One look at a post from CNN Money’s "500-page mortgage applications are the new normal" is a reminder that things aren’t how they used to be in the mortgage industry. Sure, there was always a lot of paperwork, but 500 pages? Even loans requiring considerably less paperwork still rely on the efforts of multiple people successfully completing multiple processes for a loan to be closed. Every page must be perfect and there’s a lot of room for error.
To complicate things further, new regulations have raised the bar on accuracy and timeliness. Present a new solution for improving the accuracy and efficiency of loan documents in any way and the industry is all ears. Industry veterans are among the first to recognize why processes can break down and how technology-driven solutions are helping everyone involved work smarter, work faster and stay in sync with rapidly changing compliance guidelines. Here’s what a few of them have to say:
Real Estate Agent
“I legally can’t have anything to do with the loan process itself, but I can tell you many buyers dive right into the buying process unaware of all the closing costs and uneducated as to the many loan types available to them. That can slow things considerably.”
Pulling out of a loan or stalling mid-process not only affects the buyer, it creates problems all the way down the line. Lenders now have access to third-party online homebuyer education services to ensure that buyers are truly ready not only financially, but psychologically to immerse themselves in the home buying process. To make things even more efficient, lenders are leveraging automated solutions to earmark clients who are more likely to benefit from this kind of education before the loan process is in full swing.
“So many compliance issues have to do with timing. Everything has a clock attached to it—responding to new applications, relaying credit decisions, providing disclosures. It doesn’t matter what failed in the process, let that time slip and you have more than just an impatient buyer to deal with.”
Lenders are able to easily adhere to compliance-critical timing requirements using loan origination software that has timing safeguards built in. No one has to remember what to send when. In this way, things don’t fall apart if someone goes on vacation, or the workload is at a seasonal high. The system simply responds to rule-based triggers without requiring additional intervention—sending the right information out each time, on time. Lenders are also integrating this kind of software with other systems such as those used by underwriting to ensure they are in compliance with tighter record-keeping and accuracy requirements like those handed down in 2014 by the Consumer Financial Protection Bureau (CFPB). For example, when data between the lender and underwriter conflict, automated alerts are sent to all concerned parties, prompting corrections to be made.
“Probably the most traumatic thing I’ve witnessed was a woman who had gotten married in the process of closing her loan. We had to start over from scratch. Had that happened the way we do it now, it wouldn’t be the burden on all of us that it was. We’d still have to start over, but things would have been much simpler and happened a lot faster.”
Changes like taking a new name or a new job impacts the loan process significantly and require a lot more legwork to fix than many buyers realize. But paperless environments are more forgiving of these mistakes. Lenders with fully-automated processes can change a name once and populate every piece of paperwork indexed to that client. Automated and integrated communications between lenders, the client, the underwriter and the appraiser allow the loan approval process to flow through each step quickly without necessitating dozens of phone calls, explanations, apologies and restarts.
Getting things right the first time, or at the very least, the ability to making adjustments quickly, are critical metrics for success in an increasingly compliance-driven environment. Automating processes, integrating information, allowing for dynamic information to be pushed or pulled in any direction while keeping its integrity are continuing to create efficiencies including better experiences for the loan officer, broker and borrower while reducing origination time and costs.
Find out how iDatix can help you create efficiencies in your financial approval processes. Schedule a free process automation consultation.