How technology helps mortgage lenders make data-based decisions

In today’s evolving mortgage landscape, lenders are finding themselves increasingly vulnerable.
Amidst fluctuating demand and a surge in digital mortgage processes, financial institutions are facing the daunting tasks of cutting costs and reducing fraud amid fewer applications. According to a Q2 2022 analysis by FundingShield, wire-related issues saw a significant increase of 40.69% compared to the previous quarter, emphasizing the mounting pressure on lenders to balance cost optimization and risk management.

At the same time, rapid digitization has transformed mortgage processes, making it streamlined and efficient. Borrowers can complete applications online, submit documentation electronically and even receive automated loan approvals. This digitalization improves the borrower experience and enables quicker and more accurate loan processing.

To navigate these challenges successfully, mortgage lenders are turning to technology as a crucial ally in making data-based decisions. Advancements in intelligent document processing automation, artificial intelligence, and machine learning are revolutionizing the way lenders operate and enabling them to sift through vast amounts of data to identify patterns, detect anomalies, and assess risk with greater precision.

What is the importance of technology in the mortgage industry?

With rapid digitalization, the sheer amount of data lenders need to manage can be overwhelming. But with the rights tools and technology, lenders are able to harness the power of their data to make data-driven decisions and optimize their operations, including:

• Improved Efficiency and Faster ProcessingTechnology enables lenders to streamline and automate various aspects of the mortgage process, resulting in increased efficiency and faster loan processing times. Manual processes such as data entry and document classification can now be automated, improving efficiency and accuracy. This not only improves the borrower experience but also allows lenders to handle a larger volume of loans effectively by accelerating processing.

• Lower Defaults and Improved Risk AssessmentAdvanced analytics and AI-driven algorithms can analyze large datasets and provide lenders with more accurate risk assessments. By leveraging historical data, machine learning algorithms can identify patterns and trends that help lenders assess the creditworthiness of borrowers more effectively by getting a more detailed picture of their financial health. This leads to better loan underwriting decisions and reduces the risk of defaults, ultimately benefiting both lenders and borrowers.

• Servicing Tech-Savvy Home BuyersToday’s home buyers are increasingly tech-savvy and prefer digital experiences. Technology enables lenders to cater to these preferences by providing user-friendly online platforms for loan applications, document uploads and communication. By offering digital self-service options, lenders can enhance the overall borrower experience and attract tech-savvy customers.

• Mitigating Mortgage FraudTechnology plays a vital role in combating mortgage fraud, which has become a growing concern in the industry. AI-powered fraud detection systems can analyze large datasets, including applicant information and financial data, to identify potential red flags and suspicious activities. Advanced document fraud detection solutions like Ocrolus can detect anomalies, inconsistencies and patterns indicative of fraud, helping lenders prevent fraudulent applications and protect themselves from financial losses.

• Reliable Lending Data and Data Integrity Accurate and reliable lending data is paramount in making informed decisions in the mortgage industry. To address this need, innovative technology companies like Ocrolus offer solutions for lenders to capture and analyze data from various sources, including hard-copy documents and digital materials. By leveraging this technology to analyze and make data-driven decisions, lenders are empowered to manage risk, underwrite more broadly, and make smarter lending decisions.

• Regulatory ComplianceThe mortgage industry is subject to numerous regulations and compliance requirements. Technology can help lenders proactively address lending rules and regulations and enable unprecedented compliance by ensuring that all necessary documentation and legal requirements are met. By automating compliance processes, lenders can reduce the risk of errors, improve audit trails and maintain regulatory compliance more effectively.

How has technology impacted the mortgage lending process?

Modern technology has had a significant impact on the mortgage lending process, revolutionizing the way lenders operate and enabling them to navigate the evolving market more efficiently.

Gone are the days of manual paperwork, lengthy processing times, and potential errors that plagued the mortgage lending process. Lenders who leverage modern technology are empowered to expedite the review and approval of mortgage applications, significantly reducing loan processing times while simultaneously reducing risk.

For example, automation and digitization streamline workflows, allowing lenders to efficiently handle high volumes of applications while ensuring accuracy and consistency. This not only saves lenders time but also improves the overall borrower experience, as applicants receive quicker responses and faster loan processing.

Digital lending platforms also offer lenders access to a wealth of data, allowing them to make more informed lending decisions. This data includes not only traditional financial information but also alternative data sources like social media activity, employment history and utility bill payments. Lenders can more accurately assess creditworthiness and determine appropriate loan terms by leveraging this data.

What are some types of technology that mortgage lenders should be adopting?

There are countless tools and technology available to financial institutions to support more effective and efficient mortgage lending at every step of the process. 

In the loan origination process, lenders can benefit from loan origination systems (LOS). LOS platforms automate the mortgage application process, allowing borrowers to submit applications online and lenders to efficiently manage the application workflow. These systems streamline data collection, document verification and underwriting processes, resulting in faster and more accurate loan origination.

For loan processing and document analysis, lenders can leverage specialized software solutions to automate the gathering, organization and management of borrower information. By utilizing advanced optical character recognition (OCR) and data extraction capabilities, these tools can extract relevant data from documents and perform data validation automatically. This significantly reduces manual data entry and enhances accuracy and efficiency in loan processing.

Automated underwriting systems are another valuable technology for lenders. These systems employ algorithms and data analytics to assess borrower creditworthiness and determine loan eligibility. By automating the underwriting process, lenders can make faster and more consistent lending decisions based on predefined rules and risk models. This streamlines the loan approval process, reduces human bias and improves overall efficiency.

Experience modern mortgage lending with Ocrolus’ mortgage automation solution

Ocrolus, a leading mortgage automation platform powered by AI and machine learning, is transforming the way lenders handle mortgage documents.

By automating the extraction and analysis of captured document data, Ocrolus eliminates the need for manual data entry and expedites the loan review and approval processes by reducing the need for document pre-sorting.

By combining the best in machine learning and automation with the review of humans, Ocrolus  enables organizations to digitize and automate unstructured data originating from various types of documents so they can be integrated into daily business processes, such as informing risk models or calculating cash flow and income metrics.

Adopting mortgage technology is crucial for lenders in today’s digital landscape. Technology offers improved efficiency, faster processing, better risk assessment, enhanced borrower experiences, greater fraud detection capabilities and more reliable regulatory compliance.

Embracing advanced technologies like those that Ocrolus offers empowers lenders to make data-driven decisions, significantly accelerating the lending processes, improving decision making and ensuring reliable data extraction from mortgage documents.