TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1008878
30 | TH E M R EP O RT FEATURE T here's a reason why fin- tech is often called the savior of the mortgage industry. Though most lenders, servicers, and structured finance issuers have some idea of how to optimize their processes, they generally don't have the team—nor the time and resources to dedicate—to build the necessary tools to do it. They are more focused on growing their core businesses and their staff, in many cases, they live in an insu- lated, siloed area of the industry, making it harder to see the overall impact a tool could have on the larger mortgage lifecycle. Thus, the opportunity for fin- tech firms to swoop in and save the day is created—and save the day they will. Not only are care- fully chosen fintech tools going to help traditional mortgage lend- ers make more money, but they also have the power to increase consistency across business lines, insulate fraud, and make regula- tion easier to comply with, all while providing a better borrower experience in the process. (And happy borrowers mean happy returns and repeat business.) The key to all this lies in finding the right fintech tools for the right point in the mortgage process. Finding the Right Fit W ith increased regulation and the vast array of other challenges today's market poses, mortgage lenders need fintech partners who have real knowl- edge in their area of business (origination, servicing, structured finance, etc.)—or who have part- nered with industry veterans in those areas. This allows them to truly understand the challenges a lender faces today, as well as provide tools and tech that can streamline, enhance, and improve what the lender is already doing. Here's an example of what fin- tech can offer in each unique line of the mortgage business: NEW ORIGINATION Point of Sale and Documents-From-the- Source: On average, it takes between five to 10 business days to collect the full array of underwriting documents from a prospective borrower, significantly adding to a borrower's time-to-close. But with the proper use of fintech, that timeframe could shrink to five minutes or less. By using a fintech point of sale system with documents-from-the- source integrations, you can have underwriting documents (i.e., pay stubs, W2s, bank, and asset account statements, tax returns, a 4506T with e-sign, ID checks, etc.) in only a few minutes. You could also easily prequalify the borrower, automatically populate their loan application with known data, and start pulling credit and pricing in- formation immediately. In the end, this shortens the time to close, on average, by approximately 10 days and saves anywhere from $270 to $400 in operational costs per loan. It also frees up team members to create more loans—and more profits—in any given month. Document Recognition, OCR, and Data Extraction: Fintech has the power to sig- nificantly improve QC processes, both by cutting costs and adding more convenience. Optical char- acter recognition (OCR) tools can extract data from documents and reconcile any corrections needed,. In addition, it can be used to identify documents which could prevent team members from ever stacking a physical delivery file ever again. By implement- ing these tools, you can insulate risks, deliver cleaner files, and also streamline both the quality con- trol and due-diligence processes, cutting costs and speeding up the timeline in which a loan can fund and also be purchased. This could allow originators to close and fund 1.5 to two times the amount of loans in the same time. ASSET MANAGEMENT/ SERVICING Transferrable ACH and Enhanced Budgeting Tools: By integrating an independent payment platform as an opt-in at origination or modification, the mortgage loans you are originat- ing or making reperform will transfer seamlessly (without losing their ACH), and the payments will be sent to the new servicer without issue. These fintech platforms will also allow the borrowers to manage all of their debt in one place, giving them a Opting for Optimization Fintech innovations have the potential to transform and streamline business processes for lenders. But first, they have to embrace them. By Jennifer D. McGuinness By integrating an independent payment platform as an opt-in at origination or modification, the mortgage loans you are originating or making reperform will transfer seamlessly (without losing their ACH), and the payments will be sent to the new servicer without issue.