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Top Strategies for Producing Higher Quality Loans Faster

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The smart use of technology is enabling mortgage loan operators to produce better loans faster than ever.

Who could have envisaged, a decade ago, a scenario where loan applications are processed and evaluated immediately, where rates are quoted and approved instantly, and where 1 in 10 mortgage closings are fully digital? And yet here we are in 2018, ten years after the biggest financial crisis of our lifetimes, and consumers are blessed with such powerful technology that this kind of seamless service is what they are coming to expect.

Everyone knows that delivering anything at speed is dramatic and exciting. On the other hand, producing anything of quality requires you to be slow and meticulous. Balancing these two opposing forces is the challenge that loan originators face in this dynamic, competitive marketplace.

By embracing cutting-edge technology and automating key processes, organizations can become far more efficient than they have ever been, and produce high-quality loans while at the same time curtailing production expenses.

The Mortgage Bankers Association released a report that highlighted many of the financial challenges facing the industry:

  • Production expenses per loan were higher in the first quarter of 2017 than they have been since 2008.
  • The average pull-through rate of loans from applications to closing fell by 6% – from 76% to 70%.
  • Personnel expenses continued to climb. The MBA reports that personnel expenses averaged $5,802 per loan in the first quarter of 2017, up from $5,001 per loan in the fourth quarter of 2016.

Of course, it’s not all doom and gloom. Many markets are booming, and the technological breakthroughs driven by a combination of mobile technology, cloud computing, and artificial intelligence are maturing at a time when the industry understands how to use them to get back on the path to profit and increased productivity.

How can you produce higher quality loans faster? Here are five ideas that AI Foundry is delivering to clients in order to achieve these goals.

1) Better Extraction for Better Onboarding

The way that a loan application process begins must set the tone for how it proceeds.

Just because you’ve switched from a paper-based system to digital doesn’t mean that you’ve addressed your onboarding issues. Regardless of how they are received, documents need to be gathered and processed accurately and quickly. There is no time to waste checking that you have all the right documents, renaming them, and filing them in electronic folders that are already overflowing with files.

Automation tools that transform applications into critical business data are priceless in terms of delivering accuracy, speed, and reliability. Look for a software solution that moves beyond optical character recognition and takes it even further to meet your capture needs. Complete high-to-low volume batch capture software that delivers robust data extraction and delivery to repository and business applications will transform your business.

There’s a 50:50 chance that a customer in 2018 will use a self-service platform to apply for a mortgage, according to Sid Probstein, CTO of AI Foundry in his 2018 Technology Predictions. With this kind of disruptive technology just around the corner, your onboarding systems must be rock solid.

2) Shutting Down Stare & Compare

For too many years, companies deployed their staff to sit with various versions of documents to check and double-check the data they were working with. You will produce higher quality loans if you invest in software that removes the need of stressed out staff members to keep scrolling between PDFs and Office documents, and instead delivers side-by-side comparisons of the most vital data.

‘Stare-and-compare’ is fraught with problems; it dramatically reduces accuracy and is deeply demotivating for staff who should be using their skills more effectively than simply comparing versions of data. This is the kind of task that automation was created for.

Invest in systems that will extract the most critical loan data for validation that can be used in evaluating the quality of a loan. When that data is successfully extracted, it can be processed through ‘rules engines’ and software checklists that will ensure it is of the highest quality.

At the same time, it’s vital that your system delivers an audit trail that can link back to the original submitted documents and take note of where changes have been made along the way.

3) Collaborate: In the Office & with the Client

Gone are the days when clients simply needed to deliver their documents and then wait in the dark to find out whether or not they were approved. Better quality loans require structured collaboration with the client. “We estimate the number of online portals used will triple, and consumers will benefit by quickly and easily checking the status of their mortgage and documents required for the application,” explains AI Foundry’s Probstein.

Collaboration must also apply internally. It’s critical that organizations create a shared workspace where employees have access to the same tools and documents while doing related tasks. A good Enterprise Content Management System improves productivity, provides intelligence, structure, and process, and reduces IT operating costs by leveraging rich data. It’s an invaluable tool on the road to producing higher quality loans.

4) Shift Left – Optimize Your Workforce

When your automation processes are running smoothly, you should notice that key staff members are spending far more time maximizing their skills and using their creativity to solve problems. This is why you hired them in the first place.

You can entrench this productive behavior by delegating more responsibility to lower level employees, particularly in customer service and queries. Nothing demoralizes an office more than being caught up in details and problems that could easily be solved by juniors.

Make sure your channels of communication, such as social media and chat widgets, are up and running, then empower your junior staff to solve problems on their own.

5) Wrap It Up Neatly

It can be demoralizing to find that you have made great strides forward in speed and efficiency, only to be slowed down at the last hurdle when you have to deliver the completed mortgage application to an investor or government enterprise.

Organizations cannot overlook the final step when it comes to packaging mortgage applications and making sure all the correct documents are available and on their way to where they should be going. A good system will use checklists to make sure everything is there, issue alerts if there are any problems, and notify you when your package has been opened on the other side.

A Mix of the Old and New

The speed of change that is occurring in the workplace can feel overwhelming. A combination of advanced technology and good old-fashioned human resource management can transform any organization into one that can compete in producing high-quality loans at a good rate while trimming costs and increasing profitability.

Actionable Intelligence.Transform your business into a highly automated, competitive player.

Let AI Foundry show you how to increase the volume of mortgage applications you’re processing while simplifying manual processes and extracting the data you need—all while ensuring data accuracy.

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Download the AI Foundry white paper: “Successful Digital Transformation Is Built Upon Actionable Intelligence.”