Illustration of doors floating in space to depict AI and Automation in the Mortgage Industry

AI and Automation in Loan Origination and Underwriting

The average time to close all loans is 47 days, according to Ellie Mae Origination Insight Report Data. However, consumers expect much quicker turnaround times. AI and automation can reduce the time and cost of closing a mortgage.

It takes advanced technology to successfully process mountains of applications to ensure same-day approvals come to fruition. AI and automation can effectively speed up the time-consuming tasks of gathering, reviewing, and verifying mortgage documents. As a result, the process is converted into a fast and accurate assembly line increasing the overall productivity of human workers and improving the customer experience

AI and Automation for Loan Origination

Further, AI and automation can replace OCR technology. OCR technology does a decent job of grabbing data and assigning it to the right field, but it can’t compare to AI and Automation, which is much better at interpreting data. In addition, AI can read and react to text regardless of the form whether it is an email or physical file.

In addition, AI and automation can help to keep the work in-house. For instance, some mortgage lenders utilize external agencies to process tasks and overflow call centers to help with customer service. With AI and automation, mortgage lenders can keep their work in-house. This allows mortgage companies to maintain compliance with an increasing array of privacy regulations, and also allows them to keep their costs down.

Indeed, mortgage lenders can quickly become a single source or one-stop-shop for home buyers by offering additional services such as access to accredited contractors, real estate agents, and inspectors. Clients won’t have to go anywhere else to meet their home-buying and loan processing needs. So then, the competitive advantage can materialize rapidly for mortgage lenders. Now, let’s discuss the buyer’s journey, and note where AI and automation can help.

The borrower’s journey.

For many borrowers, the mortgage loan process can feel quite intimidating. There are a series of steps that comprise the borrower experience and loan origination stages. We list them below:

  1. Pre-approval

Unless a borrower can pay cash, it’s critical to secure a mortgage loan. In a competitive market, a pre-approval always helps. Moreover, showing realtors verification of a pre-approval gives borrowers a better chance of locking down the home of their dreams.

  1. Shopping for a home

The home search is the time when borrowers have to create their budget, and some may use a mortgage loan calculator to determine purchase limits. Buyers may also document a list of must-haves vs. nice-to-haves. Next, listings are whittled down to select favorites and real estate agents can start making offers.

  1. Mortgage application

This is one of the most critical steps in the mortgage loan buyer’s journey because it’s about solidifying the numbers. Borrowers must bring income, debt, and asset documentation. It is also a good time to get any questions and issues out of the way before moving any further along the journey. 

  1. Loan processing

Waiting on a loan approval is another step of the process. All information must be verified by mortgage underwriters. Credit reports are often pulled up as are any data relating to collections, bankruptcies, and late payments. The underwriter also has to confirm information associated with savings accounts, debt obligations, and employment. 

  1. Underwriting

The mortgage underwriter is an indispensable part of the buyer’s journey. The underwriter can only approve a loan to close for borrowers who have passed all verification checks and have met the necessary requirements. Not to mention, the underwriter has to ensure the borrowers can afford to pay the mortgage with funds left over for typical bills and other things required for living. 

Borrowers are anxious to move forward, as are mortgage lenders. When borrowers can successfully complete the buyer’s journey, it is a win-win for both parties. Yet, one of the main concerns is how quickly all parties can get through the mortgage process – this is where AI and automation can help. For example, pre-filling and analyzing forms can be automated helping to save the lender time and resources. Application exceptions can also be identified by AI to enhance the accuracy of processing. If an established step isn’t followed correctly, AI can provide alerts so that loan officers may take action therefore mitigating issues before they get any larger.

  1. Closing

Mortgage closing, or settlement, can involve a great deal of paperwork prone to human error on both sides. AI and automation can help to detect errors while pre-filling forms to speed up the process. 

The augmented loan officer.

What does the loan officer of the future look like? As AI and automation continue to strengthen the mortgage process, will it leave any room for loan officers? The answer is yes, since in the trust economy, it still takes people to create trust. Loan officers are there to originate loans. AI and automation can afford loan officers the time to personalize their interactions with customers and focus on more complex issues offering strategic value. AI and automation are optimized when they bolster processes that help humans to perform better. Ultimately, AI and automation can ensure loan officers are able to focus on building relationships.

Contact us to see how AI and automation is revolutionizing the mortgage industry.