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Divide And Conquer: How A Data-Supported Work Environment Saves Employees Time And Increases Productivity

We have experienced a fundamental shift in technology during the past two decades. In both our personal and our work lives, there is a whole new set of technologies available and companies are taking advantage of these technologies to gain advantages in their markets. In fact, individual and enterprise access to numerous new tech tools is the new normal.


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According to a McKinsey study, more than 90% of enterprise companies will adopt intelligent process technologies to turbocharge their operations by 2020, creating an Intelligent Work Experience for employees that can significantly drive down costs and increase their productivity.Adopting new technology is the only way for mortgage companies to compete over the long term by shifting from people-powered business to a software-powered business. You’ll see solutions that will help close loans faster, at lower costs, while speeding up cycle times, and providing better experiences for customers and employees. Innovation in consumer portals have helped improve the online application process over the past several years, but the costs of originating a loan continue to skyrocket, and the length of time it takes to close is still not fast enough. 


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Big data and AI can provide significant advantages for mortgage companies that harness technology’s power to make employees more productive. Data is at the heart of getting a mortgage. The borrowers apply for a loan by providing information about income, credit, and assets. The lender then uses this collection of data to make a decision about the loan. When the loan closes, the lender sells or retains the loan in the portfolio. The loan data could subsequently be leveraged to drive repeat business at a later time.


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It is worth noting, however, that while “big data analytics” has suddenly become a go-to catchphrase for many in our industry, our own experience in the space suggests that the challenges associated with implementing and realizing value from big data are more subtle. 

For the past 14 years, we’ve been helping clients collect, validate, and leverage the data to drive workflow automation and improve productivity in the mortgage process. We have an intimate knowledge of the pain points in this process. There remains a series of key friction points that must be addressed for the mortgage process to truly be reinvented, and we’ve been innovating on our clients’ behalf to improve the end-to-end mortgage experience for every user who touches the loan.  

Creating an intelligent process leveraging data and AI helps mortgage companies get leaner, faster, and more profitable. As one of the most complex, largest financial transactions most people make in their lives, getting a mortgage requires the gathering of information, validation and coordination with multiple parties to make a decision, while also meeting multiple regulatory requirements. Many legacy systems are outdated and face several big challenges in the race to modernize. 

Those who succeed will master the harvesting and delivery of relevant data at the right time so every user in the loan process — borrowers, loan officers, underwriters, processors, closing specialists, and delivery — are provided with the tools they need to manage their workload easily and make decisions quickly. This will remove friction in the loan process that bogs most lenders down operationally. With an intelligent document and data management system that provides user-friendly tools to empower its employees, lenders can have confidence in their data quality and can operate with full transparency to accelerate decisions and dramatically increase productivity and lower costs — all without having to rip out existing infrastructure for rapid deployment.   

For example, using a combination of business process improvements and next-generation tools can remove repetitive, replicable, and routine tasks, creating workflow automation with high accuracy rates. Up to 80% of manual processes could be eliminated without replacing existing operating systems, driving significant improvements across nearly every function.

Data-driven technology that creates an intelligent work experience increases employee productivity with automation while helping lenders scale quickly and do more with the same number of employees. Moving from a labor-intensive human powered process to a software-powered model also lowers risks and costs, helping companies survive and thrive in the new era of technology. At the end of the day, the key to innovative technological innovation is about making things easier for our most valuable assets — humans.

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3 Approaches For Lenders Adapting The Next-Gen Mortgage Model: Build. Buy. Renovate.

The mortgage industry is going through a technological transformation. Gone are the days of paper applications; today, 43% of mortgage shoppers start their applications online. Lenders have been racing to modernize their front-end portals to provide a digital experience for their tech-savvy customers — and those tech-savvy millennials comprised 91% of the home purchases in June 2018, according to the Ellie Mae Millennial Tracker report. 

However, while lenders have made significant investments to “improve the customer experience,” this hasn’t fundamentally improved the end-to-end process process. Closing a loan still takes an average of 40+ days, and costs continue to rise. Some savvy lenders are now evaluating automation, which speeds up closings and drives down origination costs. Focusing on improving back-end operational efficiency will take the modern mortgage experience to the next level for both borrowers and employees.


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Choosing the right solution to drive operational changes is not always straightforward, but waiting to modernize and making the wrong move can be costly. To name just a few casualties of this attitude, remember Blockbuster, Dell and, more recently, Toys ’R’ Us?


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Based on what we’ve seen with clients and industry leaders, we believe there are three main options open to lenders and homeowners alike. Here’s an interesting way to think about them: When you know your home no longer meets your needs, your choices are to: build a new house, buy a different house or remodel your existing house.

So what does that mean for the next generation of mortgage platforms? 

Much like a homeowner who’s building a house, some lenders might have a specific vision that none of the solution providers can meet. So one option is to build your own solution. 


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You start by drawing up a blueprint, getting it approved, hiring the contractor and then building your home piece by piece and step by step. The upside is that you get what you really want — a custom solution — but it could be costly and will take longer than buying something that already exists. Still, building your own solution could be the right decision if you have the time and the resources to invest. 

Keep in mind that when you build a home, having a strong foundation is critical. In this example, the strong foundation for your mortgage loan solution would be data. 

Data is at the heart of getting a mortgage. The borrowers apply for a loan by providing information about their income, credit and existing assets. The lender then uses the data collected to make a decision about the loan. When the loan closes, the lender sells or retains the loan in its portfolio. The loan data could subsequently be leveraged to drive repeat business at a later time. Many legacy systems face issues of multiple sources of data, lack of transparency, and difficulty in accessing that data for insights.

Like having a strong foundation for a house, a data-driven solution is core to building a modern technology platform because it gives you confidence in data quality that allows you to accelerate decisions, speeding up the transaction process. And you don’t have to do it alone. General contractors bring in experts like electricians to help them build components of the house. Look for solutions to help ingest data, map data for accuracy, and provide tools to make the data accessible.  

The second option is buying a different house — for example, another existing home in a neighborhood with better schools. It may be easier than building your own, with faster speed to market, but with an existing house, you don’t have the opportunity to customize each room. You may not like the layout of the kitchen even though you got the three bedrooms you needed. 

Important factors to consider when you buy an existing solution include: 

>>Length of time for implementation and configurability options 

>>Smart automation capabilities to minimize mundane tasks for maximum efficiency

>>Whether it has the ability to meet requirements for compliance 

>>Most important of all: Whether this single solution meets your short- and long-term business goals. 

Like buying an existing home, you might just have to live with the awkward kitchen layout, but there is also a third option to consider. 

That third option is to renovate. 

Let’s say you bought a house built in the 1950s. The kitchen is outdated, the bathroom has a pink sink, and the whole place needs a fresh coat of paint. 

Renovating is like a makeover of your existing infrastructure. In my experience working closely with mortgage companies for the past 15 years, we’ve been building technology that leverages data to address major pain points in the end-to-end loan process. By automating up to 80% of the manual, repetitive tasks throughout the loan process, lenders are able to create an intelligent work experience that significantly increases employee productivity, drives down costs, and reduces risk without sacrificing confidence in data accuracy — essentially remodeling your existing infrastructure. This approach can be smart and cost-effective if the goal is to see immediate gains on efficiency and ROI.

In recent years, the common theme around the “renovation” approach has been  focused on the front end for a modern, fresh consumer portal. But mortgage companies with strategic long-term thinking are also examining their options more holistically to improve the end-to-end mortgage experience for both borrowers and employees… because conventional wisdom tells us if you only replace the faucet but keep the old pipes, your kitchen is still not functioning well. 

Whether mortgage companies choose to build, buy or renovate to implement the next-gen mortgage experience will depend on their strategic objectives, resources and timeline. Whatever approach is chosen, one thing is for certain: As competition grows more fierce and the industry experiences consolidation and layoffs, now is the time to invest in the future. 

Those who make the decision to automate and invest in the right technology will gain a competitive advantage and will thrive. 

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Working Together, We All Win

As anyone who has hailed a cab, booked an airline ticket or purchased goods online can attest, technology has the ability to transform established industries, seemingly overnight. Yet other industries appear immune to the impact of technology, with customer experiences that appear frozen in time.

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Heading this dubious short list would be the healthcare and mortgage industries, which bear interesting similarities. Both represent a significant share of the economy, impact a majority of the population and feature a customer experience that is ripe for change. So why isn’t it happening more quickly?

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Some would point to the complexity of each industry’s “delivery system.” In the case of healthcare, coordinating the activities of employers, government agencies, insurers, providers and life science companies, each with their own processes, is clearly challenging. In reality, it is likely the approach to change that is to blame for the slow pace of innovation. In each industry, early efforts to “reinvent the wheel” typically involved a single player seeking to develop and deliver a revised end-to-end process, with technology a key enabler. Unfortunately, these early efforts ultimately collapsed under their own weight, given the required cross-industry expertise and investment.

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This end-to-end approach was quickly followed by the emergence of specialized point solutions, each aimed at a specific component of the industry value chain. In healthcare, this took the form of patient engagement apps and in mortgage, the borrower mortgage application experience. While promising on their own merits, addressing only one component of the issue does not solve the larger problem. It still takes an average 40+ days to close a mortgage.

Fortunately, a “third way” has emerged.

In healthcare, firms such as Change Healthcare are integrating their own best-in-class point solutions, such as secure transaction processing, with those of their partners to create a seamless, end-to-end process and a superior customer experience. Within the mortgage space, Capsilon is adopting a similar approach, investing to integrate best-in-class partner solutions, such as Optimal Blue’s pipeline and rate lock management APIs, with its own. Here the integration of Optimal Blue’s rich feature set with Capsilon’s loan officer portal enables loan officers to perform more of their day-to-day tasks within the intuitive and user-friendly Capsilon platform. The net effect? Loan officers are able to run real-time pricing and loan scenarios, and can instantly lock rates, making it possible to complete an application and issue a pre-approval in half the time, delighting borrowers and real estate agents alike.

The “moral of the story?”

Those who are willing to collaborate with and leverage the expertise of partners, while investing the time and effort necessary to create a seamless, integrated solution, will be successful. Like-minded technology leaders will ultimately provide tremendous value to the borrower and drive the mortgage industry forward.

In such a collaborative environment, we all win.

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Technology Can Be The Magic That Makes Loan Officers Shine

Will 2019 be the year technology replaces the loan officer? While this is the hot topic of conversation and the burning desire of venture capitalists, most realists have a different view, and I certainly don’t see a world where loan officers are going away anytime soon. While many homebuyers have quickly adopted tech to start the loan process, our research has shown most people still want guidance from a finance professional they can trust. Today’s borrowers want the accuracy, speed, and ease of use that they have come to expect from the always on and instant gratification that technology has enabled in their everyday lives, but they want it in tandem with advice from their chosen expert. As a result, today’s digitally inclined borrower is forcing lenders to re-think the front and backend tools they use to fund loans. With 99% of borrowers still relying on a loan officer to help close their loan, lenders who make it easier for loan officers to deliver on their borrowers’ expectations will win more volume.

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The loan officer is like an air-traffic controller, juggling the needs of many stakeholders while guiding the borrower towards a successful landing, the loan funding. They are under tight schedules, have to effectively communicate with stakeholders at the right times, are accountable for the accuracy of information and most importantly – everyone is relying on them to ensure the airplane makes it safely to the gate. When they succeed, everyone is happy — the buyer gets their home loan and everyone gets paid! To help loan officers, lenders need to provide the tools to make their jobs easier.

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The best technologies for loan officers will integrate well with other systems to digitally take the process from application to close. Lenders should look for web-based solutions that not only simplify the loan application, submission and closing process but also balance ease of use with compliance and security. Right from the start, the best solutions will give instant pricing, enabling faster lead response, and automatically issue the loan estimate (LE) so compliance is not delayed. Look for integrated systems that utilize machine learning and intelligence process automation to do the heavy lifting and reduce manual data entry and analysis. Loan officers that leverage technology have realized that they can build a better brand and see higher repeat and referral business.

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It is important that loan officers realize that technology is not replacing what they do, it is enhancing what they do to deliver a better and faster borrower experience.  Think of it as the magic that happens behind the scenes so that the star can shine!

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What A Difference Three Days Make

The TILA-RESPA Integrated Disclosure rule (TRID) is scheduled to take effect on October 3 after nearly two years of industry-wide hand-wringing. And, while the industry has had ample time to prepare for the changing regulations, lenders and settlement partners continue to be particularly concerned about the so-called “3-day rule,” and how this review period might lengthen time to close.

In short, one of the requirements of TRID is that lenders must provide borrowers with the Closing Disclosure (CD) three business days before closing the loan. Unless the CD is hand-delivered, the time period will typically expand to six or seven days in advance of closing (three days in transit, three days for review, plus one day to cover a Sunday or Federal holiday, if applicable). This three-day review period has been a catalyst for lenders to re-evaluate their current loan processes to identify ways they can “buy back” time so as not to lengthen the time to close. Gone are the days when last-minute changes to loans were routine, and settlement agents were printing final disclosures minutes before arriving at the closing table. In fact, many industry insiders are expecting a one- to-two week delay in closings once TRID takes effect, and are predicting that closing dates may be pushed out even longer until the industry can adjust to the changes to deliverables and their related timelines.

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How can the industry cope with the three-day review period without adding a week or more to the time to close? As lenders re-evaluate their loan processes, forward-thinking lenders will realize that technology that automates key steps throughout the loan process, including TRID tolerance checks, is critical to satisfying the three-day review period without lengthening time to close. The right technology automates key steps along the loan production cycle, from onboarding to post-close compliance checks, reducing labor by up to 80 percent. And, as a result, lenders who leverage technology to speed the loan process will enjoy a compelling competitive advantage in delivering faster, on-time closings.

For example, automated document recognition technology automatically identifies, names and indexes more than 250 common loan documents, speeding the onboarding of loans by as much as 90 percent. This technology also provides a missing documents report to alert lenders of any missing documents to ensure that lenders are onboarding complete, compliant loans. As another example, data extraction technology replaces the manual “stare and compare” model of humans visually scanning numerous documents to compare data across document to ensure data integrity. Instead, technology is able to automatically extract critical data from loan documents, compare values and run the data through rules engines, flagging any values that fall outside of established parameters and require review by a human. This exception-based approach reduces labor costs while ensuring a consistent, repeatable process that eliminates human error.  This automation saves valuable hours and days – time that can be allocated to complying with the three-day review period, and more.

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Finally, electronic transaction and electronic closing capabilities, including E-Signatures, expedite the delivery and signing of mortgage-related documents, including borrower disclosures, saving the time required to print, assemble and ship physical documents. Not only do electronic transactions streamline the process and save valuable time, but they appeal to a new generation of consumers who have become more comfortable with electronic transactions in their everyday financial lives.

While TRID will ultimately improve the loan process for borrowers, it is likely to disrupt the loan life cycle for lenders, including lengthening time to close. Lenders can re-capture precious time along the loan life cycle by leveraging technology to automate key steps in the loan process, completing key tasks up to 80 percent faster. Rather than accepting that complying with TRID, including the three-day review period, will lengthen close times by a week or more, lenders should re-evaluate their entire loan process to understand where they can introduce technology to buy back hours, and days, from key steps in the loan manufacturing process – hours and days that are better allocated to the three-day review period, as well as other timeline-based deliverables.

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Bringing Mortgage Quality Control To The Next Level

The wake of the housing crisis bore an avalanche of regulatory changes, which has resulted in soaring compliance risks and operational costs. Lenders are increasingly concerned about data integrity and quality control during the loan process, and this focus on data integrity has significantly increased total loan production costs. Given the increased costs associated with complying with ever-changing regulatory requirements, total loan production costs are not only soaring, but in many cases rising compliance costs have made loan origination unprofitable.

As today’s lending environment becomes more complex, traditional document management models pose a significant hurdle for maintaining quality control and controlling costs throughout the lifecycle of a loan. Also, legacy LOSs have failed to keep pace with the amount of automation required to cope with the rising cost of loan origination. Increasingly, lenders are being forced to reevaluate their operations to ensure that their document and data management operations have sufficient automation and adequate data integrity controls to satisfy compliance requirements without increasing costs.

As lenders increasingly turn to technology to automate much of the loan life cycle, they are in fact moving toward a straight-through processing (STP) model. The concepts of straight-through processing (STP) were originally developed to describe debt and equity trading and payment transactions that are conducted electronically without the need for re-keying data or manual intervention. Although the goal of “same day settlement” that the STP model promised equity trading has not been realized, the concepts of STP are applied in financial markets today to improve the certainty of settlement, minimize operational costs, and reduce systemic and operational risk. The mortgage industry can realize similar benefits, and others, by applying the concepts of STP to the loan origination process. When the STP model is applied to mortgage loan origination, much of the loan process is automated, resulting in up to an 80 percent reduction in labor. With STP, loan turn times are reduced, costly labor is eliminated and compliance is easily managed.

Today, many key steps in the loan lifecycle are labor-intensive and error-prone. The practice of “stare and compare,” for example, in which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and costly – and errors are common. Since the STP model reduces up to 80 percent of manual labor, human intervention is required only when something that is flagged by an automation engine needs to be validated. Using this exception-based processing model not only speeds the loan lifecycle, but also helps lenders better optimize the time of their most knowledgeable staff members.

As another example, loan data could be extracted and put through a rules engine to automate pre-funding and post-close quality control. Only if the loan application has a data point outside of the rules parameters would it then be sent to a human for review. This standardizes the process, increases productivity, lowers cost and minimizes quality risks.

Historically, it’s been feasible for lenders to send only a small percentage of loans through a quality control process, despite the growing pressure from regulatory oversight for more control and thoroughness. Typically, quality control is performed by in-house staff or an outsourced third party late in the origination process, or even after a loan closes. This drastically reduces the ability to take cost-effective corrective actions, and leaves the lender vulnerable to compliance risks. With the STP model, quality control moves to the front of the loan process and it becomes feasible to perform quality control for 100 percent of loans.

As the mortgage industry continues to evolve, and data integrity and quality control move front and center, lenders need to rethink the traditional ways of doing business. In the past, a focus on quality control meant increasing total loan production costs to the point of unprofitability and slower loan turn times. However, with the adoption of STP as a way of introducing quality control throughout the loan lifecycle, lenders are able to shorten loan turn times and ensure data integrity by using technology to automate most of the loan process. This not only reduces labor costs, but also eliminates compliance risks and buy backs that result from data integrity issues. In today’s competitive and regulated environment, adopting an STP model gives lenders a sustainable competitive advantage.

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Managing Risks To Data Integrity And Security

You Can Download This Full Article As A PDF HERE

Sanjeev-MalaneyToday’s lending environment is far different from that of even just a few years ago. Heightened regulations, increases in unannounced audits by the CFPB and an ever more-complex economic environment have forced originators to change the way they do business. But even with the myriad of changes that have taken place over the past several years, there’s one threat to lenders that has remained constant: the inability to maintain data integrity.

The mortgage industry has long struggled to ensure the quality, transparency and auditability of loan information. Lenders struggle with data entry errors, conflicting information that requires risky judgment calls and untold hours spent trying to complete and reconcile data after a loan is funded. As a result of the part “bad” data played in the recent financial crisis and recent litigation, quality initiatives are taking hold across the industry. Regulators are working to ensure that proper oversight is in place to authenticate loan information throughout the loan process.

Some common practices and beliefs contribute to a lender’s inability to ensure data integrity and security, including the reliance on paper-based processes, the mistaken belief that the LOS is the source of truth for loan data because it is the system of record and the use of insecure methods to share loan documents with others involved in the loan transaction.

Paper-based processes should be a thing of the past

While the printing, copying, and shipping of paper documents should be a thing of the past, for many lenders, it is still at the heart of the origination process and contributes to the inability to maintain data integrity. A typical loan captures thousands of pieces of data, and the potential for error is huge.

The reliance on paper also poses a huge security risk. Visit any lender with a paper-based process, and it is obvious that keeping confidential information secure is a losing battle. Paper files with confidential borrower information are stacked on desks and on tables in clear view of anyone who might be visiting the office. Account numbers, social security numbers and other personally identifiable information is in the clear, available to anyone who might have bad intentions.

Once the loan is funded, it is still very common for a lender to retain all paper loan files in a storage unit or warehouse, to be searched through manually whenever necessary. By doing this, however, they put the files and confidential borrower information at great risk. Anyone who has access to the files has access to a treasure trove of confidential borrower information. If the warehouse or storage facility is broken into or damaged by fire or inclement weather, there is no insurance policy that can keep the confidential information from criminals or that can replace the lost information. Third-party document storage services are often seen as good alternatives, but are expensive and often located far from the lender’s office, resulting in an inconvenient, inefficient, and costly search and retrieval process.

Moving to a paperless process improves data integrity and increases overall data security. Today’s imaging and document management solutions replace paper mortgage folders with electronic loan files that are processed electronically from beginning to end. Using a modern document imaging solution, lenders eliminate the manual entry of loan data which introduces inaccuracies, and lenders have a reliable online workflow that results in better protection for loan information, as well as higher productivity, reduced costs and higher quality loans.

In addition, paperless technology guarantees an easily accessible audit trail for a loan file, enabling lenders to collect information quickly and have all corresponding communications relevant to that loan available within seconds. In the case of an audit, rather than scrambling to gather paper files that may be difficult to locate, lenders have complete electronic loan files available to them with a couple mouse-clicks.

Your LOS is not the source of truth for loan data from documents

While relying on paper exposes vulnerabilities in and of itself, the central issue affecting data integrity is the potential for inaccuracies when data is entered, or overwritten, in a lender’s loan origination system (LOS). Many lenders mistakenly believe that an LOS is a “source of truth” for loan information. In fact, an LOS is primarily a “system of record”, capturing, storing and listing information, which can be mistyped or manually changed over the lifecycle of a loan.

While the best source of data associated with the loan is the original documents used in the loan process, LOSs don’t provide the lender with the appropriate tools to easily locate the data on the original document and compare it with what is in the LOS.

Today, lenders invest a lot of time and resources playing the “stare and compare” game, in which a human being compares information across multiple loan documents to spot discrepancies, and also compares the information on the source documents to the information in the LOS. Whether the lender uses in-house staff or outsourced labor to complete the task, this practice is time-consuming, error-prone and costly. In most cases, this quality control (QC) is done late in the process, or even after the loan has closed, limiting any possible corrective actions. With more comprehensive document management technology, lenders are able to implement QC throughout the lifecycle of a loan, not just at the end, which leads to better quality loans and better business decisions.

An advanced document imaging and collaboration platform also provides the ability to extract data from loan documents and to validate that data across any number of loan documents, while always maintaining a link to the original source document. This technology makes it easy to compare data in the LOS with the data on the original document and alerts the lender of discrepancies in the data, as well as missing data or missing documents immediately.

Maintaining the link to the source document is critical. An LOS system can extract data for rules engines and other purposes but loses the connection between that data and its source document. If multiple versions of the same document are submitted for a loan, which version of the document served as the source for the data value that is in the LOS? With best-of-breed document management technology, the lender is always able to link from the data to an electronic image of the source document, so the source can be verified and is never in question.

What’s more, a comprehensive audit trail is created for any changes made to the data values, while always maintaining a link to the source documents. An LOS creates an audit trail of changes made in the system, but, again, the link to the original document is lost.   If a regulator were to request an audit, lenders should have the confidence that the tools they use to run their businesses will help see them through an investigation rather than send them to a warehouse to sift through stacks and stacks of yellowing documents and possibly never find the source document required to validate a business decision.

Sharing Isn’t Always Good

During the life of a loan, many parties are involved in the transaction including lender representatives, real estate professionals, title insurance agents, closing officers, and many others. Moreover, each of these parties is accustomed to different workflows, technologies and protocols when handling loan files. Today, much of the communication between these parties is done via fax, email, or the transport of paper files back and forth. The insecure channels used by the parties to collaborate on loans not only introduce the risk of human error, but significantly increases the security risk of lost or stolen files.

A document management platform gives lenders the ability to securely collaborate with co-workers and third-party service providers as the loan moves through the process. An LOS system may provide collaboration capabilities, but not secure “workspaces” where lenders can invite co-workers, or trusted service providers, to exchange documents and collaborate through the loan process. Using a document management platform for secure collaboration also speeds the transaction because electronic communication is instantaneous, and days aren’t wasted resending lost or poorly transmitted faxes or mailing paper documents back and forth. Emailing faxing, and shipping documents that contain sensitive information in the clear should be a thing of the past, and a best-of-breed document management platform offers a secure, more efficient alternative.

The mortgage industry has seen more changes in the past several years than in the past few decades. As a result of these changes, lenders must be prepared to change the way they do business by investing in technology that ensures loan data integrity and security.

By using a software solution designed to ensure data integrity, lenders improve the consistency and quality of loan information throughout the lifecycle of the loan, not just after a loan closes, when it is often too late to remedy. Technology also increases the security of loan information, as it replaces paper-based processes with secure, electronic channels for document management and collaboration. In today’s increasingly competitive and complex lending environment, the focus should be on delivering high-quality loans. With a focus on data integrity and security, lenders will be better able to meet both their operational objectives and financial goals.

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Solving the Challenges of Maintaining Data Integrity for Mortgage Lenders

Data integrity, ensuring the completeness, accuracy and consistency of data used throughout the origination of home loans, is one of the greatest challenges facing the mortgage industry today. Many lenders find that the inability to maintain the accuracy of loan data during the origination process negatively affects their workflow processes, compliance efforts, and ultimately, their profits. Yet despite the availability of technology solutions that can greatly increase a lender’s ability to ensure the integrity of the data used to make underwriting or purchase decisions, many lenders have yet to take advantage of this technology. As a result, they are plagued with inaccurate, inconsistent or incomplete data that they are betting their companies on.

Without the proper preventive measures in place, lenders struggle with data entry errors, conflicting information that requires risky judgment calls and untold hours spent trying to complete and reconcile data after the loan is funded. As a result of the part “bad” data played in the recent financial crisis and recent litigation, quality initiatives are taking hold across the industry. And regulators are working to ensure that proper oversight is in place to authenticate loan information throughout the loan process.

While the printing, copying, and shipping of paper documents should be a thing of the past, for many lenders, it is still at the heart of the origination process and contributes to the inability to maintain data integrity. A typical loan captures thousands of pieces of data, and the potential for error is huge. While relying on paper exposes vulnerabilities in and of itself, the central issue is the potential for inaccuracies when data is entered or overwritten in a lender’s loan origination system (LOS). Many lenders mistakenly believe that an LOS is a “source of truth” for loan information. In fact, an LOS is primarily a “system of record,” capturing, storing and listing information, which can be mistyped or manually changed over the lifecycle of a loan.

While the best source of data associated with the loan is the original documents used in the loan process, LOSs don’t provide the lender with the appropriate tools to easily locate the data on the original document and compare it with what is in the LOS. The only way to maintain data integrity is to use data capture technology that has been optimized for the mortgage industry to catch discrepancies automatically. This technology makes it easy to compare data in the system with the data on the original document, and alerts the lender of discrepancies in the data, as well any missing information or documents, immediately.

Not too long ago, it was acceptable to rely on internal staff or outsourced labor to double check loan information for completeness and accuracy. The practice of “stare and compare,” by which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and error-prone, not to mention costly.

Technology moves quality control to the front of the process by automatically validating the data across loan documents. Rather than send an application to an underwriter, the data could be extracted and put through a rules engine for analysis. Only if the application has a piece of information outside of the rules parameter would it then be sent to a human underwriter for review. This standardizes the process, increases productivity, lowers cost and lowers production risks. The technology would also keep a historical record of any changes made to the data, automatically creating and maintaining an audit trail to assist with compliance requirements.
Without preventive measures in place, including data capture technology, lenders are at risk of making lending decisions (or purchase decisions) based on inaccurate and potentially misleading information. Funding a loan or purchasing a loan based on inaccurate data puts the lender at risk if the loan falls into default down the line. In addition, selling loans based on faulty data greatly increases the risk of buybacks and hurts a lender’s credibility. Today’s lending environment necessitates loan quality through sound underwriting that is supported by technology to streamline business processes and ensure compliance.

By using a software solution designed to ensure data integrity, lenders improve the consistency and quality of loan information throughout the lifecycle of the loan, not just after a loan closes, when it is often too late to remedy. In today’s increasingly competitive lending environment, the focus should be on the data, not the documents. Ultimately, it’s the data that facilitates a high quality business process that meets the lender’s operational objectives and financial goals.

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Achieving Data Integrity

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Sanjeev-MalaneyThe mortgage industry has long struggled to ensure the quality, transparency and auditability of loan information. The recent uptick in buyback requests in the market has left lenders scrambling. In recent years, regulators have worked to ensure that proper oversight is in place to authenticate loan information throughout the loan process and to promote data quality controls.

Data integrity, maintaining the accuracy and consistency of loan data throughout the loan lifecycle, continues to be a challenge for the mortgage industry. Over the past few years, regulations have made operating in the industry increasingly complex. Operating in this increasingly complex environment has forced lenders to search for ways to manage these new compliance requirements, while still maintaining loan volumes and remaining profitable. Faced with these new challenges, the industry is discovering that traditional lending technologies are not up to the task. To achieve true data integrity that drives business objectives today, lenders must adopt more advanced document management technology solutions that not only increase operational efficiency through paperless processes, but also ensure loan health through data capture and validation, and automate compliance efforts.

LOS as System of Record vs. Source of Truth

Many lenders mistakenly believe that their LOS, as their system of record, provides an accurate picture of the data associated with a loan. In reality, an LOS simply acts as a system of record, storing and listing information, which can be entered incorrectly or mistakenly changed over the lifecycle of a loan. While the best sources of data associated with the loan are the original documents used in the loan process, LOSs don’t provide the lender with the appropriate tools to easily locate the data on the original documents and compare it with what is in the LOS. The only way to maintain data integrity is to use document management technology that makes it easy to compare data in the system with the data on the original documents. This technology enables the lender to determine discrepancies in the data, missing data, or missing documents, replacing the time-consuming, costly, and error-prone “stare and compare” process commonly used today.

In addition, many lenders are realizing that the document imaging “feature” included with their LOSs don’t meet the demands of today’s lending environment. The benefits of using a document imaging system that is separate from an LOS are many. Doing so takes advantage of the advanced capabilities available in a top imaging solution, such as the ability to capture documents from multiple channels (email, fax, print driver, etc.) to a single inbox, and automated document recognition (ADR). With ADR, loan documents are automatically sorted, recognized, named, and indexed for the user, significantly improving the efficiency and accuracy of the loan processes.

Achieve Long Term Loan Health

Accurate data means higher quality underwriting, it’s that simple. Technology designed to ensure data integrity improves the consistency and quality of loan information from all sources and reduces the risk of fall out during origination.

Paper-based processes in the mortgage industry include loan applications, disclosure management, submission of loans from branch offices or TPOs to centralized underwriting, verification of documents and data for completeness and correctness, sharing documents with service providers, dealing with changes at closing, and packaging and delivery of loans to investors. It is unfathomable to think that there is any way to manually safeguard these processes from error. With today’s document management technology, it is possible to identify loan defects early on, instilling confidence in the lender and investor that a loan is comprised of sound information, and reducing the chance of a loan slipping into default and minimizing the repurchase risk for lenders. With document management technology that aids in data integrity, the ability to manage risk is greatly increased.

Ensure Compliance

Regulators have created wide-reaching rules requiring the accuracy of loan files and the maintenance of a comprehensive record of signed documents. The key to ensuring compliance and preparing for an audit is employing a document management system that supports and facilitates accurate reporting. The best document management technology solutions remove manual entry processes and their inherent risks, and also provide an audit trail from the beginning to end of a loan’s lifecycle.

Effectively communicating with and receiving accurate information from the multiple parties involved in originating a mortgage is just the beginning of what a lender should strive for. To navigate the increasingly complex regulatory environment, lenders must rely on technology that offers them easy access to and full control of their entire universe of loan data. A comprehensive document management system tracks missing or incomplete documents, validates the data used to make lending decisions, and records the history of changes made to any piece of data. When an audit does arise, standardized workflows and reporting functions further streamline processes and help facilitate further investigation. If a lender stores paper loan files in boxes or in storage rooms, they put confidential information at risk of theft. If paper loan files are destroyed, there is no way to fully recover that data. Cloud-based document management systems store all loan files in the cloud, meeting retention requirements and allowing them to be securely accessed from any location. In the event of an audit, an automated system enables lenders to gather information rapidly and have the history of all corresponding communications relevant to that loan at their fingertips, stored in a single repository.

Tougher regulations have changed nearly every aspect of the lending process, prompting a shift towards a more quality-focused lending model. The rate of change in the regulatory environment of the mortgage industry is staggering, and lenders have found themselves navigating a much more complex market than ever before. To remain competitive, lenders must address data integrity and risk management with sophisticated technology, making their processes leaner and more efficient. Using technology solutions to simplify the origination of new loans reduces risk, increases customer satisfaction and enhances profitability. Applying a document management system to loan origination is a practical way to apply tools to meet business goals and manage compliance cost-effectively. Lenders must remember that the integrity of loan file data is a determinate of the lender’s profitability. Re-engineering these processes with secure and reliable automated workflows allows for higher productivity, lower cost per loan, reduced errors and duplicated efforts, higher quality loans and better compliance.

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