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loanDepot Automates Home Lending

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From your smartphone, you can summon Lyft for a ride, buy just about any product using the Amazon app and use Zillow to shop around for a new home.

loanDepot LLC, a Foothill Ranch, California-based mortgage lender, on Monday unveiled a host of new tech tools that will enable customers to do one more thing: apply for a mortgage without even talking to a loan officer.

The new service brings loanDepot in line with one of its chief competitors, Quicken Loans Inc., the nation’s largest mortgage originator that is not a bank. The Detroit-based company announced its fully online and mobile offering Rocket Mortgage in late 2015 and has heavily promoted it, including buying advertising during the 2016 Super Bowl.

loanDepot customers will not only be able to fill out a mortgage application online but also submit documents using a smartphone camera, allow loanDepot to pull credit, income and employment information from outside data providers — and get near-instant approval.

It’s a strategic positioning for the future,” said Anthony Hsieh, loanDepot’s founder and chief executive. “I don’t think anyone knows in five years how much financial activity will be controlled from the smartphone.”

But don’t necessarily expect the smartphone to be as disruptive to the mortgage market as it has been elsewhere. Even if would-be home buyers can apply for a mortgage on their phones, it’s not clear that they will — or that they’ll cut banks, loan officers and mortgage brokers out of the process.

Although an ever-growing share of daily commerce is transacted on smartphones, including transactions as diverse as buying shoes, ordering dinner and trading stocks, it’s hard to imagine that most home buyers will rely on just a mobile application when making a huge financial commitment, said Erin Lantz, vice president of mortgages at online real estate listing firm Zillow Group.

“Financing and buying a home remains an emotional and complicated process, even for millennials,” Lantz said. “Most consumers still want to talk to a professional and get expert advice.”

Borrowers for years have been able to apply for mortgages online, and just over half of home buyers, and 56 percent of millennial home buyers, already do so, according to an October report from Zillow. But applicants often have to submit or sign documents offline.

loanDepot, like other lenders, is trying to cut out those steps and streamline the process, so they can apply and finish their applications “whenever and wherever it’s convenient for them, with or without the assistance of a licensed loan officer,” the company said in a statement.

Lantz said that she expects experienced borrowers looking to refinance a mortgage or get a home-equity loan would be more likely to apply online or on a mobile device, while buyers and especially those in the market for their first home would be less likely.

“For home purchases, I think we’re a long way off,” she said. “Not because it’s impossible, but because home buyers will want some kind of in-person support, even if that’s over the phone or through text.”

Rick Cirelli, a mortgage broker in Laguna Beach, California, said some borrowers will have no choice but to work with a loan officer or broker. The online systems that allow loanDepot and other companies to verify employment and income information may not work as well for home buyers who are self-employed or have irregular income, he said.

“It really only works for salaried people. If you go to work every day and punch the clock, yeah, it’s easy,” he said. “But most of my clients tend to be self-employed. It doesn’t work well for them or for people who have a combination of sources of income.”

loanDepot customers will still have the option to work with a loan officer in person or over the phone. Hsieh said in an interview last year that he wants customers “to tell us what they are comfortable with and how they want to interact with us.”

Hsieh, who spoke Monday at New York financial technology conference Lendit, told The Times that online applications and rapid mortgage approvals are only the first step for loanDepot’s new platform.

The technology is designed to continuously track the creditworthiness and financial activity of the company’s customers. The goal, Hsieh said, is to analyze that activity and recommend useful loans or other financial services, similar to the way Amazon uses a customer’s browsing and buying history to recommend products.

“We see you just picked up $9,000 in additional debt and it looks like you’re doing some home improvements. Can we suggest a home-equity loan?” he offered as an example.

For now, loanDepot offers mortgages, HELs and unsecured personal loans, but it could eventually offer many more types of products and use its system to steer existing customers to those offerings.

“Can I offer you a real estate agent? Can I offer you solar panels and financing because I know how much you spend on utilities every month?” Hsieh said. “I’m going to know everything. And that’s a little scary. But if I understand your credit report, bank account, employment, job stability, debt-to-income ratio, I can do a lot of things that will allow you more access to other financial services.”

loanDepot said it has spent $80 million over the last 18 months to develop the platform. Later this year, the company will open a 65,000-square-foot office in Irvine, California, dedicated to its tech operations, which employ more than 400.

The company already has offices in the Orange County, California, cities of Lake Forest and Costa Mesa, in addition to its headquarters.

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