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New Zealand home loan compliance: a data-driven approach

In the digital era, data and tech have the power to transform the way lenders manage their compliance obligations.

In an evolving regulatory environment, many lenders find it challenging to stay on top of growing compliance requirements. Managing their obligations often means redirecting valuable time, focus and resources away from other parts of the business, which can ultimately impact the customer experience.

But with digitisation now transforming many aspects of mortgage origination, technology and property data may be the key to easing these compliance burdens. These platforms may even highlight opportunities for a deeper level of customer engagement.

"Lenders have to keep up with frequent legislative changes and other requirements from multiple industry bodies,” said Tom Coad, Principal of Product Management at CoreLogic NZ. "Fortunately, it's now easier than ever for lenders to take advantage of the process efficiencies that data and technology can bring to compliance management.”

New obligations for NZ lenders

Many of the recent regulatory changes for NZ banks have focused on measuring risk, improving transparency and meeting responsible lending obligations – with significant fees and penalties for non-compliance.

As an example, new regulations under the Credit Contracts and Consumer Finance Act (CCCFA) seek to place additional obligations on mortgage lenders around loan suitability, staff due diligence and personal liability, and proper evidencing of customer finances.

Meanwhile, the global pandemic has added a new layer of complexity to lending decisions and risk factors, causing major disruption across the market.

"In the last year, we've seen significant changes to the code of conduct for banks to ensure they provide the best service to their customers,” Tom said. "These changes went live in April 2021 after Covid-related delays, and banks had to focus on meeting their new obligations. Then the new CCCFA requirements were announced, with banks having just six months to make further process improvements.”

Flow-on impacts to customers

Ongoing regulatory changes are impacting not only on lenders, but on borrowers as well. While the onus is generally on lenders to show evidence of each customer's financial situation, the task of gathering this evidence ultimately falls on customers themselves.

This can often translate to longer processing times and higher costs for lenders who may need to follow up customers for the required paperwork. This can also lead to greater conservatism in lending policies, potentially making it harder for some customers to access credit.

"Banks are generally required to obtain details from their customers upfront, which often means the customer has to supply more documentation,” said Tom. "And the biggest hurdle can often be in getting the right documents. So if the process isn't easy and straightforward for the customer, it can become harder for the lender as well.”

Streamlined, automated processes

To overcome these challenges, forward-thinking lenders are looking at how technology can help them meet their obligations. This means investing in their ability to source and analyse relevant data, so they can gather information about customers and properties more efficiently during the loan origination process.

Central to this approach is the use of automation to eliminate manual processes. So instead of having to physically gather all the information they need, lenders can quickly obtain accurate, up-to-date details in just a few clicks. This efficiency is designed to remove friction points and create a seamless mortgage process for both the consumer and the lender.

Tom commented: "Relevant property data can go a long way towards helping lenders meet their compliance obligations. Successful lenders will be those who can use this data to solve regulatory challenges, while at the same time driving better outcomes and faster turnaround times for customers.”

Harnessing the power of property data

Up-to-date and relevant property data can do more than assist with compliance; it can also help lenders better manage their entire mortgage portfolio. This can include everything from understanding their regional risk concentration to benchmarking their performance against their competitors.

For instance, lenders can use CoreLogic's Property Hub platform to order, track and manage all their valuations from a single platform which brings efficiency to the valuation process. The tool's portfolio performance dashboard also features a report suite for compliance and broker activity, helping to streamline the lender's compliance reporting.

Making the most of the right data can even help to foster stronger customer relationships for lenders, brokers and insurers. For instance, tools like Automated Valuation Models can assess property value, so the borrower can have the tools to help them make a more informed purchase decision. Meanwhile, CoreLogic's Property Monitor has an alert notification function for sales and rental listings and transactions, so banks and brokers can create valuable touchpoints at key stages of the home ownership lifecycle.

"The mortgage industry is on a journey of simplification, and the ability to harness powerful data is the next step,” Tom said. "Through better use of data-based platforms, lenders can deliver an enhanced customer experience where regulatory obligations don't unnecessarily impact the end consumer.”

Find out more

Discover how CoreLogic's solutions are designed to smooth out your end-to-end mortgage processes while helping you manage your compliance obligations here.

Case study: CoreLogic's solution for Stearns Lending

How one lender slashed their borrower income analysis time from hours to minutes

As one of the largest lenders in the US, Stearns Lending represents 14 brands operating across multiple channels. In 2020, as increased borrower demand pushed out underwriting times, they needed a streamlined income analysis solution that could maintain the consistency and quality of their underwriting.

CoreLogic's tool automates and standardises the borrower income calculation process. Fully integrated within Stearns' loan origination system, it enables lenders to collect borrower documents and manage calculations within a single platform. And since the tool automatically identifies new potential income sources, it can help overcome the challenge of calculating the income of self-employed borrowers.

Stearns have now minimised risk while boosting the accuracy and efficiency of their underwriting. This has including slashing manual processes that would typically take over 4 hours to just 20 minutes. Now with more reliable borrower income calculations and faster turnaround times, they're delivering an even better customer experience.


CoreLogic New Zealand

CoreLogic New Zealand

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