5 Steps to Modernize Mortgage Operations
The mortgage industry is full of legacy processes and inefficient workflows leading to high operational cost. Technological advancements in various fintech industries are now forcing this sector to adapt. With borrowers pressing for more user-friendly operations, from origination services to mortgage servicing digitization of the processes is need of the hour & has to be proactively initiated at the earliest. For mortgage lenders who are still adapting to technology, here are 5 possible areas of modernization
1. Changing Up Mortgage Loan Origination
According to McKinsey & Co., the US mortgage origination process takes an average of 46 days to complete, comprising over 30 touch points. Traditional practices such as physical collection of information and title services take a long time, which increases the waiting period. Instead, collaborative technology, such as implementing an online portal for mortgage origination can speed up the process. Self-serve tools, chatbots and AI technology that are handled at the back-end by a few agents can streamline the process. McKinsey estimates that digitizing the mortgage origination process can reduce cost per loan by 10% and cut down the processing time by 15-45%.
2. Automation in Mortgage Underwriting
Using technology like robotic process automation, machine learning and artificial intelligence in mortgage underwriting can significantly save time and costs. Automated underwriting systems grant mortgage approval to clients by analysing information such as income and credit score of appliers and compare them to the value of the property they are seeking to buy. The systems can automatically weed out applicants who do not have the financial credibility to apply for the loan and only transfer eligible clients to a human underwriter, who can then take the process forward.
3. AML Technology for Risk Management
Anti-money laundering practices are an essential part of risk management in the mortgage process. As the demands of the industry are growing, sophisticated technology and analytical tools are emerging to manage risk. For instance, using a technique such as graph analytics that can explore individual relationships and scan AML documents to spot anomalies can be beneficial in identifying fraudulent activities. Machine learning can also be employed to identify patterns and flag suspicious activities in the AML process.
4. AI & Blockchain for Title Research
The title research step in mortgage processing is highly resource-intensive and requires the researcher to pay attention to minute details in public records and other documents to ensure that a property is free from any claims, liens or other stipulations that could hamper the legal transfer of ownership. Artificial intelligence-driven tools for title research can undertake bulk scrutiny of documents in a shorter period of time and with increased efficiency. It can avoid errors that are common in a manual process, improve turnaround time as well as productivity. Also, over the period with the implementation of Blockchain technology Title search can be done in no time with minimal margin of errors.
5. AI and ML for Claims Management Services
Claims processing requires human-like cognition to sort through mounds of data and verify accurately. They also have to be checked for any frauds and potential duplications. Artificial intelligence and machine learning technology can scan through documents faster. From automatic processing of claims to invoice and document matching, today’s technological solutions can smoothly streamline claims management in the mortgage industry.
Digitization and technological innovations in the mortgage industry can increase internal synergies for companies and lead to considerable cost & time savings. Finding a trusted technology partner for different steps in mortgage servicing can make the transition easier. Allsec provides superior digital mortgage services, from title services to mortgage origination & servicing, that will provide you with intelligent workflows, customized solutions and the best technology in the market.