Why some borrowers have been slow to authorize underwriting data access

While lenders are seeing some use of third-party applications that help borrowers authorize digital access to data used in underwriting, use rates remain low.

“Those numbers need to move up a lot,” said Sonu Mittal, executive vice president and head of mortgage at Citizens Bank, told attendees at National Mortgage News’ 2022 Digital Mortgage Conference. 

Mittal’s comments were in response to an Arizent survey published earlier this year that showed 6% of all mortgage borrowers submit information from their financial institutions in this way.

While Mittal said at his company he’s seen “good traction” when it comes to digital access to data related to income and assets, less exists when it comes to other areas, like collateral.

While lenders see varying uses of different offerings, consumers prefer to stick to one method when submitting all their underwriting information, panelists said.

Vendors have been forming partnerships that combine bank, payroll and tax transcript information to address the challenge, and key government-related housing agencies  have been approving several of these companies’ offerings to encourage broad use.

Those partnerships show a lot of promise given that they solve for what the Arizent survey and others have identified as key pain points in the origination process: collecting, submitting and resubmitting personal information. So technology-forward lenders and other experts have been trying to figure out why adoption rates in the industry at large aren’t higher.

In addition to consumer preferences for submitting information through a single channel, they’re looking into the question of whether more can be done internally to make consumers aware of the option.

“That goes back to, are we setting the customer up to be able to do that while not forgetting the person who’s the single point of contact or whoever’s working with the customer?” Mittal said.  “Have they bought into the tools and digitization, as much as the company?”

Bob Jennings, an executive overseeing collateral collateral and risk solutions at CoreLogic, suggested that real estate agents and loan officers might be able to spread awareness of the option.

“Those people need to be the ones that are the advocates and champion the cause in order for, for the consumer to adopt,” Jennings said.

If the low use rate stems from consumers’ uneasiness to provide lenders with secure digital access to their financial information, it’s counterintuitive, Jennings noted. In comparison, methods with less protection have use rates of around  20% or higher.

“They’re sending PDFs and photos via email and text, which is absolutely not secure, and yet they’re afraid to go into this granted-permission world, which tends to be a little bit more secure,” said Jennings, who also previously was the CEO of ClosingCorp.

A key point to emphasize for borrowers given the interest they’ve shown in it is speed, Jennings added, noting that he thinks that this could help drive heavier adoption in the next two years..

“It’ll be really interesting to see…if people start to adopt this type of distribution of their own identity to really accelerate these processes…because if you want something to take [less time] you’ve got to give granted permission up front,” Jennings said.