Tag: mortgage lending

In the ever-evolving landscape of mortgage lending, efficiency and responsiveness are paramount. Greg Holmes, Chief Revenue Officer at Xactus, shares his insights on how their partnership with Experian has significantly enhanced their operations and client satisfaction. He highlights the dual nature of their relationship with Experian, describing it as strategic and tactical. This multifaceted partnership allows Xactus to swiftly address day-to-day business issues while focusing on long-term strategic goals. Experian’s willingness to listen and incorporate feedback has been a cornerstone of this successful collaboration. Holmes said, "Their willingness to listen to us and take feedback that we've been able to provide has really helped separate them." Commitment to mortgage lending According to Holmes, one of the standout aspects of Experian's service is its unwavering commitment to the mortgage lending process. This dedication is evident in their continuous investment in the sector, which has enabled faster and more accurate loan closures. He also notes, "You can truly see the investment that Experian has put into our space, which has enabled homeowners to close loans faster and more accurately for lenders." Technological advancements and automation Experian's technological advancements have played a crucial role in enhancing Xactus's operations. The integration of Experian Verify, particularly in the verification of income and employment data, has streamlined the process, contributing to the goal of achieving a digital mortgage. This automation speeds up loan origination and closure and ensures greater accuracy and efficiency. Cost control and flexibility Another key benefit of partnering with Experian is the cost control and flexibility it offers. The single price point for orders and the robust integrations with loan-origination software companies have been particularly beneficial. These integrations allow Xactus to leverage Experian's data effectively, providing a seamless experience for lenders and borrowers alike. Greg emphasizes, "They love the fact that it helps with cost control. That single price point with orders has been extremely important." The testimonial from Xactus’ Greg Holmes clearly shows how Experian's proactive approach, technological innovations, and commitment to the mortgage lending industry have made a tangible difference. According to Holmes, by listening to client feedback and continuously investing in their services, Experian has positioned itself as a vital partner in the quest for optimal efficiency in mortgage lending. Learn more about Verify

Colorado has a great deal to offer first-time homebuyers (FTHBs). While the Denver area attracts many people with its combination of outdoor recreation, culture, and economic opportunities, other parts of Colorado are worthy of attention as well. Take Colorado Springs for example – it ranks third among best places to live in the U.S. when considering lifestyle, the job market, and overall popularity.1 Overview of the Colorado FTHB market Colorado accounts for 2.15% of all U.S. first-time homebuyers, according to Experian Housing’s recent first-time homebuyer report. This figure puts Colorado in the top 20 of all states across the country. Colorado's charm holds a special appeal for younger generations. Known for its wealth of enriching experiences, Colorado naturally attracts adventure-seekers. With an array of outdoor activities like hiking and skiing, it's no wonder that Generation Y and Generation Z make up 75% of all first-time homebuyers in the state, surpassing the national average of ~70%. Affordability With three-quarters of all FTHBs in the younger market segments, affordability is a key consideration in buying a home as housing costs are a significant part of an individual or family’s overall cost of living.2 What determines affordability? Affordability can be assessed through various metrics. For the purposes of this study, Experian Housing defined affordability by calculating the rent-to-mortgage ratio (RTM). This involves comparing monthly rent payments to monthly mortgage payments. A higher rent-to-mortgage ratio suggests renters may find mortgage payments more feasible, potentially making home buying a more appealing option. Comparison of rent costs to mortgage costs What we observed: Based on the RTM ratio, home buying is most affordable in Colorado Springs, Pueblo, and Castle Rock, while renting may look more attractive in Lakewood, Fort Collins, and Arvada. Additional measures to consider: Other realities play a key role in determining what is affordable. A prospective homebuyer’s income, monthly expenses, downpayment funds available, and the cost of the rent or mortgage payment as an added expense against income, factor heavily in final decision-making. In this regard, Experian Housing examined other metrics for assessing affordability. Debt-to-income What we observed: Down payments Sample of CO data observations: (High, mid, low down payments) Sale prices and income What we observed: Experian Housing examined the median sales prices and median incomes across the U.S. This metric is useful to see how much of one’s income typically is going to housing costs in a given area, which again, impacts overall cost of living. Comparison is essential because while sales prices may be higher in a given area, correlation with income helps determine affordability. A closer look at Colorado Springs Colorado Springs ranks #1 in affordability based on Experian’s research, and its status of best affordable place to live considering overall living costs, jobs, and livability is solid.4 The younger generation is the fastest growing population in Colorado Springs. Colorado Springs is expected to be the largest city in the state by 2050 given its current rate of growth and expansion.5 In addition to its five military installations, with a huge U.S. Air Force presence, key job sectors include the larger defense industry, education, technology, and manufacturing. Affordability coupled with opportunity and lifestyle suggest Colorado Springs deserves a closer look and area mortgage lenders have a lot to tout. Experian’s data system offers unique value to lenders given the ability to take a more comprehensive look at a borrower’s financial behavior. Experian uses credit, property, rental, and other alternative data sources to capture the borrower profile. Access to such data also gives Experian a unique ability to conduct research for reports like this one, and the recent reports on Texas and Florida. For more information about the lending possibilities for first-time homebuyers, download our white paper and visit us online. Download white paper Learn more 1 US News & World Report: Best Places to Live in the US 2024-2025 https://realestate.usnews.com/places/rankings/best-places-to-live 2 https://www.experian.com/blogs/insights/top-destinations-for-first-time-homebuyers/ 3 Arvada, Lakewood and Castle Rock, part of the Denver Metro Area and what is popularly known as the Front Range Urban Corridor, also have price to income ratios of 2.8%. 4 https://www.sofi.com/best-affordable-places-to-live-in-colorado/ 5 Colorado Springs Chamber & EDC, coloradospringschamberedc

As a mortgage lender, understanding the intricacies of the New York housing market is crucial, especially when dealing with first-time homebuyers (FTHBs). While the housing market fluctuates nationwide, New York presents unique challenges and opportunities that require a nuanced approach. Distinguishing NYC from the rest of New York New York City's housing market, along with its suburbs, stands distinct from the rest of the state. With a high cost of living and unique lifestyle, NYC demands a tailored mortgage marketing strategy. This article will highlight key factors affecting affordability in New York, providing valuable insights for mortgage lenders working in this market. Overview of the New York FTHB market According to Experian Housing’s recent report on first-time homebuyers, the state of New York accounts for nearly 4.9% of all first-time homebuyers nationwide.1 More than half of first-time homebuyers are from Generation Y. When combined with Gen Z, these younger buyers make up just over 67% of the state's FTHBs, a figure slightly below the national average of 69%. Affordability metrics: The rent-to-mortgage ratio For many Americans, homeownership represents stability, security, and the future for family, community, and life. However, the decision to buy versus rent often hinges on affordability. Mortgage lenders must understand this dynamic to better assist their clients. Affordability can be defined in various ways. For the purposes of this study, Experian Housing defined affordability by comparing rental and mortgage payments, known as the rent-to-mortgage ratio (RTM ratio). A higher ratio indicates that buying a home is more economically attractive. Again, this metric does not consider incomes and debt levels, but simply housing rental prices and mortgage costs. Based solely on the RTM ratio, the transition from renting to homeownership may be more attractive in New York City, Syracuse, and Oyster Bay, while the transition may be more difficult in Cheektowaga, Amherst, and Hempstead. For mortgage lenders, understanding local markets and buyer profiles is essential. Building trust through personalized service, such as educating buyers on relevant loan programs and showcasing geographic expertise, can set you apart. With this knowledge, you can help buyers make informed decisions about affordability, whether they prefer living in the city or the suburbs. In some areas, the suburbs may offer more affordable options, while in others, the city center might be more cost-effective. Additional factors: Income, debt, and down payments Affordability extends beyond just rent and mortgage payments. Prospective homebuyers must consider their income, monthly expenses, and access to funds for a down payment. Mortgage lenders need to account for these factors when advising first-time homebuyers. Debt-to-income Average DTI across the 14 cities observed was 25.6%. The chart below highlights those at the higher and lower end of the spectrum. Down payments Down payments varied greatly, but the median across the cities observed was 16.5%. The chart below highlights an example at the high, mid, and low point. Sale prices and income Experian Housing analyzed median sales prices and incomes across the U.S., with New York serving as a prime example of the importance of this comparison in assessing affordability. This correlation is crucial; while sales prices may be high, understanding how they align with local incomes helps lenders accurately gauge market dynamics and guide buyers more effectively. In conclusion, having a deep understanding of the New York housing market is invaluable for mortgage lenders aiming to support first-time homebuyers. By leveraging insights into market dynamics, affordability metrics, and borrower profiles, lenders can offer tailored advice that meets the specific needs of their clients. This not only helps buyers navigate the complexities of homeownership but also builds lasting trust and loyalty. Equipped with these insights, you, as a lender, can play a pivotal role in making the dream of homeownership a reality for first-time buyers in New York. Let's continue to empower our clients with the knowledge and guidance they need to make informed and confident decisions in their homebuying journey. For more insights, check out our recent studies on the Florida and Texas markets and download our first-time homebuyer whitepaper. Download white paper Learn more

Housing affordability is a pressing concern across the United States, and Florida is no exception. The affordability issue can be particularly crucial for renters looking to become first-time homebuyers (FTHBs). The desire to live in a sunny location must be measured against the cost of living, particularly housing costs. Experts at Experian Housing carefully examined data from the top 15 Florida cities (by population) to gain insights into the state of housing affordability in Florida.1 Experian examined factors such as mortgage payments, rent prices, income levels, and sales prices to assess affordability. Overview of the Florida FTHB market Experian Housing’s recent report on first-time homebuyers ranked Florida the state with the third highest percentage of FTHBs nationwide, at nearly 7.7% of FTHBs.2 It outranked New York, falling behind Texas and California. In Florida, the younger populations of Generation Y and Z account for 60% of all first-time homebuyers. Nationwide, roughly 70% of FTHBs belong to these populations. Among younger buyers, affordability is often the deciding factor in whether they continue to rent or become homeowners as they balance housing costs with student loan debt and other expenses. Let’s look at some key metrics Comparative monthly mortgage payments and rent prices How this affects affordability: The bottom line for prospective homebuyers often comes down to whether it's more affordable to continue to rent or purchase a home. While the metrics discussed all contribute to the picture of affordability, for this study, Experian Housing defined affordability by calculating the rent-to-mortgage ratio, a comparison of monthly rental payments to monthly mortgage payments. Homebuying becomes more attractive to renters when the rent-to-mortgage ratio is higher because mortgage payments are more economically practical. What we observed: Experian Housing found that Pembroke Pines, Palm Bay, and Cape Coral have the highest rent-to-mortgage ratio in Florida, at nearly 80%. In other words, for example, if the average mortgage payment is $1,000, the average rental payment is ~$800. Compare this to Tallahassee, Hialeah, and Hollywood, where the rent-to-mortgage ratio is <60%. These numbers illustrate the varying home purchase and rental market trends across the state. Debt-to-income How this affects affordability: This metric compares monthly debt responsibilities, including mortgages, car loans, student loans, and minimum credit card payments, to monthly income. A high debt-to-income ratio indicates a significant portion of income is dedicated to paying debt, leaving little room for other essential living costs and discretionary spending. What we observed: Down payments How this affects affordability: A higher down payment can also assist buyers, especially first-time buyers, by increasing attractive financing options. Importantly, a down payment of 20% avoids the need for private mortgage insurance (PMI), which is insurance for the lender, protecting the lender against loss should a foreclosure occur. PMI typically costs between 0.5% and 2% of the loan amount, annually. What we observed: Sale prices and financial hurdles How this affects affordability: In comparing home affordability across Florida, first-time homebuyers should consider home prices in relation to income. While other considerations, including an individual’s debt level and other expenses, contribute to the bottom line, this gives an indication of how much income will be consumed by the home purchase. What we observed: Experian Housing examined the median sales prices and median. Comparison is essential because sales prices may be higher in a given area, but correlation with income helps determine affordability. A Florida housing opportunity, up close: Miami metropolitan area The Miami metropolitan area is an example of an area where mortgage lenders who understand their clients and the area they seek to live may well attract first-time homebuyers, loyal clients, and more word-of-mouth business. The Miami suburb of Pembroke Pines, roughly 20 miles from Miami, offers a more affordable housing market. With Florida sunshine, nearby beaches, and access to three main highways, mortgage lenders whose knowledge base is not limited to the Miami city center may have an opportunity to turn a renter into a homeowner. Florida residents navigate the cost of living in the Sunshine State Analysis from Experian Housing highlights the diversity in housing markets and the opportunities to enhance financial well-being for residents in Florida. These insights are crucial for lenders to identify affordable opportunities for all residents. Experian’s data system offers unique value to lenders given the ability to take a more comprehensive look at a borrower’s financial behavior. Experian uses credit, property, rental, and other alternative data sources to capture the borrower profile. Access to such data also gives Experian a unique ability to conduct research for reports like this one and the recent Texas affordability study. For more information about the lending possibilities for first-time homebuyers, download our white paper and visit us online. Download white paper Learn more 1 The analysis is based on the trade and rental data reported to Experian and considered first-time homebuyers during the period between November 2022 and January 2024. 2 Based on those getting a mortgage.

First-time homebuyers (FTHBs) represent a significant portion of the homebuying market across the United States, particularly in Texas where we see the largest proportion. While an overall diverse market segment, affordability is paramount to all. Experian Housing recently examined the mortgage landscape, looking at who is buying, where, and why, uncovering both expected and surprising insights. Texas at a glance Eight of the top ten fastest-growing US cities are in Texas. Lately, Texas business growth has included large employers, such as Amazon, Oracle, Caterpillar, Chevron, and Schwab, moving or expanding to the state. Looking for a more affordable life, consumers have also made the move. No state income tax, no corporate taxes, overall lower business taxes, business incentives, and a generally favorable cost of living make it very attractive to individuals and businesses. Recent research by Experian Housing revealed Texas accounts for the largest percentage of FTHBs in the US at nearly 10.5%, based on those getting a mortgage. Among these buyers, ~72% are Generation Y (Gen Y) and Generation Z (Gen Z), meaning they are in their early 40s and younger. Defining and measuring affordability Affordability often tips the scale for prospective first-time homebuyers, particularly younger buyers, deciding to rent or buy. Texas mortgage lenders familiar with the geography of their local markets will likely have an advantage with these consumers if they understand affordability from a citywide perspective and at a hyper-focused neighborhood or zip code level. What determines affordability? Affordability can be assessed through various metrics. For the purposes of this study, Experian Housing defined affordability by calculating the rent-to-mortgage ratio. This involves comparing monthly rent payments to monthly mortgage payments. A higher rent-to-mortgage ratio suggests renters may find mortgage payments more feasible, potentially making home buying a more appealing option. According to Experian’s latest 2023 rental market report, Gen Z and Gen Y made up nearly 70% of the U.S. rental sector. When considered with their first-time homebuyer numbers in Texas and across the U.S., their importance in defining the market trend stands out. The rent-to-mortgage analysis provides important insights into whether these buyers may look to buy now or continue renting. Texas by the numbers Experian Housing examined affordability at the city and more granular, localized levels. Among those analyzed for affordability, Experian findings included: Lubbock is the most affordable city with a rent-to-mortgage ratio of 67%. Following Lubbock were Fort Worth (64%), San Antonio (63%), andEl Paso (62%) are the next cities. Among metro areas, Houston (58%), Arlington (56%), Dallas (52%) and Austin (49%). In these cities, the low to high average current home sales price rankings tracked the rent-to-mortgage ratios except for El Paso, with the 2nd lowest average sales price, but coming in 4th in the affordability metric. Lubbock had the lowest average home sales price at $212,812. El Paso had the next lowest average sales price ($216,424), then San Antonio ($269,232) and Fort Worth ($312,579). Next came Houston ($317,882), Arlington ($345,077), Dallas ($402,830), and Austin ($598,431). Is the city center or are the suburbs more affordable? A look at the city level only tells part of the story. Examining the area by zip code reveals more insights into where loan officers might direct first-time buyer prospects. In general, based on the median rent-to-mortgage payment ratio, the farther away from the city center (outer suburbs), the more affordable buying is for first-time buyers. San Antonio proved to be the notable exception where prices trended higher in the suburbs. Mortgage lenders who are savvy about these inner-market differences, set themselves up for a greater likelihood of attracting first-time homebuyers and keeping them as loyal customers. For more information about the lending possibilities for first-time homebuyers, download our white paper and visit us online. Download white paper Learn more

Mortgage lenders looking to attract first-time homebuyers must understand their needs, wants, and finances, especially as the economic environment and evolving generational trends shift. Understanding who this buyer segment is and what they buy unlocks growth potential for today’s attentive mortgage lenders. Financial diversity defines first-time homebuyers First-time homebuyers are searching for the attainable, which is not easy today. High interest rates, low housing inventory, and individual financial circumstances contribute to the hardships the housing market presents. Even with ups and downs and difficulties in the marketplace, first-time homebuyers continue to show their grit. Over two-thirds of first-time homebuyers have an annual household income over $90k, with 27% having household income over $180k. Additionally, Experian Housing research shows that 85% of first-time homebuyers have prime or super-prime credit scores. While credit and income play critical roles in evaluating borrower risk, they're not the only factors. The mortgage lending market is slowly leaning into the use of alternative credit data, such as rental payment information, to determine a borrower's creditworthiness. These changes are crucial in our industry's effort to support consumers on their journey towards homeownership. Financial realities impact property choices Experian Housing’s recent white paper looking at first-time purchasers shows over 85% buying single-family homes, with roughly 70% of these buyers belonging to Generation Y (Gen Y) and Generation Z (Gen Z). While starter homes suggest impermanence, Gen Y and Gen Z buying habits reflect their values and overall desire for stability. These motivated buyers that understand the economic woes, are adjusting and looking for options. More than three-fourths of first-time purchases are older homes, built before 2000. However, Experian’s same research showed sales of new construction homes (2021-2023) increased over the prior two years, particularly among first-time buyers. Builder credits and other incentives make new builds more appealing, and lenders leveraging their mortgage market expertise will be able to discuss options customized to the borrower, helping them make the decision best fitting their needs. Especially among younger generations, first-time homebuyers are considering different housing options in their path to homeownership. From multigenerational housing and co-owning a home with friends and family to smaller homes and moving further away for affordability reasons, options are on the table.1 Untapped potential for savvy lenders The modern mortgage landscape offers thoughtful lenders opportunities to drive growth. Diversity in the first-time homebuyer profiles means that lenders who distinguish themselves by tailoring their services to the borrower’s needs. This may include, but is certainly not limited to: Drawing on their knowledge of first-time homebuyer programs, grants and loans appropriate to the borrower. Improving their overall financial well-being with financial literacy education. Expertly guiding them through the complex lending process. Ensuring as swift and smooth a transaction as possible with timely and responsive communications. For more information about the lending possibilities for first-time homebuyers, download our white paper and visit us online. Download white paper Learn more 1 “Several Generations Under One Roof,” census.gov; “What to Know About Co-Buying A House,” myhome.freddiemac.com

Where in the U.S. would you guess first-time homebuyers are having the most success securing a mortgage? The answer may surprise you. While over one-third of first-time homebuyers reside in our most populous states, California, Texas, Florida, and New York, research from Experian Mortgage reveals they are having greater success securing a mortgage in more affordable locations, such as Minnesota, Iowa, and Indiana. Understanding who is buying properties around the nation and what drives their decision provides insight into where they are buying and why. This knowledge paves the way for mortgage lenders to create more targeted and effective marketing strategies to gain trust and win loyal borrowers. As discussed in a recent blog post on generational behaviors, Generation Z (Gen Z) and Generation Y (Gen Y) account for a sizeable majority of first-time homebuyers and nearly half of repeat buyers. Mortgage lenders who understand what motivates these young buyers and meet them where they are will be better positioned to win. Why understanding buyer traits and their motivations matters Nearly 70% of all renters are in their early 40s or younger. With rents up more than 30% since before the COVID-19 pandemic, many Americans yearn for the stability that homeownership brings to their financial well-being. Younger buyers are increasingly focusing on their overall financial health. Experian's survey of more than 2,000 millennial and Gen Z consumers across the United States revealed: ‘Better understanding personal finance’ is a goal for most consumers within both groups. Nearly 70% are actively searching for a trusted source for personal finance information. Over 30% of first-time homebuyers have a household income under $90,000 annually. They want to make decisions that align with their financial goals and position themselves well for the future, which is likely why we are seeing a higher concentration of first-time homebuyers converting in lower cost of living areas, such as the mid-west. Even for a mortgage lender outside of the geographically preferred states, those who understand their areas with minute specificity and know where opportunity and affordability meet will be best positioned for these buyers. Why strategically positioned lenders will win the day Affordability remains the operative word. The housing supply shortage heavily impacts affordability.  A lack of new housing construction and limited existing home sale inventory contributed largely to the limited for sale stock. Lower interest rates can influence the affordability outlook, but rising inflation and the Federal Reserve not yet moving to lower rates has resulted in mortgage interest rates creeping upward this year.1 Additionally, overall economic indicators influence the housing market. While the Federal Reserve does not directly dictate mortgage interest rates, mortgage rates are influenced by the actions they take. Federal Reserve Chairman Jerome Powell’s recent remarks that the Fed will not likely lower rates until much later in the year due to inflation signals mortgage rates are unlikely to decrease soon.2 Mortgage lenders who dive into buyer behaviors, geographical nuances, and truly service these potential buyers will benefit. By employing market and buyer savvy strategies that resonate, you can drive both short and longer-term business growth. For more information about the lending possibilities for first-time homebuyers, read our latest white paper and visit us online. Download white paper Learn more 1 “Mortgage Rates Move Toward Seven Percent as Markets Digest Incoming Data,” freddiemac.com 2 “Federal Reserve Issues FOMC Statement,” March 20, 2024, federalreserve.gov

In today’s age, where speed and convenience are paramount, lenders must transform their digital income verification experience to meet customer expectations. Leveraging the benefits of instant verification is crucial to delivering a seamless experience. However, there are situations where instant verification may not be available or unable to verify customers. This is where the value of incorporating user-permissioned verification into your workflow becomes evident.   Let’s explore the advantages of using a combination of instant and permissioned verification and how they can synergistically enhance coverage, reduce costs, improve efficiency, and deliver an exceptional customer experience.  Instant verification: The epitome of efficiency and experience  Instant verification technology enables lenders to access real-time customer data, making it the pinnacle of verification efficiency. Its ability to deliver immediate insights facilitates quick decision-making, ensuring a seamless and frictionless experience for lenders and customers. There are several benefits to streamlining your verification process, including:   Speed and efficiency: Eliminate the time-consuming process of manually gathering and analyzing data to expedite loan approvals and reduce customer waiting times.  Enhanced user experience: With real-time results, customers can complete their applications quickly and effortlessly, leading to increased satisfaction and higher conversion rates.  Reduced risk: Assess applicant information promptly, maintaining the security and integrity of lending processes.  Permissioned verification: Expanding coverage and engaging customers  While instant verification technology offers numerous advantages, it may not always be available or suitable for every customer. This is where permissioned verification plays a vital role. By integrating permissioned verification into the verification workflow, lenders can expand coverage and keep customers engaged in a digital channel, reducing abandonment rates. The benefits of leveraging permissioned verification include:  Convenience and speed: By granting permissioned access, customers avoid the hassle of uploading or submitting documents manually. This saves time and effort, resulting in a faster verification process.  Increased coverage and reduced abandonment: Permissioned verification ensures a higher coverage rate by minimizing the potential for customer abandonment during the application process. Since the information is retrieved seamlessly, customers are more likely to complete the application without frustration.  Privacy and control: Customers retain control over their data by explicitly granting permission for access. This enhances transparency and empowers individuals to manage their financial information securely.  Creating a verification "waterfall" for optimal results  To harness the combined power of instant and permissioned verification, lenders can establish a verification "waterfall" approach. This approach involves a cascading verification process where instant verification is the first step, followed by permissioned verification if instant verification is not available or unable to verify the customer.                                              Example of Experian Verify’s automated verification waterfall.  There are numerous advantages to adopting a “waterfall” approach, including:   Cost efficiency: Lenders who prioritize instant verification save on operational costs associated with manual verification processes. The seamless transition to permissioned verification reduces the need for manual intervention, minimizing expenses and improving efficiency.  Improved verification success rate: A verification waterfall ensures that alternative verification methods are readily available if the initial instant verification is unsuccessful. This increases the overall success rate of verifying customer data and reduces the likelihood of losing potential borrowers.  Enhanced customer experience: The combination of instant and permissioned verification creates a streamlined and frictionless customer experience. Customers can progress seamlessly through the verification process, reducing frustration and increasing satisfaction levels.  Propelling your business forward  In the dynamic landscape of lending, a combination of instant and permissioned verification technologies provides significant value to lenders and customers. While instant verification delivers unparalleled efficiency and experience, incorporating permissioned verification ensures expanded coverage, reduced abandonment rates, and a seamless digital journey for customers. By implementing a verification "waterfall" approach, lenders can optimize verification processes, reduce costs, improve efficiency, and ultimately deliver an exceptional customer experience.  Learn more about our solutions The advantages of instant and permissioned verification *This article leverages/includes content created by an AI language model and is intended to provide general information.

High property values and rising interest rates have priced many borrowers out of the market. In the face of declining home purchases, lenders are focusing on their portfolios and opportunities to expand borrower relationships. At the same time, portfolio health is increasingly important. Keeping a pulse on and successfully managing portfolio risk is just as important as portfolio growth. To effectively manage a mortgage portfolio, an understanding of the complete financial standing of a borrower, along with the most recent loan performance and property data characteristics, is crucial. Below we discuss three ways to analyze your portfolio to maximize performance. Portfolio risk While mortgage delinquencies remain well below pre-pandemic levels, rolling delinquency rates are seeing an uptick. In a recent study, we found that, of the at-risk population, over 24% may be at high risk of delinquency or default. Having the tools and resources to segment your portfolio and identify these borrowers is key to preemptively assisting or modifying loan terms and reducing risk exposure to the business. Growth and retention Did you know up to 64% of prime and above borrows may be ideal Home Equity Line of Credit (HELOC) candidates? Having the ability to segment your portfolio to identify borrowers who can tap into their home equity as a line of credit for upgrades, remodeling, or simply a rainy-day fund, will allow you to grow your originations pipeline while also supporting your mortgage retention strategy. To optimize your segmentation strategy, consider leveraging In the Market Models (ITMM) to identify borrowers with a high propensity to respond to HELOC offers. Through a retrospective analysis, we found that ITMM can improve campaign performance by over 700%. Similarly, a HELOC can be a prime option for borrowers with increasing debt. Through our newly launched solution, Mortgage Insights Dashboard for Servicing, we found that up to 46% of prime and above borrowers may be ideal candidates for debt consolidation. For this segment of your portfolio, a HELOC can consolidate high-interest debt from credit cards, retail cards, or even short-term loans. Peer analysis Like sports teams, many mortgage lenders and servicers are interested in comparing their performance against that of their peers. Are your portfolio runoff rates above, equal to, or below that of your competitors? In some instances, we’ve seen a lender’s runoff rate averaging 10% MoM higher than their peers. By comparing your portfolio performance against your peers (and the market) you can assess both the efficacy of portfolio recapture strategies and demonstrate loan quality to investors. While these are just a few examples of ways to analyze your portfolio, perhaps what’s most important is having the data, such as credit, income, DTI, and property information, needed for this type of intelligence available in one place. Partner with a provider that can offer you the mortgage servicing solutions to easily segment your portfolio to gain insights and inform ongoing strategic decisions. Learn more *Data charts source: Experian's Mortgage Insights Dashboard for Servicing

In recent blog posts, we’ve discussed growing in a down market and getting ahead with a proactive outreach and engagement strategy. In this article, we’ll focus on audience segmentation and multichannel marketing. As the market has shifted, effective cost management is a top priority. Lenders who get the most bang for their buck tend to use data to create their audience, segment and message. Best practice #1: audience segmentation It’s hard to beat the combination of credit and property data for mortgage lenders. Obtaining a holistic consumer view and property details (if they’re a homeowner), can help lenders determine the best mortgage product and refine their messaging. Many of our partners have great success leveraging a combination of property and credit insights to identify consumers for a home equity line of credit (HELOC) or new first mortgages. Let’s look at HELOC as an example. From a process perspective, we use property data to identify borrowers with properties that qualify for the lender’s HELOC program – sufficient equity, owner occupied, no tax liens, not listed for sale, a value below their upper lending bound, etc. Once the initial population is identified, we further segment their target population by adding key credit insights, such as current score and outstanding unsecured debt. This allows the lender to identify borrowers who qualify for their HELOC program and do specific outreach for either debt consolidation or remodel. By performing the equity and credit analytics with a single vendor, the lender can increase their speed to market.  The results? Lenders succeed by quickly reaching the right borrowers, with the right offer and message. Additionally, they don’t waste money on or disappoint applicants who don’t meet their program guidelines. Best practice #2: refining the message The next best practice I’d like to focus on is refining the message with relevant demographic and consumer behavior data. Experian studied the differences among consumers who recently purchased a home, those who recently secured a HELOC, and the general consumer population.   Look at these four categories from our Mosaic Group and consider how you would adjust your messaging if you really know your prospect? Might you incorporate different imaging for a Power Elite homeowner in your HELOC campaign than a Flourishing Family to whom you are marketing a first mortgage?   Or consider how different decision-making styles would impact the information you highlight in your outreach?  Look at the difference between HELOC borrowers and first mortgage borrowers in terms of their decision-making style. Different messaging will appeal to a consumer who is a brand loyalist versus someone who is a savvy researcher.  Best practice #3: omnichannel marketing strategy Finally, let’s focus on how best to reach the consumer. Not only is it important to meet consumers on their preferred channel, but a best practice is to execute an omnichannel strategy. We increasingly see lenders using emails in prescreen campaigns with invitations to apply, or ITAs, across multiple communication channels.  Look at the overall research for email, text, and direct mail. Increasingly, savvy marketers are asking us for emails in their prescreen campaigns, and it’s no surprise. Based on the research, a tailored email campaign can be very effective. Perhaps most surprising is the level of mortgage borrower engagement in streaming TV! This is just the tip of the iceberg in terms of how data can be sliced and diced to drive your omnichannel engagement strategy. In short, when executing a mortgage marketing campaign, it’s important to leverage available data for audience segmentation. Once your audience is identified, you’ll want to refine your message to resonate with each segment. Lastly, instituting a multichannel marketing strategy is key to ensuring you’re getting in front of your audience in the channel they’re most likely to engage. By adopting these best practices, you’ll reach the right borrower, with the right message, in the right channel, which, in-turn, will help boost the ROI of your marketing program.  To learn about Experian Mortgage solution offerings, click here. Learn more

Driving growth in a down mortgage market can be tricky. It’s a mad scramble to obtain quality mortgage leads that convert into profitable loans. At Experian Mortgage, we have a front row seat into the efficacy of different lead generation strategies, and what we know for certain, is that data matters in both the audience creation and outreach approach. I’ve compiled several best practices for identifying qualified prospects early in the homebuying journey and using analytics to focus your outreach on those most likely to convert. Best practice #1: credit-based triggers First, let’s focus on borrower-behavior triggers, as they’re key for getting ahead of the competition. I occasionally hear skepticism about tried-and-true credit-based prospect triggers, but many find them indispensable. Credit triggers alert you when borrowers apply for credit and when other indicators meet your specific lending criteria, including credit scores, score trends, credit limits, utilization and much more.  They’re effective – and not just for big lenders. Our clients leverage credit-based triggers to quickly pursue “hot leads,” and have reported higher response rates, lower acquisition costs and revenue growth. Best practice #2: property listing triggers Another borrower behavior to watch is listing a property for sale, which can be done using property listing triggers. You can use listing triggers to monitor current customers – and with Experian, you can prospect for new customers outside your portfolio. One of our clients instituted property listing triggers and immediately identified 40,000 homeowners in their footprint who had recently listed a property for sale. Experian research shows that a homeowner lists their property for sale, on average, 35 days before applying for a new mortgage. This means this lender had over a month to reach those consumers with a tailored message. Now that’s getting a jump on the competition! But what about those homeowners who list a property for sale but don’t move? We hear anecdotally about more homeowners putting their homes on the market to see what offers they can get. According to recent data, a higher percentage of listings fail to sell today than last year. While property listing remains one of the most predictive behaviors for purchase, there’s room to optimize. Whether your prospect came to you via a property or credit trigger, there’s an opportunity to improve your ROI by identifying trigger leads most likely to convert. Best practice #3: in-the-market models A key best practice in audience segmentation is to incorporate in-the-market models (ITMM). A good model is based on sophisticated analytics across hundreds of data elements and millions of loan applications. Additionally, a good model is tailored to your product. A consumer in the market to buy their first house will “look” very different than a consumer in the market for a Home Equity Line of Credit (HELOC). Experian clients are doing two impactful things with ITMM. First, they create their audience list by bundling ITMM with credit, income, and property data to identify qualified consumers likely to be in the market soon. Second, they optimize an existing marketing list. However, when it comes to a mortgage lead generation program, you can only optimize what you measure. Experian has been helping clients by analyzing their lost leads and lost loans. Several clients recently asked us to analyze their efficacy with marketing lists originating from digital mortgage lead aggregators (i.e., lists of consumers who sought information online about mortgages). I’ll focus here on the leads who did NOT originate a mortgage with our clients, but DID open a tradeline with someone else. My first observation is that prospects who opened a tradeline were significantly more likely to open a credit card than a mortgage. My second observation is when the prospect opened a mortgage loan with a different institution, 80% of the time that lender was a non-bank. This is higher than the current non-bank share of the market, which indicates non-banks are aggressive with their leads and poised to grow their share. Here’s where ITMM comes into play. By incorporating an ITMM specifically for your product – HELOC, purchase, refinance – you can focus attention on borrowers most likely to open a mortgage. In summary, instituting credit and property triggers is a critical best practice and will open the door to a plethora of prospects. If you want to level up your marketing strategy, incorporating an ITMM is key and will help you segment the trigger leads and home in on those that are most likely to convert. Be sure to check out the final blog post in this series, Lead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy. To learn about Experian Mortgage solution offerings, click here. Learn more

Today’s mortgage market is challenging. Mortgage lenders and servicers will need to focus on product expansion to continue to grow their business. In a recent Q&A session, Susan Allen, Head of Product for Experian Mortgage, shared best practices for leveraging data for profitable growth.Q: At a high level, how can mortgage lenders and servicers grow their businesses?A: There are a lot of options to increase pipeline. One best practice we’re seeing now is to consider expanding both your product suite and your footprint. Very few lenders offer a comprehensive set of solutions in a national footprint. But demand is strong for solutions that go beyond traditional 30-year fixed-rate mortgages, including options to tap home equity. These types of products can help you grow your business by exposing you to new borrowers and broadening your relationships with clients. For example, we see several clients, even non-banks, venturing into credit cards and personal loans to meet their customers’ broader financial needs.Q: You mentioned demand for home equity solutions is strong. What should lenders consider when it comes to home equity loan growth strategies?A: The current record level of untapped equity makes home equity lines of credit (HELOCs) attractive for borrowers to use for debt consolidation, remodeling or to add to their rainy-day fund. For lenders to decide whether HELOCs would be profitable for their business, they should look broadly at data about borrowers, volumes and indicators of profitability, such as credit lines and utilization.Q: It’s one thing to talk about the HELOC market, but does Experian have any home equity data to show what’s happening in this space?A: Absolutely. We’re seeing several things when it comes to home equity data. First, HELOC volumes have doubled since January 2021, which indicates strong borrower interest. Second, we know that home prices are at record highs across the board, and we see this record of “tappable” equity translating into credit lines well over $100,000. What’s more, we’re seeing borrowers drawing down consistently at $37,000 on average, which is a healthy and profitable utilization rate. Lastly, greater than 90% of HELOC borrowers have a prime or super prime credit score. Our data shows HELOC borrowers have higher credit scores than new purchase borrowers. Additionally, conventional wisdom says that HELOCs are for seasoned homeowners, but according to the data, the younger generation of homeowners has tripled their HELOC originations. I’ve been in this industry for a long time, and to be honest, this shocked me. This makes it clear that it’s always important (especially for industry veterans) to constantly update our understanding of current market dynamics. Q: Wow, it sounds like expansion into home equity solutions is a no-brainer. What am I missing? A: HELOCs are a strong and growing market segment. But it’s not sufficient to look only at opportunity. We must also use the best data at our disposal to evaluate risk. With HELOC performance impacted by property values, recent concern over the stability of home prices is causing some lenders to pause. Clients tell us they would like to expand their HELOC offerings but aren’t sure when or where to start. Q: So, what’s the answer here?A: Data is key to taking the guesswork out of decisions. When it comes to HELOC expansion, lenders voice concern specifically about home price forecasts. Although it is notoriously hard to forecast home prices, you can use actual, current data to inform decisions about where and when to expand a home equity portfolio. For example, lenders can use listing data to gauge markets shifting from a “seller’s market” to a “buyer’s market.”Q: Susan, this has been a great discussion. Any final thoughts? A: As I’ve shared, great opportunities exist. With best-in-class data and analytics, lenders can find these opportunities and propel their businesses forward. Be sure to read the other blog posts in this series:Getting Ahead with a Proactive Mortgage Outreach and Engagement StrategyLead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy To learn about Experian Mortgage solution offerings, click here.

There are many facets to promoting a more equitable society. One major driver is financial inclusion or reducing the racial wealth gap for underserved communities. No other tool has impacted generational wealth more than sustainable homeownership. However, the underserved and underbanked home buyers experience more barriers to entry than any other consumer segment. It is important to recognize the well-documented racial and ethnic homeownership gap; doing so will not only benefit the impacted communities, but also elevate the level of support of those lenders who serve them. What are we doing as an industry to reduce this gap? Many organizations are doing their part in removing barriers to homeownership and systemic inequities. In 2021, the FHFA published their Duty to Serve 2021 plans for Fannie Mae and Freddie Mac to focus on historically underserved markets. A part of this plan includes increasing liquidity of mortgage financing for lower- and moderate-income families. Fannie Mae and Freddie Mac each announced individual refinance offerings for lower-income homeowners – Fannie Mae’s RefiNow™ and Freddie Mac’s Refi PossibleSM. Eligible borrowers meet requirements including income at or below 100% area median income (AMI), a minimum credit score of 620, consideration for loans in forbearance and additional newly expanded flexibilities. As part of the plan, lenders will lower a borrower’s monthly payment by at least a half a percentage point reduction in their interest rate, which can translate into hundreds of dollars of savings per month and sustain their homeownership. Experian has the tools to help mortgage lenders take advantage of this offering  As a leader in data, analytics and technology, we have the tools needed to help lenders recognize opportunities to be inclusive and identify borrowers who may be eligible for Fannie Mae’s and Freddie Mac’s lower-income refinance offerings. To illustrate, we performed a data study and identified over 6M eligible mortgages nationwide (impacting over 8M borrowers) for this plan, and some lenders had as much as 30% of mortgages in their portfolio eligible with lower- and moderate-incomes.1 These insights can have a positive impact on the borrowers you serve by promoting more inclusion and benefit lenders through improved customer retention, strengthened customer loyalty and an opportunity to continue to build generational wealth through housing. We are committed to enabling the industry's DEI evolution As the Consumer’s bureau, empowering consumers is at the heart of everything we do. We’re committed to developing products and services that increase credit access, greater inclusion in homeownership and narrowing the racial wealth gap. Below are a few of our recent initiatives, and be sure to check out our financial inclusion resources here: United for Financial Health: Promotes inclusion in underserved communities through partnerships and have committed to investing our time and resources to create a more inclusive tomorrow for our communities. Project REACh (Roundtable for Economic Access and Change): brings together leaders from banking, business, technology, and national civil rights organizations to reduce barriers that prevent equal and fair participation in the nation’s economy, and we are engaged with the Alternative Credit Scoring Utility group as part of this initiative. Operation Hope: Empowers youth and underserved communities to improve their financial health through education, so they can thrive (not just survive) in the credit ecosystem so they can sustain good credit and responsibly use credit. DEI-Centric Solutions: From Experian Boost to our recent launch of Experian Go, we offer a variety of consumer solutions designed to empower consumers to gain access to credit and build a brighter financial future. What does this mean for you? Our passion, knowledge and partnerships in DEI have enabled us to share best practices and can help lenders prescriptively look at their portfolios to create inclusive growth strategies, identify gaps, and track progress towards diversity objectives. The mortgage industry has a unique opportunity to create paths to homeownership for underserved communities. Together, we can drive impact for generations of Americans to come. Let’s drive inclusivity and revive the American dream of homeownership. 1Experian Ascend™ as of November 2021

As quarantine restrictions lift and businesses reopen, there is still uncertainty in the mortgage market. Research shows that more than two million households face foreclosure as moratoriums expire. And with regulators, like the Consumer Financial Protection Bureau (CFPB), urging mortgage servicers to prepare for an expected surge in homeowners needing assistance, lenders need the right resources as well. One of the resources mortgage lenders rely on to help gain greater insight into their borrower’s financial picture is income and employment verification. The challenge, however, is striking the right balance between gaining the insights needed to support lending decisions and creating a streamlined, frictionless mortgage process. There are three main barriers on the path to a seamless and digital verification process. Legacy infrastructure Traditional verification solutions tend to rely on old technology or processes. Whether a lender’s verification strategy is centered around a solution built on older technology or a manual process, the time to complete a borrower verification can vary from taking a day to weeks. Borrowers have grown accustomed to digital experiences that are simple and frictionless and experiencing a drawn out, manual verification process is likely to impact loyalty to the lender’s brand. Stale employment and income data The alternative to a manual process is an instant hit verification solution, with the aim to create a more seamless borrower experience. However, lenders may receive stale borrower income and employment data back as a match. Consumer circumstances can change frequently in today’s economic environment and, depending on the data source the lender is accessing, data may be out of date or simply incorrect. Decisioning based on old information is problematic since it can increase origination risk. Cost and complexity Lenders that use manual processes to verify information are adding to their time to close and ultimately, their bottom line by way of time and resources. Coupled with pricing increases, lenders are paying more to put their borrowers through a cumbersome and sometimes lengthy process to verify employment and income information. How can mortgage lenders avoid these common pitfalls in their verification strategy? By seeking verification solutions focused on innovation, quality of data, and that are customer-centric. The right tool, such as Experian VerifyTM, can help provide a seamless customer experience, reduce risk, and streamline the verification process. Learn more

Hispanics are not only the fastest growing minority in the United States, but according to the Hispanic Wealth Project’s (HWP) 2017 State of Hispanic Homeownership Report, they would prefer to own a home rather than rent. Hispanic Millennials—who are entering their home-buying years—are particularly eager for homeownership. This group is educated, are entrepreneurs and business owners that over index on mobile use, and 9 of 10 say wanting to own a home is part of their Hispanic DNA. For them, it’s not a matter of if but when and how they will become homeowners. An optimistic outlook is also a trait of Hispanic Millennials, who generally are more positive about the future than the average Millennial. They are also confident in their ability to handle different types of tasks that are part of their day-to-day lives. And at 35 percent, the share of bilingual Hispanic Millennials with a household income of $100,000 or more is consistent with U.S. Millennials as a whole Homeownership challenges Yet, despite their optimism and goal of homeownership, Hispanic homeownership at 46.2 percent lags when compared to the overall U.S. home ownership rate of 63.9 percent in 2017. There are signs the gap could narrow; Hispanics are the only demographic to have increased their rate of homeownership for the past three years. Moreover, the report shows Hispanics are responsible for 46.5 percent of net U.S. homeownership gains since 2000. Still, the 2017 State of Hispanic Homeownership Report notes that a shortage of affordable housing, prolonged natural disasters in states with a significant Hispanic presence (California, Florida, Texas), and uncertainty over immigration policy could hinder Hispanic homeownership growth. An opportunity to reach Hispanics It seems most Hispanic Millennials will strive for homeownership at some point in their life, as they believe owning a home is best for their family’s future. With no convincing needed, there is a tremendous opportunity for mortgage providers to look deeper into the reasons behind Hispanic Millennials’ optimism to determine how to insert themselves into that dynamic. Research highlights the importance of creating interest in financial advice and making this a potential means of gaining trust. Hispanic Millennials who gain a better understanding of the benefits—not only for them but for generations to come—and costs of owning a home may translate their confidence into action.