A surge in mortgage originations and its effect on title and settlement services
The mortgage industry encounters its busiest time of this year due to the large volumes of new origination and refinance. Michael Fratantoni, the chief economist of Mortgage Bankers Association, predicts that mortgage lending for new home purchases and refinances together will hit $2.65 trillion towards the end of this year-the highest since 2006 when low mortgage rates shot total mortgage lending of $2.74 trillion.
Impact on the title and settlement industry
Several challenges are being faced by lenders to execute some procedures due to the COVID-19 situation. The county offices are closed most of the time due to the lockdown. Title and settlement companies and closing agents are all working hard to get the settlements that were already under process. Moreover, not all lenders have been able to convert their paperwork to digital content in such a short period. It requires additional resources, training, and software that involve additional costs as well.
Identifying defects and amending them to fix issues such as pending taxes or other dues require more time and effort with a rising number of new loans and refinances. Service providers can help lenders by providing these services for which they have the expertise as well as dedicated resources.Conducting rising number of refinance searches and other title processes such as data entry, preparing a deed report, auditing and assignment chain verification can be done faster and with more efficiency with the help of an outsourcing partner reducing cost at the same time.
How can lenders be benefitted from technology to cope with increasing volumes of title and settlement services?
In a traditional system, gathering information and making even a small change can take a lot of time for processing according to existing guidelines.
Loan origination and settlement services can be time-consuming as well as tedious. Before the borrower gets a disbursement, certain compliance guidelines need to be ensured by the lender. Officials are required to manually verify and validate several hundred pages of documents before a loan disbursement to a borrower. To fulfil customer expectations while keeping pace with ever-changing mortgage regulations has proved to be challenging for the lenders in the past few months.
Newer technologies like DocuChief make it easier for the officials to verify documents from several hundred pages and can reduce time by more than half. Processes like indexing of documents and extraction of even minor data within seconds can be done in any desired format and stored digitally. Officials can have a quick look at the digital data, check for accuracy of the document, and amend them manually wherever required before processing it further.
Rapid transformation to reduce the risk of losing out is a vital step to be considered to remain competent in the current market scenario. Adopting digital transformation in various mortgage origination and servicing processes is the need of the hour for the mortgage industry.