Joel Rickman: Mortgage lenders facing rapid change in 2022
PERSON OF THE WEEK: Mortgage lenders have had to keep pace with some rapid change over the past couple of years, especially with the impact of the pandemic, and it looks like the pace of change won’t slow in 2022.
Today, as the industry transitions to a buy-to-market, new challenges loom on the horizon, including rising mortgage rates, increased regulation, very tight housing inventory, rising houses and the lack of affordability. As a result, the lending industry is likely to experience further contraction and a subsequent period of operational adjustment in 2022.
With the recent decline in origination volume, some lenders have already begun mass layoffs. This loss of personnel can sometimes be likened to an inability to scale if volume were to suddenly increase again. Meanwhile, the regulatory landscape is constantly changing, creating its own set of challenges.
Today, financial institutions need to be nimble, fast and flexible to keep pace with changing market conditions, regulatory pressures and borrower preferences. To learn more about how lenders can quickly adapt and scale to meet this influx of change, MortgageOrb recently interviewed Joel Rickman, Senior Vice President of Audit Services at Equifax Workforce Solutions.
Q: How can lenders leverage technology to manage change as the housing market continues to evolve?
Rickman: Many changes are happening in the market right now, but one thing remains constant: when consumers need loans, they often want them quickly and, more importantly, they want approval and always want to be sure they can lock in interest rates.
That’s why lenders need insights and data-driven solutions to approve loans while minimizing risk quickly. We are seeing an increase in buying behavior for each loan issued, which increases the competition to secure the customer.
Verifying income and employment is a great example of a notoriously clunky, manual mortgage origination step that could slow down the process. However, there are technological solutions readily available for lenders to instantly and securely determine loan affordability.
For example, suppose loan seekers have to wait a few days for that first response, or they have to upload many documents manually. In this case, they will often try other websites or lenders to see if it’s easier before committing to so much work.
Lenders who create a simpler process for consumers to get the loans they need can increase the chances of conversion. Technology and data can also help lenders quickly and efficiently secure applicants, regardless of their position on the credit spectrum.
Many financial institutions may be looking to cut costs as lending volumes decline. Are there ways for these companies to stay afloat even if they are not looking to make major technology investments.
For most lenders, savings are waiting to be leveraged across many categories by maximizing efficiency. The key to this is automation. Automated technologies mean employees spend less time on traditionally manual tasks. By reducing the time spent on tedious tasks, reducing the risk of human error, and speeding up time to close, lenders will be better able to operate more efficiently, reduce costs, and increase conversions simply through the ‘automating.
And for many mortgage lenders, these cost savings may be hidden in plain sight. Technologies that improve automation are already available in their existing loan origination systems.
Q: How does data and technology, such as instant income and employment verifications, bring value to consumers?
Rickman: Well, for starters, it’s a mandatory part of the mortgage approval process for lenders – and it helps them better understand risk. But it’s also good for consumers, especially when automated.
The process of getting a mortgage can be daunting. With access to instant income and employment verifications, the loan process – and your borrowing experience – can be accelerated and simplified. That means no more stress from wasted paperwork, no more time wasted sending follow-up emails to HR, and no more unnecessary obstacles between you and your loan. It also means borrowers can get rate approvals and locks faster.
Plus, automated checks can give the millions of Americans who have thin or no credit records a shot at home ownership. With traditional loan decision processes, these people risk being denied loans, regardless of their actual ability to pay. Income and employment data help paint a more complete picture of your financial situation. So you always have the opportunity to get the loans you need and might qualify for, even with a low (or no) credit score.
Q: What are you most proud of in your career?
Rickman: This is a very stimulating question. Very often, we want to refer to big deals, years of record growth, or acquisitions that advanced our careers. However, I would say that what makes me most proud is less a specific moment or a task accomplished, but rather the moment when my teams really work effectively and in harmony.
This balance is not easy, and it is not a constant. Teams move in and out of the lineup. But when my team works fully collaboratively and aligned to the business and market, it generates an unprecedented level of trust and pride with individual accomplishments.
I am incredibly lucky to have a great team at Equifax and to see them working towards the same goals and working together to meet the challenges auditors face on a daily basis. Taking the best and aligning and connecting them to become a top performing team amplifies all of our accomplishments.