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The Mortgage Lending Process of the Future

Introduction 2

Lenders know technology is the answer 3

It’s not just the big banks that are taking the plunge 4

It’s not just about data — it’s about all of the data 5

Finding a digital solution that works 6

What a real solution looks like 7

A real solution for digital lending: Agile Mortgage Lending 8

The future of mortgage technology 10

Videos 11

Other resources 12

Table of Contents

The mortgage industry in its many forms including origination, servicing, and processing, is notorious for its complexity. Applying for a mortgage can be a difficult, lengthy and frustrating process for both customers and financial institutions. Consumers are losing patience and new entrants are providing options that were not available to them just a few years ago.

This eBook provides a short primer on the changes we see coming to the US home finance business and what lenders can do today to stay ahead of the trends and profit in the years ahead. Financial services firms that do not respond appropriately and provide the experience consumers demand will find it very difficult to compete with the agile mortgage lending process of the future.

This document includes published reports that serve to forecast the future based on the trends in the market today. Finally, we provide information about the way Artificial Intelligence is providing answers to lenders who need an improved process for mortgage lending.

The traditional mortgage process is so well established that it can be difficult for participants to imagine what bringing agility to the mortgage would look like. What might be equally unimaginable is that the digital transformation of the mortgage industry is now already taking place. We only have to look as far as today’s headlines to see it coming.

IntroductionThe traditional

mortgage process is so well established that it can be difficult for participants to imagine what bringing agility to the mortgage would look like. What might be equally unimaginable is that the digital transformation of the mortgage industry is now already taking place. We only have to look as far as today’s headlines to see it coming.

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Lenders know technology is the answerTo win market share, lenders know that they must reduce costs and pro-vide a better borrower experience. This is a problem that cries out for a technology solution and lenders are searching for an answer. There can be no greater evidence than the incredible success of the SourceMedia Digital Mortgage Conference.

In a survey conducted at that event, lenders revealed that their current focus is the digital mortgage. While not every lender agrees on what that looks like, the trends suggest that this concept is red hot with lenders. Sixty percent of the lenders surveyed said they are already working toward a digital lending solution. Another 30% said they were formulating their plan for doing so.

Shortly afterward, this news, written by Elina Tarkazikis, appeared on the National Mortgage News (NMN) website. In her piece, Tarkazikis pointed out that “Digital mortgage” is the hot new buzzword taking over the industry, but questioned whether lenders really knew what it meant.

Almost 14% of respondents defined a digital mortgage as having an electronic borrower experience and digital internal processes, and about 10.4% claimed a digital mortgage constituted an online experience for the borrower. Of those participants, only nine voted that they already have a true end-to-end solution in place, with the

vast majority claiming they have some, but not all, features available. About 34.4% are still determining the best approach for their specific organization.

But their inability to reach a consensus on the definition of the digi-tal mortgage is not stopping lenders from working toward this goal. Tarkazikis noted that most attendees anticipate being able to offer borrowers a fully digital experience within 18-24 months, followed by almost 18% who said their organizations will be ready in 24-48 months. Only 11 voters claimed they needed over 48 months to offer borrowers a fully electronic experience.

▶ FIND OUT MORE:

https://www.nationalmortgagenews.com/slideshow/4-signs-that-digital-mortgages-are-coming-in-hot

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It’s not just the big banks that are taking the plungeThis movement has caught fire across the industry, in mortgage origination shops large and small. Unlike complex technology initiatives of the past, smaller lenders don’t seem to be waiting for their larger brethren to test the concept. They are pushing forward.

A perfect case in point was found by American Banker reporter Kate Berry, who wrote about a community bank in Maine that has already taken the plunge into digital.

Last spring, $4 billion-asset Camden National Bank in Maine became a member of a group of about 35 banks, including Wells Fargo and U.S. Bancorp, that have moved into the digital mortgage space through the help of a technology partner. Last April, Camden launched its online mortgage portal, which it calls MortgageTouch, to automate the application and pre-approval process. It’s already closing loans with the technology.

▶ FIND OUT MORE:

https://www.nationalmortgagenews.com/news/a-maine-community-bank-finds-increased-accuracy-with-digital-mortgages

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It’s not just about data — it’s about all of the dataOne of the first places lenders look as they begin to streamline their operations for the move to digital is at the consumer data they are collecting and storing. It’s a natural starting point as the way they handle their data must closely align with the way their technology partners treat the data if they hope to keep the process fully electronic.

We’ve seen this recently with industry data initiatives. Lenders need to capitalize on the information they have, but if they do not include all of the data they own, including unstructured data, these initiatives cannot offer everything the lender is seeking, and their costs can be high.

National Mortgage News reporter Bradley Finkelstein reported in early 2018 in a story entitled “Costs cloud some lenders’ view on the suc-cess of data initiatives.” He cited a Fannie Mae survey that found that while the majority of lenders feel mortgage industry data initiatives have been valuable, their cost is clouding some originators’ viewpoint.

“In general, 46% of the respondents felt the data initiatives were only somewhat valuable for the mortgage industry, while 28% said they were very valuable, 22% said they were not very valuable and 4% said they were not valuable at all. Nearly one-third of the smaller lenders (those with under $248.3 million in 2016 volume) felt the initiatives were not very valuable or not valuable at all.”

According to National Mortgage News, fewer than 60% of the respondents felt that the mortgage industry was only somewhat prepared to prevent data breaches and cyberattacks, while only 9% said participants were very prepared. Furthermore, one-quarter of those surveyed said the industry was not very prepared and 4% said it was not prepared at all.

To mitigate these threats, lenders must utilize technology that will allow them to protect their customers’ data, an agile mortgage solution that will allow originators to remain in a state of preparedness for data breaches. Such technology is currently available.

▶ FIND OUT MORE:

https://www.nationalmortgagenews.com/news/costs-cloud-some-lenders-view-on-the-success-of-data-initiatives

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Finding a digital solution that worksLenders are finding that the answer to a better process will involve a more complete solution that reduces friction across the entire process and allows the lender to manage all of their data.

Lenders are getting closer, but they still need to solve some key problems, as National Mortgage News Editor-in-Chief Austin Kilgore pointed out in an article that appeared on NationalMortgageNews.com entitled “How to solve the digital mortgage divide.”

In his story, he pointed out that lenders and technology developers have made considerable progress improving the customer experience of applying for a mortgage and that many are beginning to see momentum for widespread adoption of digital mortgages. But he pointed out that the slick user interfaces and data integrations that streamline the process of getting a borrower hooked up with a lender is only a first step.

“Few, if any, of the fintech startups entering the mortgage arena have focused on the work that happens after a loan file reaches the hands of an underwriter, largely because it’s the hardest part of the process to address. But it’s where the biggest efficiency gains can be made,” Kilgore wrote in his story. “While there hasn’t been much digital mortgage love for the mortgage back office, the lenders and vendors that crack this code will have a competitive advantage over their peers as the first wave of digital mortgage technology becomes table stakes.”

▶ FIND OUT MORE:

https://www.nationalmortgagenews.com/news/how-to-solve-the-digital-mortgage-divide

Few, if any, of the fintech startups entering the mortgage arena have focused on the work that happens after a loan file reaches the hands of an underwriter, largely because it’s the hardest part of the process to address. But it’s where the biggest efficiency gains can be made.

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What a real solution looks likeLenders are being driven to the digital mortgage because they believe it will enable them to deliver what consumers want to compete. The truth is that no partial solution, no matter how much it resembles an end-to-end digital mortgage loan process will be successful unless it is built upon an agile framework.

As banks and lending institutions embark on the digital transfor-mation path, they must constantly keep the customer experience in mind. Trying to approve more loans with the same number of people while transitioning to a digital process can tax any organization.

Part of the problem is the reliance upon extensive paper documenta-tion. Attempts at automation, though great in theory, in reality have been stifled by the challenge of extracting and interpreting data from very dissimilar documents.

Artificial intelligence (AI) changes this picture. As opposed to static automation technology of the past, AI enables machines to learn. In practical terms, when it comes to mortgages, new technology itself is capable of learning, and is able to create validation rules and identify data anomalies.

Profoundly, it is able to make decisions. The entire process is aided by advances in data extraction. It is now possible to read images to capture data, and streamline or entirely eliminate manual processes. The confluence of all these advances has resulted in the “Agile Mortgage.”

This provides banks and lending institutions the automated mortgage solution they must have, including the ability to accept loan file doc-uments from a variety of sources including mobile devices, interactive websites for both the customers and operations, and an automated document classification and data extraction capability.

Artificial intelligence (AI) changes this picture. As opposed to static automation technology of the past, AI enables machines to learn.

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A real solution for digital lending: Agile Mortgage LendingBanks and lending institutions must have an automated mortgage solution, which includes the ability to accept loan file documents from a variety of sources including mobile devices, interactive websites for both the customers and operations, and an automated document classification and data extraction capability.

With this type of automated solution, organizations can streamline manual back office loan origination processes, while connecting the front and back office operations and creating a great customer onboarding experience.

AI Foundry leverages the latest artificial intelligence and user-guided machine learning capabilities to help companies maximize the value of their digital data to improve their overall business outcomes. Making the data actionable so that companies can use it to transform business processes and operations, offer new products and services, provide better customer service, and save costs, while differentiating themselves from their competitors is the goal for organizations both large and small. AI Foundry helps companies transform their business operations in a “truly digital” fashion by converting their data into actionable business intelligence.

AI Foundry solutions for lending, generally decrease the chance of human error by eliminating the “stare and compare” syndrome, save significant time and resources by streamlining the mortgage origination and operations processes, and ultimately provide a significant ROI.

When a bank or mortgage company deploys the AI Foundry solution during the mortgage loan origination process, they reduce human involvement as much as possible and only apply it on an intervention basis. The data is extracted from the documents, automatically populating the system of record. Only when there is a missing document, piece of information or signature missing do loan officers get involved.

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On the other end, customers do not have to wait for the mortgage process to go all the way through only to then find out that they must either come in again or, re-submit missing documents. Instead, during the mortgage application process, any incorrect information is flagged so that the information is corrected even before the application is submitted. Doing it right the first time streamlines the entire process and provides a great customer experience. In turn, this increases customer interaction, satisfaction, and loyalty; which allows lenders to differentiate themselves from the competition.

AI Foundry specializes in combining the best possible technology and data intelligence to solve a specific customer problem and digitally transform their end-to-end business processes.

Our actionable Intelligence technology organizes customer’s important information and documents while providing straightforward reports to enable quick decisions. In the Internet age, speed, information and customer experience is the Holy Grail.

AI Foundry leveragesthe latest artificialintelligence anduser-guided machinelearning capabilitiesto help companiesmaximize the valueof their digital data toimprove their overallbusiness outcomes.

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During this podcast, Sid Probstein, chief technology officer at AI Foundry, shared his thoughts about what the mortgage of the future will look like, what millennials will demand as they become the primary generation of mortgage borrowers, and how mortgage data could be better mined for uses like customer insights, marketing, and fraud detection.

▶ FIND OUT MORE:

http://aifoundry.com/our-company/resources/podcast-digital-mortgag-es-of-the-future/

The future of mortgage technology: Gems that can be dug out of mortgage data with the use of analytics.

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Videos

http://aifoundry.com/our-company/resources/aifoundry-vision/

http://aifoundry.com/our-company/resources/aifoundry-growth-strategy/

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Other Resources

Agile Mortgage SolutionTech-savvy customers expect financial organizations to provide streamlined, automated and real-time interactions regardless of the product or service. And it’s no secret that banks and lending institutions must digitally transform their businesses to provide these types of interactions. The customer experience must be top-of-mind in this transformation, as well as improving the speed and convenience in delivery models and service offerings. AI Foundry helps transform organizations by accelerating internal processes and providing a fantastic customer experience that will foster loyalty and repeat business.

▶ FIND OUT MORE:

http://aifoundry.com/default/assets/File/Solutions/AGILE_MORTGAGES_DATASHT.pdf

FOR MORE INFORMATION, CONTACT US TODAY…

http://aifoundry.com/our-company/contact-us