Page 32 - June 2018 Disruption Report Flip Book

TRANSFORMING MORTGAGE LENDING JAJNUUNAERY20210818
Below, we describe some of the strategies, and opportunities across the mortgage process.
OPPORTUNITIES ACROSS THE MORTGAGE PROCESS
A. Hide the complexity, then fix it — for seemingly faster home purchase
The fastest way to initially improve the mortgage user experience is to not actually try to improve it, but to shield the mortgage applicant from the backend complexity. What if an agent managed your full home buying process and your mortgage process? A startup here could choose to guarantee a mortgage to a home buyer, making it look “instantaneous”, as if the home buyers had made an all-cash offer (so practically no mortgage process). The company would then go secure the actual mortgage on the market which, without other process improvements, could still take up to 45 days. While the company does assume
the risk that it may not be able to secure the mortgage at the rate given to the borrower, it could command a premium for the convenience offered to the user. (And spread over many mortgages, the premium charged would offset the risk of doing so in the first place.)
B. Make home sale timing faster and more predictable
Uncertainty around the timing and price of the home sale are some of the worst problems for buyers and sellers, especially when a seller wants to sell one property in order to buy another. Does she sell before obtaining a mortgage for a new home, and risk not having a new place to live... or does she wait to sell until after obtaining a new home, but then risk holding two mortgages at once?
Some startups (like OpenDoor) provide sellers with a “buy it now” price and a timing guarantee as a way to provide much-needed predictability in the process. But to deliver this predictability, these startups need to develop smart models— often with the help of
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