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Correspondent lending is built on relationships that now demand innovative technology that optimize the transaction process for both buyer and seller. That optimization should result in a fast turn time, trade transparency, reduced risk and of course profit.
Loan Origination Systems (LOS), which have acted as a partial substitute technology, have long been used to facilitate the process and are failing to meet those goals. Thankfully, they are being replaced by dedicated systems specifically designed to manage the loan acquisition process from seller engagement through funding with a lot less friction.
Simply said, the purpose of the LOS is to manufacture loans, not the due diligence and validation of loans that have already been closed. When used as such, they will require a network of additional technology – hence the Frankenstein reference – to perform the complex tasks of loan acquisition. Another scary thought to consider is that with more technology comes more maintenance, customizations, licensing agreements and vendor management challenges.
Even at the onset of a buyer/seller relationship that begins with the seller application process, through communication of defects and condition clearing, a great deal of information is exchanged between the two parties. The timeliness of those responses is critical in achieving an ideal turn time of a few days. Without a dedicated front-end portal to help facilitate it, most of this communication tends to be email centric. If your inbox looks anything like mine, that can become a black hole of missed messages and disjointed communication.
Though some LOS systems tout the benefit of “push to start” delivery of seller data directly to an investor, this requires both be on the same platform and tends to limit the choice of buyers. Furthermore, this only addresses the transfer of information, not its verification or validation by a set of automated rules prior to delivery, increasing risk for both parties. Purified data is a critical need for true due diligence. A data transfer is not that.
When it comes time for the loan file review, manual spreadsheet-based due diligence checklists and condition clearing management processes are for too pervasive in the industry. This adds delays, minimizes transparency and dramatically drives up risk. Dedicated correspondent loan acquisition technology makes this central to the process and automated. Rules-based technology automation flags quality issues for auditors enabling an exception-based workflow for quickly identifying and clearing conditions that need to be addressed right in the system. Integrated pricing and eligibility can then be easily synced to the due diligence findings.
When pricing and eligibility is not well integrated, you lose the desired real-time lock and commitment management, impacting the profitability of the trade. Investor teams must jump between systems to manage market fluctuations, monitor commitment volume, and respond with updated pricing..
Finally, systems not designed specifically for closed loan acquisition may not include any functionality for purchase advice approval procedures leaving them to be manually tracked, most likely through a repetitious exchange of emails. This could certainly result in funding delays and offers poor visibility for management of approvals. Those systems that are equipped to track the initial funding review, capture approval details, final approval and the funded date offer sellers a more transparent funding experience. From there investors can easily on-board loans to their servicing system.
It’s time to give up the ghost when it comes to correspondent lending technology that looks like Frankenstein (patched together) and doesn’t work optimally for the process. Loan acquisition systems like LoanLogics LoanHD® Investor Module are used by some of the industry’s top correspondent lenders to offer a seamless, profitable experience for buyers and sellers.
Pricing & eligibility and loan due diligence converge in real-time to deliver complete control across the entire acquisition workflow. It’s an all-in-one platform that uses automation to transform the seller application, file review, funding and onboarding experiences. Sophisticated pipeline management tools offer a 360-degree view of flow and bulk loan file delivery. Finally experience enhanced process automation from initial loan pricing through funding an onboarding with LoanLogics correspondent loan acquisition technology.
Learn more about the benefits of an integrated loan acquisition system in this infographic.
For more insights on frictionless commerce in the correspondent, wholesale and servicing channels, register for our November 4th webinar with National Mortgage News “Achieving Frictionless B2B Commerce in the Mortgage Industry.”
