The mortgage industry is undergoing massive disruption.
Technology is redefining how lenders look at the entire mortgage application process. While conventional lenders are reeling under the heat of higher application volumes, tech-savvy lenders and those enabled by FinTech are taking the lead in devising smart mortgage processing mechanisms.
If you’re a mortgage lender, we have put together this post to highlight how technology can help you lower your application processing costs, processing time, and risk profile.
How artificial intelligence and machine learning cut the mortgage processing time.
Did you know that AI and machine learning can cut your average mortgage application processing time by 15%? Research from the Federal Reserve Bank of New York indicates that lenders using cutting-edge technologies for mortgage processing take 7.9 days less than their conventional counterparts.
Modern mortgage lenders or fintech lenders achieve it by:
- Streamlining the approval process with the use of Artificial Intelligence and Machine Learning
- Verifying personal details, income levels, and debt-to-income ratio using data provided by direct-from-source data providers
- Analyzing applications based on multiple factors instead of only credit history, income, or property valuations
- Adapting to changing guidelines by forecasting and predicting changes to market conditions
How lenders can reduce mortgage processing costs by 90% using technology.
Our anecdotal research, combined with multiple reports, indicates that processing a single mortgage application can cost as much as $9,000. When data collection, data verification, and underwriting analysis is all done manually, the costs to process an application can be incredibly high, especially when you consider all the regulatory compliance checks that have to be done.
We analyzed the costs associated with the traditional mortgage application process and compared it with technology-led processes. Our analysis indicates that reductions of up to 90% can be achieved. We were able to process a mortgage application with a net cost of $1,000, much lower than the industry standard of $9,000.
Technology can lower the default risk of a mortgage.
On top of lower processing costs and shorter underwriting timelines, technology is helping forward thinking lenders reduce the chances of a default. The Federal Reserve Bank of New York indicates that the delinquency rate for the mortgage applications processed by FinTech firms are 38% lower than conventional lenders for purchase loans. Similarly, the risk of default is 29% lower in refinancing applications.
The mortgage industry is behind other sectors in terms of technology utilization. Nonetheless, the industry is witnessing massive technology insurgence across multiple fronts.
Technology is helping mortgage lenders:
- Lower processing cost of mortgage applications
- Cut the overall processing period involved in an application
- Write mortgages with a lower risk of default
FundMore provides an automated underwriting software suite that allows traditional mortgage lenders to embrace technology. We use Artificial Intelligence and Machine Learning to reduce the mortgage processing costs, reduce mortgage underwriting risks, and process the applications in a shorter period.
Are you ready to take your business to the next level? Reach out to our team with your questions! We’ll be happy to help.