Compliance a crucial aspect of real estate lending technology
When it comes time to considering technology, one area non-bank lenders in real estate finance cannot ignore are compliance challenges, Digital Risk LLC’s senior vice president of client services Leo Loomie cautions.
Mr. Loomie works with large banks, non-bank lenders and GSEs on managing loan compliance, helping them incorporate digital platforms in ways that don’t violate lending regulations.
Non-bank real estate lenders have the difficult balancing act of remaining compliant while playing technology catch up with credit card providers, business payment facilitators and other sectors that embraced technology much sooner than they did, Mr. Loomie explained. Following the crash, the real estate lenders were somewhat occupied with compliance issues.
Non-bank lenders have enjoyed some advantages for the past few years, Mr. Loomie said. They’ve seen less regulatory pressure, which has been directed more at the banks. Because they have less legacy infrastructure, they’ve found it easier to adapt to new technology.
“They are ahead of the game with digital mortgages but banks are catching up and are beginning to close the gap,” Mr. Loomie said.
Whether you are one of those nimble startups or a more established player, data aggregation and integration are key to reducing costs and providing a better buyer experience, Mr. Loomie said. And through Digital Risk’s partner model it is easier to capitalize on that data, especially for startups who don’t normally have access to large amounts.
“We do the heavy work of integrating the data,” Mr. Loomie said. “When you have good quality clean data then the sky’s the limit.”
In the past the problem was being able to get enough data, but not any more, he added. Via APIs platform can talk to each other and exchange data without including proprietary knowledge. The challenge then becomes what you do with all of that data. Netflix and Amazon have figured out how to use that data to produce a great user experience but lenders are still working on it.
Banks should have the advantage over younger fin-techs, as they should know more about their existing customers from their use of credit cards, accounts and other financial products and services. That allows them to build clean profiles and provide the right offer at a non-intrusive time.
“What’s really cool about it is it doesn’t have to be expensive if you’re using the data in the right way,” Mr. Loomie said.
Artificial intelligence (AI) and machine learning play key roles in improving the lending experience, Mr. Loomie explained. With voice-to-text technology, institutions can analyze calls and check for keywords. Issues can be flagged and addressed within hours.
That technology also helps with compliance he added. At the point of sale it enables mandatory data to be captured without customer effort. Later in the process it helps with document acquisition while at the end it can help reduce servicing costs that are causing regulated banks to leave the process.
Mr. Loomie believes blockchain can play an important role in this space.
“It’s highly applicable on the back end when you look at regulation. It’s pretty secure and can be used as a recording device for mortgages, which is done a lot.”