Story by Kenon Chen for HousingWire
Here’s one for you: How many fintech companies does it take to reduce the cost to originate a loan? There’s no great punchline to throw in here — only the sobering fact that it cost a record high of $13,171 to originate a loan in the first quarter of 2023, according to Fannie Mae’s recent lender sentiment survey.
Still, the FHFA set out to answer this question by gathering more than 60 companies together in Washington, D.C. for the inaugural Velocity TechSprint in July. This hackathon of sorts had a single goal: determine the best solution to effectively use data to reduce loan cost and make lending more attainable and fair for consumers.
I was one of 80 participants assembled together in 10 different teams. Each team contained a cross section of lenders, fintechs, consultants and others united by a common goal. We had three days to engineer a viable solution to some of the biggest challenges in lending — oh, and boil down those three days of solutioning into a five-minute pitch in front of industry judges. No pressure there.
This was very much an exercise for optimists, innovators and maybe even dreamers. Loan costs have risen every quarter since the first of 2020. So what could really be done in three days that hasn’t been tried in three years? We have watched the record rise and fall of investment in technology solutions over the past few years amidst record loan volumes, many of which promised to automate a better borrower experience and deliver shorter loan closing times. But the stubborn fact remains that transformative change has yet to materialize.