Lending – whether to businesses, prospective homeowners, personal loan borrowers or others – is a vital profit center for banks and other financial-service companies. So, these organizations have a strong incentive to make the process of creating a loan as swift and efficient as possible.
Why, then, does the experience of moving a loan from origination to close remain so time-consuming, error-prone and frustrating, for both the lender’s employees and the borrower?
Mortgage origination is a good case in point. This process typically involves many participants (including loan officers, underwriters, closers, attorneys, notaries, real-estate agents and borrowers); dozens of documents in different formats (such as applications, credit reports, internal requests, third-party reports, underwriting and notary exceptions); and multiple dependencies – such as signatures, approvals and filings – any one of which can grind progress to a halt.
Given all that complexity, perhaps it’s not surprising that it takes up to 49 days to process a mortgage loan! (To see how this can be improved, download our Mortgage Processing white paper.)
Yet in another sense, it’s not surprising, when you consider that even in 2017, a sizable portion of the steps that make up the mortgage-origination process are being performed manually, or with paper-based systems. Lenders’ employees devote untold hours to transcribing information from borrowers; searching for essential documents that someone else holds; and retyping, reformatting, photocopying, or manually processing data that is essential to the loan. This is valuable time that could be spent shortening the application process if a workflow management system was implemented.
As a result, errors and delays inescapably creep in, which lengthens the cycle and frustrates the borrower; and the reliance on manual execution increases the likelihood that either PII (personally identifiable information) will be exposed, or regulations will not be complied with, thus creating risk for the lender. (To learn more about these challenges – and possible solutions – watch the new video now.)
A single source for continuity in lending
Today, forward-thinking lenders are using document capture and workflow solutions to eliminate many of the lapses, disconnects, and inefficiencies that accompany manual or paper-based execution of loan processes. These products provide a single technology solution to the challenges of:
- Capturing essential documents and data, from a wide spectrum of sources
- Processing the documents and data, to make them more usable throughout the loan process
- Securing the documents and data against unauthorized access or use
- Distributing the documents and data to the next step of the workflow, or to other systems used in mortgage lending
In the capture phase, these solutions gather documents – paper-based or electronic, from a diverse array of hardware and software – into a single workflow management repository, and convert them into a suitable electronic format.
In the processing phase, business intelligence – such as indexing, barcodes, or automatically pre-fetching useful data – is applied to documents or data that require it later in the cycle.
For security, these solutions provide password- or smartcard-based authentication, verification of user credentials, and encryption of data when it’s communicated.
In the distribution phase, documents and data are automatically routed to the next destination in a mortgage-processing workflow (prebuilt or custom including file, fax and email), or to document management systems (DMS) that support mortgage lending, such as imaging, storage, archiving, retention, and output management.
All of these steps are easily and securely tracked within one workflow management system to ensure the correct information is accessible to appropriate individuals.
Shorter time-to-close, greater satisfaction
The net effect of applying document capture and workflow solutions to mortgage origination is that lenders, and their borrowers, enjoy benefits that were not previously available. These include:
- Minimized manual data entry
- A consistent real-time view of loan status, for lender employees
- Increased efficiency of all participants in the loan process – employees, trusted third parties, and borrowers
- Reduced operating costs
- Enhanced customer service (including transparency of the loan process)
- Tighter security for all loan-related documents
- Audit traceability
By replacing the manual and paper-based parts of the loan process with automated document capture and workflow solutions, lenders are shortening the time from loan origination to approval, improving the customer experience, and gaining a new competitive advantage. As a result, any day in the life of these employees – and their organizations – is dramatically improved.
For more insights, check out our new ebook, “The New World of Lending.”