The Online Mortgage Has Finally Arrived

Now, you can apply for a jumbo loan while wearing, for example, purple pajamas (the ones with the footies). More mortgage lenders are offering digital portals in which home buyers can apply for a loan, submit documentation and track the approval progress.

In the fall, Alfonso Brigham, a 32-year-old corporate-loan underwriter, applied for a $711,000 mortgage from SoFi to purchase his first home, a $790,000 condo in San Francisco. While he did speak to a loan officer on the phone to ask questions, he was able to upload all income and asset documentation and track progress from the initial application right up to closing online, he says. “It made the process so much easier,” Mr. Brigham says.

Mr. Brigham’s experience is becoming increasingly common, says Michael Tannenbaum, vice president of SoFi’s mortgage business. “Almost everything at SoFi can be done without speaking to someone,” he adds.

Consumers have been going online to check rates and compare loan products for a long time. What’s different now is that lenders running the gamut from online-only SoFi to Wells Fargo, the nation’s largest jumbo lender, are creating one-stop tracking applications.

SoFi is best known for providing student loans, but the online lender expanded into mortgage lending in the fall, partly because it saw a niche to attract tech-savvy, first-time home buyers, Mr. Tannenbaum says. “We’re trying to bring the millennial approach to mortgages.”

Online capabilities are making the mortgage process vastly different from even a few years ago, but it’s a misconception that millennials—those born between the 1980s and the previous decade—are the only ones driving demand for digital mortgage services, says Brad Blackwell, executive vice president and portfolio business manager for Wells Fargo Home Mortgage. Older generations are also using Wells Fargo’s yourLoanTracker since it expanded its services last year, he adds.

With yourLoanTracker, borrowers can upload W2s, 1099s, bank statements, tax returns and other income and asset documents; receive loan approval; and track progress through all these steps, as well as check off and set alerts when an appraisal or title search is needed and completed, and every other step up to the closing.

SoFi’s online-tracking services are similar, Mr. Brigham says. Customers upload documents directly to the portal, which he considers to be more secure and convenient than email. And unlike old-school lenders, the websites are “open” 24/7.

Jumbo borrowers, however, may have a few additional hurdles with online services. For example, loan underwriting is automated and can go through in as little as 15 to 20 minutes for government-backed loans, says Victor Ciardelli, CEO of Chicago-based Guaranteed Rate, an online lender. In contrast, all jumbo mortgages (those above $417,000, or up to $625,000 in pricey markets) require manual underwriting, meaning that uploaded documentation must be inspected by a human being, a process that usually takes about 48 hours at Guaranteed Rate, he adds.

The handful of lenders that offered automated online approvals for jumbos before the mortgage crisis were “burnt so bad” that no one dares approve a loan of that size without human eyes on the documentation, Mr. Ciardelli says.

More improvements are coming, Mr. Ciardelli says. For example, now consumers can compare fixed-rate and adjustable-rate mortgages, but a more sophisticated decision-tree process could actually suggest loan products best suited to a borrower based on responses to a menu of questions, he adds.

Wells Fargo also is working on expanding its digital capacities, such as creating interactive tools to answer borrower questions and anticipate needs while filling out the loan application, Mr. Blackwell says.

Convenience of completing the mortgage process online was viewed positively by 79% of respondents to Wells Fargo’s “How America Views Homeownership” 2015 survey, which had about 2,000 respondents. However, 73% still wanted assurance that they could speak with a lender representative if they had questions.

And unless state and federal regulations change, a hard signature is needed on closing documents, meaning a full digital mortgage process will remain science fiction at least for now. In other words, don’t cancel that trip to the lawyer’s office for the closing.

Source: Realtor.com, Anya Martin
http://www.realtor.com/news/trends/the-online-mortgage-has-finally-arrived/?iid=rdc_news_hp_carousel_theLatest

Can the Mortgage Process Really Be 100% Digital?

As any Realtor whose been in the business for a while knows, all cash deals close ALLOT quicker as opposed to one where there is a loan/mortgage. The major reason for this is the lender and all the docs they require from the borrower, the underwriting process, etc. Being here in the heart of the Silicon Valley myself, I can't help but think about how technology can used to speed up this process. The mortgage industry is slowly moving in that direction, but it still will be many years before you have a truly all digital, all automated mortgage process.


Technology advances have reinvented mobile phones, music, TV, and many other industries in the past decade. And now technology is finally beginning to overhaul the mortgage process.

But is it really possible to have a 100-percent digital mortgage? Let’s take a look.

Clarifying the digital mortgage process

The two biggest misconceptions of digital mortgages are that you can get a mortgage with the push of a button, and that you won’t have to provide as much documentation.

When you make a video call or stream a song or movie, you’re literally pushing a button or two. But a mortgage is still a major financial transaction requiring documentation and analysis of your full financial life, so you’ll need to put in some effort — even when it’s sped up by a digital process.

Likewise, digital mortgages speed you up, but typically don’t reduce the documentation required.

Reduced documentation mortgages played a major role in setting off the financial crisis in 2008 as lenders required less and less income, asset, and employment verification to approve mortgages.

Then the reverse happened for years after the crisis: lenders would provide seemingly never-ending checklists of required documentation to approve and close your mortgage.

Today, you’re still providing the same amount of documentation, but the efficiencies of technology make the process much easier.

For example, today you’re answering questions about credit, residence, and employment history in an online form, whereas just two years ago you would have had to write, sign, and send letters to answer acceptably.

And today you can authorize your lender to obtain pay stubs, bank statements, and tax returns from the sources rather than assembling and sending all of this documentation yourself.

What you can do digitally vs. what you can’t

The federal laws created after the crisis require lenders to prove (with your full documentation) that they’ve verified your ability to repay your mortgage before you take it out.

To do this, lenders must follow eight federally required loan approval factors. So if a digital process doesn’t satisfy these parameters for any reason whatsoever, you can be sure your lender will send you follow-up checklists requesting more documentation.

If you applied online originally, follow-up checklists and documentation may be requested and provided online, or the old-fashioned email way. Each lender’s process is different, and your lender will instruct you.

Processes are also different depending on loan size and type.

For example, if you’re applying for a conforming mortgage up to $417,000; you’ve been a straight salary employee (that is, receiving no bonus or commission) at a large company for more than two years; you file your taxes using an online service; and you have online accounts with all of the financial institutions that have your money, then the digital mortgage process will likely be very easy. You apply online; authorize your lender to directly obtain pay stubs, bank statements, and tax returns on your behalf; and run a credit report. Then the digital process will analyze this documentation, and run an automated loan approval. For a profile like this, you could be approved in 10 to 30 minutes.

Conversely, if you’re applying for a jumbo mortgage above $417,000; you’re self employed with multiple sources of income; you have a tax adviser manually prepare your taxes; and you don’t have online accounts with all of the financial institutions that have your money, then the digital mortgage process will require more human intervention by you and your lender. You apply online and provide the same authorizations as above, but you’ll need to assemble and submit a lot of documentation yourself, and you’ll likely see follow-up checklists as your lender manually reviews and approves your file — because loans above $417,000 are often ineligible for automated approval. The process could take hours or days.

How many lenders offer digital mortgages?

Today, the digital revolution is still working its way through the mortgage industry. You might get amazing technology or outstanding service and advice, but not all lenders have married both so far.

As more lenders adopt the digital processes described above, your decision as a mortgage shopper will come down to whether you want to run the whole process yourself online, or you want an adviser to help you in person along the way.

Because home buying is a large — and often intimidating — financial decision, good advice is likely to remain at the forefront of the mortgage offering. So if you want great advice plus the efficiencies of a digital process, it’s best to start by finding a great local lender, then interviewing them about their digital offerings.

Source: Zillow Blog, Julie Hebron
http://www.zillow.com/blog/can-mortgage-process-be-digital-191267/