Top 4 Advantages of Automated Mortgage Processing for Lenders

Juliet D'cruz

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Top 4 Advantages of Automated Mortgage Processing for Lenders

The importance of automation in mortgage loan processing cannot be stressed enough at a time when lenders are challenged with staff shortages, loan file backlogs, and an influx of borrowers’ queries. Such challenges will stay, and mortgage lenders will have to adopt means to co-exist with these challenges. While there are no quick-fix solutions, automation has emerged as a must-have ability. It has proved its functionality in helping mortgage lenders deal with these challenges and operate with minimal disruptions. On this note, here’s looking at the 4 critical advantages of automated mortgage processing.

Expedited Credit Analysis

Automation tools use machine learning algorithms and optical character recognition to process borrowers’ financial data such as tax returns, income payslips, transaction history, and others. Such tools tally financial information provided by borrowers to their financial data. The findings help mortgage lenders determine borrowers’ propensity to pay back the loan. Based on this metric, lenders can quickly take a decision on processing loans.

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Asset Monitoring 

After originating loans, lenders must monitor and manage mortgaged assets. They must check borrowers’ level of adherence to loan covenants on a monthly basis. However, there are chances that lenders may miss out on a date that was scheduled to collect data on borrowers’ loan covenant adherence. Automated covenant tool has in-built features that send alerts to collect the required financial data. It issues pop-up warnings in case of a loan covenant breach. This tool can be customized with features that can predict and warn against any potential covenant breach.

Better Fraud Detection

Mortgage lenders use loss origination system that is powered by advanced predictive analytics. It flags risky applicants and help lenders to take instant decisions. The process is entirely automated and helps lenders determine which types of loans should be tried for fraud analysis. Mortgage process automation tools scan over 100 million loan applications and link various disparate data. Such data links flag anomalies and reveal a pattern that establish risks of processing loan for a particular applicant.

Minimum Dependence on Human Labor

Right from origination to closure, processing a mortgage loan involve multiple critical steps. Relying on human labor to execute these tasks will not only decelerate the process but will also result in process errors. Mortgage process automation is based on pre-defined rules and algorithms. These rules and algorithms empower automation tools to execute tasks without any error and within the stipulated time.

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Mortgage lenders must analyze and prepare their operational and IT infrastructure to adopt automated solutions. However, additional investment on infrastructure will result in operational overheads, let alone the management complexities. Ideally, automation solution should not function as a replacement of existing loan origination system. Rather, it should integrate into legacy infrastructure and improve  the mortgage lending process.

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