The loan underwriting process is a critical process that goes through multiple iterations. This consumes a lot of time. By improving the loan underwriting process, a lender can save time and money and also improve productivity. Not only the underwriting stage, a lender should try to improve the pre-underwriting stage as well. The pre-underwriting stage involves document verification, preparing the initial mortgage disclosures, sending them to the borrower and a lot of other paperwork.
Challenges and Cost of Underwriting
Depending on the loan type and lender, direct underwriting fees may be between $400 to $900. This is a substantial amount. This is the reason why the lender should utilize the services of an underwriter in an efficient manner.
Pre Underwriter Review
A lender can identify qualifying factors in a pre-underwriting review. This review allows us to filter out loan applicants that meet the pre-underwriting qualifications. Some applications are most likely to be rejected. Others can be approved but require some missing documents. This can speed up the loan underwriting process. The underwriter focuses on only those applications qualifying for the loan. The underwriter does not spend time on unqualified applications. This also reduces production costs. With a fast underwriting process, a lender can close more deals.
Automated Underwriting Process
There are benefits of automating the underwriting process. This helps in improving process flow, customer service levels, improved tracking, enhanced communications and a lot more. All these benefits further save time and money and improve productivity.
Improved Workflow and Better Tracking
Automatic underwriting process keeps applications moving. Once an application enters the pipeline, it hardly requires manual intervention. This increases productivity and improves customer services. It takes a few clicks to check the status of an application.
Efficient Utilization of Underwriting Resources
The lender can make the best use of available underwriting resources. It takes more time, effort and resources to manually handle complex cases. Using automated underwriting systems significantly reduces the resources required to handle such cases. The lender can utilize these resources to secure more deals. Automation allows better resource allocation.
Enhanced Visibility and Service
If a lender is not using an automated underwriting system, checking the status of an application requires making several phone calls. This wastes time at both ends. Dashboards and visible tracking provide real-time data of an application. This reduces the number of phone calls between the lender and the borrower. The borrower also gets a better experience.
Consistent Decision Making
The lending industry is a regulated industry. The lender has to follow some rules and regulations. There are internal policies to be followed during different stages of the underwriting process. The automated underwriting system triggers messages and forces actions to ensure that all the rules, regulations and policies are followed while processing an application. Decision making becomes fast, consistent and accurate.
As the application is processed fast, it requires less paperwork. There is no need to collect data on paper. Automating the underwriting process reduces the number of manual handoffs. This eliminates manual failures.
When it comes to speeding up the underwriting process, the very first requirement is having an automated underwriting system.