For lenders it is a new era in which rates have risen and purchase mortgages have made a bit of a comeback, and this means new strategies are called for when it comes to building a better business process, according to Kelly M. Adkisson, an executive at Accenture Credit Services.
“The market is starting to transition,” she said, noting that it is becoming more customer-centric as it moves out of the “HARP environment” and into a situation where lenders need to compete more for purchase business.
“They need to define where they can be competitive relative to other players” as well as look for where they can gain efficiency in their process, said Adkisson.
“Cycle times are increasingly important as we move to a purchase market,” she said. “Borrowers have less tolerance for cycle times” as the nature of the transaction puts more pressure on lenders to get loans done with in a 30- to 45-day window of time.
This means data and information flow need to be more efficient and the lender/originator must be much more proactive when it comes to communicating with borrowers, letting them know the status of the loan or reminding them about outstanding documents, Adkisson said.
She suggests three main steps toward developing a better business process with these ends in mind, which involve: process re-engineering, technology and analytics that can be used throughout the business process.
Adkisson suggests starting with process re-engineering.
This can be done by examining the many “hand-offs” in function or role internally and with external partners in the origination process, and then looking for ways to streamline the process by reducing those handoffs, she said.
Adkissson also advises lenders to keep in mind as they re-engineer processes that if there are quality issues early in the process they can create because it “drives the problem downstream” creating extra “rework” later in the process.
She suggests examining, for example, the number of times an underwriter looks at a loan file, making sure the right quality checks are in place but also seeing whether it is possible to “reduce the number of touches” involved.
Another key part of the process Adkisson advises examining is the point during the process where loans are going into closing. She suggests making sure nothing that will cause the loan to “go backward” once it goes into closing.
“We implemented a checklist we put in place in an audit prior to the loan going into closing” to address this, Adkisson said.
As far as technology, she advises looking for way to automate processes such that the automation “reduces the overall complexity in the process.”
“Oftentimes the technology workflow is driving the process itself,” said Adkisson, noting that a key part of the workflow should be automated alerts and warnings as well as pro-active notifications about potential deadlines or concerns that could affect the process such as documents expiring.
Also potentially making the process more efficient is technology that automates the ordering of third-party services like title, appraisals and flood certification, as this reduces the time a processor spends making decisions, she said.
Optical character recognition and document imaging are forms of technology that may provide some efficiency along these lines, Adkisson said. OCR has been imperfect in the past but has made great strides since then, she said when asked about this.
“OCR has come a long way,” said Adkisson, although she noted that it is generally is more optimal when used to recognize and read third-party business partner documents than borrower documents.
On top of this technology designed to more efficiently manage workflow she advises adding analytics that can, ideally on a real-time basis, do things like identify where the bottlenecks are in a lender’s process are.
The Mortgage Cadence system Accenture recently acquired is one option that can do this and has different modules that lenders can purchase and use as needed that can accommodate functions like support for different loan channels, or a front-end portal that offers borrowers more of a digital experience.
Adkisson said in addition to opportunities to develop a better business process when it comes to origination there also is still opportunity to look at the business process on the servicing and default side of the business.
She said this is driven primarily by
“Whereas the origination market is enabling lenders to be able to compete and emerge in this new market,” servicing and default process re-engineering goals are driven by compliance requirements and a need to reduce costs.
She said some of the same principles apply as on the origination side of the market in terms of opportunities to streamline by reducing handoffs, using the right technology in the back office to support manual functions, and using analytics to make sure work is being routed appropriately, the company is managing exceptions optimally, and that it is appropriately monitoring its output.
There also is regulatory pressure to ensure there are standards processes across sites, Adkisson said. Other process re-engineering goals include service level agreements that provide a timeline to respond to borrowers and borrower contact mechanisms, so that there is a “compliant, enhanced customer experience.”
This goal can be met through technology that provides alerts and notifications throughout the process, so if a customer is due a response the system triggers that action, Adkisson said.
“You have to make sure communication protocols are followed, especially on default side.”
