With the outbreak of COVID-19, the US mortgage industry has come under lot of pressure. With high unemployment levels, many borrowers are struggling to meet their mortgage obligations, a development with close resemblance to 2008-09 financial crisis. However, unlike 2008-09, this time, the Federal Government has acted swiftly to help borrowers deal with the impact of COVID-19. According to a Deloitte study, nearly 70% of homeowners will benefit from the relief options for federally backed loans.
However, all of this can lead to severe capacity constraints on the mortgage servicing industry. Consumers are likely to be confused about new processes and formalities. The same Deloitte study points out that 1 out of 5 COVID-19-related complaints to the Consumer Financial Protection Bureau pertained to mortgages. The increase in complaints also increases the risk of litigation in the future. The impact of COVID-19 is expected to last for a while. In such times, mortgage BPO can be a huge aid to the mortgage industry. Let us understand how.
Reliable Mortgage Loan Processing:
The process of mortgage loan processing is marred with challenges. Be it meeting fast closure deadlines, expertly stacking and indexing loan documents, or compliance with regulations, mortgage loan processing requires precision at all stages. For example, the implementation of the Dodd-Frank Act has increased the paperwork involved for lenders. Mortgage outsourcing companies provide comprehensive mortgage loan processing services. From receiving and reviewing application documents to confirm closing, mortgage outsourcing covers the length and breadth of mortgage loan processing. They will make all sorts of verifications, including that of employment (VoE), income (VoI), deposit (VoD), and mortgage (VOM). Precision plays a key role in mortgage loan processing. Mortgage BPO companies have expert loan processors, resulting in higher turnaround, a greater number of loans processed, and reduced capital and operational expenses.
|Role of Mortgage BPOs During Covid |
—Follow up on repayments and defaults
Proactively send reminders to borrowers on behalf of lenders to repay loans within the agreed timeline. Educate borrowers on foreclosure moratorium programs to avoid foreclosure risks. This has helped many lenders keep the cash inflow ringing.
—Leverage automated systems for increased efficiency
Employ data analytics and automation to bring acceleration and accuracy across a range of functions. These functions include back-office operations required for borrower’s credit check, appraisal, underwriting, document management, among others. Predictive data models are used to forecast any disruptive market risks such as the Covid 19 pandemic.
—Meet resource crunch and reduce operational costs
Cross-train team members across a range of mortgage loan processing functions. Automation reduces dependence on manual labor to perform repetitive tasks. Mortgage BPOs have resources stationed at less-affected areas who compensates for the lack of mortgage professionals for lenders operating from a highly affected area.
—Streamline lengthy and complicated processes
Mortgage BPOs undertake a systematic approach to delegate equal number of resources at every stage of mortgage loan processing. Leveraging automation not only helps them streamline the series of complicated tasks but bring efficiency into the process.
Diligent Mortgage Underwriting Support:
Many lenders face challenges in their underwriting process, such as missed or insufficient information and lower underwriting productivity. Inefficiencies at the underwriting stage can lead to huge problems such as incorrect calculations of assets and incomes, poor quality loans, and higher denial rates. It can also lead to a constant piling of the backlog of underwriting work.
Mortgage process outsourcing companies employ experienced underwriters with vast experience in evaluating loan applications and analyzing applicants’ creditworthiness. As part of underwriting support, such companies use an automated underwriting system to extract and validate data. They can redefine the entire lending decision analysis process to improve the quality of loans. If needed, they can revamp the existing questionnaires of lenders, or create new ones, to validate customers’ data. Such automation increases speed and reduces the chances of errors.
Even though the entire process is automated, mortgage outsourcing companies also employ special quality control staff to review each and every loan file. This special team uses its expert judgment and insights from automation to determine whether an application meets the lender’s guidelines. Automated underwriting provides instant loan approval or denial decisions, saving valuable man-hours for the lender.
Streamlined Mortgage Closing and Post-Closing Support:
The loan origination cycle is prone to a lot of inefficiencies. Examples include slow collection of documents, cumbersome and manual data validation, or non-standard processes with no checklists. These can have multiple negative implications on business, such as reworks, increased turnaround times, and overall, a bad borrower experience. By outsourcing their mortgage services, lenders can automate their entire closing process. Automation can also help in the standardization of their processes with minimum submission checklists. Such companies can also create detailed process maps and robust quality checks.
Mortgage outsourcing solutions include both loan closing as well as post-closing support. Such companies provide end to end support, including preparing closing documents, scrutinizing titles, ensuring regulatory compliance, etc. These changes can lead to a substantial reduction in errors, processing times, and operational expenses.
Meticulous Title Support Services:
Property titles play a huge role in the final closing of loans. Many things need to be checked, such as whether there are any prior claims to the title or any unresolved issues. Mortgage outsourcing companies provide comprehensive title support services, including title order, title examination, title commitment, and final policy production. They also cover title insurance, settlement, and closing services.
As part of their title examination services, they will thoroughly analyze the report provided by the title company and ensure that it’s error-free. Overall, mortgage outsourcing companies help in thoroughly scrutinizing all financial obligations that may come in the way of closing the deal. They will analyze the minutest details, including all pages’ presence and the quality of images. They can also coordinate with loan officers and listing agents and collect pay-off settlements and title search reports.
Intelligent Appraisal Support Services:
As part of mortgage outsourcing services, lenders and mortgage brokers can use third-party support for comprehensive appraisal support services. A combination of smart analytics and the latest valuation technology enables mortgage outsourcing companies to provide timely and accurate property valuation services.
These services cover right from appraisal ordering to helping find professional appraisers. At times, lenders struggle with managing the work of individual appraisers spread across distant locations. There are quality errors, and those need to be corrected quickly to avoid building a backlog of work. Mortgage outsourcing companies can help in performing quality checks on the work of other appraisers. By engaging their services, lenders can get accurate reports within deadlines while adhering to specific lender guidelines.
Proactive Loss Mitigation Services:
No lender likes to lose money to bad loans. Mortgage process outsourcing services cover a full range of loss mitigation services, from basic document processing to complex processes such as borrower outreach. Their services include foreclosure management assistance, custom loan modification, short sale management, and more.
Simply adding a quality check before the loans get closed can substantially reduce bad loans. Mortgage outsourcing companies can help lenders put in place a pre-funding QC team, which can do a random sampling of loans and rewrite them completely. Subsequently, they can compare this with the underwriter’s output. Sometimes, such comparisons can lead to finding glaring discrepancies and errors. This analysis also helps in providing timely feedback to the underwriters, thus, improving their output in the future.
Moreover, mortgage outsourcing companies have dedicated teams across multiple time zones. They can easily scale up the capacity to provide clients with pre-fund QC reports within 24 hours of receiving a loan. A simple quality check can go a long way in reducing bad loans and operational costs.
As part of borrower solicitation services, mortgage outsourcing companies also handle forbearance. In light of COVID-19, forbearance has gained a lot of significance. As of May 31st, 2020, nearly 4.3 million mortgages were in forbearance. That’s 8.53% of the total outstanding mortgages. Once the forbearance period ends, there could be a huge surge in loan modification services. This surge would put a lot of load on mortgage servicing teams. By using mortgage outsourcing services, they can quickly scale up their capacity to meet the growing loan modification requests. This way, they can ensure the quality of work is not compromised, thus, reducing the risk of losses in the future.
Smart Mortgage Automation:
Mortgage outsourcing is not limited to manual back-office processes and support. Mortgage outsourcing services also include the latest mortgage automation and software solutions. Latest advancements in technology have now automated various manual processes such as data extraction and validation. For example, automation of mortgage loan origination decisions can significantly reduce the turnaround times, resulting in higher customer satisfaction. Automation of mortgage underwriting can be done in such a way that data can be picked up directly from the source. Such smart automation can save a lot of time and money spent otherwise on manual data entry. Automation can also help in instantly collating the required customer documents such as customer credit check reports and income statements from credit reporting bureaus.
Automated mortgage loan processing can help in assembling mortgage loan packets and auto validating critical data. Mortgage outsourcing also makes it possible to automate the classification of documents by their preferred formats and types. Within mortgage appraisal, automation can reduce the communication gap between the appraiser and the loan processor. Automation allows the creation of smart checklists, which consolidates all the information related to a property in one place. As a result, appraisers have access to all the information they need. By doing so, mortgage outsourcing companies eliminate the cumbersome and manual compilation of written reports.
The use of technology can help lenders and mortgage brokers improve their processes, increase their processing speeds, lower costs, and minimize data entry errors.
Key Benefits of Outsourcing Mortgage Services:
Let us look at some of the key benefits of outsourcing mortgage services:
- Get Access to Professional Expertise:
These days, mortgage loan processing knowledge is not restricted to mortgage outsourcing companies in the USA. Over the years, mortgage outsourcing companies operating out of low-cost locations have built/ developed skills to handle all kinds of mortgage loan processing services. These include developing knowledge of industry regulations or handling complex processes like ratio analysis and fraud detection.
- Improve Turnaround Times:
Providers of mortgage outsourcing services offer a combination of skilled staff and the latest technology for processing mortgage applications. As a result, lenders and mortgage brokers can get faster turnaround times and improved efficiency, leading to increased revenues.
- Superior Customer Experience:
One key advantage of mortgage outsourcing is reduced customer waiting time. With 24×7 operations and skilled resources, mortgage outsourcing companies enable faster processing of loan applications, resulting in superior customer experience.
- Focus On Core Competencies:
By opting for mortgage outsourcing services, USA-based lenders and mortgage brokers can focus on core competencies such as developing the business and coming up with innovative products and solutions. Mortgage outsourcing companies can take care of all the non-core activities, including doing follow ups on defaults and repayments.
Mortgage Processing Guide for Lenders to Battle the Impact of COVID-19:
COVID-19 has created unprecedented challenges for mortgage lenders. At the time of this crisis BPO companies have risen to the occasion like never before, working round the clock to mitigate the impact of the pandemic on the industry. Here are some tips for lenders to deal with this situation:
- Dealing With COVID-19 Affected Borrowers:
Lenders should consider extending payment holiday options beyond mandates. They should explain such terms to borrowers clearly via all communication platforms. The use of artificial intelligence (AI) and robotic process automation (RPA) can help in scaling capacity, reducing processing times, and improving accuracy. Much of these dealings are effectively being dealt by BPO mortgage companies.
- Dealing with Loans Waiting to be Closed:
Here, lenders should ensure there’s no change in the borrower’s economic viability due to COVID-19. Where lenders are confident, they should immediately close the loans. However, where lenders are not as confident as before, they should use the material adverse change clause to introduce new protections to the deal. Using third-party support for mortgage outsourcing solutions can lead to low-contact and no-contact closing options for real estate transactions.
- Dealing with a Surge in Refinance Applications:
Automating processes and using AI and RPA solutions can help reduce manual intervention and increase the speed of processing refinance applications. Also, outsourcing tasks to countries with reliable remote working setups can ensure work is moving seamlessly. Lenders should also simplify their requirements for receiving verification proofs.
Overall, mortgage BPO has a huge role to play in the mortgage industry. With a full suite of services, mortgage BPOs can enable lenders to free up their time and resources from regular tasks and focus on high-end work such as product innovation and sales.
Why Choose Expert Mortgage Assistance for Outsourcing Mortgage Services?
Expert Mortgage Assistance has more than 10 years of experience in mortgage process outsourcing. Lenders, brokers, credit unions, title companies, and appraisal companies from all over the US count on Expert Mortgage Assistance to provide high-quality mortgage outsourcing services. With its operations spread over 8 global delivery locations, Expert Mortgage Assistance provides 24×7 support to American mortgage brokers and lenders. Its team of expert mortgage processing professionals has vast experience in providing end-to-end loan servicing solutions for both the residential and commercial mortgage markets. By outsourcing mortgage services to Expert Mortgage Assistance, lenders and mortgage brokers can get faster turnaround times, reduced costs, and improved customer satisfaction.