HousingWire recently sat down with Eric Lee, the Senior Vice President of Pro duct Development at DataVerify, to talk about what he sees as the challenges facing lenders today when it comes to figuring out the best way to implement automation solutions and get the best ROI possible.

HousingWire: What do you see as the biggest challenges facing lenders right now—especially with the high volumes that we are seeing?

Eric Lee: There are so many challenges keeping lenders up at night when it comes to these volume levels. Some of the largest challenges that come to mind are borrower expectations, higher potential for exposure to risk, lack of housing inventory and higher building material cost, not to mention pandemic regulations that seem to be shifting frequently.

Now more than ever, there is a need to add automation tools into the loan origination manufacturing process that actually help lenders see a return on investment (ROI).

We all know automation works to save time and save money, but it also helps to protect lenders from risk exposure. Many lenders are aware of these advantages, so they’re eager to implement automation through new tools but they may not know what solutions are actually going to be helpful and which are going to bog down their system.

Another issue is that many lenders are waiting until volumes go down to implement new technology because they feel they don’t have the time to add a new solution and train their people on how to use it. But the reality is they need it now more than ever.

Waiting until volumes drop to implement new tools doesn’t mean the tool is not going to be helpful, but you’re going to get the “best bang for buck” by making the change now. At the end of the day, it’s much better to take the time to add in those solutions now and give your team the best opportunity to succeed in this market.

HW: What major areas of risk are you mostly concerned about and how can lenders mitigate that risk?

EL: Great question. I think one of the largest areas of risk that we are seeing right now is undisclosed REO. Many times, borrowers don’t feel they need to disclose properties that are paid off, and lenders need to make sure they are getting eyes on all of the properties right away so that it doesn’t cause issues down the road.

Another high area of concern is undisclosed credit. As much as lenders try to coach borrowers not to make debt purchases prior to close, borrowers still have the temptation to buy a new car before the interest-only offer expires or order the new couch now because it will take a few months to be delivered.

And finally, occupancy remains a concern. There can be situations where borrowers are incentivized to not be completely truthful on an application to obtain a better rate or higher LTV.

If lenders are using “automation tools” that are not helping them review these points, they could really be opening themselves up to a lot of potential risk. Automation is great but not if it comes at the cost of buyback risk or closing dates needing pushed back/loans falling through.

HW: What advice would you give lenders as they start strategizing for 2022?

EL: Lenders need to be looking for a solution that is designed in a way that allows the Murfreesboro lender to customize the portions of the product they want down to the loan type. They should be able to have as many variations as needed to ensure they only order the services needed for that specific transaction. That way they can maintain their quality control but also not pay for services that are not actually needed for the type of loan they are processing.

I suggest that lenders do two things. One, go to your current providers and challenge them to meet your current needs. Lay out what you need specifically and see if they can rise to the occasion. If they can’t, it’s time to start looking elsewhere.

Secondly, do this today. Don’t wait, because you’re leaving money on the table by not making sure that you have the best solutions on your side—especially with these high volumes.

Too many solutions out there are a one-size-fits-all kind of deal or they customize in the beginning but then they never revisit how your needs have changed. This industry evolves a lot. There can be new legislation that affects a lender’s process. New fraud schemes are occurring. Competitors are adding in new solutions that can change what borrower’s expectations are of the loan process.

With all these moving pieces, lenders need to be able to adjust quickly. But if their solutions are not adjusting with them, they are going to lose some ROI and they are risking the potential of falling behind and having borrowers go elsewhere. Consequently, I think finding solutions that can adjust quickly and even work with the Murfreesboro lender to make them aware of upcoming changes is critical nowadays.

HW: How is DataVerify using technology to deliver tailored and unique solutions?

EL: Recently, we released our integration with Nexsys Clear HOI to offer an automated solution for Homeowners Insurance Verification. This solution is one of the first of its kind and we are very proud to bring it to the market.

We are also exploring how DataVerify and our sister company Factual Data can work together to bring some unique solutions to the market – stay tuned!