A Faster, More Seamless Mortgage Approval Process with Finicity Digital Verification

Buying a home is a high-stakes process. Whether it’s for the first or the fourth time, choosing a place to live is thrilling and stressful all at once. Once buyers find a suitable home, they face a mountain of paperwork.

Buyers are often advised to gather the required documents and find a loan originator who can help them sort through their options and accompany the deal across the finish line. But this isn’t always easy. The constant hassle of going back and forth between parties slows down the process, wasting both time and money for the seller, the mortgage originator, and the buyer alike.

Embracing Fintech to Verify Loans

There are any number of rules and regulations that guarantee consumer privacy and protect against fraud. These rules and regulations, however, can hamper the free flow of information when it comes to applying for financing. Online tools exist to simplify the process, but the mortgage industry is notoriously conservative when it comes to adopting new technologies. Fortunately, lenders have begun listening to consumers and are starting to embrace cloud-based fintech to originate loans. 

At Waterstone Mortgage, we work tirelessly to make the dream of homeownership a reality for families across the country. We want to make the process of submitting a loan application as easy as possible, and like many other lenders out there, Waterstone is looking to our tech stack to improve this experience. 

Our LOS is Ellie Mae’s Encompass, one of the largest cloud-based platforms in the mortgage industry. My job is to handle all of the products that integrate with Encompass, including deployment, upgrades, documentation, and tech support. Part of my responsibilities include making sure that everybody at our branch offices is on the same page—and that means standardizing our tools and integrations across the board. 

Adding Digital Verification to Encompass

Despite its many features, we looked to expand on our Encompass capabilities. To continue our goal of developing a simple, digital customer experience, we wanted to move away from paper-based processes for retrieving bank account information to verify applicants’ assets. In the past, our loan originators had to request physical bank statements and manually scan them as part of the loan application process. But one of the common industry issues is the omission of the last page of financials, which customers often throw away or omit when submitting their application, which can lead to delays. 

To streamline and to begin digitizing the mortgage application process from start to end, we moved to the digital verification of bank records in early 2019. We started with one of the two leading platforms for asset and account verification. It was a good first solution that fulfilled the promise of electronic document gathering, but it only offered out-of-the-box functionality. We had no access to its API and couldn’t fully integrate it with Encompass, nor did we achieve the customer experience we wanted to represent our brand. While it helped us make the transition to gathering documents electronically, it lacked many of the features we needed.

By year’s end, it was clear that this wasn’t a long-term solution for us. We needed additional integrations and a better experience for our loan officers and applicants, and so we crossed the aisle to Finicity. 

Finicity is the most widely-used platform for asset and account verification, and it also provides other financial data APIs, credit decisioning tools, and financial wellness solutions. We embarked on a limited trial of Finicity in December of last year, and by the end of February 2020, Waterstone had moved all our branches to this new platform. 

Starting Small, Then Branching Out

We started small and piloted Finicity at half a dozen branches. These were among our bigger locations in terms of volume, but their loan originators were also more willing to embrace change. To be honest, people don’t like when you alter the way they work, especially when you ask them to drop a tool they’d adopted a few months earlier for something even newer. I knew that no one in our Finicity pilot locations would bemoan the fact that we were moving in another direction. 

At first, those branches were the only locations to use Finicity with our online applications. Then we expanded its use to non-online applications through Encompass. After a successful pilot, we rolled it out to the loan originators at all our locations.

In all, it took about 90 days to make the transition to Finicity, and the process could have been faster were it not for a big event. Every January, Waterstone holds a huge sales conference, so we put the brakes on the deployment to prevent overstraining our resources. When we resumed the Finicity rollout in February, it continued as if we had never stopped. 

Our loan originators started to embrace their new tool. Between March and June of this year, we’ve seen a 10% to 15% monthly increase in the use of Finicity to verify assets. That’s a telling reflection of Waterstone’s overall shift to digitization. Over time, originators not only accept the increased efficiencies, but are excited by them.

A Seamless Process That Builds Trust

One of the ways Finicity sets itself apart is in how easy it is to access from Encompass. Our loan originators don’t have to enter any credentials, they are all managed on the back end.  Whenever they want to access its asset verification features while sitting with a customer, they can do so with just a few keystrokes. They don’t have to enter a password, and they don’t have to leave Encompass because Finicity opens in the iframe within that application. 

It may not seem like much, but these few seconds saved can help build trust when people are applying for loans in person. Instead of watching their loan originator fumbling to log into one system after another, applicants see a financial services professional smoothly navigating a series of steps in a seamless process. This sense of cohesion can be extremely reassuring when people are asked to volunteer sensitive personal and financial information as part of their mortgage application.

We make the same seamless experience available to our loan originators’ customers when they apply for a mortgage online. Our web portal guides them through an intuitive series of Waterstone-branded forms that feed into Encompass and Finicity. Again, the crucial element is consistency. If consumers feel they’re being shuffled from one platform to another, they have less confidence in the loan application process. 

Better Options, Better Security

We made an announcement after the pilot notifying originators that we’d be using Finicity from now on. We’re very consumer-centric, so even though digital verification wasn’t new to originators, we wanted to give them the ability to be completely transparent with their clients when it came to who was accessing their data. With the change, we started to reemphasize the procurement of digital asset statements electronically, and originators responded to that. The verification process is easy to use and has not disrupted their workflow in any way. 

I also found working with Finicity was a cooperative two-way street. During the initial phases of rollout, we found the process for submitting support tickets could be improved. Working in partnership with Finicity we quickly resolved the issue and helped improve the process. Now, we connect every couple of weeks to ensure that everything is running smoothly. On occasion, I’ve even asked the company to add a bank that isn’t already on their list. It really is a partnership.

Our next step is integrating Finicity’s TXVerify income and employment verification solution into Encompass. That’s going to be a major improvement over our current method of contacting individual employers. Not only is that another time-consuming process, but manually checking employment information allows us to confirm or reject loan eligibility with certainty only about 30% of the time. With Finicity, it is expected that the hit ratio will rise to roughly 70%. And let’s face it, the more information you can verify, the lower your chances of dealing with a fraudulent application, which is a considerable risk in the mortgage industry.

We’re also ahead of the game when it comes to e-closings. We were seeing some traction in that area before the pandemic hit, but COVID-19 has forced homebuyers to change the way they finalize the purchase of their properties. Before the coronavirus, the number one reason for e-closings was convenience. It was easier for buyers to seal the deal on a home purchase from their office or their couch rather than having to fight traffic or take time off from work to make their way to the closing table. 

Now, health and safety are just as likely to be the reasons behind digital and hybrid closings, but another benefit of e-closings is that they are far more secure than their in-person counterparts. There are more checks and balances, better forensic tools, and improved authentication mechanisms involved.

We think e-closings are going to become the norm rather than the exception. Like every other area of life, consumers have come to expect these digital offerings, and because of this, Waterstone’s move to digitization has only helped our customers on their homebuying journey.

Finicity Is Making Wishes Come True

Looking back at our Finicity journey, I am happy that our roll-out went so smoothly. Sometimes, people are afraid to try new things but usually adapt and discover that these new things have improved their lives in some way or another.

At the end of the day, the mortgage business is about helping people find their next home. Our loan originators assemble the financial package that puts the keys in their customers’ hands. They have to make the loan approval process as quick and painless as possible. Online tools like Finicity make it easier than ever to perform the due diligence needed to help folks make the biggest purchase of their lives. Our loan originators may not be genies, but they do make wishes come true.