“Big Data” is the buzz phrase within the business world. For the mortgage industry, responsible capture and analysis of knowledge can uncover hidden patterns that reveal key insights which will be beneficial to the industry, its regulators, and its most vital stakeholders—the consumer.
In the mortgage industry, cutting-edge algorithmic models fueled by data analytics stand to assist lenders to underwrite mortgage loans more quickly and cost-effectively and, in turn, sell them to investors like Federal Home Loan Mortgage Corporation. rock bottom line: a far better borrower and lender experience and a more liquid and financially sound housing market.
What is Big Data important to Mortgage Business?
For mortgage lenders, the information needed to underwrite loans and for modeling or other loan-related intentions comes from many sources. Those sources may contain:
• In-house records like loan files, bank statements and brokerage accounts.
• Third-party information like credit scores and other traditional sources of underwriting data.
In our business, data analytics translates this information into models that analyze and draw conclusions from the info and update these conclusions as new data become available. These models, in turn, allow lenders to form better decisions during a wider range of cases than they might otherwise do.
Looking More Broadly at Non-Traditional Mortgage Applicants
By using the insights gleaned from big data, to which the borrower has allowed access, lenders can learn more about consumers who apply for a loan but who don’t have a big credit history to present as a basis for prudent underwriting.
In the same way that lenders can build alternative credit profiles for millennials, they will also do that when working with borrowers in underserved communities, many of whom lack traditional credit histories. That’s true of millennials too, many of whom don’t remove car loans, use credit cards, or work as salaried employees the way their parents did.
Accelerating the Mortgage Approval Timeline
In the face of rising interest rates, declining volume and high production costs, controlling costs will enable lenders to save lots of money, at an equivalent time as they expand their capabilities to serve a wider customer base.