MReport May 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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24 | TH E M R EP O RT FEATURE T echnological advances are providing an alternative to mo- notonous data entry in day-to-day processing require- ments. One such advance that is changing the industry is Optical Character Recognition (OCR), which is most recog - nizable by its basic function that gives users the ability to convert a printed document back into searchable text. This process offers varying levels of sophistication and technological intelligence to document pro - cessing, yet unfortunately, this feature alone isn't useful in the mortgage market, since quickly finding a data point is only part of the challenge faced when looking at a PDF mortgage file of 500 or more pages. Structure must be brought to the documents before we can glean data points. This is done by 'document classification' a term we use to indicate the identify - ing of individual documents in the file. More sophisticated OCR solutions incorporate an artificial intelligence (AI) rules engine that can read the OCRed text and make decisions similar to the way a human would. In this way, the text scanned by an OCR process can be leveraged to automate the document classification effort and effectively bring order to the chaos. Once a working structure has been brought to the document, we can extract individual data elements for the relevant docu- ment types, i.e., the date from the note, the disbursement date from the closing disclosure, or the original loan amount from the deed of trust. OCR on its own can create the relevant text to generate these data elements, but without a robust AI element that can understand what that text means, the data remains locked in the documents. Cutting Cost, Creating Convenience W ith the costs to process each mortgage continuing to rise, lenders must leverage automation to improve prof- itability and consistency in their business processes. With advanced mortgage OCR solu- tions, companies have been able to reduce their level of manual document indexing and data entry activity, enabling them to process more loans per day, at a lower cost per loan, yielding a leaner process and increased profit margins. Today's most advanced mort- gage OCR solution does more than just convert document images to text; it is then processed by an AI rules engine in the same way a human being would pro- cess the content. Based on these rules, documents are automati- cally indexed, and relevant data points are extracted. Downstream applications then receive this in- formation for appropriate routing, decisioning, and archival. The process begins with a full- page OCR scan of each image, typically completed at a rate of less than one second per page. This high-speed performance allows every word on the page to be included in the scope of the AI rules engine analysis, just as a human eye would consider each line of data for consideration. This content evaluation process is unique to only the most advanced OCR solutions regarding the combination of speed and ability to include all page content in the evaluation scope. This makes the process extremely flexible with documents of varying layout, such as bank statements. Unloading the Onboarding Burden T raditionally, after transfer- ring servicing rights to a new servicer, the process of loan on-boarding is labor intensive and expensive. A data file and scanned images of the loan are typically provided to the new servicer for ingestion into their business system, but the data file is not always correct as related to the documents of record, so an auditing process is needed to validate the data file. This process is cumbersome in that it can be difficult for the new servicer to identify the final version of key documents, as well as the sheer volume of data needed for comparison be- ing quite onerous. The Loan Onboarding Audit solution automatically reads every word of each document in the incoming portfolio and identifies the final version, which is then passed through AI data extrac- tion logic to pull out the elements relevant for a servicing operation's due diligence process and loan data archival needs. It is com- mon to have loan ingestion rates of thousands per day with this approach. A Non-'TRID'itional Asset T he most advanced OCR solution provides a rigorous tool for a comprehensive review of each TILA-RESPA Integrated Disclosure (TRID) transaction. Typically, during the origination Process of Observation New technology allows for processing rates that exceed human capability in daily data analyses. By Paul Fischer

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