Blend’s Soft Credit Functionality Supports Fannie Mae’s Desktop Underwriter Early Assessment Enhancement
- None.
- None.
Insights
The integration of Blend's soft credit pull functionality with Fannie Mae's Desktop Underwriter represents a strategic shift in the mortgage industry's approach to borrower qualification. By enabling lenders to utilize soft credit pulls, Blend is addressing a significant cost concern within the origination process. This is particularly relevant given the recent increase in the cost to pull hard credit files. From a financial perspective, the data suggesting up to a 71% cost saving is substantial, indicating a potential reduction in operational expenses for lenders. This development could improve lenders' margins and potentially make them more competitive in pricing their mortgage products.
Furthermore, the adoption of soft credit pulls could have implications for customer acquisition strategies. As the mortgage industry contends with high origination costs and buyer fallout, enhancing the pre-qualification process with cost-effective measures can enhance customer satisfaction and retention rates. Lenders that leverage this technology may see an increase in completed applications, thereby boosting their conversion rates and revenue potential. However, it is essential to monitor the long-term accuracy and effectiveness of soft pulls compared to traditional hard pulls to ensure that risk assessment standards remain high.
The move towards soft credit pulls in the mortgage pre-qualification process, as pioneered by Blend, reflects evolving consumer expectations for a streamlined and cost-effective borrowing experience. The digitalization of the mortgage process is an ongoing trend and Blend's offering positions the company at the forefront of this innovation. The partnership with Fannie Mae's Desktop Underwriter enhances Blend's value proposition to lenders, potentially increasing the company's market share in the cloud banking services sector.
It is imperative to consider the broader market implications of this technology adoption. As more lenders embrace soft credit pulls, we may observe a shift in industry standards, with an increased emphasis on efficiency and borrower education early in the mortgage process. This could stimulate competition among lenders to offer more borrower-friendly solutions, ultimately reshaping the mortgage landscape. Additionally, the convenience of soft credit pulls may attract a larger pool of potential homebuyers, expanding the market for lenders and service providers like Blend.
The integration of soft credit pull functionality raises questions about regulatory compliance and data privacy. Soft credit pulls are less invasive than hard pulls and do not affect a borrower's credit score, which aligns with consumer protection interests. However, it is crucial for lenders and service providers to ensure that the use of soft credit data complies with the Fair Credit Reporting Act (FCRA) and other applicable regulations. The legal landscape surrounding consumer credit data is complex and the adoption of new technologies must be navigated with diligence to avoid potential legal pitfalls.
Moreover, as this technology becomes more prevalent, lenders will need to maintain transparency with borrowers regarding the use of their credit information. Clear communication about the nature of soft credit pulls and their impact on borrowers' credit profiles is essential to foster trust and compliance with consumer rights. The legal implications of integrating such technologies into the mortgage process must be carefully considered to protect both lenders and borrowers from future liabilities.
Starting in 2023, the cost to pull a hard credit file has increased and comes during a difficult time for an industry already dealing with significantly high costs to originate.
Traditionally, early in the origination process, where buyer fallout is highest, lenders will qualify borrowers by using a “tri-merge” hard credit pull. If the borrower does not move forward with that lender, the lender will typically absorb the cost as a loss. As a result, the mortgage industry is moving towards using a soft credit data file early in the origination process for qualifying and assessment in the pre-qualification and pre-approval phase.
Blend first piloted its soft credit functionality for lenders in July 2022 and announced its general availability in May 2023. As the first and only digital banking platform to support soft credit pulls in the mortgage pre-qualification process, Blend has helped its customers - including Paramount Residential Mortgage Group,
With the availability of Fannie Mae’s DU early assessment, more lenders will be able to leverage the benefits of soft credit functionality within Blend’s digital platform.
“Early assessment in Desktop Underwriter can provide lenders with increased certainty during their pre-qualification process, which benefits borrowers as well,” said Mark Fisher, Vice President of Single-Family Credit Risk Solutions at Fannie Mae. “We’re pleased this offering is now available to enhance the experience for both lenders and borrowers at the beginning of the mortgage process, in particular allowing them to get an early look at eligibility for our mission-oriented options for credit-worthy borrowers.”
For more information on Blend’s soft credit pre-qualification, please visit https://blend.com/products/mortgage-suite/originations.
About Blend
Blend is the infrastructure powering the future of banking. Financial providers— from large banks, fintechs, and credit unions to community and independent mortgage banks—use Blend’s platform to transform banking experiences for their customers. Blend powers billions of dollars in financial transactions every day. To learn more, visit blend.com.
Forward-Looking Disclaimer
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements generally relate to future events, future performance or expectations and involve substantial risks and uncertainties. Forward-looking statements in this press release may include, but are not limited to, our expectations regarding our product roadmap, future products/features, the timing of new product/feature introductions, market size and growth opportunities, macroeconomics and industry conditions, capital expenditures, plans for future operations, competitive position, technological capabilities and strategic relationships, as well as assumptions relating to the foregoing. The forward-looking statements contained in this press release are subject to risks and uncertainties that could cause actual outcomes to differ materially from the outcomes predicted. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other comparable terminology that concern Blend’s expectations, strategy, plans or intentions. You should not put undue reliance on any forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which such performance or results will be achieved, if at all. Further information on these risks and uncertainties are set forth in our filings with the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available to Blend and assumptions and beliefs as of the date hereof. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. Except as required by law, Blend does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240104641539/en/
Source: Blend
FAQ
What does Blend (BLEND) support?
When did Blend announce the general availability of its soft credit functionality?
Who can save up to 71% by adopting soft credit pulls?
Where can I find more information on Blend’s soft credit pre-qualification?
