Three ways to evaluate automation of mortgage onboarding and servicing

Whether you're onboarding dozens or thousands of mortgage loans each month, verifying loan data is time consuming and prone to error. To address that challenge, lenders are turning to automated multisource, real-time data reconciliation to dramatically enhance the quality and speed of loan onboarding and servicing.

Think of loan servicers as New York City's Grand Central Station, which has multiple entry points for different transit systems – all running on different tracks and schedules. Like the famous terminal, servicers are a hub for the exchange of loan information coming into and out of the system in different formats and from multiple places.

To keep loans running on time, servicers must ensure the accuracy of documents and data points as they pass between originators, customers, investors, regulators and others.  Errors and defects increase when content switches between systems, especially when servicers rely on redundant manual data entry instead of digital content transfer. Automating the exchange of structured and unstructured content helps servicers quickly identify, classify, compare and resolve any issues. That can significantly increase servicer efficiencies and improve validated data exchange between all parties.

One leading mortgage servicer recently automated its content onboarding processes to make significant improvements to its servicing operations. The servicer's goals were to automate the comparison and validation process for new loan onboarding, identify and report loan performance trends, and identify and remediate loan defects earlier in the origination process. To enhance staff productivity, the servicer used automated workflows to isolate the work requiring a human touch, queuing mismatches for staff review.

The result? The servicer was able to onboard more loans in less time and with higher quality through real-time reconciliation and automation, increasing identification of issues and defects at the time of onboarding by 15 percent while reducing manual exception processing. In addition, by converting to automated reviews in onboarding, the servicer saved 10–12 minutes per loan.

To keep loans running on time, servicers must ensure the accuracy of documents and data points as they pass between originators, customers, investors, regulators and others.

After onboarding, automated document and data transfer capabilities deliver immense value to other servicing processes, especially regulatory reporting under the Home Mortgage Disclosure Act (HMDA) and mortgage servicing rights (MSR) transfers. Automating reviews provides a way to efficiently analyze and report on the data to assess compliance and make any necessary changes before data is sent to investors and other parties.

Guidance for Mortgage Lenders

Implementing a loan servicing system adds workflow-driven digital documentation and data management to mortgage onboarding, post-closing and servicing processes. But where do financial institutions and other servicers start?

Here are three steps to consider when evaluating how to automate loan onboarding and servicing processes that build on existing technology investments:

1. Prioritize Your Needs

Determine, evaluate and rank your strategic goals for your servicing businesses. Which servicing processes provide your best opportunity to refactor or redesign? What are your strategic priorities and how can technology-enabled processes help you achieve those goals? Improved efficiencies can help you find new revenue and margin from your portfolio. The amount of time spent boarding a loan and reporting on it can vary based on quality and reliability of the onboarding data. Optimizing that step can reduce overall servicing costs and risk. If you want to grow through servicing transfers, it's important be able to quickly assess sample or portfolio characteristics and documentation quality. And if you're looking to sell off part of your portfolio, improved accuracy and reporting improves the value of those loans.

2. Determine Compatibility Requirements for Existing Systems

Next, determine the best way to redesign those processes. Assess the capabilities your organization has in place now and what your organization needs to optimize those servicing processes. Spend time mapping your processes and the solutions that address your needs. Evaluate both your current state and proposed workflows to help determine what you need. That will help you evaluate third-party providers' ability to fill any gaps in automation and analytics.

3. Plan

Clearly identify the criteria your organization will use to define success. Establish the business case return on investment for your initial focus, whether it's boarding time metrics, customer retention rates, reduced errors, quality assessment of onboarding data, customer satisfaction or other metrics. Look for ways to invest once to leverage your investment across other servicing processes.

Improved Speed and Efficiency

Whether it's in paper or electronic form, servicing data can be overwhelming to review in the timeframes needed for onboarding loans and completing servicing rights transfers. Automation and real-time reconciliation makes servicing data exchange easier, faster and more secure.

What can that kind of efficiency – a comprehensive, birds-eye view of what's coming in and what needs resolved, plus the ability to let the rest flow through the system – do for your organization?

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