Vail Daily column: Technology to change the future of getting a mortgage loan
Escaping the sweeping changes technology brings to every aspect of our daily lives is impossible and the mortgage loan process is no exception.
When I first started out in the mortgage business we filled out loan applications by hand or with a typewriter (I still actually own one, hoping it will be a valuable antique someday). When we sent the loan file to the lender we had to run three copies of the entire file and send them by courier to the lender. When closing day came around documents were sent by overnight delivery to the title company and returned to the lender the same way. I recall a few times when details delayed the approval until the last minute and I drove to Denver at the crack of dawn to pick up the papers to sign at closing and raced back to make an 11 a.m. deadline.
Approving the loan required a underwriter to sit and ponder the merits of the file and if another document was needed it would be faxed over. I recall an underwriter who worked for Chase back then who was in a wheelchair and worked out of her home. She loved Chinese food and always liked company. I would bring Chinese and we would sit at her kitchen table and eat lunch and she would underwrite my loan files.
Now, of course, loan applications are done on the computer, the scanner is the most used piece of hardware in the office and loan documents fly across cyberspace in mere seconds. More and more decisions are made by a computer (although each loan approval is ultimately reviewed by a human being) but no more Chinese lunches, presumably because an underwriter might be accused of only approving a loan because she approved of the loan originator’s choice of take-out restaurants. However, we still do a lot of paper chasing in that we have to verify the borrower’s income, employment, assets and tax documents. We must also order an appraisal, title work, mortgage insurance (if needed), a flood zone certificate (even if the property is in Wildridge) and numerous other odds and ends.
The mortgage loan process is about to take another quantum leap forward and for the most part it’s a good leap. Fannie Mae, which ends up owning most of the mortgage loans in the U.S., is launching some very innovative technology to streamline the loan application and approval process.
These changes will include an expanded ability for loan applicants to e-sign loan applications and disclosures, which will cut the use of paper and toner drastically. In addition, verifying income, employment and assets will become much more automated and easy. Lenders will be able to verify your employment and income within minutes if you work for an employer that reports such data to places including the work number service (and that is limiting in the mountain areas, as there are many small employers that do not report). The borrower will also authorize the lender to electronically verify bank balances and account history. Tax returns and W-2 forms will be easily verifiable with the IRS in the near future. This means ultimately less paper for the borrower to track down and a quicker loan approval.
One area that probably will never work particularly well in the mountain areas is automated property appraisals, but that is something Fannie is betting big on in typical metro areas. As anyone who has ever shopped for a home here will attest, you never know what is behind the front door. We have a huge disparity in our housing inventory between old and new units and rich and poor doors on the same street. There are duplexes in Eagle-Vail that have been totally renovated on one side and the other side may have orange counter tops and lime green shag carpet from 1975.
While Fannie is continually adding millions of appraisals to its automated valuation database and the capabilities have expanded geometrically in guessing a property value simply by its address and square footage, I doubt we will see a drop in the requirements locally.
But if we do, then hope your neighbor’s place that just sold for a bundle was way nicer than your house and perhaps you will ride the wave to a higher value and lower loan to value (which could mean a much lower mortgage rate). Borrowers should always have the right to have their loan decisions based on a real appraisal if they disagree with the derived value of an automated valuation.
Chris Neuswanger is a loan originator at Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage related inquiries from readers. His blog and a collection of his columns may be found at http://www.mtnmortgageguy.com.
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