Upgrading the Lender Experience in Home Equity Lending (Pt.2)
By Craig Austin
Executive Vice President, FirstClose
In part one of this blog, we looked at how technology is transforming the customer experience in home equity lending. In part 2, we’ll explore how intelligent automation and vendor integrations can significantly improve cost management, risk reduction and pull through. Or in other words, how technology and better workflow is enhancing the lender’s experience.
Home equity lending for the most part is a no-cost transaction for the borrowers. Many of the fees that would be passed-throughs at closing with a first mortgage—valuations, flood, title, credit, for example—are absorbed by the lender, not to mention underwriting, processing and miscellaneous staff time. So, efficiency at every stage of the origination process takes on greater importance in home equity lending.
FirstClose Equity was designed to reduce friction and at the same time reduce loan fall-out. Accelerating decision-making and making the whole process less burdensome for the customer are the keys to greater pull through. Our system can take applications and underwrite and fund them as little as 7 days, versus the industry average of 45 to 60 days. Clients using our system, for example, report a 25% lift in pull though.
An advanced point of sale, white-labeled to our client’s brand, is the initial gateway to the process. In as few as 10 questions it can immediately determine a prospect’s initial eligibility. If the potential borrower meets your loan program requirements, they are asked to verify the information submitted, provide eConsent, and agree to a soft pull of their credit. Borrowers who don’t meet basic criteria—not enough equity, citizenship status, property outside the lender’s footprint, etc.—are politely blocked at this stage, before they have to provide additional information and before the lender incurs out of pocket costs for services.
The next stage in the process creates engagement with the customer by immediately showing them the value of their home and the amount of equity they can tap. The prospect is prompted to apply, authorize full credit and verifications (employment, assets etc.), eSign disclosures and to upload their ID. With this information, the platform can deliver a final credit decision, as well as definitive pricing, within 5 to 7 minutes.
Behind the scenes, our system automatically orders required services based on the lender’s guidelines: credit, flood, verifications, fraud, valuations (AVMs or appraisals based on the lender’s rules) to tax, property reports and title (if needed.) The entire process up until this point is automated, enabling lenders to redeploy their resources to create and maintain relationships rather than focus on back-office processing.
The borrower can use the portal to select the type of closing they prefer (RON, hybrid, in-person), select the date and location. They can also request their initial draw and provide bank information.
Banks and credit unions can customize almost any step in this process: opt for in branch closing, for example, to create high touch ceremonies for members; or select preferred vendors rather than use FirstClose’s base set of providers. All data captured in the origination process is mapped to the lender’s LOS, as the platform of record.
The bottom line? Technology and vendor management is not only raising the bar for the home equity customer experience but also giving lenders new options in terms of satisfying both their borrowers and their investors.
