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Can Underwriters Solve the Problem of Requesting Documents from Borrowers Multiple Times in Order to Process a Loan Request?

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The amount of data required for a mortgage application has slowed the process down for years, but technology is moving fast to address the issue.


by Percy G. Johnson, Jr, Vice President Agile Solutions

The Italian writer and thinker Antonio Gramsci, living in the 1920’s, wrote that “the old world is dying, while the new world struggles to be born.” No doubt he was writing of the turmoil shaking the globe between the two World Wars, yet those words still ring true today. We are living through a fundamental shift into a digital economy while held back by legacy systems and a fear of change.

The digital economy, driven by the powerful forces of cloud computing, big data, mobile, blockchain and artificial intelligence is changing the world. We’re beginning to see what seamless, real-time digital financial services would look like, yet it’s safe to say that for the vast majority of consumers, very little has changed in any meaningful way.

Banks and lenders have been slow to change.

A mortgage application still requires mountains of paperwork, back-and-forth communications to make sure the data is all there and correct, followed by a long wait to find out if all the right boxes have been ticked.  For a generation who have grown up with  smartphones and on-demand services, it’s a maddening process and they’re looking to disrupt it.

Yet there are reasons why a mortgage cannot be performed with just the click of a button.

The biggest stumbling block is still the gathering and processing of data. 

Under the current Consumer Protection Act, there are eight basic factors to consider when deciding whether someone will have the ability to repay the loan. Those factors include:

  • Current income and assets
  • Employment status
  • Projected mortgage payment for this loan
  • Projected monthly payment on any simultaneous loans
  • Monthly payments for property taxes and insurance
  • Debts, alimony and child-support obligations
  • Monthly debt-to-income ratio
  • Credit history

It’s no wonder that the process is slow, seeing as there is so much data to be gathered from a variety of sources in a variety of formats.

Technology companies have solutions for the front end online mortgage application but once a customer hits the “submit” button, the evaluation of the documentation, veracity of the information provided and ultimately the determination of a loan package for the borrower is a manual task completed by the experienced underwriter. There are however, technology solutions in the market today that can help streamline the disconnected underwriting processes. Whether its income verification, credit report documentation, etc. lenders can gain market share and reduce costs by deploying leading-edge technology solutions designed to create efficiency and trust in the underwriting process.
In the mortgage application process, today’s underwriter generally has a tremendous impact on whether a borrower will receive a loan offer. These individuals have years of experience with industry knowledge and insights, but they are bogged down by the lack of technology in their work process. Being able to utilize the latest in technology advancements and machine learning to speed up the decision process benefits both the customer and the underwriter by focusing their expertise on the value added activities in the process.

The AI Foundry approach to data

Customers today expect financial organizations to provide streamlined, automated, and real-time interactions regardless of the product or service. Through years of practical experience with a variety of lenders, AI Foundry has discovered that the best route to efficiency is via an end-to-end automated approach to loan management. That begins with the way we ingest required loan documents, followed by processing, and underwriting through to mortgage post-closing, selling, and servicing while efficiently connecting the front and back office operations for a superior customer experience.

There are four basic challenges to address when it comes to effective data capture. 

  1. Manual capture: The demanding task of manually capturing documents leads to errors big and small creeping into the data and significantly slows down the process as workers are forced to ‘stare-and-compare’ when entering data.
  2. Compliance issues: Errors and poor accuracy lead to blockages and quality control issues later in the process which result in higher costs for banks and lenders and even potential fines.
  3. Lack of integration: Valuable contact with consumers is wasted on data entry, which leads to wasted opportunities and customer dissatisfaction.
  4. Poor customer service: Errors, delays and a lack of communication and transparency frustrate consumers, leading to the spread of negative news about an institution and a reluctance to engage in further business with the lender.

Automation is a successful way of dealing with most of these issues. The new Digital One Office from AI Foundry transforms the gathering of data into a set of automated, parallel processes which can alert customers to any discrepancies or errors and presents the data in an actionable way to move the process forward.

Breaking down the barriers between front and back office

By doing this, the technology is able to break down the barriers between front end and back end processes and work towards a more integrated environment that speeds up the mortgage process.

Most banks have focused their initial digitization strategies on the front-end of the system, for obvious reasons. They want customers to see and to feel the change. But when that transformation is extended beyond simple onboarding then the changes become more profound

A particular bank in Asia ‘”invested heavily in bolstering its online capabilities but went a step further to maximize the returns,” according to research firm McKinsey. "It instituted a ‘no tolerance’ mind-set for paper statements. Within eight weeks, it signed up two million customers for e-statements, resulting in a 45 percent reduction in paper-statement spending.”

Creating a virtuous cycle that benefits everyone

The results of successful automation and integration of technology into a mortgage application process are profound. User-guided machine learning improves accuracy and compliance, which results in improved loan decisioning. Errors are minimized, and the amount of manual time spent on “stare-and-compare” activities is reduced dramatically, leading to a reduction in costs overall.

This produces a knock-on effect into an enhanced customer experience and a more transparent process which builds trust and better relationships. The reduction in manual data collection speeds up the process and allows for more high-value contact time between staff and potential consumers. It’s a virtuous cycle that is transforming the industry for the better. 

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Get in touch with AI Foundry today to request a one-on-one demonstration of the Digital One Office. 

Download the new AI Foundry app to view our new augmented reality experience showcasing how AI Foundry can help create the one office for future-ready and friction less mortgages. 

With the app scan this image to unlock the AI Foundry AR experience.    

The AI Foundry app is available in the The Google Play Store for Android and the Apple App Store for iOS.