Most prospective mortgage borrowers start the process on the Internet, but then transition offline to either a loan officer or a call center. But online mortgage lender Lenda wants to keep the process online while wringing out origination costs, according to American Banker.
"It costs money to pay commissions to telemarketers and junior loan officers and loan officers," said Jason van den Brand, CEO of the San Francisco-based startup, which launched in October 2013. "We're building software that removes a lot of that stuff so when people find us online, they actually stay online and they don't have to talk to a loan officer," van den Brand said.
At Lenda, applicants who need help can call a toll-free line to talk to a licensed loan officer. But the company's technology uses algorithms to identify the most suitable type of loan for a borrower early on in the process, and then eliminate questions unnecessary for that product. Lenda is also working on tools to let borrowers log into their bank accounts from the Lenda platform to verify deposit information and access their income tax transcripts.
With the cost of a loan officer accounting for 50-100 basis points of a loan's amount, removing the loan officer reduces cost. Lenda has also cut the time from loan application to closing from two months to three weeks, "and we want to get that down to hours," van den Brand said, though he admits there are many regulatory challenges which have to be overcome in order to pull it off.
Lenda currently only originates conforming refinance mortgages and is only licensed in California, though it plans to expand into Oregon and Washington by the end of Q1 2015, and targets nationwide expansion within a year after that.