Bank and nonbank lenders have been increasing investments in mortgage automation technologies to perform document extraction, verification, process flow management, e-closures, and various other tasks.
Traditional software tools typically assist lending companies in the initial processes. For instance, they allow customers to create loan applications online or request a callback, and seldom more than that. However, lenders need tools that can help mechanize more processes in the origination cycle.
Mortgage loan automation tools address the need by automating nearly all the rule-based tasks in the origination process, reducing manual efforts.
The measurable impact of automation on efficiency, quality, and the cost is driving this adoption, wherein lenders have optimized their repetitive, error-prone tasks and streamlined overall operations.
For instance, Robotic Process Automation (RPA) tools are widely used to automate data entry, validate applications, facilitate customer interactions, and speed up process documentation.
RPA tools can route application forms and data with minimal human intervention and high accuracy, improving the overall service quality and customer experience.
Benefits of Mortgage Process Automation
In today’s competitive markets, mortgage loan automation solutions can help lenders reduce costs, increase quality, and save time. Here are some of the key benefits:
1. Reduces the Origination Cycle Time
The biggest benefit of mortgage process automation is that it reduces the time taken across the entire loan processing journey. From the time taken to onboard a new loan application to disbursement, automation can help lenders reduce the overall cycle time.
Some tasks that can be partially or completely automated include reviewing a loan application, verifying the information, submitting relevant files to underwriters, getting appraisals from other parties, and so on.
2. Optimizes the Processing Costs & ROI
Automation tools can augment, reduce, or replace human efforts in repetitive, rule-based tasks, and thus optimize the overall ROI by freeing up the workforce for more valuable or strategic activities. However, this is not the only way automation benefits a lender’s bottom line.
It allows lenders to deploy their resources cost-effectively based on data-driven insights, reducing costs across functions such as marketing, legal, finance, business strategy, and more.
3. Increases Accuracy and Quality
While automation might not eliminate all the errors, it can reduce human errors in routine tasks dramatically and save human efforts for higher-level tasks. This further diminishes human interventions and delays while improving the response time and service quality.
4. Data-Driven Decision Making
Lending businesses generate immense information (customer and financial data) that poses unique challenges to analysis due to its size and complexity.
Some mortgage automation tools have built-in data extraction and analysis features that can process data and provide actionable insights to support business decision-making.
5. Improves Customer Experience
Mortgage automation tools allow lending institutions to process loan applications faster, resolve queries in near real-time, and offer a personalized service experience to customers.
6. Detects Fraudulent Activities
Mortgage fraud is on a constant rise. As per industry estimates, frauds have consistently increased since 2020, and approximately 0.8% of all mortgage applications are fraudulent. With the help of fraud detection systems and predictive analytics, lenders can access and verify borrower data, employer data, and property data and can identify risky loans promptly.
Domain-Centric Approach is Key
Considering the vast variety and applications of mortgage automation solutions, lending institutions look forward to swift adoption. However, successful outcomes depend on “fitment” with specific needs and necessary proficiencies for using these tools. A realistic and domain-centric consultative approach can help lenders find optimal solutions that meet their needs.
Associate Director – Mortgage