Mortgage origination has all along been a human-intensive and time-consuming process where it takes 35 to 40 days to close a loan. Despite a lot of talk and work on digital mortgages, a bulk of the activity still is manual with multiple checkpoints for compliance.
In recent times, low mortgage interest rates fuelled a surge in refinance activity resulting in record-breaking loan volume for lenders. In the process, many lenders have been facing challenges to scale and respond quickly. The situation exacerbated amidst the pandemic with the absence of relevant and trained staff as most lenders worked with a skeletal staff and a majority of the workforce was operating remotely.
Besides, many lenders continue to use manual and paper-based loan approval procedures that have slower decision times than what customers expect. This leads to an internal data management problem creating more work for the staff and opacity for both management as well as external examiners.
If you are a lender and any of this sounds familiar to you, it is important to understand the need for an overhaul in the way you operate. Lenders need to be agile and well-equipped which is essential if they wish to improve their position and create a modern lending experience for customers. They also need to focus on the aspect of maintaining accuracy and keeping the turn-around time low at every point.
Amidst growing competition, lenders need to have an advanced, efficient, compliant, and customer-friendly approach to mortgage origination now and forever.
Here are a few mortgage loan processing tips for you to ensure that the loan processing is smoother and delivers a competent experience.
1. Leverage technology to speed up the loan process
A modern automated loan processing system has several distinct advantages because it provides a superior customer experience, improves decision-making accuracy, and eliminates paper documents. Through automation, it is possible to accelerate all stages of the loan cycle. Replacing manual steps with technology and transforming paper into digital format offers a better user experience to improve the speed and accuracy of loan applications.
Technology also helps process a larger number of loan applications with the existing resources while eliminating human errors. It reduces delays and costs associated with paper processes and enhances the loan performance by continually improving efficiency and profitability.
2. Line up for pre-underwriting to improve efficiency
It is important to review a loan file before sending it ahead because it helps identify anomalies early on in the process. This is why a meticulous review of potential borrowers’ files through pre-underwriting is necessary to give an objective insight into their profiles and also ensuring that all the documents are in place. Pre-underwriting helps filter out all the applications that have no scope of being funded.
Preparing for pre-underwriting reviews goes a long way in reducing production costs as underwriters do not end up spending too much time on unqualified applications which offer the advantage of a faster time to close and speeds up mortgage underwriting. There are specialized companies that can handle the verification of all information that is supplied by the customer in vital loan documents. They also follow up with the borrowers wherever needed and procure missing documents.
3. Ride-on expertise to ensure QA/compliance across all processing
In a constantly changing compliance landscape, it is mandatory for lenders to meet the growing requirements of regulatory compliance. Good document compliance helps identify competing regulations, establish tight operational process controls, have better hold over data quality, and strengthen operational strategies. However, hiring full-time teams to oversee the process of compliance with regulatory requirements may prove to be a huge operational cost. It is best to join hands with companies that can offer compliance support to seamlessly enable you to disburse loans that fully meet regulatory requirements.
4. Ensure closing disclosures are delivered on time
A mortgage closing is a complicated process. For a smooth transition from the seller to the buyer, the closing documents must be collated properly and should be duly signed by both parties. Failing to comply with the mortgage guidelines in this process can attract penalties, which means as a lender you have to be diligent in carrying out the mortgage closing process. Lenders can work with companies who have expert professionals who can help identify the inconsistencies in the closing documents and any impending compliance issues.
5. Continuous engagement with borrowers
Since lenders may be dealing with large volumes of loan applications and managing rigid regulations, strict deadlines, documentation, closing fees, and costs, this process might be challenging as well. Throughout the closing phase, lenders could use help in navigating the complex process. It might be good to seek mortgage closing assistance for a more holistic and watertight mortgage process. It is also important to comprehensively engage with the borrowers and take them into confidence so that the process remains smooth and easy.
How PrivoCorp can help
You can benefit immensely by outsourcing one or all of the above processes/sub-processes to an experienced mortgage processing company like PrivoCorp. We can help you reduce closing time by 30% and significant savings in operational expenses. We are a one-stop-shop for any mortgage assistance that you may need as we offer a host of mortgage services like pre-processing, processing, mortgage closing, post-close, pre-underwriting, appraisals, title, and many more. Get in touch with us today!