Supercharge Your Servicing Operations

Four Ways that Automation can Help You Service Loans Faster, Cheaper and More

Even as mortgage originations continue a steady march toward digitalization, the servicing side of the business has been slower to shed its paper-based fulfilment processes. Those traditional business models, though, aren’t sustainable. Shrinking profit margins and tightening regulatory pressures have raised the stakes. Mortgage servicing companies can no longer afford to sit on the sidelines watching the digital revolution pass them by.

Here are four ways that automation can make loan servicing more efficient, compliant and profitable.

1. Accelerate Onboarding
Despite great strides in financial technology (fintech), much of the onboarding process for new mortgage loans is still being done manually. In a survey conducted by SourceMedia for Canon, 75% of servicing industry professionals describe onboarding as a bottleneck, and 54% report that at least half of the work involved in onboarding is performed manually.

At firms with minimal automation of processes, 81% of professionals say the manual work negatively impacts loan servicing performance. Converting paper documents into searchable PDFs can help automate document classification and filing, quickly identify missing information and reduce human input errors.

Advanced technology can pull relevant data out of individual documents and use it to prepopulate servicing platforms, as well as customer relationship management (CRM) software. A report from Thompson Reuters found that using artificial intelligence (AI) to extract information from documents can save up to 90% of cycle time while rooting out human error.

2. Automate Payment Processing
Consumer research indicates that the ease-of-use and flexibility in payment options can influence borrowers when deciding which lender they may want to use. Millennials, in particular, would like to be able to use credit cards to pay their mortgages, and borrowers of all ages are increasingly using auto-pay options so they can “set-and-forget” fulfilling their mortgage payments. Automated payment options can save borrowers time and help protect lenders against late payments.

Then there is the consistent risk of human error. Nearly 80% of mortgage-related complaints submitted to the Consumer Finance Protection Bureau (CFPB) in January 2019 had to do with issues consumers reported running into when they were making payments, or when they were unable to pay their mortgage. Scanners can read checks and recognize handwritten account numbers in the memos, helping ensure the correct amount is posted in the proper account in a fraction of the time it takes a human to post a payment.

3. Streamline Customer Service
AI can help manage customer correspondence. It can be programmed to recognize key words in letters, emails, texts or voicemails and immediately route that message to the appropriate person or department. It can also help power self-service tools that younger borrowers prefer – enabling customers to get payment questions answered faster, look up payoff information or apply to have their mortgage insurance cancelled from their smartphone or laptop, reducing the need to engage anyone in customer service.

The right data can help speed up loan modification requests. For example, when customers reach 20% equity in their homes, they usually apply to have the mortgage insurance dropped. Data can confirm the applicant’s credit standing and employment status, along with the property’s current value and the mortgage payoff amount, in real time.

Automating routine services enables your staff to focus on proactively engaging with clients. For example, you can set up specific parameters and run regular CRM screens to identify existing borrowers that are paying above-market rates on their mortgage. The system can flag potentially qualified prospects for refinancing and refer them directly to the sales team.

Automated portfolio reviews using credit rating information can alert your team to a customer potentially at risk of default. Your team can proactively reach out to that borrower to explore loan modification options before delinquency occurs.

4. Manage Costs, Ensure Compliance
As dropping interest rates continue to squeeze already-tight profit margins, mortgage loan servicers will have to look to automation to reduce costs and mitigate risk of defaults. Automating payments and other servicing processes can help protect sensitive personally identifiable information (PII) better than manual systems, helping to ensure regulatory compliance.

The mortgage servicing industry has fallen behind in the digital revolution, but it’s ripe for modernization. Increasing amounts of data are already coming in from the loan origination side, and ramped up efforts by Fannie Mae and Freddie Mac to standardize servicing data across the industry will help accelerate the pace of digitalization. To stay in the game, servicing operations will have to embrace automation or risk being sidelined.