Lenders are working hard to adapt to the current unstable environment, thanks to an ever-shifting market and the ongoing effects of COVID-19 on business and the economy. HousingWire spoke with Paul W. Harris, head of First American’s mortgage analytics business, about how data and insights can both reveal and solve for lender pain points during these uncertain times.
HousingWire: What are some of the key challenges lenders and mortgage professionals are facing today?
Paul Harris: During this time of unprecedented job loss, historically low interest rates, heavy refi and purchase volume, and pandemic-related health concerns for employees, borrowers and other loan participants, origination and servicing processes have been altered significantly.
On the origination front, lenders face challenges with timely employment and income verification, limited physical appraisals or Appraisal Waivers, and undisclosed debt.
In servicing, while the number of loans moving into forbearance seems to be on the decline, the future is unknown as COVID-19 cases and associated resource constraints are on the rise in many states.
HW: How is First American responding and helping lenders solve for these challenges?
PH: Our goal is to mitigate risk at the time of application, so on the back end, we are continually refining our data and analytics so lenders don’t have to work so hard to get a loan out the door.
First American has several different solutions that create valuable and reliable scoring models and analytics to solve for problems as they arise. The solutions also assist with a loan professional’s everyday concerns: loan quality, valuations, and customer retention/acquisition.
On the origination front, mortgage professionals can leverage our FraudGuard solution or standalone APIs to help with Verification of Employment (VOE) and Verification of Income (VOI). As lenders start to use employer contacts outside of underwriting to verify or reverify employment at end of loan, reliable employment contact information can often make or break a deal.
However, a neutral source to verify the company is still in business, with employees in full-time, part-time or furloughed status, is often hard to come by and very expensive. FraudGuard automatically offers an extra contact outside of the business for third-party verification with a high return rate included as a part of the package.
Appraisal waivers and limited physical appraisals present another unique challenge that we can support with automated valuation models and our property reports. Our cascading AVM model offers lenders a high hit rate and instant results, which is important in mortgage and home equity channels.
Lenders can leverage several different solutions to verify undisclosed debt. Whether it’s our Undisclosed Debt Monitoring module, Real Estate Owned modules, Open Lien Reports, TaxSource, HOA/PACE lien data, or liens and judgments, lenders have many resources available to them either within FraudGuard, DataTree Online, through API or as standalone reports.
On the servicing front, we have the First American Forbearance Indicator available as both a standalone product and with FraudGuard integration. The indicator helps servicers and originators alike with the current forbearance challenges they are managing.
HW: Many people associate First American with title insurance – how does the data and analytics business fit within the organization?
PH: At First American, we’ve been collecting data for over 100 years and digitizing data for nearly 50 years. Data is just as important on the origination side of the business as the title manufacturing side.
Data really is our DNA, and we’ve maintained the leadership position in the industry with our data assets and robust analytics. Data is the raw material behind all our solutions, whether they’re for title production, or to help lenders in origination and servicers in their efforts.
HW: Are there uses for that data beyond mortgage origination?
PH: Yes, First American data supports every aspect of real estate finance – from customer acquisition, processing and underwriting to servicing, loss mitigation and portfolio surveillance. Our skilled team of data solution experts is committed to deliver best-in-class data the way customers need it, when they need it.
The collective experience building, curating and growing the industry’s largest public record database, coupled with our expertise in developing new technologies, delivers the results that will set our financial services clients apart and get them in front of their customers ahead of the competition. Our data can be consumed or delivered through a variety of different channels and solutions:
- DataTree Online is our self-service destination and provides customers with Flex Search and Verified Search to help them easily search for records. We have over 7 billion document images and 80-plus reports available on DataTree.
- We also have our Digital Gateway, which is our API storefront and features more than 50 APIs that can be leveraged in point of sale and loan origination systems.
- Bulk Data Licensing, a third delivery channel, allows our customers to leverage First American real estate data, with property and ownership information, in bulk to pair with origination and/or servicing data to create derivative internal solutions or use for research and analytics.
- And finally, we offer Advanced Data Solutions, which is a professional services team that can create fully customized solutions to meet our customer’s unique needs. Examples of those solutions include Portfolio Surveillance, Lien Position and Monitoring, and Market Share Reporting.
HW: How does first American use its data and technology to prepare for what’s ahead and adapt to the rapidly changing environment?
Our combined years of experience and tech-forward data acquisition processes enable us to consistently deliver unmatched services to our clients – even when faced with the challenges of massive file movement from refinance and the recent major disruption of county services.
We’re continuously creating new solutions to meet the evolving business needs of our clients and the marketplace. We consistently involve end users in conversations with our product team to capture their input, strengthen relationships and keep creating a superior user experience at the forefront of our innovation processes.
Thinking ahead to the future, we anticipate that there will be an increase in loss mitigation with these forbearances that may or may not be cleared. Economic uncertainty will continue to drive low interest rates, which will drive both refinance and purchase loan volume.
We’re prepared to continue to meet these needs head on to drive efficiency and reduce cycle time in origination, as well as provide core documents and data to servicers and other stakeholders across the real estate finance industry.