Where Do Ideas for Mortgage Apps Come From? A Look Inside Fannie Mae’s InLab

February 10, 2016 | By

According to Housing Industry Forum (also published by Fannie Mae), many lenders are still warming up to the idea of replacing loan officers with laptops and smartphones to conduct their mortgage lending.

But thinking that it will eventually make the move, Fannie Mae’s Re-engineering America’s Mortgage Partner (RAMP) division is already working on online services and applications to support its business. In recent years, RAMP has built and distributed free of charge the groundbreaking Collateral Underwriter™, an app that gives lenders added certainty on appraisals, thereby contributing to improvements in the underwriting process.

“We want to make it easier for lenders to do their job,” Stacey Shifman, a key member of the Single-Family Innovation Lab (InLab) and principal designer of Fannie Mae’s data validation services, tells Housing Industry Forum. There are many steps in the mortgage making process, she adds, and electronic applications can improve those steps for both the lender and the borrower.

“With electronic technology in hand, it shouldn’t be all that difficult for a prospective homebuyer to apply for a loan or for a bank to ensure the mortgages they are delivering to the market are free of the kinds of errors that Fannie Mae’s Loan Quality Center is always on the lookout for,” says Eric Rosenblatt, vice president for InLab.

“You have to ask why anyone should ever get the income wrong, when information on the income of some 90 percent of people is held by some third party that can send it electronically,” he says. “We’re always playing with the technology, anticipating the next issue. It’s important to me that we are always working on things that have a practical value. In the world we live in, where banks serve borrowers, the back end worries about foreclosures and the quality center review errors, we have to be able to see that somebody benefits from the applications we create.”

What’s Up Next

What’s up next for InLab is completion of work on an electronic mortgage app that will be able to validate household income through Desktop Underwriter® with third-party data. At last fall’s Mortgage Bankers Association convention in San Diego, Fannie Mae announced that the service will be available in 2016.

Jane Severn, Fannie Mae’s director of product development, says the new electronic mortgage app will validate income in seconds. “This is more secure — the borrower doesn’t have to dig up pay stubs and bring them in to the lender and the lender can close loans faster,” she says.

Hopes are that Fannie Mae will eventually be able to offer similar validation services for additional borrower data, such as bank statements, and additional income documents, such as tax returns.

Gaining Traction

Survey research from Fannie Mae’s Economic & Strategic Research Group (ESR) on consumer attitudes about getting a mortgage online and via mobile technology found that many consumers still prefer speaking face-to-face to an expert at certain points in the mortgage shopping process. It also found rising numbers of homeowners going online to get their mortgages, particularly on personal computers, and to a lesser extent on mobile devices.

Severn tells Housing Industry Forum that the idea of applying remotely for a mortgage is gaining traction among consumers who tend to be younger or at the high end of the market “and are most active at 10 p.m. at night, when they feel they don’t need a loan officer and they’re ready to go.”

Both Severn and Rosenblatt told Housing Industry Forum they’re concerned about the security of online mortgage application activity, which ESR found is a common concern among both consumers and lenders. According to Severn, consumers tend to underestimate the risk of providing paper documents. Rosenblatt points out that data repositories have good security controls in place, and consumers, once they become more familiar with applying online, will likely feel just as safe using mortgage apps as entering a credit card number into their computer to complete a transaction on Amazon.

Rosenblatt likes to point out that the services and applications InLab produces aren’t actually mobile apps in the strictest sense and they can work in any environment, including an office. They also largely have a business-to-business orientation, even while making life more comfortable for the consumer.

Piloting a Mobile App to Locate Homes

Currently in the pilot stage of development, another potential app addresses consumer needs more directly than the typical app coming out of InLab. It centers on locating HomePath® properties (for sale by Fannie Mae) based on geographic data, and not mortgages.

The program enables a prospective buyer to enter an unfamiliar metropolitan area and map available homes listed for sale within a specified commuting time from work during rush hour, by car or by foot. Various search options are available, including finding the proximity by travel time of homes to other locations, such as a second job site or day care center. The data, including property photos, comes from the Multiple Listing Service. In the initial phase of a rollout, the search would be limited to foreclosed properties Fannie Mae owns.

“Fannie Mae is not in the origination business,” Rosenblatt emphasizes. “We are in an electronic world, and we are supporting things that will make it a lot easier for lenders to work remotely.” When the data starts flowing, he says, “it’s bing, bing, bing, they’re done, and that’s it.”

Source: “Electronic Mortgage Apps Give Lenders and Borrowers a Smoother Ride,” by Tim Ahern, published on Housing Industry Forum, Feb. 4, 2016.

 

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