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Mortgage Lending in the Year 2001 -- "The Jetsons Return"
Internet use is expected to grow at an exponential rate over the next couple of years. Many business executives believe there is tremendous opportunities in marketing goods and services through the Internet technologies. The banking industry in particular is attracted to the Internet and the World Wide Web as a cost effective and "high tech/high touch" mechanism to connect to their customers. Another industry poised to take advantage of the Internet is the residential mortgage lending industry. Let's look into our crystal ball and see what a real estate lending transaction may look like sometime at the end of 2001. Remember, this is only a story. Or is it? Our customer is a family of four, existing homeowner and one of 70 million households in American that are connected to an online service. The television, telephone, and PC have all become integrated into a new device called the Interactive Media and Communication Apparatus (IMCA). The online service provides "rent ware" for 1000 software programs, 500 interactive media stations, and tele-conferencing all through ISDN lines (or equivalent); the monthly cost is $50.00. Mr. and Mrs Jetson, as we will call them, have decided they need a larger home and have begun the house hunter process. Their search begins by activating the nationwide interactive real estate listing service on their IMCA. The first item on the service is a questionaire that will help the Jetsons' locate a suitable home that meets their needs. There are a series of questions relating to the location, number of bedrooms, bathrooms, square foot size, school district, etc. that will help narrow the search to few selections. After the search has been completed, the service provides a list of potential homes that meet the Jetsons' criteria. They proceed by touring each home--viewing a three dimensional movie that shows all of the rooms and the exterior of the home. Without calling a real estate professional, the Jetsons locate homes that merrit a actual visit. After selecting a few homes, they call a local real estate professional to represents them in transaction. Prior to physically visiting the selected homes, the Jetsons want to be assured they can qualify for a loan to help finance the acquisition. Another service on the IMCA is a Residential Mortgage Lending Resource Center that provides interactive tools and information to help consumers locate a mortgage professional to help in the mortgage lending process. . After comparing the performance of their current mortgage with other types of mortgage loans, the Jetsons decide on a loan. They locate the product description and current terms and conditions of the loan to help validate their selection and review other salient loan information that is available. The Jetsons begin the process of obtaining a loan by completing an online application that has less than 20 questions. The uniform residential loan application has been compressed from the outdated 187 question application. Upon completion of the application, the mortgage lending service instantly validates most of the information on the application. Information on the application is electronically validated. Balances in the depository institutions and wall street firms are validated through a central data base; income from tax returns and self employed are verified directly by the IRS; incomes from employees of fortune 500 companies, government agencies, and unions can be verified through a central data base; and credit reporting agency provide current credit balances, history of payments, and credit scoring. The application and supporting documentation are instantly routed to an automated underwriting system (AUS) and the Jetsons' quickly obtain an approval for the loan they desire. The credit application, processing, and approval takes 30 minutes. The Jetsons continue with the process by locating a mortgage professional that is a member of the online Residential Mortgage Lending Resource Center. A mortgage professional can help the Jetsons locate a competitive lender to fund the mortgage, help gather any additional information or documentation that is needed to complete the transaction and assist in the loan closing. All of the member firms can receive the application and supporting documentation from the online service and transmit it to a suitable lender. Each mortgage professional markets their products and services in a creative and informative way to attract customers. Some other ancillary services, such as appraisals, title, home inspections, etc. can be located from this online service. After the Jetsons obtain an affirmative answer from the AUS--and a suitable loan located by a mortgage professional--a letter of commitment is issued. The Jetsons deliver the loan commitment to the real estate agent to help assure any seller that they can qualify to purchase the subject house. After an offer has been accepted and conditions required to consummate the transaction have been met, the loan documents can be prepared and delivered through the online service. The Jetsons can receive a copy of the documents at their house (over their on-line service) to review prior to funding--at the same time they are being delivered to the closing agent. The Jetsons' current house will be listed and marketed the same way over IMCA. As soon as a buyer can be found for the Jetsons' home, the real estate and mortgage transaction can be consummated. This scenario creates a cradle-to-grave real estate and mortgage transaction that takes hours and days rather than weeks and months. Is this a futuristic fable? Or, will technological innovations allow consumers to shop for and purchase mortgage lending products and services from the comfort of their home? Stay tuned as mortgage lending and the Internet meet. Excerps from an article written in the November 1995 issue of Mortgage Matters. Mortgage Matters is a mortgage broker trade magazine that is published by the California Association of Mortgage Brokers (CAMB). |
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