Posted on February 21st, 2019
In yet another effort to push mortgage lending firmly into the 21st century, loanDepot has debuted its proprietary “mello smartloan” technology, an end-to-end digital mortgage loan intended to cut out the paperwork and lengthy turn times.
It should also make the process a lot more secure, with less sensitive information floating around the web via email from borrower to lender.
loanDepot claims it made history with this launch, so let’s learn more about it.
mello smartloan Can Generate a Real Loan Approval in Just 7 Minutes
- loanDepot claims its new proprietary loan engine technology is really fast
- With real loan approvals generated in as little as seven minutes
- The process is less paperwork-intensive and more secure
- It can reduce fraud, lower costs to both lender and borrower, and create a better overall customer experience
Aside from being a more secure lending platform, mello smartloan is built for speed, similar to many of the other new offerings we’ve seen lately in this space.
The mortgage loan process can be very lengthy as it often takes anywhere from 30-45 days to close a mortgage, something that just won’t do in today’s era of instant gratification.
Coincidentally, the company claims it can provide a customer with a full loan approval in as little as seven minutes, which happens to be a minute faster than Quicken’s Rocket Mortgage.
So if you’re short on time (or patience), this might be just the ticket for you. Of course, timing isn’t everything. We also have to consider pricing, which will stick with you for as long as 360 months if you go with a 30-year fixed.
While convenience is great, a lower mortgage rate is probably a lot better, even if you have to put in a little more time.
How mello smartloan Works
- Income, asset, and employment information are imported digitally
- This data is then “intelligently processed through proprietary loan engines”
- At which point loan options are presented to the borrower if they are approved for financing
- The closing and funding process (and potentially the appraisal) are also digital to greatly increase speed and increase security
It’s different from “traditional mortgages” in that each step of the process is digital, as opposed to paperwork-intensive.
With just about any mortgage, you’re required to send the lender financial information such as income, asset, and employment documentation.
This allows the underwriter (or automated underwriting system) to determine if you’re eligible for certain loan programs based on your ability to repay the loan.
Because mortgage lenders are committing hundreds of thousands of dollars or more, they’ve got to be pretty thorough.
It’s for this reason that obtaining a mortgage has been so painstakingly long. What companies like loanDepot are attempting to do is speed up the process while also making the underwriting more reliable.
Sounds like a dream come true, right? Well, it’s no longer a dream, and will soon be a reality for all mortgage lenders.
What’s great is that these digital processes can actually reduce fraud and improve the customer experience, while also lowering lender costs, which sounds like the ultimate feat.
They can manage this because all that borrower information is now validated digitally.
Instead of sending over bank statements in PDF format, companies like loanDepot are granted access to your bank account information and can instantly import it into their loan decisioning engine.
That’s not only faster, but also more accurate, and it should be a lot more difficult to game the system.
The same digital process connects your income and employment, similar to how a credit report (and scores) are generated on the fly from the credit reporting agencies.
From there, the lender has all the key pieces of information it needs to generate an underwriting decision.
Instead of asking you how much you make, how much you’ve got in the bank, where you work, what you think your credit score is, they go straight to the source.
This allows their proprietary loan engines to almost instantly determine the loan options available to you that will provide the greatest potential cost- and/or time-savings.
Then one of the company’s 2,000+ loan officers can get involved and help guide the customer accordingly.
Time to Close a Mortgage Can Be Reduced by 75%
- loanDepot projects that loan closings can be reduced by up to 75%
- Which means some borrowers may be able to get a mortgage in as little as 8 days
- However only about half of borrowers will be able to take advantage of mello smartloan
- Because of issues like self-employment or other factors that prevent digital verification
Aside from making things a lot easier for the customer, something that will likely jibe well with today’s impatient consumer, turn times should also be drastically reduced.
loanDepot claims time to close can be condensed by as much as 75 percent, slashing the time it takes to get a mortgage to just eight days in some cases.
Of course, for that to happen the borrower will likely need to be of the vanilla variety, meaning everyday W2 employee (not self-employed) with nothing funky going on in their loan file.
Oh, and they’ll probably need to get an appraisal waiver to skip that lengthy step too, something that Freddie Mac has been working on since last year.
What might separate mello smartloan from the other digital mortgage offerings is that their paperless process exists from start to finish, including the closing and funding portion.
loanDepot projects that up to 55% of new applicants will be eligible for their digital home mortgage experience, with some left out thanks to things like being self-employed.
Additionally, these same customers may also enjoy favorable mortgage rate pricing due to lower overhead costs associated with the rollout of the technology.
Of course, loanDepot says it invested more than $80 million on the technology, so always take the time to shop around.
loanDepot, which has only been around since 2010, has funded over $165 billion in mortgages and currently ranks as the nation’s 5th largest retail mortgage lender and 2nd largest nonbank lender behind Quicken.
They’ve even been rumored to be a potential acquisition target for Amazon as a means to get into the lucrative mortgage space.