Striving for the Holy Grail of Loan Processing

An effective tech platform reduces pain points for all mortgage stakeholders

By Christopher Hussain, CEO, RealKey

Featured in the February 2021 Residential Edition of Scotsman Guide, Hussain writes on the time suck that is the current process for stakeholders in mortgage processing and what can be done to right that ship. Below is a preview of the full article, which can be found here.

When it comes to the mortgage process, homebuyers and loan originators sometimes describe their transactions as trauma-inducing in nature. The breadth and depth of information — and infinite documentation — required is enough to make anyone severely stressed.

What’s more, the complex and time-consuming nature of the process severely limits an originator’s ability to scale their business beyond the closing of a handful of loans each month. To provide their clients with a world-class experience, they are forced to work long hours, leaving little time for the people and activities they love.

Restrictions related to the COVID-19 pandemic have injected even more limitations and complexities into the process. With the dramatic growth in borrower demand spurred by record-low interest rates, originators and their lender partners are overwhelmed. This trickles down to clients, leaving everyone frustrated and exhausted.

Need to streamline

In November 2020, the average mortgage closing process took 55 days, or 10 days longer than a year earlier, according to Ellie Mae. This was due in part to overwhelming demand for new purchase loans and refinancing activity. This time is mainly spent chasing down and processing the documents required from borrowers and other collaborators.

Multiply the inefficiencies in the process with the sheer number of players involved in each transaction and it’s no wonder everyone is frazzled by the end. To say mortgage processing is due for a digital transformation is an understatement. Efforts to streamline mortgage processing through technology have provided some relief. Existing systems, however, have gaps and limitations.

For example, a point-of-sale system may require a tax return as an initial document but typically lacks the intelligence to ask for the necessary letters of explanation and supporting documentation. Additionally, a loan origination system can have numerous integrations, so while it can capture data from submitted documents and other sources, it may not automatically trigger requests for the correct documents from all of the parties involved.

Timely feedback

Communication is another area in need of significant improvement. Current systems generally focus only on communications between the lender, originator and consumer. To streamline the process, it’s important to bring all parties involved into a central gathering place to share the required documents and other transactional details.

Any party in the process should be able to get immediate feedback without having to wait for overwhelmed processors and underwriters — each of which have differing levels of experience — to review items. These are gaping holes that are complex and difficult to solve. Lenders are not in a position to decipher the issues regarding third-party document collections, reviews or communications. These ancillary parties do not want a portal for every lender. They want a neutral platform with a world-class and intuitive solution.

Without automation to facilitate document gathering, intelligence to detect what’s missing and a portal for centralized communications among all parties, one missing form or data point can stop the entire process. This creates added delays and frustration. Enough is enough — it’s time for a change.

Ultimately, what’s needed is a system that focuses on documentation rather than the application itself, since this is where much of the inefficiencies start. Technology can significantly streamline mortgage processing in several ways, helping originators to effectively double the number of loans they close each month, improve client satisfaction and have more time to enjoy life.

Read the rest of the article in the February 2021 Residential Edition of Scotsman Guide, found here.