MReport January 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 9 are filling in the gaps through manual workarounds and additional systems, such as web portals and pricing engines. Technology specifically designed to automate the correspondent workflow can eliminate process inefficiencies and the need to invest in and maintain multiple systems. M // What is the problem with relying solely on seller LOS data? FOX // A correspondent with limited automation may be tempted to improve turn time by relying solely on LOS data provided by sellers. This is a big mistake and highlights a huge myth in the industry that LOS data is the single source of truth for the loan file, which simply isn't correct. The LOS is a system of record, to be sure, but anybody can put data into the LOS—that doesn't make the data ac- curate. Correspondents who purchase loans from multiple sellers are also dealing with data from a variety of LOS systems. They need an efficient way to compare that data with the final loan documents and identify inconsistencies. Relying solely on LOS data for loan file reviews leaves a correspondent with too much exposure related to defects. Fully automating the correspondent loan acquisi- tion process needs to go beyond the automation of standard processes and progress to "intelligent automation." The former type of automation applies to tasks such as populating forms and sending alerts. Intelligent automation, on the other hand, leverages a rules-based architecture to interpret information in a useful way. You could say that there really is no shortage of basic automa- tion, but there is definitely a shortage of intelligent automation. We're trying to change that. M // What steps are correspondent investors taking to apply more automation? FOX // It varies by investor. Some investors want a complete solution that will help them deliver more effectively on their value proposition, what- ever that may be. For example, some lenders focus on providing customers with a high-touch experi- ence and want added data and intelligence that addresses seller improvement and competitive pricing. Others desire a more low-touch approach, and choose an elevated level of automation across all steps in the processes while focusing on provid- ing sellers with the best prices. Then there are correspondent investors who need help solving a particular pain point, such as document processing, which is a huge challenge for many. Very large amounts of loan file data remain "locked up" in documents that require very precise technology to extract. This same technol- ogy should also enable indexing, classification, and versioning of all loan file documents. Correspondent investors may vary on their ap- proach to automation, addressing a specific issue or pursuing systemic improvement, but there is no lack of opportunity for it to deliver value to their businesses. M // What would investors consider a digital transformation? FOX // The best possible digital experience for cor- respondent investors is one that prevents buybacks, reduces seller turn times, and lowers costs across all processes. The question is: how do you get there? An increasing number of investors are diving in, while many others don't know where to begin. For example, with today's technology, investors can verify the accuracy of any loan file, streamline the clearing of conditions, and create documented proof of compliance, which helps all sides avoid potential buybacks. The same type of technology is capable of finding and addressing loan defects across data and docs that would otherwise go un- detected by using only LOS data. Automation en- ables this to happen efficiently, which speeds seller turn times and funding to their warehouse lines. While we may not yet be at a place where a total digital transformation is embraced by all, most investors would consider a successful digital trans- formation one that achieves the above three goals: preventing buybacks, reducing seller turn times, and lowering costs across all processes. M // Where is the tipping point for true ROI through automation? FOX // For all lenders, the holy grail is lower- ing costs and achieving consistent, verified, and validated compliance with investor guidelines. The only way to do both is by automating the quality control oversight of the underwriting and decision-making processes as they occur. This will ensure accurate, validated data is used to make underwriting decisions with minimal manual data entry. Real-time, in-line quality checks and auto- mated rules will test and document compliance with investor guidelines, passing on high quality loans to correspondent investors. Pre-purchase reviews can then be streamlined, refocusing staff resources on managing exceptions. The holy grail drives quality from the start of the origination process. However, we're not there yet as an industry. For correspondent investors, the burden is still on them to identify and cure defects prior to purchase. The good news is that a growing number of them are investing in the right technologies that are helping them achieve true, documented ROI on automation right now. "[W]ith today's technology, investors can verify the accuracy of any loan file, streamline the clearing of conditions, and create documented proof of compliance, which helps all sides avoid potential buybacks." Experience: Prior real estate investing experience preferred.

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