In the world of finance, mortgage processing has long been a complex and time-consuming affair. However, artificial intelligence (AI) is revolutionizing how lenders, institutions and homebuyers are handling this once archaic process, by making it faster and more efficient. Companies like ClearCloser, an AI-driven mortgage processing platform, is leading the charge with its advanced data solutions tackling this long-standing problem.
The Breakdown You Need To Know:
Despite technological advancements in many sectors, mortgage processing has remained largely traditional, presenting numerous challenges for lenders and borrowers alike. Specifically, underwriters are tasked with examining loan applications for discrepancies, inaccuracies, or misrepresentations of facts. This process often requires cross checking credit reports, employee records, tax filings, and other documents furnished by the applicant.
ClearCloser’s AI is speeding up document processing, improving accuracy in underwriting, and enhancing the overall customer experience. “ClearCloser is addressing real challenges in the mortgage ecosystem. We’re not just improving the process—we’re fundamentally changing how financial institutions operate,” said Kristine Viera, CEO of ClearCloser to CultureBanx.
This prolonged process has put pressure on lenders’ revenues and undercut growth goals. In fact, the Federal Reserve Bank of Minneapolis released a report highlighting how lenders often reject more than 20% of applicants due to incomplete documentation. It’s issues like these that make it clear why the mortgage industry, which has remained stagnant for decades, is in need of modernization processes.
By digitizing the mortgage process from end to end, ClearCloser, a Latina-led company, gives financial institutions a competitive edge. It allows them to scale rapidly and handle a higher volume of transactions with ease.
Streamlining Data Remediation:
Mordor Intelligence estimates the U.S. digital lending market is expected to see significant growth over the coming years, with a forecasted market value of more than $801.25 billion by 2029. This growth is being driven by a number of factors, including the increasing availability of data, the growing demand for credit from underserved populations, and the need for lenders to improve their efficiency and profitability.
Also, a recent report from McKinsey & Co found that AI can help lenders to reduce the cost of loan processing by up to 40% through automating tasks such as data entry and document verification. With access to real-time data and AI-driven insights, institutions can now swiftly make well-informed decisions, leading to a faster, transparent, and more efficient process.
“Before ClearCloser, financial institutions relied on historical data, which could be outdated by more than two years, to make critical decisions, and lacked the ability to instantly evaluate the value of their mortgage asset portfolios using real-time data,” said Viera.
Harnessing Intelligent Mortgage Automation:
The company has been able to successfully reduce mortgage processing costs by 70%, while lowering average closing times to just 5-7 business days. Currently, the average time to close a mortgage loan in the U.S. is currently 47 days, according to mortgage software company Ellie Mae.
Mortgage processing is manual in nature and has led to inconsistencies in risk assessment. Paper-based systems have created a significant need for innovation in the industry. As Fannie Mae’s Mortgage Lender Sentiment Survey reveals, “cost-cutting” was lenders’ top priority in both 2022 and 2023, and it’s likely to remain a key focus throughout 2024.
This is where ClearCloser’s automation comes into play as it significantly reduces the manual workload, allowing underwriters to focus on tasks that require critical human analysis and problem-solving. The platform currently offers 32+ application programming interfaces (APIs) data streams and a proprietary Instant Underwriter Algorithm.
By turning mountains of paperwork into streamlined digital assets, institutions can unlock faster approvals, increase liquidity, and create a more agile financial ecosystem. “They can close deals faster, track mortgage data with unprecedented accuracy, and offer their clients a fully digital, secure mortgage experience,” said Kristine.
Situational Awareness:
There are other companies dipping their toes into this space like Detroit-based Rocket Mortgage, a leading mortgage lender in the U.S. It has unveiled an AI-powered platform called Rocket Logic, accelerating loan closing times by an impressive 25%. The system automatically identifies close to 70% of the 1.5 million documents submitted monthly, eliminating over 5,000 hours of manual labor for underwriters, the company wrote in a statement on its website.
Ultimately, the integration of AI not only streamlines operations for lenders but also makes the often complex process of obtaining a mortgage more accessible and less daunting for borrowers. With AI-powered solutions like ClearCloser and others leading the way, the future of mortgage processing looks bright, paving the path to a more efficient and accurate industry.