Lending operations involve a gamut of work outside transactions and calculations. Mortgage operation entails asset valuation, networking with foreclosure attorneys, adherence to regulations, and understanding customer requirements.
Legacy systems hardly facilitated those tasks and they were time consuming, to the extent that overheads were disproportionately high compared to the potential earnings for lenders.
Most operations conducted by banks and other lenders have been around for decades. However, the way those operations are conducted have recently changed.
Consumer lending operations are now standardized and have become more customer-supportive owing to regulations. For lenders, the new processes have shrunk profit opportunities. Mandatory guidelines to service the customers in a transparent way are new to banks in the US, but technology is enabling them to reduce overheads incurred for full compliance.
Software Features Necessary For Reducing Overheads
1. Foreclosure Monitoring
Monitoring foreclosures should be as streamlined a process as possible. In the traditional setup, lenders incurred large overheads trying to obtain quick information on foreclosures.
However, with cloud-based software available today, real-time information on foreclosures has become a part of the user interface.
Visiting the borrowers and spending hours on arguments is a thing of the past. While customers are able to access their mortgage operation accounts online, lenders can stay in control of the developments in real-time.
2. Attorney Networking
Foreclosure attorneys are very much a part of the mortgage operation. Banks would have a list of attorneys to connect them to foreclosure customers.
However, earlier, the process would involve phone calls, appointments, contract writing, travels and more. As cloud-based software can connect large databases, banks can provide their customers with a user interface that allows them to connect with foreclosure attorneys by just going online.
Banking portals on the cloud allow customers to carry out such transactions without much involvement of the lending body personnel.
3. Appraisal Management
Valuation of property requires licensed appraisers, who assess the value of mortgaged properties and collaborate with banks in the mortgage operation.
Banks can eliminate many communication overheads with mortgage servicing software on the cloud. Not only can valuations be updated on the system for real-time viewing, but customers can know about the valuations as they happen. A cloud system will also enable them to find suggestions based on the property value estimated.
4. Third Party Data Checks
If mortgagors are bordering on defaulting, lenders can use third-party data from credit organizations by using cloud. Defaulting is one of the major risks lenders face from mortgage customers.
Preventing defaults by identifying certain customers and taking appropriate action is necessary. By finding real-time third-party information, lenders can offer those customers a host of choices such as risk-adjusted rates, shared appreciation mortgages, and reverse annuity mortgages. This occurring in swift manner, especially before the customer actually defaults can help the entire mortgage process become less stressful.
With regulations like KYOB increasing and mortgage lenders under other federal mandates, maintaining profit margins is not easy. Financial institutions must be stringent with process-oriented banking and that can result in huge costs over a short period.
If the processes are feasibly automated, with access to all the necessary contacts such as appraisers and attorneys, many overheads can be eliminated. Banks should be looking at a system which can help them comply with regulations without inflating the total cost of operations.
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Preethi Vagadia is a business architect worked in Mortgage and Finance software department with top notch companies and has over 8 years of experience in Mortgage Lending Technology,Mortgage Loan Servicing Software, mortgage software solutions etc. She has also worked in several process improvement projects involving multi-national teams for global customers in warranty management and mortgage.