Why Should Lenders Depend on Automation tools for Mortgage Underwriting?

Traditional underwriting has been a long and tedious process involving heaps of paperwork. This slows down such a critical process slow as well as make it prone to errors. This is not an ideal scenario at a time when remote working scenario is expected to motivate consumers to buy houses. The need of the hour is mortgage automation for underwriting to expedite loan application and approval process. 

Automated mortgage underwriting uses a combination of machine learning and robotic process automation algorithms to analyze borrowers’ information such credit report, payslips, tax returns, among others. Based on the analysis, it decides on whether to approve the loan application. It directs only those applicants to a manual underwriter who seem to face financial troubles. Here’s looking at the top reasons why lenders must adopt mortgage automation to make their underwriting process quick and efficient.

Synergized Workflow

Underwriting automation works based on a well-defined process flow that has synergy in it. This enables a smooth transition of loan application through every process touchpoint without the risk of missing out any details. This makes the process much quicker and improves employee productivity.

Improved Resource Allocation

Automated mortgage underwriting can process simpler loan applications with accuracy. This frees manual underwriters to handle complex mortgage loan applications. Such an optimal allocation of resources allows lenders to widen their loan services portfolio as well as provide customized mortgage loan packages to customers.

Improved Fraud Detection

Intelligent document processing based on machine learning algorithms turns borrowers’ financial information into a standard format. It then uses this format to compare with other documents to see whether datapoints of the investigated borrower information matches to standard financial information datapoints. If not, the file is flagged and sent for further inspection. For instance, if a borrower does most of the transactions at midnight, it is considered as suspicious and his/her loan application file is immediately flagged. 

Better Regulatory Compliance

Mortgage underwriting regulations are extremely dynamic. Failure to keep up this dynamism will cost lenders expensive litigations. Manual underwriters often oversee newly stated guidelines. Automated underwriting simplifies adherence to regulations by just a single alteration in algorithms. Loan documentation should strictly adhere to the relevant regulatory framework. Automated underwriting documentation ensures utmost regulatory adherence. 

Simplified Auditing

Artificial intelligence and machine learning algorithms render underwriting process more accurate. This virtue automatically eliminates the chances of penalties during auditing. Mortgage lenders have successfully used automated underwriting for compliance monitoring. It aids in risk mapping, findings management, and regulatory examination, all of which are essential parts of auditing process. Mortgage audit software aids in automatically identifying and flagging violations in mortgage loan processing. This saves time in auditing process.

Parting Note

A difference of five minutes in approving a loan application can set give a lender an edge above scores of other competing lenders. This difference can be made by mortgage underwriting automation. However, lenders must understand that even an automation solution cannot be static. An ideal mortgage underwriting automation solution should be customizable so that it can be scaled to the evolving lending market trends and consumer expectations.

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