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Mortgage Automation: Improve Speed and Resilience


Home buyers don't want to go through the hassle of waiting 30 days to close on their loan, which is the current average. The reason for this long wait is that much of the underwriting process in the industry is done without mortgage automation. Importing info from paper to digital is a problem since the error rate for manual data entry is 4%. Then there’s the rest of the steps involved in approving a mortgage.

What if you could reduce the entire lifecycle of a loan origination? Not only would it make your team more efficient, it would also improve your mortgage pull-through rate. Here's an in-depth look at mortgage automation and the benefits it provides.


Benefits of Mortgage Automation


The Three Main Benefits of Automation to Loan Processing

While people are still needed for aspects of loan processing, foregoing automation altogether only serves to lengthen the mortgage underwriting process. In the event that the fail-point for manual loan processing involves crunching numbers and handling documents, mortgage automation mitigates these issues almost entirely. The following takes a look at three of the main benefits derived from loan processing automation:


Benefit #1: Digitization Takes Mistakes Out of the Loan Application Process

One way the mortgage industry can benefit from automation is by using it to minimize mistakes during the loan application process.

When mortgage lenders receive an application, it will likely be accompanied by many different financial documents, which can include everything from bank statements to tax returns. This data must be taken from paper documents (or scans) and input into software. While it's possible to accomplish this task manually, mortgage automation allows lenders to benefit from digitization via optical character recognition (OCR).

Side note about OCR: OCR is a type of technology that's able to convert data from an image into machine-readable text. The text then goes through data extraction and indexing... automatically. This type of automation allows for information on paper documents to be imported to digital in a more efficient manner.

As mentioned previously, manual data entry has an error rate of 4%, which means that mistakes will be made from time to time. These mistakes could lead to an application being denied or approval taking longer to be completed because of the need for corrections. OCR virtually eliminates chances of mistakes.

While OCR technology was created nearly four decades ago, it has improved considerably since that time. AI, machine learning, new providers competing against each other are a few drivers behind this change. OCR is now able to provide almost perfect text-detection accuracy. By digitizing the loan application process, far fewer mistakes should be made, which will reduce the amount of time it takes to approve or deny an application. Some additional benefits of digitization during the application process include:

  • More security - It's possible to restrict access to digitized documents
  • Mitigates potential risks - While physical documents can be lost, digitizing these documents means that they should always be available
  • Saves space - Physical documents invariably take up space, which isn't an issue when it comes to digitized documents
  • Cost efficiency - Creating digital documents is much more affordable when compared to the costs associated with printing, storing, and creating paper documents
  • Environmentally friendly - By digitizing mortgage-related documents, it's possible to save on ink and paper, both of which use up a considerable amount of energy resources


Benefit #2: The Power of AI Speeds Up the Underwriting Process

Another benefit of mortgage automation is that artificial intelligence (AI) is able to expedite the underwriting process. AI does this through machine learning. It’s a technical term that generally covers how software ‘learns’ from millions of data points and constantly updates itself.

AI has an upper hand over loan officers in two main categories:

  1. AI is just much faster at processing many applications at one time. Just input the data and AI accesses, compares, and assesses documentation at the speed of a modern computer.
  2. AI will easily detect edge cases or anomalies that an underwriter would normally miss. In this case, the underwriter gets a notification, indicating that a manual review should be performed.

OCR and AI naturally go hand in hand and make quick work of large loan volumes. That said, it’s always ideal to have underwriter involved in the process for manual reviews or conduct a quality control through a manual process.


Benefit #3: Streamline the Workflow to Avoid Fatigue and Burnout in Your Teams

Mortgage automation with loan origination systems (LOSs) is able to significantly streamline an underwriter's workflow. The new generation of LOSs integrate OCR and AI onto one platform. More importantly, LOSs centralizes the various steps involved in mortgage loan processing for an entire team. This reduces the amount of tools employees of a mortgage company need to open, consult, and interact with.

In general, fully integrated LOSs help avoid fatigue and burnout in your teams.

Something to think about: A big benefit of LOSs is the reporting and analytics tools. Since your team works from one central tool, it’s possible to track where your mortgage operations are taking the longest. Brainstorming with your team on ways to reduce friction points will improve your overall loan processing speed. It might also empower your employees and contribute to higher team morale.


Thoughts on Implementing Automation in Your Loan Origination Process

If you're thinking of implementing automation in your loan origination process, there are many tools that will bolster your automation efforts. The best option available to you is to revamp your entire tech stack to integrate modern automation software and tools. However, this isn't always feasible.

Even if you can’t switch your whole tech stack right now, here’s an option to future-proof your software. When shopping around, select each piece of software with an API that supports a wide range of different integrations. When the time will come to integrate all your software together, you won’t have to redesign your entire tech stack.


Borrowers Discussing Automated Mortgage Processes


Why Borrowers Also Gain from Automated Mortgage Processes

While lenders will see immediate benefits when using mortgage automation, borrowers also gain from automating these processes. For instance, the risk of an application denial because a mortgage document wasn’t entered correctly is substantially lower. It also lowers document processing times on the borrower’s end, which increases the customer experience. Finally, the application process can also be handled much more efficiently, which means that the borrower will receive a quicker response.

Likely the most advantageous aspect of automation during the lending process involves underwriting. By streamlining the underwriting process, borrowers may no longer need to wait 30-60 days to close on their homes.


Using Your Automated Mortgage Stack as a Selling Point

When you're advertising your services to potential customers, you can even use your automated mortgage stack as a selling point. Consider emphasizing how fast your mortgage application turnaround times are. You should also learn on your RPA and smart document handling, the former of which refers to robotic process automation. By prominently displaying the advanced technology you use, customers will better understand how they can benefit from requesting your services.



Regardless of which automation solutions you use, mortgage automation offers a sense of speed and resilience that can't be found when manually performing application processing and underwriting tasks. Automating your mortgage processes should improve productivity, bolster profitability, and boost approval rates.