Despite Mortgage Innovation and advances in technology the Mortgage Loan Origination Systems for many lenders still rely on paper-based archaic systems. These systems are not only inefficient but are also a contributor to driving up the costs of lending. This results in higher spending and lower bottom lines for the mortgage industry. Thanks to FinTechs who are ushering in Mortgage Innovation, processes like Mortgage loan origination systems are becoming paperless and automated with data-rich platforms. Looking at data from Mortgage Bankers Association it can be seen that there has been some reduction in Mortgage Loan Origination costs since 2019. Part of the reason is lower interest rates and high volumes, but experts do agree that Mortgage Innovation with technology is a significant factor in cost reduction for the Mortgage Industry. In today’s blog, we will talk about how digital mortgage loan origination systems can help the mortgage industry in improving bottom lines.
Image 1: Mortgage Loan Origination Costs Image https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-bankers-performance-reports-quarterly-and-annual
Reduce Compliance Costs with Mortgage Loan Origination Systems
The mortgage industry is a heavily regulated industry with many rules and regulations for lenders to follow. With the introduction of acts like the Dodd-Frank Act and CFPB, the compliance for mortgage industry players has just become more complex. The cost of compliance is a considerable cost for lenders where there is also an opportunity for improvement with mortgage innovation. Intelligent Mortgage Loan Origination Systems make the lending process digital. Collecting documents and maintaining records no longer need to be manual tasks. Self-servicing and fully digital mortgagees make it possible for application and verification to be automated. Checks and balances are conducted automatically, requiring fewer resources, thus reducing costs and increasing bottom lines.
Efficiency with Mortgage Innovation in Process Automation
The mortgage industry has limited opportunities to raise prices or cut costs. Mortgage Innovation with Mortgage Process Automation is supporting a new era of increased efficiency. Automation of processes helps in streamlining the Mortgage Loan Origination System. This eliminates chances of data errors, allows for easy storage and retrieval of data at a centralized location, and provides a secure platform for all documentation. Borrowers can also benefit from such digitization of mortgage loan origination systems as they can apply for loans and get status updates without having to visit the lender’s office. This results in increased efficiency of processes, improvement in service quality, and cost reduction due to lesser resource requirements and errors.
You can read more on Mortgage Process Automation for increasing revenue in the Mortgage Industry in our blog.
Cost of Technology in the Mortgage Industry
Investment in technology has long been perceived as a costly affair. With mortgage innovation, especially for mortgage loan origination systems, the mortgage industry is seeing that cost of technology can actually be reduced by newer systems. With Modular IT architecture that includes API-based connectivity, cloud-hosted platforms, configurable systems, and robust data architecture, mortgage loan origination systems have become more agile and adaptive. This has enabled lenders to reuse solution components from the platform to speed up the process of building or addition of new capabilities. The result? The cost of technology can be significantly reduced by as much as 20 to 30% according to estimates from a study by Oliver Wyman.
Mortgage Pricing Systems
Mortgage Pricing is critical for the mortgage industry to earn profits. Providing the right quote for the right borrower needs skill and understanding of the market dynamics. Product Pricing Engines built into mortgage loan origination systems gives tools for real-time pricing. These engines can be customized as per the lender’s preferred models for accurate and optimum pricing structures. With AI and predictive analytics being used in mortgage loan origination systems, specific pricing for specific markets is also easily possible. This only helps in making the lending business more profitable and efficient. You can read more about mortgage pricing systems in our blog.
Lower Servicing Costs
Customer servicing is an area that has a huge impact on lender’s profitability. It needs investment in dedicated resources that are available 24x7. With fully digital mortgages possible through mortgage loan origination systems, the need for spending on customer servicing can be greatly reduced. Manual resources need to only intervene in cases that are critical or cannot be handled by the automated mortgage loan origination system.
Opportunity for Technology
According to Mortgage Banker’s Association, the cost to originate a loan has many components of which fulfillment is about a quarter of the costs. This includes processes like underwriting, processing, etc. that can all be made a part of Mortgage Loan Origination Systems to reduce allied expenditure. Similarly, there are many opportunities for cost reduction with technology in Sales, Post-closing, and production support.
Image 2: Components of Loan Origination Cost Image https://www.mba.org/publications/insights/archive/mba-insights-archive/2019/mba-chart-of-the-week-components-of-cost-to-originate-in-retail-production-channel
Mortgage Loan Origination Systems can be a boon for the mortgage industry when chosen correctly. This is why you need partners like inflooens, who provide the best mortgage loan origination systems that are reliable and efficient. Mortgage Loan Origination Systems should be able to utilize the latest technologies to help in cost reduction and thus improvement of bottom lines. Not only does a great mortgage LOS result in financial benefits, but it also helps you stay ahead of the curve by faster processing times and greater customer satisfaction. This advantage can further be a key factor in increasing profitability.