Amid the push for more transparency and rising pressure to contain costs in mortgage originations, automated workflows are becoming a necessity for lenders. Adapting automation technology on a timely basis to help lenders weather increasing regulatory demands, meet mandates and stay ahead of the competition relies on a solid workflow management foundation.
From last year’s Quality Mortgage rule to the upcoming Integrated Disclosures rule, the wave of regulatory reform has lenders continually scrambling to adjust business processes and technology systems to stay afloat. This alone can cut into quality and loan profits.
Freddie Mac’s March 2015 forecast indicates that mortgage volume will increase for the first time since 2012 but shrink in 2016, further challenging profit margins. Collaborative methods to process information and transactions at a massive scale are key to overcoming varying staff needs and remaining competitive throughout fluctuating loan production cycles. Automated workflow technology can help, but only if the right processes are implemented to begin with.
Nearly three out of four lenders are implementing new technology, with workflow capabilities being among the most sought features, according to Xerox’s 2014 Path to Paperless Survey. To ensure IT investments are optimized, now is a good time for lenders to establish or revisit their workflow management game plan.
Five Steps to Automating Your Business
Here are five steps mortgage organizations can take to implement automated workflows that achieve faster loan processing, reduced errors and improved performance:
- Know your numbers and goals. Before investing in new technology or costly reconfigurations, take time to analyze the health of your team’s performance. Sales or operations teams can alert about imperfect processes, but hard data such as key performance indicators can help determine whether your workflow has a cold or a terminal illness.
KPIs can uncover where automated workflows could be useful or improved within the origination process. Moreover, the data can serve to identify the metrics necessary to establish desired, yet realistic, goals and track progress in both performance and profitability over time.
KPIs that can serve to define and track your goals are:
- What is the number of full-time employees per loan closed?
- What are the cost, revenue and profit per loan compared to your last check-up and the industry?
- What is the pull-through ratio for applications to closings?
- What are overall turn times for purchase and refinance transactions?
- What is each role’s turn time for originating, processing, underwriting and closing?
- Create an automated workflow implementation team. Once metrics and goals are delineated, identify a S.T.A.C.K.E.D. team that can successfully guide the implementation of new and automated work processes. This means selecting members who demonstrate a deep understanding of the following attributes:
- Service: Members should understand how the project can impact the service levels to your customers.
- Teamwork: Members should work well with others.
- Accountability: Choose a project manager to drive the project to completion and supporting members that accept accountability for the project.
- Communication: Members should be able to express the needs of their role.
- Knowledgeable: Members should have a high-level understanding of the overall mortgage process.
- Expertise: Select subject-matter experts for each process that is being evaluated.
- Diversity: Choose a diverse team, representing the full range of the mortgage cycle, to allow a broader perspective.
Depending on your organization’s size and the overall project effort, your automation dream team may comprise anywhere from three to 50-plus members.
- Identify your business requirements. Gather your STACKED team to determine which technological functionalities will help meet overall business requirements and mortgage workflow goals. A wish list that contains some or all of the following functionalities can help optimize investments in workflow automation technology:
- Organize, prioritize and manage all high-level activities related to a mortgage loan.
- Route files to the correct users or work groups who have the delegated authority to perform specific tasks.
- Allow for flexibility in the control and routing of folders and tasks.
- Provide a detailed audit trail for easy tracking of what tasks along a loan’s processing path are completed or outstanding.
- Make it easier to comply with regulations through built-in controls to ensure correct and timely routing and information-gathering by any approved user.
- Ability to integrate to other systems.
- Allow for multiple parties to work on a loan simultaneously to better manage service levels.
- Evaluate your options for automated workflow technology. When’s the last time you took time to analyze vendor updates to the technology you have in place?
Workflow automation features are typically embedded in a lender’s origination platform, within a feature of their e-document platform or driven by a third-party workflow engine. If you take a moment to understand your existing vendors’ additional functionality, you may find a quicker and more profitable way to improve your processes right at your fingertips.
Asking your existing and potential technology providers for a demonstration of their latest system’s functionalities can also help uncover which technology needs to be replaced versus reconfigured. Ensure your STACKED team participates during the demonstrations to facilitate decision making.
- Configure a flexible, collaborative mortgage workflow. Once you’ve selected your workflow technology, engage your STACKED team and your vendor’s delegated staff to design an automated mortgage workflow that is flexible and collaborative.
While each organization has a unique process driven by data, documents or people to determine how mortgage applications should progress through their systems, the key is to incorporate parallel processing capabilities and avoid seemingly logical, sequential parameters that result in a single-threaded process. Workflow configurations should not mirror a loan folder going from desk to desk to complete processes in a sequential order. From the point of application through investor delivery and loan servicing, automated processes that enable various departments to concurrently access and collaborate on loans are pivotal to meeting the needs of the customer, internal teams and the company on a timelier basis.
As an example, a well-configured system won’t stop a processor from submitting a loan to the closing team, even if there’s an outstanding item that has yet to be completed. If the file needs to move forward, based on unique characteristics such as a mail-away closing or pending expiration date, the system provides flexibility for it to move to the closing work queue and, in parallel, creates a follow-up activity for the processor to collect the remaining items.
On the whole, an effective automated workflow should eliminate the time-consuming, manual administrative task of analyzing reports to determine “What do I do next?” by automatically queuing work and routing it to the appropriate party with a pre-determined due date for each task. Employees should be able to quickly see whether they’re on track with service levels and deliverables, while managers should have a global view and status of the activities they choose to track to ease identifying and re-delegating tasks that risk being past due.
Optimizing workflows can be a complex or simple project, depending on the level of change necessary to create the most value add to the lender. It’s easy to focus on big tasks such as vendor selection and system configuration, but neglecting to establish a solid workflow management foundation can lead to operational inefficiencies and costlier reconfigurations. With the right technology and collaborative processes, mortgage lenders will be able to empower their employees to close loans faster while remaining in compliance.