Chad Whittenberg of Equifax: Providing First-Time Homebuyers With An Optimal Lending Experience

Chad Whittenberg is Vice President of Marketing and Product Strategy at Equifax Workforce Solutions, leading development and promotion of verification solutions. He brings more than two decades of experience deploying innovative B2B technology solutions. Prior to joining Equifax, he was Director of Product Management and R&D at Computer Services Inc. There, he oversaw the growth of the fintech-focused company by driving vision, technology and product strategy.

The Work Number is the trusted leader in providing automated and secure income and employment verifications. The Work Number can help lenders mitigate delinquency and default risks and increase efficiencies for loan origination. Credentialed verifiers can quickly access more than 125 million active employment records from more than 2 million employers.

As the refinance market in the U.S. continues to contract, the purchase market is projected to grow this year, represented by a large percentage of first-time homebuyers. While lenders are keen to meet this opportunity, they will likely find that the lingering economic effects of the pandemic, and the changing nature of work, may uncover some shortcomings of their legacy (pre-pandemic) loan decisioning capabilities.

Lenders who are still relying wholly on traditional credit data often overlook prospective borrowers who may have the financial capacity to pay a mortgage. The reasons for this are myriad: from the impacts of the pandemic being felt unevenly across industries; to increases in average salary nationwide; to the rise of the self-employed or “Gig Economy”; to the impact of ongoing government assistance plans that are now ending, among others. The result is that there are now a number of “prime” borrowers who traditional credit scoring may identify as “near-prime,” as well as consumers who have historically struggled to establish credit in the past, who may now be in a position to borrow responsibly.

For first-time homebuyers entering the market, lenders will be tasked with meeting their expectations in terms of automation and convenience. They have been conditioned to expect seamless, instant access to information and service through the digital channel, which extends to loan origination. Today’s borrowers demand faster decisions and greater transparency into how those decisions are made.

For years, lenders in other industries have leveraged alternative data to gain a more holistic view of a borrower’s entire credit picture and a similar approach has now become the standard for evaluating so-called “thin file” borrowers and prime borrowers alike. Whether verification of income, employment or assets; or payment histories tied to rent rolls and utilities like mobile phone service; by incorporating these additional data sets into the loan decisioning process, lenders gain a deeper understanding of the borrowers they serve. The key in today’s market is in not only utilizing this alternative data, but in having direct access to it in an efficient, automated way that helps accelerate the approval and underwriting journey for lenders and borrowers alike.

Whether through the digital channel, or through the branch, more automated access to required data reduces the need for long, drawn-out, paper-based processes as well as requests for sensitive banking log-in credentials that threaten the quality of the borrower experience.

While some borrowers demand a faster, easier digital lending process, many still prefer a high-touch, personal relationship with their loan officer. Particularly for first-time homebuyers who may be unfamiliar with the loan origination process, this helps loan officers better guide them through the steps and frees time to engage directly with them in a more meaningful, consultative way. To successfully meet borrowers where they want to be requires lenders to have the right solutions in place to offer borrowers a variety of delivery options.

The ongoing effects of the pandemic on the greater economy, paired with rising (yet still historically low) interest rates, have created a unique mortgage lending environment. The good news is that the industry is already on course to support better and more broad levels of financial inclusion, leveraging deeper data sets and actionable insights to serve a more diverse mix of borrowers, each representing unique personal circumstances.

For lenders to succeed with the new crop of first-time homebuyers, layering traditional credit data with income and employment data provides lenders with a more consistent, comprehensive view of risk – ultimately leading to more informed credit decisions, more approved loans, and a growing, stronger loan portfolio.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)