We are in the hottest housing market in 14 years, and lenders are under incredible pressure to process mortgage applications quickly. Low rates have more buyers entering the market, while the shrinking number of available homes is making each purchase more competitive. Houses are selling an average of two weeks faster than they were just a year ago. Meanwhile, this is all happening during a global pandemic that is changing the way everyone does business. This situation presents a number of challenges and opportunities for lenders hoping to capitalize on the hot market in this unusual time. 

The Challenges

Each application takes time to process, and rejected applications are time wasted. Many lenders are facing a backlog of applications. Long wait times leave buyers and sellers waiting, which can present a customer service problem. Going through the process of gathering and reviewing financial documents is taxing on both the lender and the buyer. 

Loan officers also want to assess the risk of a given application quickly. Credit scores are useful, but it can take days of back and forth before a lender concludes that an application isn’t worth the risk. Time wasted is money wasted, and a prospective buyer who has spent days on an application only for it to fall through can also present a customer service challenge. 

Of course, if the loan process takes too long, the home in question may be sold to someone else. That leaves you with a frustrated customer and a loan officer who has wasted hours processing the application. There is no sign that the tightness in the housing market is going to let up anytime soon, and rates seem likely to stay low enough to continue drawing in new buyers. Processing applications quickly to give buyers an advantage in their bidding process will remain a key challenge moving forward.  

Finally, the global COVID-19 pandemic is also a challenge. Both buyers and lenders want to avoid unnecessary face-to-face meetings, which can make walking buyers through the application process more difficult. Phone calls and video conferences may not be able to bridge the gap and could introduce technical difficulties to the process. 

Opportunities

Clearly, anything a lender can do to speed up this process will give them a leg up on the competition. If you can shave days or even weeks off the process, you’ll have a huge advantage over slower lenders. Not only will buyers be more eager to use your services, but you’ll free up valuable time for your staff to process more applications. 

Helping buyers understand the process and do their part quickly can also offer an advantage. It’s frustrating for both loan officers and buyers to have to make constant minor changes to forms and explanation letters. Helping buyers do it right the first time can drastically speed up the process and increase customer satisfaction. 

With millions of young, first-time home buyers entering the market, lenders who can offer fast, easy-to-understand services online can establish great relationships early. Generation Z and Millennial homebuyers expect to be able to do everything online. Lenders who can provide that service have a huge leg up, not just with the buyers, but the real estate agents referring them. 

Technology Can Help

Machine learning and artificial intelligence are revolutionizing every industry, and lending is no different. Even as it helps lenders identify trends in the market, new innovations are allowing it to be deployed in customer-facing ways that can make the process a lot easier for lenders and buyers both. 

From a lender’s perspective, the hardest part is often getting all of the financial documentation you need from the buyer. Buyers are often unprepared or leave out critical documents, leading to a frustrating and time-consuming back and forth and lots of requests for letters of explanation. Not only do many buyers not know the information they need to provide, but they also don’t know how to write a usable explanation letter.  

Technology can handle many of these steps from the front end of the application, prompting the applicant to include the required documents and walking them through the process of writing up detailed letters of explanation. Instead of a loan officer reviewing the application, spotting a discrepancy and asking for a letter of address explanation or letter of missed payment explanation from the applicant, fintech companies like ATTUNE can do that during the initial application, delivering not only the financial information but also teaching the buyer how to write letters of explanation alongside it — often in just 11 minutes. 

Technology can also help explain why customers are going through this lengthy process. Lenders know all of the requirements institutions like Freddie Mac and the Federal Housing Authority put on lenders, but buyers do not. By explaining why buyers need to include information, even as it walks them through the process of providing it, ATTUNE makes the process much less frustrating and confusing for buyers.

All of this also cuts down on the demand for in-person meetings. By walking the buyer through the process and explaining the information the lender will need, AI reduces the customer service workload for the loan officer, leaving them more time to work on any sticking points in the process so that the buyer can have a better experience. Keeping everyone safe and giving them a better experience is the kind of win-win technology offers. 

ATTUNE’s AI technology automatically creates Letters of Explanation flagging large deposits. 

Faster, Better Service

Using AI can take your home-lending business to the next level. By weeding out bad applications and getting you the information you need upfront, it lets you focus on the loans that offer you the best upside and lets your customers close their deals more quickly and with less stress. The fully online process also keeps your customers and staff safe, letting your business continue even as more traditional lenders struggle. 

Fannie Mae is projecting more than $1.5 trillion in new home purchases in the coming year. AI can help your business capture a bigger piece of that pie by speeding up the process and helping your loan officers sort through the applications more quickly. That means happier customers and lower risk for your business.