As we enter the new year, Whether it is working from home, online classes for students, ordering food from your favorite stores, or even Mortgage Process Automation, technology has encompassed our lives. Customers are expecting and demanding a better mortgage experience with technology tools. Mortgage lenders cannot take a backseat in adopting digital technology in their systems. Digital connectivity is causing Mortgage Disruption. Here, we will discuss how the digital age is resulting in mortgage transformation.
Challenges faced by mortgage lenders
Mortgage lenders are facing issues related to operational inefficiencies. Simultaneously, they are receiving feedback from their customers to make the mortgage process more customer-friendly. Other than these issues, mortgage lenders are also facing challenges like:
1. High operational costMortgage cost depends on the size of the loan and the location. The cost associated with a mortgage loan depends not only on the property but also includes fees required for processing the application. Mortgage costs run to about 2%-5% of the loan principal. The Mortgage Bankers Association (MBA) states that the total housing costs were 30% of their income in 36% of households. Some households have spent over half of their income on housing. A lot of manual loan processing is causing the closing costs to increase exponentially.
Figure 1 - The distribution of total monthly housing costs as a percentage of income Image source: https://www.mba.org/news-research-and-resources/research-and-economics/chart-of-the-week
2. Longer Loan processing timeMortgage loans take a long time to process. It is due to paperwork and cross verification of the data from different stakeholders. An average processing time for a mortgage loan extends up to 50 days. The process also involves compliance checks to prevent any fraud and defaults.
3. Increased competitionCustomers have the option of buying or comparing products at any time from the comfort of their homes. They are expecting the mortgage process to be equally customer-friendly, efficient, and quick. Mortgage lenders are facing competition from fintech, who are providing better customer satisfaction and experience.
The role of Mortgage Process Automation
The use of Mortgage process automation is vital in expediting loan processing. Mortgage Process Automation facilitates the loan origination process of underwriting, pre-approval, and closing. Robotic Process Automation (RPA) is one of the key tools used in automation. We have discussed Mortgage process automation and the role of RPA in increasing revenue in our previous blogs. Mortgage Process Automation with RPA is expediting the loan processing time by performing repeatable, rule-based activities, which do not require human intervention. According to industry estimates, the use of RPA by customers, for processes such as online application, is also being welcomed by mortgage lenders.
Figure 2 - Benefits of Robotic Process Automation
Mortgage process automation is leading to better control over the mortgage loan process. Mortgage companies are using chatbots to improve customer service and operational costs because of their availability 24/7. Mortgage process automation helps to detect errors when filling out mortgage applications. This aspect of mortgage process automation increases productivity by speeding up the mortgage loan process. Mortgage process automation is bringing digital innovation in the data content management. Cutting down on manual processes is the next step towards automation in the mortgage industry. Processes like loan advice should be automated and be available to customers beyond business hours. Inflooens’ mortgage CRM has an easy-to-use portal that gives users information at any time.
Digital technologies and Mortgage Transformation
Digital technologies like Data analytics, Artificial Intelligence (AI), Machine Learning (ML), blockchain, etc., are leading to Mortgage Transformation. Machine learning is improving the underwriting process by automating reviews. ML does automatic verification of the credit scores, income documents, historical payment data of borrowers. The information is shared with the lenders to evaluate borrowers and their readiness to buy and repay loans. AI is necessary for mortgage process automation. AI helps in data extraction by using advanced text recognition technology. Extracting Data accurately from scanned images is another step towards mortgage transformation. Lenders are using AI to detect any frauds or defaults early, and make quick, informed decisions. AI is making the lending process more secure, faster, and borrower-friendly.
Figure 3 - AI’s impact on the mortgage industry Image source: https://www.nationalmortgagenews.com/list/5-ways-the-mortgage-industry-is-thinking-about-artificial-intelligence
The use of blockchain technology in verifying customer data is essential. The verified data gets assessed by multiple stakeholders such as realtors, attorneys, credit rating agencies, and mortgage lenders. The lending process gets expedited by eliminating additional verification by lawyers and regulators, thus reducing cost and time. We have explained in our previous blog about blockchain technology causing Mortgage transformation.
The complete digital mortgage transformation requires the mortgage lenders to train their employees in the desired technology. It is also vital to avoid regulatory compliance risk by adopting Mortgage LOS.
Mortgage disruption and digitalization
Digital mortgage platforms are causing Mortgage disruptions. Mortgage lenders are relying on intelligent automation to streamline the loan origination process. The entire mortgage lifecycle has transformed with the use of digital technologies. With the help of digital technology, borrowers can connect with lenders throughout the loan origination process. Mortgage lenders compete to provide better options for customers and increase profitability. A seamless, personalized loan origination process with the latest technology is causing Mortgage transformation. The reduced paperwork and intervention of digital technology is making the entire mortgage loan process efficient and reliable. Mortgage LOS and Mortgage CRM are disrupting the mortgage industry. The use of digital and innovative technologies is causing Mortgage disruption by offering a highly customized user experience. Inflooens’ mortgage LOS and mortgage CRM are causing mortgage disruption with next-generation automation and the best customer experience.
By creating a seamless customer experience, mortgage lenders are disrupting the mortgage industry. The use of digital technology is minimizing errors and improving operational efficiencies. Better customer experience powered by mortgage process automation is here to stay. Inflooens’ Loan team Optimization platform is transforming the mortgage industry.