Reinventing the loan processLayne E. SappAutomated Underwriting,Loan Tracking
Technology is one of the most powerful factors that affects how
business is conducted, today. As a result of technology, business
operates more quickly and efficiently, constantly allowing room for
improvement and change. Early in my exposure to the industry, I
could see that the mortgage lending process was a natural fit for
technology. Frankly, not every industry is. There are plenty of
businesses that could do just fine without the aid of the latest
technology. But the mortgage lending business is heavily
process-driven and involves managing lots of detailed data.
Technology is ideally suited for managing that task. The key is to
develop the right technology that supports the broker.
Most brokers spend their time and energy processing
applications, trying to get their loans, borrowers and lenders to a
successful close, which happens to be the only place brokers make
money. If a loan could reach the finish line with less red tape and
paperwork, brokers would be able to handle more loans, even with
today's declining margins.
The bottom line is that brokers need a more advanced loan
process with fewer manual steps, less human interaction and no
meaningless intermediate measures. Since forming MILA Inc., our
goal has been to develop technology to make buying a home similar
to buying a car, ultimately bringing the consumer a four-hour loan.
An efficient loan process can make this dream a reality.
To make the loan process efficient for the broker, each stage of
the process had to be critically examined. Thats why our company
spent years defining the best approach with technology by analyzing
where and how brokers interact with their lenders and borrowers,
and how these interactions could best be simplified and shortened
without sacrificing accuracy or detail. It was necessary to cut out
excess time and certain measures that had a low return on
investment and, at the same time, incorporate availability of and
access to information for brokers.
Since technology neither sleeps nor takes breaks, all critical
information can be made available around the clock, accessible from
anywhere. There are many loan processing systems out there;
however, basic technology is not enough. Borrowers are looking to
work with brokers, who can deliver more loan options faster, with
less time and effort on their part. Today, loan production systems
need to be real time and online, so that brokers have access to the
most up-to-date loan pipeline anywhere and anytime. To survive
today's fluctuating market and economic cycles, it is imperative
for a broker to find and be able to use these technology tools to
quickly and efficiently bring loans to a close.
The technology tools are out there
To be efficient and effective, brokers must seek out lenders
with technologies that simplify the process, so that they close
more loans quickly, with positive results. Successful brokers use
an interactive production management system to efficiently manage
their loan pipeline. Here are some functions that interactive loan
production management systems must supply the broker to be
successful:
†Real-time loan information. Real-time
tracking is growing in popularity in the mortgage industry;
however, it began in other applications, such as the shipping
industry. If consumers can track their packages with exact
departures from cities, why shouldnt a mortgage broker be able to
track a loan in real time? Todays successful broker receives loan
data from a lender with up-to-the-minute notification when each
transaction of the loan has occurred. The broker is able to access
a system that notifies them which steps have been completed and
when, from when the lender receives a file, to when each condition
has cleared, to funding.
†Information sharing. Just as file
sharing is important in other industries, it is critically
important in mortgage lending. Interactive management programs
allow multiple users to view the entire loan. Brokers are able to
share loan information with others in the office and view the file
with the lending team. If there is ever a question about the loan,
all parties have the capability to view the same information at the
same time and resolve issues quickly.
†Direct communication. A technologically
savvy broker doesn't have time to play phone tag, wonder who has a
loan file or waste time calling for updates. Successful brokers
recognize the importance of direct communication. Immediate answers
can mean gaining--or losing--a borrower. Interactive program
management systems store a list of names from their lending team.
The broker chooses a contact, e-mails a question, and receives a
call or e-mail reply in minutes, all without ever leaving the
system.
†Document review. Today's broker knows
the importance of having access to documents. All documentation
tied to each loan submission is viewable at any online location
anywhere the broker has online access. Each document is in a simple
format and is time- and date-stamped for easy tracking and
reporting.
†Loan condition status. Successful
brokers use management systems, where conditions for each loan are
clearly displayed, complete with description, status and dates
received and cleared. Common questions like, “Did you receive
my conditions?” and, “What are my outstanding
conditions to close?” are easily and correctly answered by
the lender, without requiring the back-and-forth phone calls and
paper chases required with traditional processing.
†Convenient access. With the growing
popularity and significance of the Internet, it is a necessity that
management programs are Web-based. Brokers working with a lender
that uses Internet technology are able to view loans anytime, from
anywhere.
†Automated underwriting. Successful
brokers realize that underwriting can be a long, grueling process
to deliver the borrower a pre-qualification, only to find out their
hard work was wasted when the borrower is actually not qualified
for the loan at all. That is why technology has given way to
automated underwriting. At MILA, we've created an automated
underwriting system that gives borrowers a full loan commitment,
not just a pre-qualification, in seconds. The system shops the loan
against hundreds of products, giving the best loan options for the
borrower. In our automated underwriting system, all our rules and
underwriting criteria are built into the system to ensure an
accurate, consistent loan commitment every time. With today's
technologies, why would a broker use a lender with anything
less?
The bottom line
With today's declining margins, how can brokers avoid declining
incomes? The answer is simple: Manage more loans through the
pipeline with technology. Technology should ultimately make the
broker feel as though their lender is working for them in their
office, in the next cubicle. Mortgage brokers, no matter the skill
level, should be able to deliver the same customer service to the
borrower with greater efficiency, so that in less time, the
borrower is in their home and the broker has received their
commission.
Technology has allowed brokers to have real-time access to the
loan process, as well as loan commitments--not just
pre-qualification--during the underwriting process. Through
technology and an online interactive loan production management
system, brokers can work more efficiently, ultimately passing that
customer service to the borrower. Technology frees up the broker
from the loan process, allowing them to originate and close more
loans. As technology is rapidly changing and expanding, it is
important for brokers to keep up with smarter ways to work in order
to adapt and thrive. This means constantly seeking improved
technologies that provide better, quicker, easier solutions. Thanks
to technology, our vision of a four-hour loan is closer than ever
before.
Layne E. Sapp is founder and CEO of Mountlake Terrace,
Wash.-based MILA Inc. He may be
reached at (800) 332-MILA or e-mail
[email protected].
