In conversation with Fortune
During the Great Recession, Fannie Mae had 18 million mortgage loans on its balance sheet. Each of those loans came with hundreds of pages of paper. As a result of the lacking transparency that these piles of paper created, regulators were unable to catch perilous indicators. Better and more accessible data could have been instrumental in untangling what was in those loans. With talks of a looming recession, Blend CEO Nima Ghamsari and Blend President Tim Mayopoulos (also the former CEO of Fannie Mae) stopped by Fortune’s Balancing The Ledger to talk data over documents, how mortgages might fare today during a recession, and what’s next for Blend and fintech.
Here are a few highlights.
Data over documents
“There’s still a lot of work to do on the mortgage process,” Nima said. “There’s still a lot of manual processes that could be done using data instead of documents.” He added, “What we’re thinking about is not just how do we make the mortgage process simple but also help bring together all the other pieces for consumers so they can have an amazing experience all the way through.”
MORE ON DIGITAL LENDING PLATFORMS HERE.
Accessibility to loans
Who is most likely to buy a home? Tim mentioned that millennials make up the largest share of home buyers but noted that: “Communities of color will be the largest proportion of new home buyers in the coming decades. For that reason, it’s all the more important that we figure out how to best serve those communities.”
MORE ON HOW TECHNOLOGY ENABLES ACCESSIBILITY HERE.
One-tap approval process
“On the way here, we were talking to one of the people in the lobby and he was saying he just applied for a loan with a bank that he already banks with. It took two weeks to get an approval. They already knew him. They should have been able to instantly look at his history of cash flow, look at his history of his payroll deposits, and say, ‘This is what you’re approved for.’”
Tim added that the process for a one-tap loan is just as robust as the traditional, paper-based process. “We’re still searching for and collecting the same data that would have been collected in paper form previously. We’re just able to do it much faster. We’re going to the primary sources; we’re going to people’s bank accounts because they give us access to them.”
“At least in the housing market, I think, given home price appreciation, given the quality of the loans that have been originated over the last 10 years, and given some of the risk management techniques that are being applied, both at the origination and servicing stages of loans, I’m much less worried about the state of housing and home prices than I was 10 years ago.”
MORE THOUGHTS FROM TIM MAYOPOULOS’ ON THE ECONOMY HERE.
What’s next for fintech
“One thing that I’m interested in and Blend is thinking of working with partners on is this idea of digital identity and digital financial identity using blockchain to power it. How do we give consumers access to their own data. Doing that is very difficult, and having that be a thing that they can use and keep up to date is also very difficult.” He added, “In 5 or 10 years I expect consumers will be able to frictionlessly access their financial data, have control over it, and be able to share who can use it and who can’t use it.”
READ MORE ABOUT HOW LENDERS ARE USING DIGITAL LENDING PLATFORMS.