Skip to main content

Reinventing the loan process

National Mortgage Professional
Mar 24, 2014

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].



Published
Mar 24, 2014