The mortgage origination process today is human-intensive and time-consuming. On an average, it takes 35 to 40 days to close a loan. Lenders work with multiple service providers and business partners to perform many functions related to data collection and verification. The lender’s profit margin has decreased due to the upward trend in production costs such as commissions, compensations, brick and mortar, equipment, staff and other production expenses. The traditional way of processing loans continues to add costs to the loan manufacturing process.
The need for process automation is significant to increase productivity, reduce operational costs, minimize human errors, and provide better user / consumer experiences. Lenders have many opportunities to automate the mortgage origination process and transform the traditional method of processing through digital solutions.
Automation is the key
Majority of the paper-based processes happen during the initial stages of loan origination and these are highly time-consuming events. Process automation is the way forward for lenders to improve traditional business models.
Lenders need to:
- Automate data capture and data collection events
- Enable digital verification processes throughout the loan cycle
- Automate processing and underwriting events completely
- Automate the document generation process (e.g. initial disclosure, closing disclosures, etc.) and enable digital delivery of the same
- Enable real-time integration of all associated parties with loan origination system(LOS) for exchanging data between applications
- Introduce e-closing, recording and vaulting options. Provide online collaboration with settlement agents, counties, notaries, etc.
- Enable automated workflow models in the LOS to complete events automatically
Enabling these functions in the origination cycle will bring down the loan-processing time from weeks to days. Lenders should design a good governance model in the mortgage origination process to audit system transactions through various system reports and touchpoints. Figure 1 shows the blueprint for automation in the mortgage origination ecosystem.
Adopting automation using technologies such as API, Microservices, ADR/OCR, Artificial intelligence and Machine Learning are doable in any technology platform. Integrating these technologies into loan origination system will vastly reduce mundane human work, decrease overall processing time and manage huge transactions volumes effortlessly.