As high interest rates continue to negatively affect home sales, there is a considerable amount of uncertainty in the US mortgage market. The past year witnessed consecutive reductions in existing home sales every month until the National Association of Realtors published a 14.5% increase this past February₁. While this is a promising sign, it underscores the need for mortgage lenders to prepare and quickly adapt to changing market conditions.

Lenders have reacted to these economic challenges in a number of ways, from revisiting their internal business processes to shifting resources towards more productive tasks. While each business has been affected differently by the downturn, the impact has been felt throughout the industry. Many mortgage lenders have found it challenging to shift staff away from origination and toward other areas such as refinancing.

Preparing for the Future

As the housing market cools off, some companies have utilized their available staff to embrace technology innovations like automating manual workflows. Projects and feature enhancements that had been overlooked during busy periods are being reevaluated in light of freed up resources. Industry professionals understand that the housing market fluctuates, making it critical to take advantage of low demand periods in anticipation of the next high demand cycle.

Now that demand is beginning to increase again, mortgage lenders must ask themselves if they’re technologically positioned to take advantage of the opportunity. For those that are well-positioned, are they agile enough to weather the next storm?

Mortgage Processing Automation

Intelligent automation is one of the most beneficial steps a mortgage lender can take to streamline their operations. This technology can be applied throughout the mortgage processing workflow including simple tasks like loan application data entry to much more involved tasks like underwriting fraud detection. Intelligent automation combines robotic process automation (RPA) with artificial intelligence (AI) to perform a wide range of tasks quickly, accurately, and securely.

Mortgage Processing Automation is a service offered by FPT that reduces or eliminates the manual steps involved in processing mortgage applications. It’s designed to be platform-agnostic and integrate with any point-of-sale (POS) system or loan origination system (LOS) to enable automation features beyond the scope of the original platforms.

This service is powered by our award-winning RPA platform, akaBot, a comprehensive solution that allows companies to automate business tasks across the enterprise. It also leverages our akaOCR platform to perform more complex tasks such as reading form data and decision-making. These powerful tools allow nearly any business activity to be automated intelligently and result in the same or even higher quality output than trained staff can provide.

The use of automation not only frees up existing resources, it helps them focus on higher value tasks that require human intervention. For example, if a mortgage application is rejected because of a discrepancy between submitted documents, it may be preferable for a loan officer to call them and resolve the discrepancy rather than sending an automated response that may result in a frustrated customer.

Selecting Customer Touchpoints

Intelligent automation is a powerful solution, but there are significant challenges in implementing it seamlessly. Customers want all the benefits of automation without drawbacks, so selecting the right tasks to automate is a critical but often overlooked step.

Lenders must evaluate each of their customer touchpoints to determine how they can be improved through automation. Each of the touchpoints should be prioritized in terms of staff effort and impact to the customer. Some tasks like customer communications may be time-consuming for the staff, however, the overhead still may be worthwhile since it establishes a personal relationship that may extend to future business.

The general recommendation is to start with an area that will provide the most value to both the customer and the business. Tasks that require a significant amount of time or manual effort are often good candidates for automation, especially if there is an inherent benefit to the customer.

Mortgage Application Processing

A significant volume of loan applications are submitted after hours or during weekends, as many borrowers begin searching for homes outside of business hours. The ability to respond immediately, rather than on the next business day, may be the deciding factor that stops customers from moving on to the next lender. If applied properly, intelligent automation has the potential to benefit both parties. This model results in immediate approvals for the majority of customers while allowing Loan Officers to focus on the exception cases that were escalated for manual review.

Figure 1. Intelligent automation in document processing

The figure above demonstrates our approach to automating document processing workflows. This use case utilizes preconfigured templates that define how to extract the document data. When a new set of documents are uploaded, the automation tool identifies the correct template and extracts the data according to the template parameters. Since optical character recognition (OCR) extractions often include unwanted artifacts, a processing step evaluates the extracted text using a complex language engine and makes corrections to improve the extracted data quality. Finally, it analyzes the results and determines a confidence rating for each extraction, and documents falling below a certain threshold are escalated for manual review.

These capabilities are further enhanced with machine learning algorithms to improve over time. In cases where there are similar predefined templates and the tool identifies the wrong template, it learns from being manually corrected by the staff. It is also useful for cases that are manually updated, as it identifies how the staff resolved the issue and can apply similar logic without needing to escalate in the future.

Evaluating Automation Results

To fully understand the impact, it’s crucial to quantify or evaluate the baseline figures before applying intelligent automation. These metrics are used to set goals and determine how well the IA solution is meeting expectations. Before reaching any desired future state, one must fully understand the current state.

Following the implementation of an automation solution, it’s important to assess and quantify the results to determine the appropriate next steps. Businesses tend to focus primarily on cost-cutting measures and the impact to other areas may not be fully apparent. Some metrics are easier to analyze, such as loan application volume or time spent manually reviewing documents, but there are also qualitative considerations like customer satisfaction that must not be overlooked.

The power of automation is typically highlighted by quantitative metrics such as average processing time. Turnaround times can be reduced from days to seconds as the tool performs all the tasks that had been done manually. Metrics with more subjective information come with a unique set of challenges to quantify and improve using methods like surveys and focus groups. However, it’s equally important to analyze and evaluate qualitative metrics to ensure the overall adoption of the solution.

Conclusion

Intelligent automation is an essential technological tool used across the mortgage industry. It allows companies to quickly adapt when markets change while delivering a high level of customer service across all business lines.

FPT Software is a trusted partner to over 80 clients in the banking and financial industry, including many Fortune 500 companies. We have implemented digital mortgage solutions for our clients across the mortgage lending and title industries. With our world-class team of 3,000+ BSFI engineers, we enable rapid end-to-end business process automation and accelerate digital transformation.

Our Mortgage Processing Automation service leverages our own suite of innovative digital tools to integrate with any POS, LOS, or third party system. No matter where your company is at on its digital transformation journey, we can deliver a customized solution to help your business move to the next level. Contact us for more information about our mortgage IT services and solutions.