Premier Member Editorial: Improving Efficiency as Mortgage Activity Rebounds

Joel Rickman is Senior Vice President and General Manager of U.S. Mortgage and Verification Services with Equifax, Atlanta.

Ongoing economic uncertainty and issues around affordability have kept many homebuyers and owners sidelined for much of 2025, but the Federal Reserve’s decision to cut interest rates by 25 basis points in September could change that. Prior to the Fed’s announcement, investors had already begun to drive rates down with 30-year fixed mortgage rates heading toward 6%.

Last month, the Mortgage Bankers Association reported that mortgage applications are climbing, with refinance applications accounting for over half of all mortgage activity. This may signal that consumers are finally seeing an opportunity to participate while rates remain relatively low.

Barriers to efficiency

Increased activity in the mortgage sector should be a wake-up call for lenders to improve efficiency in their processes, and to offset declining conversion rates. Lenders can start by assessing their current processes and identify areas of improvement.

Manual processes have long been an obstacle for both lenders and borrowers. For borrowers, being required to find and provide necessary documents such as pay stubs and tax forms delays the application process and is paper-intensive. Similarly, keeping tabs on received documents is difficult for lenders, especially if they come in different formats.

While some hard copy documents are required during the mortgage loan origination process, relying too heavily on a paper-based process can quickly become a restricting choice that can impair the borrower experience. If rates continue their downward trajectory, borrowers will expect a quick and seamless experience when applying for and closing loans. Lenders must be ready to adjust if they want to meet this demand.

Automation and cloud-based solutions help remove lending barriers

Increasingly, lenders are adopting cloud-based solutions to make more informed decisions with greater speed and efficiency while cutting down on operational costs. Cloud-based solutions may help lenders gather, store and process large volumes of data across formats. Ultimately, access to more data gives lenders real-time insights that can quickly deliver a more smooth and secure digital mortgage experience to borrowers. Additionally, cloud-based platforms are a more cost-effective way to manage data as they can help eliminate the need for expensive in-house infrastructure.

Forward-thinking lenders are already leveraging cloud technology to great effect by streamlining processes and adjusting more quickly to abrupt changes in mortgage market demands. Integrating this technology into the application process offers lenders a faster, paperless process that is not only cheaper, but helps enhance the customer experience.

Bundling automation with alternative data

Traditional credit scores remain the gold standard for determining credit history and financial reliability, and many lenders are adding further data sources to obtain a more holistic view of a consumers’ unique needs or overall financial position, especially for younger demographics and individuals who haven’t used traditional credit extensively.

For mortgage lenders, alternative data provides a means of accessing an untapped pool of creditworthy consumers pursuing homeownership. Alternative data is comprised of non-traditional financial information that gives a deeper understanding of borrowers’ financial situations and their repayment propensity.

For mortgage lenders this information may include:

• Utility and phone bill payments
• Rent payment history
• Employment and income data
• Specialty finance data

By leveraging alternative data during early-stage originations, lenders can proactively identify and target qualified leads. Lenders can also reveal creditworthy individuals who may not be identified through traditional credit scoring.

Additionally, as AI becomes more prevalent and even a quick search online for “fake paycheck” returns pages of results for fabricated paystubs and W-2s for free, it’s hard to know what’s real without due diligence. Using automated, verified data that is sourced directly from an employer or payroll provider can help provide lenders with certainty that the data they’re using to make decisions is valid. This is becoming increasingly important as Cotality’s Mortgage Application Fraud Risk Index increased 6.1% nationally year over year, and 1 in 116 mortgage applications were estimated to have indications of fraud in Q2 2025.

Alternative data, especially early in the mortgage lifecycle, is no longer an “alternative”, it’s a competitive necessity that can result in more efficient decisions and captured market share. As the mortgage landscape continues to change, borrower demand will follow suit. Lenders who can responsibly approve more qualified borrowers will find themselves at an advantage and position themselves for success.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)