With record-low interest rates, an ongoing rush of refinance demand and intense online competition, mortgage lenders are racing against the clock to process as much business as they possibly can, while providing each borrower with an exceptional home lending experience. Their challenges run deep.
“Based on industry forecasts, we could be looking at a 10- or 17-year high for activity in the third quarter, but heavy volume is only part of the equation,” says Dan Greggs, senior vice president of Origination Title and Close at ServiceLink. “Market volatility — people losing their jobs, the rising forbearance rate and government requirements for traditional lenders to work with the Paycheck Protection Program (PPP) — are adding even more pressure. In many cases, lenders that were just getting accustomed to their new work-from-home business models are now having to reassign staff members who specialize in sales or processing to work on government programs instead. These circumstances are changing their dynamic at the worst possible time.”
Lenders are becoming concerned, says Greggs, as processes as simple as obtaining payoff demands and subordinations are causing delays. “We’ve heard of some of these requests going from 24-hour turn times to 10-day turn times. Slowdowns like this are unnecessary; you just need to have the right settlement services partner in place.”
Indeed, the need for back-office technology solutions has never been greater. Lenders are now exploring how automation can help them process more loans, more quickly, while helping them build their margins. In fact, in the Q4 2019 Mortgage Lender Sentiment Survey by Fannie Mae, lenders who said they expected to see improving profit margins cited operational efficiency as a top driver.
“We’re working with lenders to build speed into their processes anywhere we can through EXOS technology solutions,” Greggs continues. “By giving them title complexity decisions in mere seconds and the majority of title commitments in minutes, we’re enabling them to reach out to a borrower sooner to say, ‘Your title is clear. You’re locked in,’ which stops the consumer’s shopping activity and removes them from the market.”
Reducing Cycle Times and Costs
Automation can have a significant impact on cycle times and costs, at various stages in the loan process. Cloudvirga co-founder and Chief Strategy Officer Kyle Kamrooz talks about one area of great potential: “One example is that with our technology, we can automate the entire opening department — the back-office function that sets up the loan, generates disclosures, ensures the borrower’s eligibility and checks for errors. When you automate this process, you can cut days out of the process. Part of that is eliminating unnecessary back-and-forth between originator and borrower, because the originator can now generate disclosures for the borrower to sign and review while they’re on the phone together. We call this ‘the one-call close.’” EXOS is integrated into Cloudvirga to give lenders using the digital point-of-sale software provider the ability to close deals faster, and boost consumer loyalty and satisfaction by providing loan officers access to various parts of the lending process that had been previously disjointed.
Greggs speaks to the value of automation within the title process, an area that’s under particular scrutiny in today’s lending environment. “Our EXOS Title engine automates the title search, pulling available land records data together to create a complete property profile. Having this information up front is vital to lenders’ confidence in making loans,” he says.
“EXOS Title gives the loan officer the ability to determine at point of sale whether this particular loan involves a title that’s a little messy or if it’s clean, with no liens or other issues. They can make decisions about what type of product they should be putting in, what type of lock period they should be putting in and how much cash back they want all within one platform,” adds Kamrooz. “Leveraging the workflow this way empowers the originator, the consumer and the lender to make quicker and better-informed decisions so that everybody wins.”
An infusion of new technology helps reduce the time and uncertainty involved in the title process. On average, ServiceLink lenders who use EXOS Title’s decisioning functionality close more than eight days faster than those who don’t. Those who combine EXOS Title with EXOS Close, which digitizes the closing scheduling process, may experience closing times more than 10 days faster than those who use traditional processes.
Every piece of automation adds up in the quest for time and cost savings. Kamrooz shares a dramatic illustration: “We did a case study looking at each step in the typical process, from deal structuring to application fees to back office. We found that it takes a loan officer in a traditional system about 212 minutes to structure a single loan. Through automation, we’ve been able to reduce that 212-minute process to eight minutes, so in the time it would traditionally take to do one loan, our system can do about 27.”
How to Choose the Right Technology
Digitization of the mortgage process is a concept whose time has definitely come. Borrowers expect it, regulators encourage it, and early adopters are reaping the rewards. What should a lender look for in a mortgage technology platform?
Mortgage acumen, says Kamrooz. “Technology isn’t the issue, but the mortgage industry is. It’s complicated. Make sure that mortgage DNA is built in. What makes mortgage so unique is the workflow, so a lender needs to ask, ‘Does this product solve a small piece — or all — of my workflow? If it’s only going to handle x% of my process, is that going to create more manual work because I’ve added a new system to the equation?’ Look under the hood to make sure the platform meets your specific needs and goes deep enough. Avoid shiny object syndrome.”
Also make sure it can scale without increasing risk, says Greggs. “There are many ways you can speed up your processes, but in the meantime, you could be disproportionately increasing your risk. This is a very substantive consideration to keep in mind.”
Visit exostechnology.com to learn more about mortgage technology built to improve efficiencies and profit margins.