- Manual Underwriting- Recognizing the issues: 68 percent of customers have to provide additional documents after completing the loan application process, and 48 percent of customers were asked to provide the same document more than once. The outdated process isn’t just costly for the borrower. These inefficiencies in the home loan origination process have seen an increase in the personnel expenses by 40%. Loan production also stalled to 2.4 loans originated per production employee per month.
- Frauds and Scams-Apparently, experts say that 2016 could reach the highest mortgage fraud risk since 2010. In addition, this growth in fraud risk is actually attributed to areas that were previously considered low-risk. While all banks feel the impact of a fraud scheme, for smaller community banks, the results could be devastating. Mortgage schemes that use false documentation to secure loans are unfortunately all too common, and they don’t appear to be slowing down anytime soon.
- Convenience and Technology- Catering to the millennials: Today, the borrowers count on convenience and efficiency of technology, especially when millennials make up the largest share of home buyers. These individuals in particular are doing everything online, and cannot understand why they still have to locate and submit multiple paper documents to secure a loan. When choosing a bank, online banking services are a key factor for millennials. The generation was also 15 percent more likely to switch primary banks in the past 12 months than people 55 and older. Millennials desire a personalized and seamless banking experience, and that preference does not change when it comes to the home loan origination process.
- Automated Authentication and Verification-Banks and Credit Unions are increasingly implementing automated asset search and verification. Automation isn’t just about speed; data accuracy and quality are even more vital to making smart lending decisions and preventing fraud. Rather than adding solutions that don’t solve the full problem, lenders should evaluate whether a given solution is capable of systematically verifying liquid asset information using collaborative, shared data.
Every lender is multi-tasking in all possible areas. Managing competing priorities: closing loans faster, strengthening loan portfolios and meeting borrowers’ demands. What may seem as one, small aspect of the entire loan origination process in many ways represents lenders’ biggest opportunity to positively impact their businesses and more importantly, their borrowers.
Source by Ritesh Srivastava