Editor’s Note: This story originally appeared in the July issue of MReport, out now.
Traditionally, putting together a mortgage has been an intricate, mostly manual process, with lots (and lots) of paper. But with advancing technology, much of that is changing. As the industry becomes increasingly digitized, there are opportunities for not only improving existing processes but mining the wealth of data that comes along with it as well. Technological advancements done the right way mean saving the originator and the client’s time. With this extra time, mortgage professionals can focus on clients and provide all of the things machines can’t. When dealing with financial information, however, it is especially critical for innovation to be paired with implementation, placing customer security as the highest priority.
Today, the confluence of several technologies, including digital documentation, robotic process automation, and data mining, is advancing the mortgage industry and helping mortgage professionals focus more on customers and customer service, and less on time-consuming and repetitive tasks.
The Rise of the Digital Docket
Before the housing bubble burst, the average mortgage application ran about 100 pages, a stark difference from today’s 500-page-plus application file, according to the MBA. From tax returns to bank statements and everything in between, borrowers and originators alike have been drowning in seas of paper. The move to digital documentation has helped to make gathering this information easier and more efficient for all parties, yet it remains cumbersome. Although these mountains of pages still exist, today’s move to digital processes means the pages might not appear in any physical file folders after all. Most lenders are now able to accept applications and files digitally, and e-signatures are a widely used tool. So, rather than gathering paper documents and transporting them by hand or sending them in manually, borrowers can quickly email documents, submit via a photo portal, or allow companies to access their information directly online. These advances have helped streamline the mortgage process for many borrowers and lenders, but there is still room for improvement. The day of the truly digital mortgage has yet to dawn, but the industry continues to move closer through increasing use of recognition and workflow technologies, which continue to show marked improvement.
Digital documentation has also helped mortgage lenders and servicers, as well as others involved in the process, to streamline their information-gathering and verification processes. This has paved the way for further advancement in terms of leveraging complementary technologies for automation and data mining. Proper use of encryption and other secure protocols also assists in improving sensitive data protection as compared with legacy, paper-based processes.
Mortgage origination is not the only area of the overall process that will benefit, however. Loan servicers can be aided by document automation as well. As new loans are brought in for servicing, an automated program can make sure to account for all the documents required for every loan and double-check for system data accuracy. As the MBA has concluded, there could be hundreds and hundreds of documents associated with each loan, which results in a cumbersome, time-consuming onboarding process— and the number of documents just increases for seasoned loans. As these documents are automatically brought into the system, the process can also include automatic indexing, which means that files will be ready and retrievable for customer service.
Automatic Response, Human Service
With so much of a mortgage’s processing and documentation now digitized, there is a plethora of information taken in by mortgage companies, creating the opportunity for further technological advances to not only become more efficient but better in quality. For this reason, many companies are considering such new technology as robotic process automation (RPA). Simply put, RPA is software that runs software. For those in the mortgage industry, these automated processes can be programmed to complete workflow steps and perform quality checks and other helpful tasks. RPA bots accomplish this by accessing a platform and gathering information through many of the same application interfaces used by the operations and sales teams.
With the latest advances, bots have become highly intelligent and can be programmed for tasks such as opening, reading, and composing a response to an email message. For mortgage professionals, this kind of technology could be implemented in a variety of ways to help streamline processes and speed up response times, while minimizing human error. For example, an automated process could receive a loan application, read the file and attached documents, and either acknowledge receipt or notify the applicant if documents are missing, or if the wrong documents have been sent.
Automation at this level can move extremely fast, meaning applicants don’t have to wait until after their originator is out of that meeting or finished with that phone call to get a response. Additionally, if further or different documents are needed, the process of gathering those missing documents can be started immediately, keeping the application moving without delay. Automation also removes the component of human error, as this technology minimizes the potential for data entry hiccups. For an industry steeped in paper, digital document automation is a significant boon for both speed and accuracy.
Although some people might be concerned that all this automation will make people less important, the opposite is true. These technological improvements allow people to focus on higher value activities and on delivering an exceptional customer experience, as they will have more time to work one-on-one with the client and ensure that processing exceptions are resolved in a timely manner. By delegating back-end data processing tasks—whether it be for origination or servicing or one of the other many components of the complex mortgage process—mortgage professionals will be able to focus on the kinds of discerning decisions that are critical to getting the customer the right level of service to meet their specific needs.
Utilizing the Information Highway
The move toward digital transformation has also moved the industry forward in terms of access to data. Those details captured during the mortgage lifecycle among the many hundreds of pages of documentation, while unwieldy in their paper form, are data-rich sources once digitized and accessible via automation. Processing and financing mortgages generate a wealth of data, from information such as which loan products are the most popular to where the most loan activity is happening.
But this data must be pulled together in a responsible and meaningful way. Accessing and analyzing this information can help mortgage companies evaluate their performance and pinpoint where there is a need in the market. But it can also help them serve their existing customers better, as well as help originators to locate clients who might be in the market for a refinance or similar product. By leveraging advanced algorithms that analyze a customer’s data, mortgage professionals can be primed to approach customers at the right time and with the right product that is not only in line with changes in the market but also aware of the customer’s impactful life events.
This data can be even more useful to companies with interests across the spectrum of the home buying and financing spectrum. For instance, if a company has branches in real estate sales, mortgage origination, and servicing, there is even more data to be mined and analyzed. This rich supply of data can give everyone involved better insight into the overall picture for each client, versus the narrow view typically seen by each segment of the process. And, of course, this means greater global data, as well, helping the company to make better business decisions about products and services based on concrete information from their client base.
Protection on All Fronts
Of course, with increased digital and automated technologies come increased challenges, and paramount among them are the risks posed to the privacy and security of customer data. Along with keeping up with the latest technological advances, it’s imperative for mortgage companies to fully commit to customer privacy and security, as protecting client data is every lender’s responsibility and should be its highest priority.
Internal risk-mitigation measures should focus on the three key components: people, process, and technology. This focus requires oversight and measures in place that cover all aspects of not only the data being gathered but of the people working with that data across the company, from originators to underwriters and more. That means robust training for personnel and support for that training, from the top down. Daily processes, such as change authorizations, should be ingrained with best-practice basics. The technology itself should be constructed with layers of monitoring built in, to provide proactive and reactive responses to any threat.
In addition to making sure their security is of the highest quality, mortgage companies must also ensure that any and all third-party vendors also maintain the strictest security protocols. Companies have the responsibility to do their due diligence and discover the details of how data is stored, transported, or shared by their partners. With today’s technology, risk should be examined at every layer in any partner relationship, as it is not only good for the company but also critical for the consumer.
The Wheel of Change
Although the mortgage industry is often seen as slow to change, change comes nonetheless, with technology advancing and moving the industry forward. As digital documentation becomes the standard, new automatic processes can be put in place, freeing up time for mortgage professionals to focus on clients and higher-level decision-making. This digital data can then be analyzed to help mortgage professionals, regardless of their role, to better serve clients with the appropriate products and services. The right technology can help bring together the mortgage originator with the servicer, the title company, the real estate brokerage, and more, creating a seamless experience for the client.
As technology continues to advance, it should remain in service to the people it strives to help. This kind of technology not only enhances the work experience for employees and the service experience for clients, it also enhances the quality of the products created as well.