5 Ways to Improve Mortgage Banking with Automation
John Mancini

By: John Mancini on December 14th, 2016

Print/Save as PDF

5 Ways to Improve Mortgage Banking with Automation

Automation  |  Accounting and Finance

If there was ever an industry in need of automation, it would be the mortgage lending industry.

This industry is plagued by time-consuming and error-prone, paper and labor-intensive processes, front-end systems that do not communicate efficiently with back-end systems, and third-parties that are often not integrated into the process electronically. These problems are exacerbated by the huge volume of loans that are generated each year (nearly 5 million new consumer mortgages alone). Content management is a key enabling technology in solving these problems.

Get Your Free eBook: 5 Ways to Increase Profits in Mortgage Lending

Inefficiencies in the Loan Origination Process

The inefficiencies in lending in the mortgage banking industry start at the loan origination process, which encompasses five steps: 1) Application submission; 2) Underwriting; 3) Closing and funding; 4) Post-closing; and 5) Shipping and delivery.  

While paper remains a fact of life in each of these steps, it has an especially big impact on the loan application submission process, which accounts for over 70 percent of the manpower required to produce a loan. This step drives the production of loans to consumer, business and institutional clients from the initial application to the funding and processing of the loan in a core accounting system.

The effectiveness of loan application processing is a linchpin to success in lending.

However, paper-based and semi-automated processes make it difficult for lenders and third-party processors to cost-effectively approve and originate loans to consumers, businesses and institutions. In fact, there are four main challenges that arise:

High loan processing costs: The average net cost to originate a loan rose 23 percent between 2013 and 2014, resulting in an average loss to lenders of $194 per loan, according to research from the Mortgage Bankers Association.

Long cycle times: Historically low interest rates have not only meant a rise in mortgage volumes, but also an increase in processing backlogs. It took lenders an average of 46 days to close a loan in 2014, Ellie Mae Market Trends reports.

Lack of visibility: Disjointed systems for processing loan approvals results in rekeying of information, poor visibility into the status of loan applications, and delays in responding to customer inquiries.

Compliance risk: Creation of the Consumer Financial Protection Bureau, and the significant penalties and fines it can levy, has raised the stakes of complying with regulations such as TILA-RESPA (Truth in Lending Act-Real Estate Settlement Procedures Act).

Solving with Intelligent Capture

Intelligent capture solutions address these challenges by providing five critical capabilities:

  1. Import any paper-based or electronic document, from any source.
  2. Classify documents into an unlimited number of pre-defined groups and easily add them to any new document.
  3. Extract information from documents.
  4. Validate extracted data based on information stored in downstream systems, such as a loan origination system, core accounting system, virtual folder or database.
  5. Export information to any downstream system, process, or person.

To learn more about how content management can address these challenges and improve the profitability of mortgage loan processes, download a copy of this free ebook. It outlines how content management can be used to address these challenges. 

5 Ways to Increase Profits in Mortgage Lending

About John Mancini

John Mancini is the President of Content Results, LLC and the Past President of AIIM. He is a well-known author, speaker, and advisor on information management, digital transformation and intelligent automation. John is a frequent keynote speaker and author of more than 30 eBooks on a variety of topics. He can be found on Twitter, LinkedIn and Facebook as jmancini77. Recent keynote topics include: The Stairway to Digital Transformation Navigating Disruptive Waters — 4 Things You Need to Know to Build Your Digital Transformation Strategy Getting Ahead of the Digital Transformation Curve Viewing Information Management Through a New Lens Digital Disruption: 6 Strategies to Avoid Being “Blockbustered” Specialties: Keynote speaker and writer on AI, RPA, intelligent Information Management, Intelligent Automation and Digital Transformation. Consensus-building with Boards to create strategic focus, action, and accountability. Extensive public speaking and public relations work Conversant and experienced in major technology issues and trends. Expert on inbound and content marketing, particularly in an association environment and on the Hubspot platform. John is a Phi Beta Kappa graduate of the College of William and Mary, and holds an M.A. in Public Policy from the Woodrow Wilson School at Princeton University.