The traditional lending process required a middleman who could handhold consumers through reams of paperwork. 30 percent of loan originations in 2006 were through brokers. In 2014, it has come down to 10 percent. Where are all the brokers going? After the financial crash, many left business. The Consumer Financial Protection Bureau (CFPB) put in rules, which still prevent brokers from increasing their incomes by pushing clueless consumers into expensive mortgages. The CFPB rules also disallow brokers to extract commissions from borrowers and lenders simultaneously. Such developments have made brokering a less luring field in the US. In addition, there is the reverberation of advanced technology.
These days, technology helps consumers avail mortgages through personal computers and mobile devices. Online-only mortgage firms like QuickenLoans, Lenda, GuaranteedRate, and Sindeo are beginning to dominate the lending industry. Even big traditional banks are losing market to them and mortgage brokers are finding it increasingly difficult to hold relevance.
Mortgage software: the champion of multi-tasking
Mortgage software plays the broker, the loan officer, the assessor, the reviewer, and the gatekeeper, and processes become swifter. The costs of processing shrink remarkably. Noticing the lightning pace at which online-only lenders are growing, traditional lenders are building their online lending models.
Intelligent rule-based mortgage software can provide a simple online form to submit applications. Applicants can submit their income proofs, identity proofs, photographs, and signatures online. The software retrieves the applicant’s credit scores from credit-rating agencies (third party) and check for eligibility. Such a system can also parse credit behavior of applicants and offer risk-adjusted rates.
Speed, cost efficiency, and convenience on the cloud
Taking your consumer lending system to the cloud makes the entire processing and loan disbursal complete in about 15 days. With legacy systems, the steps might take more than a month.
Legacy banking systems involve volumes of pages to be filled by customers and call for help from a knowledgeable person, who in this case, happens to be the broker. With software as a service deployed over the cloud, only relevant forms and fields, based on the kind of loan applied, show up. Many of those fields get auto-filled from the database related to the applicant due to access to big data. This saves a considerable amount of time, and ensures accuracy by evading manual entries.
The information can be updated in the central database and reported to credit rating agencies. These steps occur quickly and seamlessly, avoiding many layers of redundant data entry and wasted manpower. The gain goes to the lenders and the borrowers. The pain goes to brokers and other intermediary officers. However, this model is here to stay. More and more banking institutions are turning to automation with robust software to improve business and customer satisfaction.
