MReport April 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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28 | M R EP O RT FEATURE with paperwork as they try to accommodate customers' needs for refinancing or other potential modifications should a refinance not be approvable. Imagine having to capture and review all of the required documents, identify what additional paperwork is needed, and communicate with and request information from thousands of individuals, their employers, creditors, and financial institutions. The situation is reminiscent of the housing crisis of 2008-2012, when there were tremendous volumes of loan modifications and people were hiring attorneys and specially licensed mortgage loan originators (MLOs) to document and argue their hardships. The entire process often took months to complete, with significant back-and-forth between lenders, borrowers, and anyone they hired to represent them. This extensive back-and-forth further exacerbated the hardships people were already trying to avoid and/or relieve by working with their lenders. Similarly, with the tsunami that is coming, consumers and lenders can't afford to have these pro- cesses take months. They need it to be handled properly the first time around. In essence, what the mortgage industry needs are greater efficiencies, more automa- tion of the document collection and review process, and stream- lined methods of communication between all parties involved. Automated Digital Mortgage Processing Can Help E fforts to streamline mortgage processing through technology already provide some relief from the burdensome amount of pa- perwork involved in the mortgage lending process. However, existing systems have gaps and limita- tions—and with the onslaught at our gates, loan originators, underwriters, and lenders will still need greater efficiencies through automated document collection and review. While Point of Sale (POS) systems require tax returns and bank statements as initial documentation for submitting to underwriting, they lack the intelligence and foresight to ask for the needed letters of explana- tion or supporting documentation. Additionally, Loan Origination Systems (LOS) have numerous integrations and can capture data from submitted documents and other sources, but they don't automatically trigger the request for specific documents as needed or help get the items from all the parties involved. Hand-in-hand with the document collection process is communication—another area where significant improvements can be made. Current systems focus on communicating with the lender and consumer only. But to streamline the process, it's impor- tant to bring all parties involved into a single place where everyone can communicate, and to have a single point of truth for the trans- action and documents involved. Any party in the process should be able to get immediate feedback without having to wait for over- whelmed originators, processors, and underwriters to review items (each of which has differing levels of experience). Without automation to facilitate document gathering, intelligence to detect what's missing, and a portal for centralized communica- tion among all parties, one miss- ing form or piece of data can stop the entire process. This creates added delays and frustration in an already cumbersome process. Ultimately, what's needed is a system that focuses on the docu- ments rather than the application, because the application is where most of the misinformation and inefficiencies start. Below are three ways that technology can significantly streamline mortgage loan process- ing to help MLOs effectively meet the increasing demands for loan modifications, while also improv- ing the customer experience. 1. Automation Through Intelligence T he sheer volume of documents required to process a loan can number in the hundreds—and reviewing them all to make sure information is confirmed and consistent is a Herculean effort. In addition, current systems like LOSs, POSs, and AUSs (Automated Underwriting Systems) rely on a fair amount of self-reported data from borrowers—either through online applications or over the phone—that can create inaccuracies or result in conditions not being met, which stops the loan process from being completed. With automated document col- lection and algorithms that enable intelligent data review, a digital mortgage processing system can trigger conditions and document needs based on the information at hand and automatically invite appropriate collaborators at the right stage. It can also understand and address unique situations and combinations of borrowers, lenders, and loan program specific requirements. This leads to far less back-and-forth with under- writing, as well as a significant time savings. The result is the holy grail all originators strive for, especially in today's COVID-19 era: a "zero-touch" loan. 2. Centralized Communication I n addition to tracking down documents and data, one of the greatest areas where MLOs spend their time is in communicating with the numerous individuals involved in the process—using age-old, highly inefficient meth- ods such as phone calls, emails, and texts to ask for documents, While Point of Sale systems require tax returns and bank statements as initial documentation for submitting to underwriting, they lack the intelligence and foresight to ask for the needed letters of explanation or supporting documentation.

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