Opinion

Why now is the time to improve the mortgage origination process

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Today, banks are facing pressure from all sides. Interest rates are at historic lows. Technology is reshaping customer expectations. And a global pandemic is stretching remote workforces thin and causing increased demand as more consumers seek to refinance and consolidate debt in these unprecedented times.

Even in a healthy economy, a robust resale market and increased housing starts force financial institutions to juggle managing higher demand from consumers with fast, simple and seamless customer experiences to compete effectively. However, many institutions lack the ability to scale and respond quickly to changes in this fast-evolving industry, which is essential if they're to improve their position and create a modern lending experience for customers.

One of the prime candidates for process improvement is mortgage loan origination. Mortgages remain important contributors to a bank's revenue. But today's predominantly paper-based mortgage loan origination process is plagued by costly delays and inefficiencies. Copying, faxing, scanning, printing and manual keying of data occur at every point in the mortgage loan process. Completing the process can take over a month and a typical mortgage origination package averages about 400 to 500 pages. In 2019, mortgage processing from origination to closing was taking on average 45 days.

Meanwhile, smart information technologies — such as multifunction devices, mobile phones and tablets — through which banks hope to realize process improvements introduce vulnerabilities that could find them out of compliance with regulatory requirements. Customers' nonpublic information or personally identifiable information is at risk every time a mortgage-related paper document or electronic information is created, scanned, copied, printed, faxed or emailed. To make matters worse, the increase in remote workers due to the pandemic means many of these processes could be happening outside of an institution's secure network.

Prior to the pandemic, organizations had already begun to automate to reduce paper and manual work. A recent study by Forrester Consulting found that virtually all companies have implemented some degree of automation across front and back-office functions. And banks are no exception. For instance, most lenders have implemented a digital mortgage application, but many haven't automated their back-office processes yet.

While lenders have provided borrowers with online access to bank statements and other loan documents, they're in the infancy stage as they transition away from paper. This leaves many reliant on documents and manual tasks.

To become more competitive, compliant and efficient in mortgage processing, banks need to capture documents and information electronically to eliminate as much paper as possible, automate manual steps and workflows and reduce costs, add security and control wherever paper is required or information is transmitted, and simplify the sharing of information between business units and deliver a positive and engaging customer experience.

When the mortgage origination process is automated end-to-end, banks minimize the chance of human error, reduce the risk of compliance violations and promote customer cross-selling and retention — all while significantly lowering operating costs.

Five steps

Even in uncertain times lenders should work to improve the mortgage loan origination process. In March 2020, the Mortgage Bankers Association found refinance activity was up 168%, in the midst of the COVID-19 pandemic, even as The Wall Street Journal reported an 8.5% decline in sales of previously owned homes for the month. It's more important than ever banks have an advanced, efficient, compliant and customer-friendly approach to mortgage origination now and for the aftermath of this crisis.

Here are five steps lenders can take to achieve speed, efficiency and security in automating the mortgage loan process:

1. Digitize documents at the point of origin. Don't just scan images of related documents and manually enter the customer's information into the system. With automation, you can use an MFD or mobile device to capture and distribute all the customer's documents and information, transmitting it securely and automatically at the time of collection into the bank's mortgage loan system.

2. Automate error-prone manual tasks. Speed the handling and processing of loan documents, increase accuracy and eliminate costly delays of manual rekeying with content-aware print and capture technology, automated data extraction, document type identification, image correction and cleanup, blank page removal and double-sided scanning.

3. Accept documents from any input source. Missing documents shouldn't be a cause for delay. Allow the customer to send the needed document any time from any input source: scanner, email, fax, web forms, mobile and others.

4. Improve the customer experience. Features such as auto-filling of loan application fields, automated data capture from scanned images, instant document transfer from branches to central offices and continual visibility into loan status increase accuracy and offer customers the digital experience they desire.

5. Simplify compliance. Leveraging content-aware print and capture technology will also ensure documents containing NPI and PII can't be scanned, copied, printed, emailed or faxed without authorization. And extend this same level of security to mobile devices and remote workforces.

Now and in the post-COVID world, those continuing to rely on antiquated paper-based, manual processes and partial automation will find it difficult to compete against those that have successfully completed a digital transformation of their operations. Leverage automation and transform the mortgage loan origination process and begin working like the digitally enabled bank of tomorrow, today.

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