As the mortgage industry increasingly embraces technology to streamline the homebuying process, a recent survey reveals a significant opportunity for broader adoption of digital verification tools. Despite the efficiency and simplicity these tools offer, many homebuyers remain unaware or hesitant to use them, indicating a need for greater industry outreach and education.
The survey, conducted earlier this year, focused on homebuyers who purchased a property with a mortgage acquired by Fannie Mae between January and November 2023. By comparing this data to a similar survey conducted three years ago, the study highlights key trends in consumer behavior and preferences regarding digital mortgage technology.
Growing interest in digital mortgages
The survey found that interest in a more or fully digital mortgage process has surged, with many recent homebuyers expressing a strong preference for online channels. This trend spans all demographic groups and marks a significant shift from 2021, when such preferences were less pronounced.
Homebuyers particularly value the speed and simplicity that digital tools bring to the mortgage process. According to the survey, 75% of respondents cited accelerated processing as a top benefit of digital mortgages, while 71% appreciated the ease of completing steps online.
Underutilization of digital verification
Despite the enthusiasm for digital solutions, the survey revealed that many homebuyers were not offered the option to use digital verification tools during their mortgage process. Digital verification allows borrowers to grant lenders or third-party service providers (TSPs) access to their online bank accounts to verify employment, income, and assets, eliminating the need for manual submission of financial documents.
Only about one-third of respondents reported being asked to use digital verification for closing or down payment fund verification. Among those offered the option, most agreed to grant access. However, 4% declined, citing data security concerns as their primary reason for opting out.
Interestingly, experience with digital verification seems to play a significant role in future adoption. Slightly more than half of those who used digital verification for their current mortgage said they would use it again. In contrast, only 15% of those who were not offered the option indicated they would use it in the future.
Experience matters for adoption
The survey results suggest that familiarity with digital verification technology can help alleviate concerns about privacy and data security. Respondents who had positive experiences with the technology were less likely to worry about these issues and more inclined to use digital channels for other homebuying tasks.
“Effective communication between loan officers and homebuyers is key to driving greater adoption of this technology,” the survey report noted. “Potential borrowers need to clearly understand what digital verification is, how it works, its benefits, and how its risks are managed and mitigated.”
Call for broader adoption
The findings indicate a strong potential for expanding the use of digital verification tools across the mortgage industry. By proactively offering these options and educating consumers about their benefits, lenders can help normalize the use of digital tools and further streamline the homebuying process.
As technology continues to evolve, the industry stands at a pivotal moment where embracing digital verification could enhance efficiency, reduce costs, and improve the overall borrower experience. The survey suggests that with the right approach, more homebuyers could soon take advantage of these modern solutions, making the often-complicated mortgage process simpler and more secure.
To learn more, read the full research deck.
