Data should be the primary driver in risk analysis, Soroye said, helping lenders determine if people have the capacity to repay the loan. Do they have the income they say they have, are they employed? Will the collateral support the loan?
“You have to make sure there is no fraud involved,” he said. “What is the fraud risk? The industry has a lot of data on suspect players, people who have tried to get loans in the past based on fraudulent information.
“You can do all of this old school, or you can make it easier by getting tax return data that is publicly available, employment salaries, estimated costs of maintaining the property once they buy it. The more data you have, the better the decisions you can make. We can go way beyond credit reports in looking at someone’s credit worthiness.”
Soroye said there is a lot of concern in the industry today that there are not enough appraisers in the workforce to do the number of appraisals that are required. “They are trying to do too many appraisals too quickly.
“We can help appraisers do their jobs better and faster by providing them with data, on neighborhood zones and comparable sales, for instance. What else is like this home? We can bring science to that question.
“If most homes in a neighborhood have big back yards and 2-car garages, but this house has a smaller yard, a swimming pool and a 1-car garage, we can help with the size of the adjustments. Right now most of them guess a little bit, but we have data about the value of that pool, we have a uniform base of information that makes doing appraisals easier and more consistent.”
Before a loan is approved and funded, originators and underwriters want to know as much as possible about the borrower, their history and their income. They also want to know that a property is worth the purchase price. The answers to all these questions can be found in the data, said CoreLogic Managing Director of Information Solutions Olumide Soroye.