Greg Marek is chief marketing officer of Capsilon Corp., a
provider of comprehensive cloud-based digital mortgage
solutions. Capsilon DocVelocity is a document-imaging and
data-capture platform built to address the needs of the
largest mortgage companies in the United States. Headquartered in San Francisco, Capsilon serves many of the mortgage industry’s most innovative companies, including two
of the 10 largest residential mortgage lenders in the United
States. For more information, visit capsilon.com. Reach
Marek at email@example.com.
The Case for
Automating file collection and loan evaluation can reduce
processing time and production costs
By Greg Marek
The TRID consumer-disclosure rules have been in effect for more than a year and no longer dominate industry headlines. Still, the effect that TRID has had on loan-production costs and time to close continues. Most
mortgage companies added staff to ensure compliance
with TRID, which contributed to a dramatic increase
in personnel-related loan-production costs and an
increase in the time to close a loan.
Although companies have had ample time to refine
their approaches to complying with TRID, total loan-production costs continue to hover stubbornly near
$7,000, with personnel-related expenses remaining
above $4,500 per loan. In addition, loan-production
times, after having leveled off, now appear to be
ticking back up.
According to the December 2016 Origination Insight
Report from Ellie Mae, it took 50 days on average to
close a loan this past December, which equaled
the peak reported in January 2016. This number has
climbed steadily from 44 days this past March, to 46 days
this past August, to 48 days this past September and
October, and then to 49 days in November of last year.
Most lenders don’t expect these trends to change
in the near future.
Need for technology
In a survey conducted in October 2016 at the Mortgage
Bankers Association’s annual convention, 70 percent of
lenders reported they expected total loan-production
costs to continue to rise in 2017. In the same survey,
86 percent of respondents revealed they plan to
increase spending on automation technology to
reduce personnel-related loan-production expenses
and to speed production times.
The real question is: Where will they focus this
spending? In the same survey, lenders were asked
if automating the consumer experience during the
application process (the front end) or automating key
steps in the loan-production process (the back end)
would be most important to their companies.
Even with all the attention paid to the consumer-application experience beginning with the launch of
Quicken’s Rocket Mortgage, 45 percent of respondents
ranked “automating key steps in the loan-production
process” as most important. Another 37 percent stated
that “automating both the consumer experience and
their loan-production processes were equally important.” Only 15 percent ranked “automating the consumer experience” as the most important step.
Clearly, the industry realizes that in order to accelerate loan origination while delivering exceptional customer experience, key steps in the loan-manufacturing
process must be automated, and not just the application process.
Focus on underwriting
When evaluating where to automate in the loan-manufacturing process, underwriting is a crucial step
that deserves focused attention. Underwriting is a
critical function in the process but, too often, underwriters face multiple obstacles to their productivity.
Much of their time is consumed with simple, routine
tasks such as looking for missing documents, manually
comparing different versions of documents and per-
forming basic calculations.
If these repetitive, routine tasks are automated,
underwriters could focus on the high-value activities
that require their expertise, such as carefully evaluating loans that need more thorough reviews. This
type of automation will dramatically accelerate underwriting times.
Automation technology can deliver benefits even
before a loan file reaches an underwriter as well. It’s all
too common for underwriters to receive loan files that
are missing important documents, contain incorrectly
named documents, or have documents arranged in
an order that makes it difficult for the underwriter to
work efficiently. The underwriter then must devote
valuable time to renaming, reordering, and hunting
down missing documents — time better spent on
the critical task of evaluating creditworthiness.
Automated document-recognition technology can
dramatically accelerate the onboarding of loans, and
save underwriters valuable time by automatically
identifying, naming, and indexing common loan
documents to create an electronic loan folder. This
drastically reduces the time and labor required for
setting up a loan file. The technology also can provide
notification of missing documents, so originators can
rectify the problem.
Automating the onboarding process can dramatically
reduce the time it takes to assemble a complete loan