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5 Steps to Transform the Mortgage Loan Origination Process

Mortgage banking, like every other industry, has felt the profound impact of the global pandemic, and yet, even prior to the COVID-19 outbreak, bankers were already facing change. New digital-only competitors are reshaping the customer experience. They’ve been adept at meeting consumer demand with fast, simple and seamless banking experiences.

The pandemic has only intensified the need to build new capabilities, especially as historic low interest rates create higher demand for home refinancing and debt consolidation. But institutions find themselves scrambling to respond. In this fast-evolving industry, many lack the ability to scale, which is essential if they’re to improve their position and create a modern lending experience for customers.

Since mortgages remain important contributors to a bank’s revenue, an obvious early candidate for process improvement is loan origination. But today’s predominantly paper-based mortgage loan origination process is plagued by costly delays and inefficiencies. Copying, faxing, scanning, printing and manual keying of data occur at every point. The typical mortgage origination package averages about 400 to 500 pages and completing the process can take over a month.

To realize process improvements, banks are turning to smart information technologies such as multifunction devices (MFDs), mobile phones and tablets. However, these devices also introduce vulnerabilities that could put banks out of compliance with regulatory requirements. Customers’ non-public information (NPI) or personally identifiable information (PII) is at risk every time a mortgage-related paper document or electronic information is created, scanned, copied, printed, faxed or emailed. To make matters worse, the increase in remote workers due to the pandemic means many of these processes could be happening outside of an institution’s secure network. 

Of course, automation initiatives to reduce paper and manual work were underway at banks even before the pandemic. A recent study by Forrester Consulting found virtually all companies have implemented some degree of automation across front and back office functions. Banks are no exception. For instance, most lenders have implemented a digital mortgage application, but many haven’t automated their back-office processes yet. 

While lenders have provided borrowers with online access to bank statements and other loan documents, they’re in the infancy stage as they transition away from paper. This leaves many reliant on documents and manual tasks.

Banks can resolve these issues by accelerating automation initiatives. By applying focus to four key areas, they can become more competitive, compliant and efficient in mortgage processing:

  • Eliminate as much paper as possible via electronic capture.
  • Reduce costs by transforming manual processes into automated workflows.
  • Gain control of paper-based transmission points by enhancing security.
  • Improve customer experiences by streamlining the exchange of information between business units.

When the mortgage origination process is automated end-to-end, banks minimize the chance of human error, reduce the risk of compliance violations and promote customer cross-selling and retention—all while significantly lowering operating costs.

5 Steps to Transforming Mortgage Loan Origination

Uncertain times shouldn’t be an obstacle to improving the mortgage loan origination process. In March 2020, the Mortgage Bankers Association (MBA) found refinance activity was up 168 percent, in the midst of the COVID-19 pandemic, even as The Wall Street Journal  reported an 8.5 percent decline in sales of previously owned homes for the month. Pandemic or not, it’s more important than ever for banks to have an advanced, efficient, compliant and customer-friendly approach to mortgage origination now and for the aftermath of this crisis.

Lenders can achieve speed, efficiency and security by following these five steps to automate the mortgage loan process:

  1. Create a paperless process for opening loans. Don’t just scan images of related documents and manually enter the customer’s information into the system. With automation, you can use an MFD or mobile device to capture and distribute all the customer’s documents and information, transmitting it securely and automatically at the time of collection into the bank’s mortgage loan system.
  2. Replace error-prone manual tasks with automation. Speed the handling and processing of loan documents, increase accuracy and eliminate costly delays of manual rekeying with content-aware print and capture technology, automated data extraction, document type identification, image correction and cleanup, blank page removal and double-sided scanning.
  3. Be flexible when collecting information. Missing documents shouldn’t be a cause for delay. Allow the customer to send the needed document any time from any input source: scanner, email, fax, web forms, mobile, etc.
  4. Design a frictionless application process. Features such as auto-filling of loan application fields, automated data capture from scanned images, instant document transfer from branches to central offices and continual visibility into loan status increase accuracy and offer customers the digital experience they desire.
  5. Strengthen security and compliance. Leveraging content-aware print and capture technology will also ensure documents containing NPI and PII can’t be scanned, copied, printed, emailed or faxed without authorization. And extend this same level of security to mobile devices and remote workforces.

The banking landscape is changing fast, and institutions must find new ways to compete and stay relevant in our digital world. As customer expectations rise, it will be ever more crucial for banks to digitally transform their operations. Institutions will be more competitive if they leverage automation to transform the mortgage loan origination process and begin working like the digitally enabled bank of tomorrow, today.

To learn more, download the white paper Solving the Problem of Paper in Mortgage Loan Origination.