How financial institutions are modernizing lending with technology

Mortgage lenders can’t afford to be wrong, especially when it comes to providing credit to potential buyers. At the same time, they can’t afford to turn down credit too often or take too long to make a decision. After all, the residential real estate market is booming despite the pandemic. People are buying and selling at lightning speed. In this rapidly changing environment, competing lenders who can offer great deals and fast, comprehensive service have the advantage.

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Knowing the conundrum facing mortgage lenders, many tech companies serving the market are offering to help. Their assistance comes in the form of solutions that provide lenders with simpler and more convenient ways to help clients. This way, lenders can process applications faster, paving the way for faster processing and an improved overall experience.

Make no mistake: consumers now expect quick responses in all areas of their lives. They will not hesitate to turn to the lender who they believe will provide them with quick and convenient support. Again, this is where revolutionary lending solutions, systems and processes can come into play.

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Below are three of the main innovations that are driving the mortgage market. Each addresses a specific aspect of the credit industry to bring it into the future.

1 Improvements in automation and automated services.

While it has always been difficult for lenders to fully rely on automation, digital transformation is happening across the credit industry. As traditional loan decisions and workflows tend to be clunky and slow, loan professionals need to be prepared to rethink all aspects of their processes, including how to fit automation into the mix. Otherwise, they risk losing ground, especially with digitally savvy Millennials and Gen Zs.

Financial software-as-a-service platforms like MeridianLink help lenders manage online applications more securely and accurately. These services help lenders accelerate interactions with consumers and drive greater efficiency and adoption along the digital lending journey. Removing barriers to borrowers through this kind of digitization presents lenders as modern and customer-focused. It also helps them attract and retain more consumers who are increasingly accustomed to fast turnaround times.

2 Larger pool of quality candidates.

For many years, lenders have operated under strict and careful demands of borrowers. Although understandable on the one hand, the thoroughness led to fewer loan applications and more refusals. Still, companies like Experian believe that many denials could turn into approvals if lenders had a broader picture of borrowers. Therefore, Experian launched Inclusion Forward – Experian Empowering Opportunities â„¢. The initiative aims to help lenders see applicants from underserved communities in a new light.

Inclusion Forward is not the first time that Experian has reinvented the way consumer credit is managed or rated. Take the Experian Boost 2019 program, for example. With it, consumers could potentially improve their credit scores by linking certain bills to their Experian credit report. By paying these bills on time, they have set themselves up to “bump” their Experian credit. By offering lenders a new way of looking at borrowers, Experian has broadened its reach and opened the doors to homeownership.

3 Relaxed subscription requirements.

During the height of Covid, many mortgage lenders and their partner financial institutions tightened borrowing requirements. At the time, that made sense. No one really knew how the pandemic would affect the financial sector. Now that everything looks set for major rebounds, these same entities are relaxing the strict underwriting standards.

Unsurprisingly, reports from mid-2021 from authorities such as the National Association of Home Builders suggest that first-time home ownership is on the rise. The increase was linked to the relaxation of credit restrictions. Again, this bodes well for younger borrowers with less credit history. Of course, borrowers remain cautious. Nonetheless, they nibble on the opportunity to grab a piece of the home buying trend.

No one can say what will happen next with mortgages and real estate. Some experts predict a secondary boom over the next year. Others put their money in a market tray. Either way, lenders will remain central pieces of the puzzle of buying and selling a home. Those who earn the most business (and the most respect) from borrowers will present simple, forward-looking solutions. And they will do it with the help of their financial partners like MeridianLink and Experian.

About Nicole Harmon

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