Underwriting consumes a lot of time and cost for the lender. If the underwriting process gets streamlined, then as a lender, you know that you are freeing up the time of your specialist underwriters, helping them process more loans each day. This can have a direct impact on your costs and profitability.
Underwriting process – a lot of paperwork
As a part of the underwriting process, an underwriter verifies borrowers’ identification documents, credit score, credit history, appraises the property and assesses financial situation — including income, cash reserves, equity investment, financial assets, and other risk factors. That is a serious amount of paperwork and its assessment can take up to 2-3 days to complete.
And typically, an underwriter can take up to a week or more to finish this process. Any iterations may cause delays which is indirectly a cost to the lender. To make this process more efficient, many lenders are deploying pre-underwriting reviews to minimize risks and save turn-around time on underwriting. However, pre-underwriting checks/reviews are far more effective and instant if they are deployed or managed in an automated manner. Automated means less human intervention, lesser repetition, lesser turn-time, and better accuracy.
Improvements at the pre-underwriting stage can have a significant impact on the productivity of underwriters. If data from the borrower documents is captured accurately during the loan set-up stage, then this will mean a smooth flow of documents to the underwriter stage.
Automated processing – to support the pre-underwriting review,
Quality / Compliance is of paramount importance, as the mortgage industry is highly regulated, and the cost of oversight can be very high. Missed compliances can result in penalties and can also lead to bad loans in the portfolio. When this portfolio is sold in the secondary market, these bad loans will create a serious liquidity issue.
Lenders can perform their pre-underwriting checks using an automated pre-underwriting QC solution, that is provided as a part of VLR, Visionet’s AI-ML powered loan processing solution. VLR works on the checklists and audit worksheets that are embedded in the solution to ensure uniform usage across the organization and ensure over 98% accuracy on every loan file. The solution helps in identifying any errors, maintaining accuracy at all checkpoints and provides powerful real-time dynamic reports with a view of trends and analytics to measure performance.
Additionally, VLR has an API integration with Ellie Mae’s Encompass® digital lending platform that allows a seamless flow of information between both these platforms. The solution can be deployed during the pre-funding /post-close QC stage by lenders to maintain the quality of the loan portfolio.
To summarize, automation in the pre-underwriting process is certainly necessary to maintain accuracy, reduce turn-time and save fixed costs. And is the only way to increase operational efficiency and profitability margins.
Visionet has over 20 years of experience in the mortgage processing domain, and its technology-rich solutions & platform make them an excellent choice for a service provider. Their unique combination and expertise in technology and processing sets them apart and helps lender clients improve profitability.
Shamit is a vibrant and highly accomplished professional with rich experience of more than 10 years in Sales, Business Development, Service Delivery, and Operations Management, Project Management, Transition, and Process Re-Engineering in the BPO / ITES sector.
He has a thorough understanding of business environments and evolving business needs, change management, the capability to work with large and diverse skill-sets.