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AI Should Be the Poster Child for Paper Free Day on Nov. 6th

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AI and Automation in Mortgage Processing Helps Reduce “Old School” Paper Use

November 6 is Paper Free Day, an annual event that aims to reduce the amount of paper generated by people in their everyday work and personal life. It was started by the Association for Information and Image Management (AIIM), a nonprofit raising awareness of the massive amount of paper used today, and promoting paperless technologies.

While the concept of the “paperless office” has been around for some time, we know that for some people, companies and industries, the concept of reducing paper use is “easier said than done,” especially for older, traditional business processes like mortgage approvals.

Mortgages and Paper Use

Those who have a mortgage now, or have applied for one, know that the application process generates a lot of paper. According to a 2017 story in The Chicago Tribune (and a website called FreeandClear) about 280 pages of paper are used in the average mortgage. Multiply that by an average of 7.8 million mortgages per year, and you end up with 2.2 billion sheets of paper used each year on mortgages. This comes from a multitude of hard-copy documents that lenders request from applicants: pay stubs, bank statements, appraisals, inspection reports and other forms and documents that may require a written signature or an original (hard-copy) document. There are times when scanned, electronic copies are not acceptable, and you must provide the original document.

Turning the Tide: Mortgages Make “Paperless Progress”

Recently, new technologies have emerged to pave the way towards paperless mortgages. You have undoubtedly seen TV ads for a “mortgage in minutes” with people starting the application process on their phones or computers. This is a good start, but often that online application turns into a request for more hard-copy documents to back up the numbers that you have entered on an online form.

However, banks and other lenders are becoming more open to a digital-first approach that uses artificial intelligence (AI) and related technologies to scan and convert hard-copy documents so they can be processed by machines as digital data, as well as using new online forms and databases that do not use any paper at all. The number of online or digital-based mortgage systems continues to grow and be more widely accepted. This is important because a younger generation of homebuyers – including millennials and Gen Z – are concerned about the environment and want to work with companies that use the mobile, online-only approach that they are accustomed to for other transactions (i.e. Uber, Amazon, GrubHub, etc.) Lenders are responding to the needs of these new, tech-savvy home buyers in order to win their business. At the same time, lenders are seeing the operational benefits of using technology, including how it can speed back-office processes, improve efficiency and reduce costs.

There are a number of benefits to having critical mortgage information in a digital format, including:

  • Easier tracking and storage – once information is entered into a database or other online system, it is much easier to find and store that information. You don’t need to worry about documents being lost. It is also much easier to store information in the cloud or on a server instead of having boxes of papers stored in an office or warehouse.
  • Faster processing – financial information can now be quickly scanned and entered into a system to get the mortgage application process moving in a faster, more efficient manner. There is no longer a need for a person to manually re-key information from a document into a system. And, in some cases the information can be entered directly into an online system and verified by a bank or other organization electronically – no paper needed. Services like DocuSign enable digital signatures to be captured, stored and quickly transferred, eliminating the need for hard-copy signatures.
  • Better transparency – by having mortgage information stored and available in a digital system, it is fast and easy to track where the loan is in the process and what information might be missing. This is much faster than calling a loan officer and having them manually track down the status of an in-process loan or identify what documents might be missing.
  • Improved compliance – having faster access and availability of documents in an online system makes it easier to verify that a loan application meets all of the applicable local, state and federal regulations for that particular buyer or region. This helps the buyer prevent any delays in their loan, and helps lenders to avoid any penalties from being non-compliant.
  • Reduced costs – because the cost to process a loan has risen in recent years, lenders are looking for ways to improve efficiency and keep costs down. A digital system allows loans to be processed faster and with higher accuracy rates, and this translates to higher productivity and lower costs for the lender.

The Role of AI and Automation in Reducing (Mortgage) Paperwork

At AI Foundry, we know that AI, machine learning and automation can play a key role in reducing paperwork. Our AI-based platform allows lenders to quickly scan and extract information for a mortgage application, identify missing or incorrect information, and automatically populate the system of record. This unites the front and back office and streamlines the entire mortgage application process, resulting in better accuracy, better compliance, and an improved customer experience.

So on Paper Free Day, remember that AI can play an important role in reducing the mountain of paperwork involved in mortgage applications. Take a look at this 2-minute video to learn more.