MReport August 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 38 of 67

M R EP O RT | 37 FEATURE These technologies require little setup and configuration and can be accessed on demand. The key to loan quality in the midst of the pandemic and beyond is leveraging sophisticated rules and algorithms, in addition to machine learning and artificial intelligence, to accelerate loan production through automation. Fueled by substantially large enough sets of data, these tools can be trained to do the same work traditionally handled by loan processors, underwriters, and audit staff, only with far greater accuracy, consistency, and speed. The beauty of this type of technology is that it can do the lion's share of work normally left to human staff, enabling them to oversee only exceptions and freeing them up to handle other higher value tasks. With automa- tion taking on most of the work, the exception management work that requires human expertise can then be distributed to available staff working from anywhere with much less pressure. How to Move Forward from Here W hile digital labor is already commonplace in most other industries, it is still somewhat new in the mortgage industry. That's about to change—but how should lenders get started? The first step is to make a total commitment to implement- ing a digital workforce, one that improves the entire business and everyone's role within it. Lenders must also be transparent with their staffs about the purpose of moving to a digital workforce and be willing to redeploy and train staff into new roles once the changes are implemented. From a technological standpoint, lenders should also collaborate with their technology partners to integrate their IT systems where appropriate through application programming interfaces, or APIs. To prepare, lenders need to identify the technologies and data integra- tions they will require to move data between systems, as well as the file formats, with an eye on managing sensitive data securely. While it is not something that most lenders think about, there are also good reasons to consider the architecture of any new applica- tions. For example, understanding the differences between cloud-en- abled and cloud native technology is important. Unlike cloud-enabled software, which is hosted in the cloud and delivered through web browsers, cloud native applications are built entirely in the cloud using tools provided by cloud service providers like Google, Amazon, and Microsoft. For software providers, cloud native technologies eliminate the expense of performing mainte- nance and upgrades on all aspects of functionality tied to their operating system, such as comput- ing power, devices, security, and performance, which tends to add weeks or months to the typical software development cycle. They also allow developers to build and release code quicker and less expensively, while being able to scale their application to meet volume demands. This means lenders don't have to worry about application performance or avail- ability—plus they can get access to new software tools and capabili- ties more frequently with rapid release cycles. Moving forward, lenders should always be looking for new ways to apply digital labor toward automating as many components of the mortgage production process as possible. I used the example of automating document classification and data extrac- tion earlier because most lend- ers spend ungodly amounts on physical labor for the sole purpose of reviewing loan documents by hand and keying in data to their origination software. There is no reason to still be doing this in the year 2020. Similarly, automation can be implemented for second- ary market transactions as well as within loan servicing and loss mitigation processes where there are heavy document processing requirements. Our industry will likely be feel- ing the impact of the COVID-19 pandemic for years to come. As the dust clears, the last thing lend- ers should do is pretend that they can go right back to business as usual. That's nothing but a dead end. But by embracing digital labor, the road ahead is wide open. . CRAIG RIDDELL is EVP, Chief Business Officer for LoanLogics, a recognized leader in loan quality technology for mortgage manufacturing and loan acquisition. A real estate finance industry veteran with over 20 years' experience, Riddell is responsible for establishing and developing ongoing relationships with LoanLogics' largest enterprise clients.

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