Close Encounters of the Mortgage Underwriting Kind
It may not be science fiction but underwriting a mortgage loan is an epic quest for the truth that involves pouring over hundreds of documents, checking fields, comparing calculations, and often, going over the same file several times.
Despite all the care taken to make fool-proof decisions, underwriters are tormented by what seems like mysterious underwriting issues that land their loans in the high-risk pile for possible fraud, missing docs, data inaccuracies, and repurchase risk.
Joining the hunt for accurate, streamlined, and high-quality underwriting, Indecomm asked underwriters to give us an idea of what may be causing these phenomena. The reasons varied but here are a few:
1) Stare and Compare Fatigue: Reviewing the same information for so long that you miss the most obvious errors
2) Details Overwhelm the Big Picture: Underwriting hours are being spent on small, repetitive tasks rather than thoughtful judgment and analysis.
3) Productivity Pressures: In a down market, an underwriter may feel pressure to take up their day with long reviews or, conversely, push loans through to ensure profitability for the organization. In high-volume markets, underwriters are racing to capture market share and keep up with demand.
With such strange underwriting mishaps occurring, it is time to leverage available technology and talent to get us closer to the truth of a mortgage loan file and help underwriters more quickly address the challenges standing in the way. Indecomm has identified a series of tracks to optimize your underwriting processes and make the most of intelligent people and automation available.
The Truth is Out There
Whether a lender will benefit from automation, or a combination of automation and talent depends on their unique pain points, business objectives, and operational strategy. Automation in underwriting can range from simple routines that take care of repetitive tasks to intelligent decisioning solutions for more complex analysis.
In the quest for the right solution, lenders may feel intimidated by the range of solutions available and hesitate to embrace automation for fear of making the problems worse. The truth is that there are levels to automation, from toe dips to deep dives. In search of the most optimal solution, we explore some of the pain points and automation options available:
Bots Bring Efficiency to Your Operation
Pain Point: Underwriting is notorious for the repetition it contains in the mortgage middle-office (set-up, processing, etc.) Tasks such as ordering credit or verifying employment, reviewing the appraisal, or ordering disclosures take time away from the more important analytical aspects of underwriting.
Opportunity for Automation: Mortgage bots such as our own BotGenius use automation such as RPA to replace repeatable, manual tasks that occur in the underwriting process. These digital workers save the lender time and money in the mortgage middle office and keep your underwriters focused on analysis. Bots like BotGenius are often pre-built and integrated easily with a loan origination platform.
Automating Income Calculations for Accurate Calculations and Time Savings
Pain Point: The majority of borrowers no longer have the traditional salaried income that can be quickly verified with a W2, which is a pain point for lenders. Self-employed borrowers, gigs, side hustles, and freelancing are all the rage. In fact, Assurance Financial says here that the proportion of self-employed borrowers is expected to grow at 8% every year. But this growing trend poses a problem for traditional income computation models which are designed around standardized documentation and do not apply in non-traditional careers.
Opportunity for Automation: For lenders struggling to compute qualifying income for the self-employed applicant, income automation for non-traditional borrowers is an excellent option and is heavily used by lenders who cater to the non-traditional borrower. In the case of Indecomm’s IncomeGenius solution, Machine learning (ML) technology, integrated “sources of truth” data, and a robust rules engine reduce income calculation time by up to 50%.
Accurate Document Extraction and Processing is a Game Changer
Pain Point: Verifying documents, classifying them correctly, and comparing certain fields from the submitted documents need not be a job for a human agent. Not only is manual document extraction, classification, and extraction incredibly time-consuming but it is also prone to manual errors, delays, and overall inefficiency.
Opportunity for Automation: There are certainly a lot of document solutions out there such as OCR but not all document extraction is created equal. Solutions that are AI/ML-based rather than strictly OCR can follow complex conditions within minutes. Indecomm’s own Intelligent Document Extraction (IDX) solution runs in the background of most of its SaaS-based automation technologies, delivering unprecedented accuracy. Check out the AWS case study to better understand this award-winning solution.
Intelligent Decisioning Takes Automation to the Next Level
Pain Point: Too many points of comparison, computation, and plenty of back-and-forth – these are indelible characteristics of the underwriting process. An underwriter might touch a given loan application between 7 and 8 times before they sign off on it. So many passes run the risk of introducing error at some stage is highly likely before the underwriting stage can be said to be completed. With too many touches and excess documentation, the analysis of a loan can suffer inaccuracies.
Opportunity for Automation: Using a rules-based, automated decisioning solution can provide a final underwriting recommendation that is grounded in mortgage domain expertise. When implemented masterfully, as it is done in DecisionGenius, lenders’ pre-underwriting and underwriting teams can have a fully-vetted decision to use as a base analysis or a cross-reference.
Get a Close Encounter with Mortgage Automation
Serving the underwriting milestone of the mortgage loan lifecycle is a great claim to merit – when it’s done right. Automation in underwriting has plenty of applications, ranging from simple routines of robotic process automation deployed for a dedicated task to decision-making stacks backed by Machine Learning and Artificial Intelligence.
Indecomm, with its Genius suite of products and services, helps lenders set forth on their automation-first journey. This spans outside of underwriting to audit, QC, document management, and trailing documents. Find out more about DecisionGenius or any product in the Genius suite through a demo here or reach out by email to [email protected]