Say the word “HMDA” to a mortgage lender and the first things that come to mind are data collection, filing deadline and fair lending compliance.  After the HMDA-LAR has been submitted, wise compliance officers turn their attention to analyzing their data for fair lending risks.  Even wiser compliance officers will involve other departments outside of Governance, Risk, and Compliance to use HMDA data to expand loan production opportunities.  The data present opportunities for a lender to better understand competitive forces, market areas, and the position of their company in the market.  By drilling down into HMDA data you can identify weaknesses in your competitors’ pipeline behavior and exploit those weaknesses, turning them into loan scoping opportunities.

Forecasting the mortgage pipeline behavior of major competitors in your primary lending areas allows you to react to market changes and take control of your lead generation activities accordingly.  Using HMDA data and filtering capability from LendingPatterns™ and the computing power of Excel, I forecasted a lender’s fallout rate for FHA purchase money loans. Fallout includes approved not accepted, withdrawn and incomplete applications.

From the results below, fallout is expected to be above 30%. This means there is a production opportunity because a competitor is not able to close 30% of the applications they received.   Not only do I know the approximate number and credit profile of applicants that will need a new source of funds, but I know where to execute a strategy for marketing loans.

Key factors to be considered in your analysis include:

  1. Focus the analysis on specific markets in your primary lending areas
  2. Identify and rank competitors based on market share and fallout rates
  3. Use data filters to drill down to analyze fallout rates based on borrower and application characteristics such as applicant income and loan type

It’s all about converting your competitors’ fallout to a competitive advantage to insure a robust flow of borrowers in the pipeline.  HMDA data is powerful.  Use HMDA data to tap new markets, improve marketing efficiency, and boost loan production while achieving your fair lending goals.

Forecast Sheet produced in Microsoft Excel for Windows 2016

Forecast Sheet produced in Microsoft Excel for Windows 2016