Ask a Mortgage Process Automation Expert – Part 1

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ask a mortgage process automation expert

Welcome to Part 1 of our series "Ask a Mortgage Process Automation Expert". Be sure to catch Part 2 of the series here. Part 3 can be found here.

Economic uncertainty in the U.S. is driving mortgage rates lower than they have been in years. Two weeks ago, mortgage rates dropped below 3% for the first time ever. According to Freddie Mac, interest rates on 30-year loans are currently at 2.99%, and 15-year rates are at 2.51%. A year ago, the 30-year rate hovered around 3.84%, and as recently as last month were around 3.34%. With rates dipping below 3%, purchase demand is as high as it has been since January 2009 – up more than 20% from one year ago. Applications to refinance home loans jumped 12% in the last 10 days and are up 107% from one year ago. The refinance share of all mortgage activity is sitting at a historic high of 64.2% of total applications. All of this translates to an unprecedented spike in volume for mortgage lenders that may severely strain their ability to meet borrower needs in a timely manner.

Today we sit down with Nolan Johnson, one of HPA’s foremost mortgage automation experts, to understand the landscape for lenders and how automation is the ideal solution for the challenges they face today.

What do low rates and high purchase demand mean for lenders?

The current climate is creating an unprecedented volume of work for lenders and buyers still expect a streamlined loan experience. Individual lenders need a reliable solution for managing the loan volume currently taxing their resources while largely operating remotely. This is where HPA’s RPA-as-a-Service (RPAaaS) can be particularly useful. With RPAaaS, which applies the as-a-service model to RPA, clients pay for results, not licenses. RPAaaS is ideal for mortgage companies because it allows them to reap the benefits of automation without taking on the risk and resource constraints associated with building an RPA program in-house.

How can lenders apply RPAaaS to keep their operations running smoothly?

RPAaaS can help lenders manage workload by scaling up or down instantly to accommodate volume fluctuations instantly. The real-time flexibility provided by a digital workforce allows lenders to normalize operations and ready themselves for market changes. Many of my clients have found it difficult to consistently keep up with demand, particularly with disclosures. Once an application is received, the lender has three days to send out initial disclosure packages or they will be on the hook for paying all associated fees. With increased demand and more staff working remotely, the chance for something to slip through the cracks is higher than ever, which could result in a negative borrower experience. With the current competitive environment, this is the last thing lenders want. A streamlined borrower experience can have a real positive impact on customer satisfaction.

What should lenders expect long-term?

Sam Khater, Freddie Mac’s Chief Economist, was quoted in a recent Forbes article that home sales should remain strong the next few months into the early fall. However, since the outcome of COVID-19 and its impact on the industry remains unknown, no one can truly predict how long rates will continue to drop or remain low. Some companies are hiring temporary workers or straining their existing resources, but that’s not sustainable for any lending operation. Costs associated with those short-term fixes will begin to add up and negatively impact profit margins. Lenders should seek secure, reliable solutions that can offset manual intervention within the loan cycle.

Why does HPA’s RPAaaS solution work for lenders?

An instantly scalable solution with predictable, transparent pricing will help lenders maintain competitiveness, keep up with fluctuating demand, and optimize per-loan costs. HPA’s solution helps lenders improve the borrower experience significantly by shifting robotic, routine stare-and-compare tasks to robots so that employees can spend more time with borrowers. Robots can also process work 24/7, ensuring loans are closed quickly and accurately. When employees and robots work together, lenders can rest assured they are delivering the most optimal experience for their buyers. With so much uncertainty in the marketplace, the added security of business continuity that automation provides can make all the difference.

What is the one thing you have learned from your clients that you want other lenders to know?

One of the most striking differences that generates positive results for our clients is alignment between IT and Operations. Lenders that are reaping the benefits of our service have strong alignment between their technical and operations teams, which leads to company-wide buy-in and support of the automation initiative. Understanding the impact of automation on your organization is always a learning curve. However, this lesson that can be applied to any technology initiative–the more the team is involved and incorporated into the automation process, the more likely they are to adopt it and help contribute to the program's overall success.

Got a question for Nolan about robotic process automation for mortgage lending? Let us know in the comments or connect with Nolan on LinkedIn.