On average, mortgage loan processing takes around 30 to 45 days for completion. This is mainly because the process is replete with labor-intensive and time-consuming tasks such as data collection, data extraction, and data verification. During high-volume months, it might even take longer than 60 days to close a loan.
So what’s the solution? Is there a magic wand that mortgage lenders can wave to process more than 1000 loans a day?
Yes, there is one, and it is called mortgage automation.
By automating most of the mortgage processes, lenders can significantly increase their productivity and thus process more loans per day. Along with productivity, process automation has other benefits such as lower operational costs, minimal human errors, and a better user experience for the customers.
In this post, we’ll share four mortgage processes that should be automated right away so that mortgage lenders can process 1,000+ loans per day.
To automate your data collection process, you need to digitize the entire loan application submission process that is directed by a systematic data capture process. The automated system collects structured and unstructured information from borrowers and converts it into readable data. In very simple language, hard copies of data are converted to soft copies and made readable on any device. One way to achieve this automation is by using a document management system. It comes with multiple benefits such as –
- It helps to avoid any lapses in the data collection process
- It makes the entire data collection process transparent
- It reduces physical data storage space
- It improves the speed and quality of the data collection process
Once the digital documents are received, they are indexed. The sorting of the data is made faster by identifying specific attributes available in the documents. The whole process of data indexing is automated, thanks to Advanced Machine Learning (AML) technology. The documents will be categorized and well-defined based on the different attributes, which makes fast retrieval of documents possible at a later time. The AML technology automatically adjusts itself to the updating database. In fact, it easily adapts to any new set of rules the very instant they are implemented into the system.
Automating data indexing improves –
- Data access
- Real-time collaboration
- Time management
- Audit compliance
- Data security
Data indexing helps to categorize the data based on different attributes. But how do you retrieve the indexed data? Digitalization and categorization of data are of no use if they’re not easily retrievable. This is where data extraction tools with advanced search algorithms can help. It can effortlessly pull out information from a customer database. Not only that, the same tool can be used by the lender to update the profiles of the applicants 24X7.
Automating data extraction process improves –
- Accuracy and processing quality of applications
- Time and cost optimization
- Adherence to compliance
Getting mortgage documents verified from multiple sources reduces unknown risks to a great extent. But this used to be a time-consuming process in the past. This makes it critical to automate the data verification process. To achieve this, lenders need to enable real-time integration of all associated parties with their loan origination system. This is because only third-party sources have critical pieces of information that can determine whether the loan application is genuine or not.
The integration also reduces your spending on an underwriting system and facilitates quicker loan decisions. The verified information usually includes employment history, income data, consolidated assets, records of judgments, liens or bankruptcy, utility bills, cable TV and phone bills, and rental history. When the lenders get all the above-mentioned information verified, they can make correct loan decisions.
In any industry, automation is the driving force that empowers new business models, and, of course, the mortgage industry is no exception. By automating the above 4 processes, lenders can process thousands of loans per day. It’s high time that mortgage lenders focus on loan automation and embrace quicker loan closings. Also, thanks to an automated lending process, mortgage businesses can enjoy higher accuracy, efficacy, and scalability in loan processing.