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

AI and Automation in Loan Servicing and Loss Mitigation

Loan servicing is when the mortgage lender collects the principal, interest, and escrow payments from the borrower. The mortgage lender can either collect interest by holding the loan in its own portfolio or sell the loan off to another entity in the secondary market. The terms of the loan do not change. The only modification is where payments are made. 

Loss mitigation is the ability for the mortgage lender to decrease any losses resulting from a borrower’s default on the loan. Some options may include forbearance, a repayment plan, a short sale, or even a loan modification. Federal regulators have strict rules as to when and how the servicer may interact with a delinquent borrower, but anytime the servicer must do so, the company loses money. This process takes a lot of time, paperwork, and also includes costs associated with a possible foreclosure. 

Mortgage lenders stand to gain much from AI and automation in loan servicing and loss mitigation. Replacing repetitive, time-consuming, and rules-based manual processes with intelligent automation means lenders can improve loan quality and the customer experience at the same time without increasing employment costs. 

Customer Service 

Often, mortgage lenders find that borrowers ask the same questions. Human workers are needed to respond to more complex inquiries. In these scenarios, and outside of normal business hours, a chatbot can help to manage borrowers’ demand. Some of the tasks a chatbot can handle include:

  • Appointment setting
  • Quoting 
  • Status updates
  • Short loan applications
  • Servicing questions
Chat bubbles that have borrowers frequently asked mortgage servicing questions

Forbearance 

For borrowers experiencing financial hardships, and who need forbearance, mortgage lenders can automate processes such as receiving requests, verifying qualifications, and then deploying forbearance activities. With automation, customers can self-initiate a forbearance and eliminate wait times. Customers are able to get what they need, when they need it. For example, intelligent automation can confirm whether a loan is still in good standing.

Default

Intelligent automation can review multiple data sources to predict whether a borrower is at risk of defaulting and allow mortgage lenders more time to respond proactively.

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