A Quick Look at Some the Key Mortgage Processing Challenges?


Operations and business prospects in the mortgage industry are constantly being disrupted with changing economic health, dynamic regulations, socio-political unrest, and several other factors. It is a tough task for lenders to take fast decisions to sustain in such tricky situations. Therefore, an in-depth understanding of these challenges and their potential impact on mortgage processing operations can bring more operational stability for lenders. In this blog we discuss some of those key challenges in mortgage processing.

Reducing mortgage processing TAT The long procedure of conducting title checks, verifications, unclear titles make it difficult for lenders to cope up to end-user’s demand of shorter processing TAT. Outsourcing to a mortgage service provider can open access to the right technologies and resources to execute all the mortgage processing-related tasks in an accurate and timely fashion. Reputed mortgage loan processing companies leverage modern-day tools and techniques to bring efficiency in these tasks. For instance, outsourcing vendors use data analytics and machine learning algorithms to improve QC auditing and the underwriting process. It is recommended to partner with mortgage loan processing companies who exhibit usage of big data and analytics-driven insights for tasks such as underwriting loans, creating pricing models, conducting post-closing audits, among others.

 For instance, OCR (optical character recognition) -enabled tools expedite the process of validating documents of retail borrowers. The adoption of the blockchain technology helps in making instantaneous changes in documents and transfers contracts and documents. This is essential for lenders to streamline their process and bring more accuracy and acceleration in those while staying within the regulatory limits. As a matter of fact, the true essence of a successful partnership with outsourcing vendors is their ability to maintain compliance standards without hurting the prospects of running a profitable lending business.  It essentially expedites fund disbursement, eliminate the long reconciliation process, and curbs fraud risks.

Adherence to regulations The implementation of the Dodd-Frank Act has introduced fresh complexities for lenders to maintain regulatory adherence. The amount of paperwork in various formats has significantly increased which lenders are bound to file for the legal authorities. It increases the time taken to execute mortgage processing services. Lenders should ensure that vendors conduct thorough fraud reviews for document authentication, detection of early payment defaults, and spot any red flag to reduce the chances of processing bad loans. Outsourced mortgage professionals ensure the filing of paperwork in time and absolute compliance. This unburdens lenders who can focus on strategies to drive improvement in the overall mortgage processing services.

Lack of workforce scalability Mortgage lenders can witness seasonality in their business transactions throughout a year. There will be a phase when a sudden surge in demand will require huge workforce while in another phase a dry spell will make the existing workforce almost redundant. However, it must be noted that the assessing the viability of partnering with a vendor should not singly be based on the cost-saving prospects. The most cost-effective partner does not necessarily guarantee quality services. Thereby, quality should get the first preference over cost. Engaging a large team with no visible output throughout the year proves to be an extremely costly proposition for lenders. They must explore a strategic business model that involves engaging workforce on a need-basis.

Inefficient pre-underwriting This is one of the most common areas in the mortgage processing services where most of the lenders tend to falter. The in-house experts seem to lack in efficiency and expertise in indexing and stacking loan documents than preparing and conveying preliminary mortgage disclosures. It is essential that this function is executed through a well-structured and standardized process so that all of the prerequisites can be catered to before taking up the task of underwriting.

Parting Note

While a majority of lenders have tasted success in their mortgage processing services by outsourcing it, it is critical to be careful while considering a partnership with a third-party vendor. Ideally, cost should come secondary to the level of expertise and compliance exhibited by mortgage loan processing companies. It will help protect the lending prospects profitable and safe which will automatically drive revenue for lenders. Domain knowledge, technology adoption, in-depth knowledge about the prevalent regulatory framework, quality standards are some of the primary factors that must be considered while partnering with mortgage processing companies.

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