The Lending Revolution: What Will Mortgage Origination Look Like in 5 Years?

What comes to your mind when you hear the word ‘mortgage’? Give yourself a second, and you'll know the answer. 

In that second, did you dream of owning a house, or did you think of it as a tedious, painstaking process that would drain you? One out of 10 people who talk about their mortgage processing experience claim they are ‘stressed’ because the approval process takes months. It is pretty time-consuming and overwhelming.

The loan approval process starts with a comprehensive set of documentation, including financial statements, tax returns, employment history, and asset verification, which assess the borrower’s creditworthiness and repayment capability. This is followed by a thorough review of submitted documentation, encompassing verification procedures, credit checks, and assessments of debt-to-income ratios. This evaluation prompts a back-and-forth exchange between borrowers and lenders, prolonging the timeline. Ultimately, the lender decides to approve, deny, or conditionally approve the loan pending fulfilling specific requirements. From the initial application stage to the final decision, it is a daunting series of tasks that demand time, diligence, and patience. 

But the tides have turned

An article by McKinsey & Company states a comparison by quoting the average time taken by a traditional bank and a leading bank that adopted digital lending solutions:

• Time to Decision – 3 - 5 weeks → reduced to 5 minutes
• Time to Cash – Three months → less than 24 hours

The mortgage lending industry is undergoing a dynamic transformation, turning the tide on cumbersome paperwork and lengthy approval times to usher in a new era of simplicity and speed. With the help of technology, the lifecycle of the borrower’s journey is reduced to a few days/hours instead of waiting weeks or months for loan approvals. The circumstances in which people borrowed before are not the same as today. Today, the needs have become diverse - a fancy bike, a luxury car, their dream home, and more. There is a constant need for money and they rely on lenders for it.

It is time for Lenders to bridge the gap

To meet this growing demand, lenders must find profitable ways to improve and fasten their operations. It is crucial to rethink and revamp traditional approaches and legacy software that are burning a hole in their pockets and adopt cutting-edge technology to ease up and speed up the process. Embracing AI-driven solutions is a necessity, not a luxury, in today’s evolving mortgage landscape.

A Story of Opportunity – Intelligent Document Processing (IDP)

IDP is a powerful toolkit that uses machine learning (ML) and artificial intelligence (AI) to provide a flawless data processing experience by streamlining processes, enhancing accuracy, and expediting approvals. AI-driven data extraction automates document processing and optimizes key stages of the lending process. 

Mortgage Document Processing

The loan origination process involves numerous documents at every stage— pre-qualification, application, processing, underwriting, approval, and closing. A complete loan package has the following documents:

• Personal Identification Documents: Driver's license, Passport, State-issued ID card
• Proof of Residence: Utility bills, Rental or lease agreement, Mortgage statements
• Income Verification Documents: Pay stubs, W-2 forms, Tax returns, Proof of alimony or child support payments
• Employment Verification: Employment verification letter, Contact information for employer's HR department, Business license (for self-employed individuals)
• Bank Statements: Checking, Savings, Investment account statements
• Asset Documentation: Retirement account statements (e.g., 401(k), IRA), Stocks and bonds statements, Real estate property deeds or titles
• Credit History: Credit report, Credit score, Explanation letter for any derogatory marks or discrepancies
• Debt Obligations: Statements for outstanding loans, Credit card statements, Debt payoff letters (if applicable)
• Property Information (for Mortgage Loans): Purchase agreement, Property appraisal report, Homeowner's insurance information‍
• Additional Documentation: Divorce decrees or separation agreements, Bankruptcy discharge papers, Gift letter (for gifted funds towards down payment)

The list of mortgage documents required for approval is exhaustive. However, IDP can easily completely automate mortgage document processing. This automation accelerates processing speed and minimizes the risk of human error, improving overall efficiency and reducing operational costs.

The Current Manual Challenges in the Mortgage Origination Process

> Navigating the Paperwork Jungle

The sheer volume of paperwork required for each mortgage application is overwhelming, leading to hours spent sifting through documents and forms.

> Too Many Data Entry Errors

Manual data entry is prone to errors, which can lead to inaccuracies in client information and potentially delay the mortgage approval process.

> A Mixed Bag of Documents

Addressing the complexity of handling diverse document types, including structured, semi-structured, and unstructured mortgage document formats.

> Exhaustive Document Organization 

Without automation tools, organizing and categorizing documents becomes time-consuming, increasing the risk of misplacing or losing important paperwork.

> Slow Processing Times

Manual processing slows the entire mortgage application process, frustrating clients and lenders eager for timely approvals.

> Lack of Visibility

Without automated tracking systems, it's difficult to track the progress of each application, leading to uncertainty and anxiety for clients and lenders.

> Compliance Challenges

Ensuring compliance in a heavily regulated mortgage industry becomes challenging without automation tools to help monitor and enforce adherence to industry standards.

> Manual Verification Processes

Verifying the authenticity of documents and information clients provide manually increases the risk of fraud and errors.

> Limited Scalability 

Manual processing limits the scalability of mortgage operations, making it challenging to handle increasing volumes of applications without sacrificing quality or efficiency.

The manual challenges create backlogs, and the inherent inefficiencies, delays, and potential errors in the mortgage origination process impact both lenders and borrowers. Traditional solutions are ill-equipped to address the unique challenges mortgage lenders face, including manual document processing, fragmented systems, scalability challenges, limited analytics, and compliance risks. The need for automation is crucial now more than ever.

The Winds of Change Are Blowing Stronger than Ever

Top mortgage companies in America have already started using advanced technology to maintain their competitive edge. With mortgage automation solutions catalyzing a profitable change, more and more mortgage companies are adopting automation. This transition reflects a broader industry shift towards digital transformation, where technology plays a central role in driving innovation and improving overall business outcomes.

Only Infrrd’s True Automation Can Enable No-Touch Mortgage

Most OCR and IDP vendors offer semi-automation which means that data teams end up reviewing and correcting all of the documents processed by their legacy technology anyway. With Infrrd for Mortgage, experience the power of No-Touch Processing, where documents need no human review post-extraction. Seamlessly integrate with existing systems to streamline your entire mortgage operational workflow.

Infrrd: Pioneering the Future of No-Touch Mortgage Automation 

With Infrrd for Mortgage, manual document processing becomes a relic of the past. Infrrd IDP has pre-trained machine learning models that deliver high accuracy without needing training data for mortgage documents. With a patented Confidence Score algorithm, the Infrrd IDP platform delivers accurate, ready-to-use data from day one. 

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Be an Early Adopter of Intelligent Document Processing for Mortgage Origination with Infrrd

Advantage 1: Out-of-the-Box Models for Mortgage Origination

Infrrd for Mortgage has a library of over 564 out-of-the-box document models. These pre-trained models deliver over 90% accuracy on most document fields. You can add a new document type and extract data accurately. With IDP, you can create an ML-powered model within minutes and with no headache of training data, templates, or annotations.

Advantage 2: Accelerate Lending Processes Efficiently and Accurately

With Infrrd for Mortgage, streamline document processing by automating borrower documents' extraction, categorization, and validation, meet service level agreements, and avoid compliance risks with rapid document processing times.

Advantage 3: Cut Costs with Cutting-Edge IDP Solution

Automating document processing with IDP eliminates the need for manual data entry and paper-based documentation. As a result, lenders can reduce labor costs associated with manual document handling and allocate resources more efficiently.

Advantage 4: Stay Ahead of the Competition

Early adopters of Infrrd IDP gain a competitive edge in the mortgage lending landscape by offering faster, more accurate, and cost-effective loan origination services. This will position lenders as industry leaders and attract borrowers seeking streamlined and efficient lending processes.

Advantage 5: Relief from Regulatory Compliance - Infrrd’s In-built Solution

Infrrd for Mortgage Compliance has a built-in compliance solution to process loan packages and ensure data compliance. The platform’s proprietary document classification, indexing, and versioning capabilities are designed to improve efficiency and reduce pre-closure or post-close QA risk. This reduces the risk of non-compliance penalties and ensures adherence to industry regulations such as TRID and HMDA.

Advantage 6: Elevate Borrower Experience with IDP

With Infrrd, faster loan processing times and reduced paperwork burdens lead to a more seamless and satisfying experience for borrowers. By adopting Infrrd IDP, mortgage originators can improve customer satisfaction levels and differentiate themselves in a competitive market.

Embracing IDP isn't merely about staying ahead of the curve; it's about gaining a strategic advantage in the fiercely competitive mortgage market. By adopting futuristic, cutting-edge technology, mortgage originators are relieved of manual processes, giving them time to focus on improving things that matter to the customer. 

What Will the Mortgage Industry Look Like in 5 Years with AI-driven Document Automation?

Over the next five years, there will probably be a number of changes to the mortgage lending industry brought about by technological developments, customer tastes, economic situations, and regulatory changes. The following are some possible trends to watch for:

1. Digitalization and Automation: The mortgage industry will continue to move towards digital processes and automation – more online application processes, document submission, underwriting, and approval. Automation can streamline the lending process, reducing lenders' and borrowers' time and costs.

2. AI and Machine Learning: Artificial intelligence (AI) and machine learning algorithms will play a more significant role in mortgage lending. These technologies can analyze vast amounts of data to assess borrower risk more accurately, personalize loan offers, detect fraud, and speed up the entire process.

3. Improved Customer Experience: Lenders will focus more on enhancing the overall customer experience. This may involve providing more transparent information about the lending process, offering personalized advice, and using digital tools to guide borrowers through each step of the mortgage journey.

4. Increased Use of Blockchain: Blockchain technology may see more adoption in mortgage lending for tasks such as identity verification, securely storing transaction records, and facilitating faster, more transparent property transfers.

5. Remote Work and Virtual Transactions: The trend towards remote work and virtual transactions, accelerated by the COVID-19 pandemic, may continue to influence how mortgages are originated and serviced. Digital platforms and remote-friendly processes will likely become more prevalent.

While everything is on the verge of automation today, in the next five years, we will see a radical change in complete end-to-end automation in many industries, especially the mortgage sector, where most back-and-forth delays happen due to the complex and tedious process. Lenders adopting Intelligent Data Processing will be leaders in innovation and customer-centricity, driving growth and profitability in the dynamic mortgage lending landscape.

Experience the Future: How Advanced Technologies Will Transform Mortgage Processes

• Streamlined mortgage process from application to closing; reduced borrower lifecycle
• Lenders would offer instant online loan approval experiences and personalized interest rates based on borrower data
• AI will analyze property images, providing detailed descriptions of that property. This information will enable lenders to estimate property values in real time and notify borrowers instantly.
• Virtual Reality (VR) and Augmented Reality (AR) would be used for immersive property tours and visualization of mortgage terms.
• Blockchain technology would be implemented to ensure secure, transparent, and tamper-proof mortgage transactions, enhancing trust and efficiency.
• Advanced Big Data analytics would provide personalized lending experiences, offering customized mortgage products and interest rates tailored to individual financial profiles and preferences.
• Decentralized Finance (DeFi) platforms would offer decentralized mortgage lending options beyond traditional banking systems.

Mortgage companies in America who have embraced IDP will catapult themselves to new heights. With Infrrd for Mortgage, experience the future today. With accelerated application processing times, lenders can drastically reduce the borrower lifecycle, making them the number one choice for customers. With Infrrd’s AI-driven analytics and data, lenders can provide instant loan approvals after thorough verification and stay ahead of their competitors. With Infrrd’s advanced image recognition technology, property images can be instantly analyzed, providing detailed descriptions that lenders can use to give loan value estimates to borrowers.

With Infrrd, you can already be three steps ahead!

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