In 2005, Brian Faux was working as a client relations manager at a major bank. This was years before the mortgage crisis had set in and millions of Americans lost their homes.
"I don't think the vast majority of us had any poor intentions," Faux, who lives in New York, said in a phone interview. But he admits the ensuing years "were a crazy time." He remembers when he saw federal regulators take conservatorship of Fannie Mae and Freddie Mac. "People were losing their homes [by] the tens of thousands, and that's just a really difficult situation to be in," he said.
One would think those haunting experiences would have pushed Faux to seek a new line of work. But the 32 year old still reveres the mortgage industry. "Owning a home is still, today, and will remain for a long time for many Americans, the best way to build wealth," he said, "and when used properly [mortgages are] a great tool for doing so."
Last January, Faux launched a Silicon Alley startup called Morty, a full-service and fully digital mortgage broker that aims to do for homebuyers what online banking has done for consumers: Streamline the paperwork.
Now that the mortgage industry is on the right track, he said, he's putting his 17 years of industry experience to use, employing high-tech algorithms and verifiable online data to cut down the time it takes to apply for a mortgage. "Instead of things like printing and scanning and emailing your bank statements or credit, we can do it all digitally through linked data sources," Faux said. But will it work? Credit.com took a closer look.
How Morty Works
Similar to Quicken Loans' online service, Rocket Mortgage, which touts the idea of pushing a button and getting an approval, Morty gathers borrowers' information via an online application. After syncing accounts tied to assets, employment and so on (no self-reported data here), as well as using third parties to perform a hard credit pull, Morty brings prospective borrowers to a marketplace, where they can browse different loan products based on their financial snapshot. Up to 1,000 loan options are on offer, Faux said, and the company currently works with five lenders. (Morty is licensed in five states and Washington D.C., including Colorado, Virginia, Tennessee, Florida, and Oregon, with plans to expand to 30 by June of next year.)
The company also aims to eliminate unwanted face time. After submitting your application, you may receive a prompt "telling you to ask for advice before you select," Faux said, but in reality, "today's consumer is interested in doing their own research" and would rather educate themselves before stepping into a sales environment. If the borrower decides that she doesn't want help, she can select a loan and submit her materials for processing.
The company said it can take between a week to two weeks for a consumer to sign a closing disclosure. Joe Parsons, senior loan officer at PFS Financing in Dublin, California, described it this way: "What [it sounds like] Morty is doing is gathering information from the borrower, then submitting it to the Automated Underwriting Systems. If they get an Approve/Eligible or Accept outcome, the broker sends the loan package to one of the lenders they do business with. The lender will then underwrite the file as I've described … what they describe appears to be the same process all lenders go through."
Like a traditional mortgage broker, Morty earns a commission from lenders. However, "we're uninterested in who a borrower chooses," Faux said, stressing the lack of fees for using the service. "There is no fee to use the application, even credit, income and asset pulling [has no fee for the borrower]." He added, "We don't fund the loan or collect payments."
Is Getting a Mortgage This Easy?
"Two weeks ago, we had a borrower do the whole process in nine minutes and 18 seconds," Faux said. "It was a Friday night, and we saw a note in the system because they thought something was broken. They thought it couldn't be that easy to get a mortgage."
Yet perhaps the narrative that getting a mortgage is difficult is misguided, said Parsons. "As a loan originator, what I will gather from a borrower is a month's worth of pay stubs, at least one year's W-2s, two months of bank statements to show assets, and that's it," he said. "They send me those items, and in some cases I get tax returns, depending on the type of the loan. The choice is to send those to me, or push a button and get them electronically. There really isn't a big difference, one is not less effort than another."
Parsons also pointed out that "loan approval happens within minutes for any of us." It's during the underwriting process, in which application materials are more closely scrutinized, when questions tend to arise. "That's going to be true with any loan," he said.
However you choose to apply for a mortgage, it's a good idea to review all your documents carefully. You may be asked to provide more paperwork than you expected or to better explain certain aspects of your application. Last-minute changes can throw a wrench into the process as well, so it's important to be on sure footing before you begin. You can check your credit, which can affect the type of program and terms for which you may qualify, by viewing a free snapshot of your credit report on Credit.com.
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