Closing ratios are important for mortgage lenders and we previously touched base on it through the post, In a nutshell, closing ratios are the indicators of process efficiency and the number of closures, and fairly reveal the profitability of the mortgage business.
Buyers usually check out different lenders, compare the rates and fees, and check out the type of loans they qualify for. To clarify the queries, Lenders, through their loan officers/brokers spend a considerable amount of effort, time, and finances on making the pitch and running the preliminary checks to convert the lead to a prospect. There is often a lag owing to the paper-heavy processes which can cause leads to drop off prematurely. This scenario affects both process effectiveness and profitability.
Mortgage Process Outsourcing is one way to improve the closing ratio, as service providers often employ a core team to handle the paper-heavy processes and also use the power of automation proficiently. There are many ways in which lenders can improve the closing ratio. The improvements are normally focused on increasing borrower sign up through faster onboarding and reduced errors.
Borrower document verification at the onset both for document processing and authentication is one aspect that can greatly improve the closing ratio. But what does Fetching Borrower Docs have to do with Improving Closing Ratio? To understand this, let’s look at what borrower documents really are? Borrower documents in mortgage terms are nothing but a set of crucial documents (mostly finance-related) that are customarily verified by the underwriter while assessing the risk of lending money to the borrower. Every buyer’s financial situation is unique, and the mortgage is often customized to fit the conditions. Irrespective of the conditions, the basic borrower documents required by the lenders remain relatively the same as the primary purpose of documents is to warrant that the buyers have the ability to pay back the mortgage. Many lenders follow the guidelines given by Fannie Mae and Freddie Mac, the government-sponsored enterprises that greatly influence the U.S. mortgage market, and the list usually includes:
- Mortgage application information
- Income verification
- Assets and debts
- Credit verification
- Additional financial records, if any
With a list at hand, the preliminary checks can be a lot faster. Mortgage Process Outsourcing makes Fetching and verifying the required borrower documents beforehand easier, as service providers often leverage technology/automation to speed up processes and to prepare better for underwriting. This is how fetching borrower docs play a role in improving closing ratios.
The underwriting process is often prolonged due to missing documentation, or omissions that make it tough for the underwriter to evaluate the file. Mortgage Processing Support Services are often dexterous and run an extra check to ensure that the mortgage application is not suspended. In case of missing borrower documents, Mortgage Processing Support focuses on engaging with the borrowers to collect the missing docs and hence bridging the missing link. Such proactive initiatives can considerably reduce the time between mortgage requests and closures.
In general, the Mortgage Application information covers the details required for mortgage preapproval along with documents related to employment, financial situations, etc. Manpower that mortgage service outsourcing offers can reduce the time spent behind back-and-forth communication to gather information about income, tax payments, and financial liabilities. Preliminary document gathering, that is collecting borrower documents related to income verification, assets and debts, Credit verification, and additional income information, such as alimony or child support, annuities, bonuses or commissions, dividends, pension, or Social Security, done beforehand can decrease the process lag and can provide insights that can make the validation error-free and ease the underwriter’s work besides reducing the time taken otherwise. To make the verification process smoother, it is advisable to have a Borrower’s Authorization that permits the lender to speak with the borrower’s employer and finance agent (s).
Having a list of mandatory paperwork that buyers should provide before the application process begins is an essential checklist that can directly affect the process. Fetching Borrower Docs actively can reduce the overall document processing time which includes validation, verification, authentication, cross-checks, and gives a buffer to handle errors if any without prolonging it further. This indirectly improves the Closing Ratios. In addition, creating a clear communication channel to ensure that everything is ready can help in closing mortgage applications faster and with no hitches.
PrivoCorp provides reliable Mortgage Loan processing support services to lenders. We can help you engage with borrowers on missing docs and speed up underwriting and improve closing ratios.