How to Avoid Some of the Common Mortgage Loan Processing Mistakes in 2022?

Mortgage Loan Processing is a complex task consisting of several hyper-detailed series of stages. To carry this process out successfully, lenders must pay meticulous attention to different "micro-tasks" each of which requires precise knowledge. Even trained staff are prone to mistakes when there is a deluge of applications.

In 2020 and 2021, lenders had to deal with lot of staff shortage due to COVID-19. Also, during this time there was a huge surge in mortgage refinances. This led to lot of mistakes. In this blog we talk about the common mistakes in mortgage loan processing and the best way to avoid them,

1. Being Disorganized

   Borrowers are required to submit multiple documents along with their home loan application. These include employment verification statement, income information sheet, and bank statements. The mortgage processors job is to ensure these documents are properly verified and organized in the correct order. Failing to do either of these can lead to lot of confusion and mistakes.

   Solution

   A checklist-based approach to collecting and verifying documents is a proven way to avoid mistakes like missing documents and information during the processing stage.

2. Not Communicating Effectively

   Home loan borrowers do not understand mortgage process, terms and requirements. If you do not make things clear to them, it will lead to a lot of confusion and delay. Telling them upfront about the process and clearing all doubts is a great way to build relationship with them. Not having a well-defined way to communicate is a mistake that must be avoided in 2022.

   Solution

   Always establish a good business relationship with borrower. For this it helps to have a personal relationship manager. Your manager or loan officer should reach out to them proactively. Make this need clear to them at the onset.

3. Being Careless with Data Entry

   Data entry is a very important task in mortgage processing. Here, all the data contained in the documents are entered into the loan processing system. As this a manual task it is prone to a lot of mistakes. Mistakes mostly happen when there is a flood of applications.

   Solution

   There are two ways to solve this problem. One, by hiring trained data entry professionals and second, by having a quality control process with trained quality analysts in place.

4. Not Coordinating with Mortgage Loan Originators

   A mortgage loan originator also known as a mortgage loan officer is one who helps a borrower get the right mortgage for a real estate transaction. They act as a conduit between your business and borrowers and so being in their good books will help you reap great benefits like helping the borrower make up his mind.

   Solution

   Have regular meetings with all loan originators. Hear them out on their problems and provide them with a quick resolution. It also pays to take regular inputs from them on your products and services.

5. Not Using the Best Mortgage Tools

   In the era of technology, you need to provide your employees with the latest technology to complete their job. The best way is to go digital and enable the loan originator to digitally submit applications to lenders. Always choose a system that is user friendly and helps in improving customer experience. Such tools and technologies help you save both on cost and time.

   Solution

   In the age of automation, lenders must choose automation tools to speed up the mortgage loan process. An automation tool will help lenders automate processes such as document indexing, data validation, data extraction, data submission in a matter of minutes.

6. Not Outsourcing Non-Core Tasks

   There are several noncore tasks that a lenders inhouse team needs to perform and which takes up much of their time. Some of these tasks include indexing documents, flagging missing documents, keying in data, cross-checking information etc. These tasks are too manual in nature and are prone to errors.

   Solution

   Outsourcing non-core tasks to back-office processors can help lenders focus on core tasks like growing their business. This enables them tackle challenges like getting easy and quick access to technically-skilled and experienced team and having the do away with issues like attrition.

Conclusion

In the last 2 years, mortgage loan processing has become all the more challenging because of shortage of skilled resources, fluctuating rates and the uncertainties of the pandemic. As a result, mortgage processors committed lot of mistakes in processors stage that cost lenders very dearly. Lenders need to learn from these challenges and mistakes to ensure there is no repeat.

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