenders to see an overlay of property values on a map to provide loan officers a quick estimation of the property values in the area.
To further reduce the potential for fraud and misrepresentation in loan applications, lenders should also gain access to a full text search of recorded documents to identify undisclosed liens or property ownership nationwide.
Obtaining all of the required documents in a timely manner to fulfill a loan file can be a challenge for lenders, but it’s a necessary task in order to remain in compliance with regulations. Often lenders would have to search county sites and wait as much as five days for third parties to find and deliver the needed information. And sometimes an improperly indexed document cannot be located. But lenders can streamline this process with access to an online property database. By accessing the latest property database with a full text search function, lenders can search billions of recorded documents to instantly find, in most cases, the documents they need to complete the file.
A great data tool for mortgage lenders to use is DataTree by First American, the advanced property research database that helps lenders originate more high quality loans and obtain data and documents needed to complete the loan process efficiently, while mitigating lending risks.
DataTree helps mortgage lenders speed loan origination and review by providing:
1. Quicker verification of property ownership, legal description, valuation and liens needed by lenders to qualify the borrower and property. DataTree makes researching by APN, address, map or homeowner name easy and efficient.
2. Greater confidence in data through access to the industry’s largest database of property and homeowner information through Verified Record – which digitally matches key fields in standard conveyances and mortgages against multiple, independent sources.
3. The Power of FlexSearch, which allows lenders to conduct nationwide searches instantly for any name or phrase contained within billions of recorded land documents such as deeds, judgments, liens and releases. This makes it possible to locate hard-to-find or improperly indexed recorded documents.
With DataTree by First American, mortgage lenders benefit from the most advanced property, homeowner and mortgage information solution at all phases of the mortgage cycle – from customer acquisition to providing the data, property reports and insight that empower zero defect loans. DataTree can be accessed at DataTree.com as well as within FraudGuard®, where users can get seamless, one-click access to DataTree’s property and homeowner data research.