Mortgage processing is considered one of the most complex financial processes undertaken by banks and financial organizations, for which mortgages are often seen as a cornerstone product.
If a customer has a mortgage with one organization, then it is likely they will retain more of their services such as a bank account, so it is important to marry efficient mortgage processing with enhanced customer experience to ensure brands do not miss these opportunities and you can also check out Calgarymortgages.ca for mortgage processing.
Making decisions involving long-term liability for considerable sums of money is not something organizations take lightly. As a result, the approval process can seem long-winded and involve stringent assessments of customer reliability and creditworthiness.
This process can generally be broken down into six key stages:
- Mortgage pre-approval – The lender reviews the financial situation of the potential customer, or buyer, to determine if and how much they are willing to lend.
- House hunting and offer – A potential home is located by the buyer, who then negotiates price before signing a purchase agreement.
- Loan application – A loan application is completed by the buyer, containing all necessary information about the home being purchased.
- Mortgage processing – The lender gathers all of the information needed to complete the loan and create a file.
- Mortgage underwriting – A mortgage underwriter undertakes an in-depth analysis of the loan application regarding the risk of lending to the buyer and produces a risk assessment.
- Approval and closing – The underwriter issues final approval or denial. If successful, the buyer will attend a closing meeting to finalize the deal.
This process is further complicated by the aforementioned examinations that a lender must carry out to determine the creditworthiness of the customer, which include credit checks, income verification, and property appraisal. This six-stage process is traditionally paper-based but can be optimized and accelerated through document digitization and automation of manual tasks.
This guide will outline the challenges involved in this process and the methods that can be applied for optimization, reducing human error and improving transparency.
Key challenges of mortgage processing
There are a number of key challenges that arise from such a complex and heavily litigated process that, if not properly addressed, can significantly impact the efficiency and ease of mortgage processing. If lenders are aware of these challenges and the current best practice with regard to combatting them, they can take action to reduce inefficiencies and optimize the process.
Lack of resources and technology
Andrina Valdes, chief operating officer at Cornerstone Home Lending, believes that the primary challenge currently faced by mortgage processors is a lack of resources and technology. She says that if staff are not supported with the right tools and technologies, each stage of the mortgage process can take longer than necessary as they are traditionally dependent on manual, paper-based activities with procedures that must be stringently adhered to, particularly during the current Covid-19 pandemic.
“This is especially relevant right now, at a time when more buyers are looking for remote mortgage services,” notes Valdes. “Many buyers are also seeking out speedier mortgage processing to compensate for the slowdown caused by the surge in mortgage applications when rates dropped this summer.”
Valdes explains that the only way to overcome this challenge is to provide mortgage processors with more support, both in technology and process efficiency. She notes that the latter can be improved by eliminating any obstacles that get in the way of the closing process, which Cornerstone Home Lending achieves through a focus on in-house operations and product innovation. Examples of this include specialty teams that are continually adding new loan products and hiring extra support staff to increase the support ratio so that nothing slips through the cracks.
As for technology, “a mortgage processor can benefit from integrated tools, such as an all-in-one mortgage app that enhances communication with a buyer and expedite the loan process”, she remarks. Valdes adds that “the right technology can move a loan from start to finish, with less effort, and with less paperwork, while also keeping everyone involved in the process connected”.