Residential Magazine

It’s Not Enough To Be Efficient And Accurate — Now You Need To Be Fast

With consumer needs changing by the minute, correspondent lenders need to stay ahead

By James Keegan

As the mortgage industry ventures deeper into the digital landscape, correspondent lenders must adapt to thrive. Lenders and the mortgage originators who collaborate with them need to work even harder to stay ahead of the curve to meet the ever-changing demands of today’s borrowers.

“Technology plays a pivotal role in driving the transformation and innovation necessary for correspondent lenders to flourish in a time where consumer needs are changing by the minute.” 

In response, they are harnessing the power of technology to elevate their processes. Now, technology plays a pivotal role in driving the transformation and innovation necessary for correspondent lenders to flourish in a time where consumer needs are changing by the minute. Here are some of the ways correspondent lenders are embracing the latest technology to keep ahead of the curve.

Greater transparency

One of the most important aspects of correspondent lending is transparency. Due to the relationship-driven nature of this business, transparency is a vital component. A successful relationship between borrower and lender boils down to trust, and trust is tied intrinsically to transparency. Transparency breeds trust through knowledge and the ability for borrowers to easily track their loan throughout the process.

Enter new technology, such as workflow tracking, which is highly effective for correspondent lenders, who originate and underwrite loans and then typically sell the mortgages to another financial institution. These lenders can use this technology to strengthen their borrower relationships by making each loan status easy to see, every step of the way, for all parties involved. This real-time visibility means that borrowers can stay informed about the progress of their loans, which will help build confidence in the lending process and take away much of the stress associated with it.

Along with informing borrowers, greater transparency can help identify and mitigate risks early in the lending process, so lenders can work on proactive problem solving. This level of openness and communication reinforces the lender’s commitment to the borrower’s best interests, which is a great way to gain further trust.

Seamless communication

Correspondent lenders are embracing digital platforms to facilitate seamless communication and collaboration. Quite simply, the easier it is for people to use correspondent lender platforms, the more appealing they become. These platforms connect lenders, investors and borrowers in real-time, streamlining the exchange of information.

Digital correspondent lending platforms usually feature secure messaging, document sharing and real-time notifications to keep all parties on the same page throughout the loan process. This connectivity invites collaboration from all parties involved in the loan process and issues can be resolved promptly. Such communication increases productivity and speeds up loan closing. Lenders can track multiple loans at the same time and analyze the performance of these loans using the useful insights provided by these platforms.

The digital platforms also offer extra security and features that protect sensitive information from any cyber threats or unauthorized access. Lenders can manage various loans, collaborate with others, get access to important insights and take care of the entire process online.

Expedite approvals

Faster loan processing is a vital component of keeping up with an increasingly competitive lending industry where speed to close becomes an important selling point for lenders. In today’s market, automated underwriting systems are a vital element for correspondent lending to streamline the approval process. These automated systems use advanced algorithms to assess whether a borrower is likely to pay back the loan. They also process the loans at a much faster rate.

As such, automated underwriting systems are reducing the time and effort required for loan approval. This not only expedites the lending process, but it also minimizes the potential for errors. The loan approval process through an automated underwriting system becomes more transparent and objective, which means that the overall process becomes more cost effective for correspondent lenders when loans are being done in volume.

 An added benefit to automated underwriting systems is that these technologies can give correspondent lenders a way to access valuable insights and trends that may not have been noticeable otherwise. Which means that correspondent lenders can stay ahead of the market and their competition by improving their offerings, according to these findings.

Personalized service

Correspondent lenders can provide more personalized lending solutions by using artificial intelligence. AI and machine learning are used to analyze borrowers and their risk profiles, which allows correspondent lenders to tailor the loan terms to meet each investor’s financial requirements. This goes beyond the regular credit score analysis and includes spending habits, employment history and other factors that are used to create a detailed borrower profile.

 AI technology is also being used to automate and streamline loans by completing risk assessments, working out loan terms and creating a more efficient loan process. The result is a faster loan turnaround time, which means that correspondent lenders can service more clients and offer more loans, while remaining a reliable lending resource.

According to a Forbes survey, 55% of executives think that AI will make their business, as well as the lending industry overall, more competitive. This sentiment shows the potential that exists for AI to reshape the lending industry, through innovative, personalized lending solutions.

Meaningful insights

To extract meaningful insights from vast datasets, correspondent lenders are tapping into advanced data analytics tools. These tools allow lenders to process large sets of data quickly, and derive useful, actionable intelligence from them. In-depth data analytics provide a comprehensive view of the market, highlighting emerging trends and shifts in borrower behavior which gives lenders valuable insights into what their clients need most.

Sourcing succinct information on market trends, borrower profiles and risk factors can help lenders make more informed lending decisions. Lenders can anticipate changes, adapt their offerings and stay ahead of the competition by tapping into what their clients need.

Data analytics tools are also improving risk management for correspondent lenders who can use the technology to forecast potential defaults and delinquencies and mitigate these before they occur. This is a quick way to quantify risks and put pre-emptive measures in place to avoid major losses.

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Gone are the days when correspondent lenders simply had to be efficient and accurate. Now they need to keep up with a rapidly changing real estate market that is driven by technology and transformation. Today, correspondent lenders can not only streamline their offerings, but stay ahead of the competition and mitigate risks by using the latest digital innovations. AI automation tools, big data analytics and digital platforms are all creating a more transparent, intuitive and streamlined lending process for correspondent lenders to improve their offerings and keep up with changing times.

Author

  • James Keegan

    James Keegan is senior loan adviser at New Silver Lending, a fintech lender specializing in business purpose loans for residential real estate investors. Keegan is an accomplished lending professional with over 10 years of experience in commercial banking and private lending. At New Silver, he helps drive business development efforts to direct investors while also managing the company’s correspondent program.

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