All posts by Jenna Ostmann

High property values and rising interest rates have priced many borrowers out of the market. In the face of declining home purchases, lenders are focusing on their portfolios and opportunities to expand borrower relationships. At the same time, portfolio health is increasingly important. Keeping a pulse on and successfully managing portfolio risk is just as important as portfolio growth. To effectively manage a mortgage portfolio, an understanding of the complete financial standing of a borrower, along with the most recent loan performance and property data characteristics, is crucial. Below we discuss three ways to analyze your portfolio to maximize performance. Portfolio risk While mortgage delinquencies remain well below pre-pandemic levels, rolling delinquency rates are seeing an uptick. In a recent study, we found that, of the at-risk population, over 24% may be at high risk of delinquency or default. Having the tools and resources to segment your portfolio and identify these borrowers is key to preemptively assisting or modifying loan terms and reducing risk exposure to the business. Growth and retention Did you know up to 64% of prime and above borrows may be ideal Home Equity Line of Credit (HELOC) candidates? Having the ability to segment your portfolio to identify borrowers who can tap into their home equity as a line of credit for upgrades, remodeling, or simply a rainy-day fund, will allow you to grow your originations pipeline while also supporting your mortgage retention strategy. To optimize your segmentation strategy, consider leveraging In the Market Models (ITMM) to identify borrowers with a high propensity to respond to HELOC offers. Through a retrospective analysis, we found that ITMM can improve campaign performance by over 700%. Similarly, a HELOC can be a prime option for borrowers with increasing debt. Through our newly launched solution, Mortgage Insights Dashboard for Servicing, we found that up to 46% of prime and above borrowers may be ideal candidates for debt consolidation. For this segment of your portfolio, a HELOC can consolidate high-interest debt from credit cards, retail cards, or even short-term loans. Peer analysis Like sports teams, many mortgage lenders and servicers are interested in comparing their performance against that of their peers. Are your portfolio runoff rates above, equal to, or below that of your competitors? In some instances, we’ve seen a lender’s runoff rate averaging 10% MoM higher than their peers. By comparing your portfolio performance against your peers (and the market) you can assess both the efficacy of portfolio recapture strategies and demonstrate loan quality to investors. While these are just a few examples of ways to analyze your portfolio, perhaps what’s most important is having the data, such as credit, income, DTI, and property information, needed for this type of intelligence available in one place. Partner with a provider that can offer you the mortgage servicing solutions to easily segment your portfolio to gain insights and inform ongoing strategic decisions. Learn more *Data charts source: Experian's Mortgage Insights Dashboard for Servicing

Today’s mortgage market is challenging. Mortgage lenders and servicers will need to focus on product expansion to continue to grow their business. In a recent Q&A session, Susan Allen, Head of Product for Experian Mortgage, shared best practices for leveraging data for profitable growth.Q: At a high level, how can mortgage lenders and servicers grow their businesses?A: There are a lot of options to increase pipeline. One best practice we’re seeing now is to consider expanding both your product suite and your footprint. Very few lenders offer a comprehensive set of solutions in a national footprint. But demand is strong for solutions that go beyond traditional 30-year fixed-rate mortgages, including options to tap home equity. These types of products can help you grow your business by exposing you to new borrowers and broadening your relationships with clients. For example, we see several clients, even non-banks, venturing into credit cards and personal loans to meet their customers’ broader financial needs.Q: You mentioned demand for home equity solutions is strong. What should lenders consider when it comes to home equity loan growth strategies?A: The current record level of untapped equity makes home equity lines of credit (HELOCs) attractive for borrowers to use for debt consolidation, remodeling or to add to their rainy-day fund. For lenders to decide whether HELOCs would be profitable for their business, they should look broadly at data about borrowers, volumes and indicators of profitability, such as credit lines and utilization.Q: It’s one thing to talk about the HELOC market, but does Experian have any home equity data to show what’s happening in this space?A: Absolutely. We’re seeing several things when it comes to home equity data. First, HELOC volumes have doubled since January 2021, which indicates strong borrower interest. Second, we know that home prices are at record highs across the board, and we see this record of “tappable” equity translating into credit lines well over $100,000. What’s more, we’re seeing borrowers drawing down consistently at $37,000 on average, which is a healthy and profitable utilization rate. Lastly, greater than 90% of HELOC borrowers have a prime or super prime credit score. Our data shows HELOC borrowers have higher credit scores than new purchase borrowers. Additionally, conventional wisdom says that HELOCs are for seasoned homeowners, but according to the data, the younger generation of homeowners has tripled their HELOC originations. I’ve been in this industry for a long time, and to be honest, this shocked me. This makes it clear that it’s always important (especially for industry veterans) to constantly update our understanding of current market dynamics. Q: Wow, it sounds like expansion into home equity solutions is a no-brainer. What am I missing? A: HELOCs are a strong and growing market segment. But it’s not sufficient to look only at opportunity. We must also use the best data at our disposal to evaluate risk. With HELOC performance impacted by property values, recent concern over the stability of home prices is causing some lenders to pause. Clients tell us they would like to expand their HELOC offerings but aren’t sure when or where to start. Q: So, what’s the answer here?A: Data is key to taking the guesswork out of decisions. When it comes to HELOC expansion, lenders voice concern specifically about home price forecasts. Although it is notoriously hard to forecast home prices, you can use actual, current data to inform decisions about where and when to expand a home equity portfolio. For example, lenders can use listing data to gauge markets shifting from a “seller’s market” to a “buyer’s market.”Q: Susan, this has been a great discussion. Any final thoughts? A: As I’ve shared, great opportunities exist. With best-in-class data and analytics, lenders can find these opportunities and propel their businesses forward. Be sure to read the other blog posts in this series:Getting Ahead with a Proactive Mortgage Outreach and Engagement StrategyLead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy To learn about Experian Mortgage solution offerings, click here.

Mortgage lenders are no stranger to income and employment verification. Leveraging a third-party solution provider for automated verifications is a standard practice in mortgage underwriting. Yet many lenders still struggle with time-consuming and complex verification experiences, which can be manual, inefficient and painful for borrowers. Since introducing Experian Verify™ to the market, we’ve had countless conversations with key players in the industry – from the largest banks to small independent mortgage brokers and everything in between. Through these conversations, we’ve learned quite a bit about some of the dos and don’ts when it comes to implementing a successful strategy for income and employment verification for mortgage. Lead with instant verification Digital transformation has forever changed borrower expectations for online experiences. The first key to a successful verification strategy is starting your workflow with an instant verification solution. This allows you to verify information in real time, delivering a completely frictionless experience for you and your borrowers. Consider building a waterfall process For instances when a borrower’s income and employment information is unable to be verified through an instant verification solution, add a consumer-permissioned (bank or payroll) option as a backup. Cascading from one digital solution to the next will ensure you can verify borrower information in seconds or minutes, as opposed to days or weeks. The goal is to prevent as many borrowers as possible from going through a costly manual process. Tap into unique data sources Many verification solutions in market today tap into the same data sources, which can make it difficult to differentiate between solutions and measure additive benefits. When evaluating options, look for verification solutions that leverage unique and exclusive data sources – allowing you to optimize hit rates and maximize value. Avoid a “one-size-fits-all” approach There is no silver bullet. Every market is unique and every lender has different needs. Your verification requirements are likely specific to your business, which means you need to leverage verification solutions that offer flexible options and enable you to build a verification experience that works best for you and your borrowers. Find a solution provider who’s all in It’s important to find a solution provider where income and employment verification isn’t just a “side hustle,” but is core to their business strategy. Find a provider who is fully committed – delivering new innovations, investing in key partnerships, maximizing accessibility through leading LOS / POS technology providers, and offers eligibility for key industry programs, such as Day 1 Certainty® from Fannie Mae. Challenge the status quo Many lenders have an existing relationship with a third-party solution provider. But it’s important not to put all your eggs in one basket. If your existing provider is not meeting all your needs, challenge the status quo. Consider adding a second provider to the top of your waterfall to help contain costs and tap into unique data that is not available from your existing provider. Ready for further insight? Learn more about income and employment verification for mortgage.