The construction boom of 2008 is now a distant memory. Prospective home buyers in states like Wisconsin, California, Massachusetts and Washington are facing record housing shortages and climbing prices. According to the United States Census Bureau, new home construction has increased slightly over the past few years across America. Yet, in cities like Denver, San Francisco and San Jose, homes can't be built fast enough –– available inventory has dropped by about 26%, 27% and 40%, respectively.
These conditions are stressful for home buyers of every age and income level. Rental rates are increasing rapidly in many regions, and mortgage rates are steadily creeping upwards too, after decades of decline. As families compare mortgage payments to high rents, they often find home ownership makes better sense in the long run. This leads to more borrowers looking to secure a home before they are priced out of desirable neighborhoods.
Here are some areas of opportunity that can help accelerate loan preapproval and loan processing in this era of housing shortages.
Breaking through workflow process bottlenecks
There’s an opportunity for lenders and mortgage brokers to see profitability increase as housing demand outpaces supply. For starters, decreasing the number of workflow steps that occur before a borrower can secure a loan, and accelerating mandatory steps will have a big impact.
Just think about all the steps that typical mortgages go through, and all of the people who touch the mortgage along the way:
- Pre-applications and applications with loan officers and mortgage brokers
- Loan processors that prepare mortgage data and documentation for the underwriters
- Third parties who provide services such as inspections and appraisals
- Mortgage underwriters who assess and approve or deny loans
- Closing specialists who work with closing agents to prepare closing documents
- Closing agents that oversee the loan closing and financial disbursement
Within each of these steps, there are required approvals and acknowledgements for regulatory purposes. Every opportunity to remove paper-shuffling and manual reviews from mortgage processing is a step in the right direction.
Agile banks using mobile sites and customer portals, electronic signatures and digital consent forms are capturing an increasingly significant share of the market. But this is just the beginning and only the tip of the iceberg of what’s possible.
Digital interactions throughout the mortgage loan process are key to optimizing efficiency throughout the mortgage customer lifecycle. As efficiency increases, the per-loan profit is optimized.
Leveraging digital to make processing steps more efficient
A friend of mine described his experience with buying a house and getting a mortgage like this: “Buying a house is just like war: Long periods of boredom interspersed with intense moments of actions and terror.”
In areas where people are scrambling to secure home loans, lenders processing those loans with the manual exchange of forms requiring signatures, snail mail applications, and manual “stare and compare” reviews of the data and documents received — leave customers no choice but to play the game of "hurry up and wait." Excitement at being approved for a mortgage wanes quickly if a house gets snatched up by another pre-approved buyer who attained final financing through another, digitally optimized lender.
Whether you are on the lender or borrower side of the desk, waiting for documents to be collected, passed back and forth for signature, or make their way through a clunky digital review and approval process, just gives you more time to realize how traditional or suboptimal processes will leave you behind.
We’re seeing it happen before our eyes –– traditional paper-based processing is becoming a relic. And relying on digital technology that’s not consistently updated and kept current is also a way to quickly fall behind. So, it’s not just about going digital, it’s about keeping your digital capabilities “on point.” It is also about being able to use those capabilities enterprise-wide so that your customer feels like a person and not a product.
The necessity and advantages of efficient digitally powered processes in the mortgage world cannot be underestimated. If you want to meet customers where they are and stay competitive as a lender, it means leveraging the latest digital interaction resources to advance your capabilities and optimize service for your customers.
Widening your digital scope, improving visibility and oversight
With manual and paper-based, or disparate digital workflow pathways, it's difficult for executives and staff to know where loans are in the process cycle. Work in a lot of organizations is reactive instead of proactive. When institutions infuse digital transformation across their end-to-end mortgage loan lifecycle, they gain much better oversight, proactive sensors and capture audit trails for each lending transaction.
If a mortgage is stuck in an approval step, or if a borrower needs to provide additional data or documentation, it's easier to "nudge" the process electronically than to play phone tag or wait until someone gets into the office. Mobile-enabled status, acknowledgements and approvals are igniting efficiency and improving customer satisfaction in mortgage.
When it comes to mortgage loan processing and servicing, especially with housing shortages on the increase, explore your options carefully. With digital transformation as a priority, consider the many touch points both internally and for your customers that can move mortgage processes most efficiently. Ensure any digital enhancements can be used as your customer moves throughout the mortgage life cycle, and that the process best meets the needs of increasingly demanding markets.
Conduent has led the paperless document processing industry for more than a decade. Our mortgage paperless document management and cloud-based BlitzDocs® technology accelerate mortgage loan processing and servicing throughout the customer lifecycle.