Editor's Note: National Mortgage Professional contributing writer Lew Sichelman is onsite at this week's Mortgage Bankers Association annual conference in Denver. This is one of a series of reports from the event, exclusively for NMP.
A pair of technology innovators in the student loan field are here this week searching for a few lenders to participate in a pilot program to bring home ownership within the reach of some 17 million renters who currently carry education loans.
The program is intended to help loan officers identify “high potential” borrowers who can benefit from lowering their education loan payments and improve their debt-to-income ratios, all without adding much in the way of extra technology costs to lenders.
“It’s time to move every new home buyer with student loans off the rental treadmill,” said Sara Parrish, CEO of Campus Door, which is piloting the program along with LoanSense.
The partners don’t have a name for their program yet. But they expect to see enough interest among lenders on the lookout for another source of revenue that it will become a brand all its own.
To get the experiment off the ground, they hope to ink about a half-dozen lenders at the Mortgage Bankers Association’s annual convention, which kicked off in earnest today. But by the time the next version hits the street come January, it will be opened to “a larger cohort” of lenders, says LoanSource CEO Cat Kaiyoonawongs.
“We want to keep version one to five or six lenders,” she told NMP. “With the next version, when we’re sure everything is working properly, we will open it up to more participants.”
In a sense, the two companies are closing the circle on student debt consolidations. LoanSource identifies borrowers with federal loans who could qualify for a mortgage, while Campus Door works with those who have private loans.
Their program will alert loan officers of potential borrowers who would benefit from restructuring their student loans. It also provides marketing support to help lenders reach possible clients and then automates the refinancing process.
“For the first time,” Kaiyoonawongs said, “we’ll be able to deliver both sides of the coin. It’s a creative solution to fully address all student debt.”
The system’s core technology will assess which folks with student loans can save money by refinancing. Then it will notify loan officers about those whose debt-to-income ratios can be lowered enough to qualify for a mortgage. And then it will automatically generate all the documents borrowers need to proceed.
“We can save deals; that’s what loan officers care about,” Kaiyoonawongs said. “There are no manual steps. We take that responsibility out of the loan officer’s hands. We do it all for them automatically.”
But the program won’t help just those renters who don’t know they can buy a house. It also will help those already in the market and on the prowl for funding. According to the LoanSense CEO, some 37% – more than one-third – of all mortgage applicants are hampered in their ability to qualify for financing.
