Searching for real estate on major listing directories such as Trulia, Zillow, Redfin, and Realtor.com is fast, easy, and even fun. Residential real estate buyers and sellers also benefit from agents who use current technology to show off listings. Drone photography, 360-degree video, and augmented reality give buyers a much better feel for a property than conventional still shots. On the other hand, applying for mortgages and submitting the required documentation can be a painful process with little help from technology, especially with smaller lenders.
The painful technology gap between residential real estate sales and the mortgage approval process spawned San Diego, California-based startup Approved. Approved co-founders Andy Taylor and Navtej Sahal, both former Redfin employees, set out to the bring the loan approval process to the digital age, according to Geekwire.
“You go from this tech-enabled, mobile-enabled world, to a world where all of a sudden your loan officer is asking for your signature on a physical piece of paper,” Taylor said. “One of our customers described it as landing a rocket ship in the stone age because it was like taking a step back in time.”
Apply for a mortgage today and you’ll need to submit pay stubs, W-2s, 1099 forms, tax returns, and more to prove that you can afford to make the payments and will actually pay them. Back in the mid-2000s you could often just tell lenders how much you made and maybe pay a 1/4 percent higher interest rate for an “undocumented” loan. We saw how well that worked. Strict requirements mean providing documented proof of your ability to pay.
Approved has created a secure document library stored on Amazon Web Services (AWS). The documents are accessible by potential borrowers and lenders, as long as they have the necessary two-factor authentication. The library lets borrowers use smartphones to scan and submit documents. Approved sets up whiteboards where both sides of the loan transaction can communicate, and the service handles all parts of the documentation process.
Security is paramount in the loan approval process, and Approved’s co-founders knew they had to be proactive in their system design. “Everything you build has to have that in mind,” Taylor said. “You really have to put your tinfoil hat on when you’re thinking about how you are going to be structuring these things and architecting them.”
Big name companies such as Rocket Mortgage, Redfin, and Lending Home are also modernizing the loan approval process with proprietary systems for their own business use. Approved doesn’t sell real estate or lend money, it’s purely a service that assists documentation for all sides.
