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Over half of consumers in the U.S. say they use financial apps to invest, borrow, and/or pay their bills. But many of us don’t really know exactly how our personal data is being collected, stored, or shared.

While the use of personal data can help improve products and the consumer experience — including in the homebuying and mortgage-lending worlds — the movement is often in conflict with evolving notions of privacy, trust, permission, and data ownership.

At the InnovateHousing conference, presented by the Washington Center for Real Estate Research and Fannie Mae, panelists talked about how the very data that drives innovations in the housing space is also creating some serious privacy concerns.

“It’s no secret that all of these innovative solutions require massive amounts of personal data, right? It’s a trade-off,” said Drew Meyers of Geek Estate Blog, who moderated a conference panel on data privacy. “That gets into how privacy and ownership coexist with those innovation providers and, on the other side, what the risks are that consumers are taking by exposing that information.”

What can data do for housing?
“Given the challenges ahead of us in housing — the huge lack of supply, the disparity in housing access among different consumer groups, and the need to bring digitalization to many more parts of the mortgage process — the [demand] for accurate and actionable consumer data will only continue to grow,” said Steve James, Fannie Mae’s Chief Marketing Officer.

Panelists, including international data privacy expert Peter McLaughlin, a partner at Womble Bond Dickinson, discussed how increased access to housing data can help innovators. Such benefits include:

  • Modernizing credit risk reporting by enabling a deeper look into consumer patterns.
  • Enhancing the verification and validation processes.
  • Simplifying the appraisal process.
  • Increasing buyer options by expanding how home equity is viewed.
  • Providing a digital “history of the home,” where homes tell you when they’re up to code or need repairs.

“Most advancements in our technology, ironically, are going to be about preserving privacy and presuming that anonymous nature,” commented Scott Hallworth, Fannie Mae’s Chief Data, Modeling, and Analytics Officer.

Solving the privacy conundrum
Experts on the panel discussed how, for starters, consumers would like more transparency, education, and control over how their data is used. While beliefs and behaviors vary by generation, with younger generations typically more willing to put their faith in online apps, everyone wants more — and better — disclosure.

Complicating it further, at the state and national level, policymakers, regulators, privacy advocates, and consumers are all closely scrutinizing how the data powering these innovations is collected, stored, and analyzed. Consumers can either opt in or out of data collection when they sign a terms-of-service agreement, but each approach has trade-offs.

McLaughlin joked, “You ask anyone in marketing, and they’ll tremble in fear and reach for the cross, the garlic, the gold dagger” when the notion of opt-in comes up.

For consumers to agree to share their data, said Meyers, “I think products and services are going [to need] to show value immediately, like [allowing] consumers [to] unlock specific components in exchange for data.”

“I think the answer is going to come down largely to having more of what I call a data locker solution. Everything is anonymized,” suggested Hallworth.

The panelists agreed that while evolving laws and regulations will need to be developed and reckoned with, in the final analysis it all comes down to trust.

“Do you have confidence that the information about you that’s already out there is going to be used in a respectful way?” McLaughlin pondered. “It’s difficult, because the data’s already out there. The cow’s already out of the barn.”

Disclaimer: The views and opinions expressed in this article are those of the panelists and do not necessarily reflect the official policy or position of Fannie Mae.