For the last five years, the implementation of automated workflow systems has been a priority for lenders. Equifax’s 2018 survey found that automation was the no.1 industry priority. Since then, the pandemic has emphasized the importance of lean, efficient operations that can adapt to different working models.
Further, 2023’s borrower trends show how important it is for mortgage businesses to automate repetitive processes and free up agents to provide the best quality of experience possible. Task-based workflows can simplify mortgage servicing and take the pressure off of executives handling complicated servicing relationships, so they can focus on adding value.
Understanding Automated Workflow Systems
A workflow can be described as a series of discrete activities that together make up a complete task. Workflows can have a linear or looped structure, and you can find them in nearly every business process. Mortgage servicing employs several workflows across the value chain, from tracking mortgage status to initiating foreclosure proceedings in some default scenarios.
Traditionally, these workflows are manual, with different stakeholders completing various activities within a task as per process maps and flowcharts. But modern technology allows lenders to automate these processes using automated workflow systems. Software bots are pre-programmed with business rules that determine when one step is done and the next step can begin.
Bots, working together with human executives, quickly complete task-based workflows in mortgage servicing with minimal delays and errors. The biggest benefit of these automated workflow systems is that you can program them as per market conditions, mortgage laws, and borrower relationships, relieving the executive of the pressure to remember every detail.
Why Borrower Sentiment in 2023 Demands Task-Based Workflow Automation
ICE’s latest survey points to a cautious market, where borrower relationships will be crucial to lenders for growing their business. 73% of renters in the survey felt that buying a home was beyond their reach at this time. Interestingly, 56% said they would be more likely to purchase property if there were programs addressing high prices and interest rates.
63% of borrowers plan to seek new financing, including home equity loans and reverse mortgages. 53% also want flexible loan options when it comes to financing a mortgage. In other words, borrowers have little incentive to buy property in this current economy, and the onus is on lenders to build and nurture these relationships.
Automated workflow systems can simplify back-office processes, including servicing, allowing mortgage companies to focus on the real goals – attract millennial and Gen Z buyers, navigate regulatory norms, and provide borrowers with the support and flexibility they need amid post-pandemic headwinds.
How Task-Based Workflows Help in Mortgage Servicing
Automated workflow systems can be implemented in several key servicing tasks:
1. Partial prepayment
Partial prepayment is a common mortgage servicing workflow when a borrower makes a payment against the principal of the loan. It is received ahead of the scheduled due date and not accompanied by the usual interest amount. There are complex laws governing partial payment, and mortgage executives must be careful of following the exact task procedure.
An automated workflow system can assist in this process by triggering alerts and notifications when a partial prepayment is made. All the stakeholders are informed of the borrower’s decision, and the servicing workflow can branch accordingly, without any confusion or delay.
2. Loan deferment
During the pandemic, many borrowers opted to defer their mortgage payments, and some may even request this facility now, as the US sees high inflation and a volatile economy. Accommodating this workflow lets you offer borrowers the flexibility they need, but it can be a complex task to handle without automation.
By using an automated workflow system, you can keep tabs on all the account activities taking place during the deferment period. A servicing executive will be notified to follow up with the borrower at regular intervals. A pre-programmed software bot will keep collecting data and furnishing reports. Automaton ensures that you can maintain loan health and avoid foreclosure when a borrower has already gone through a period of deferment.
3. Mortgage restructuring
Restructuring is an option that lenders may give borrowers at a time of financial crunch. This is often the case when servicing commercial mortgages in a tough economy when so many businesses are struggling to grow their bottom line. Restructuring ensures that there is no interruption in the servicing process and the borrower does not default on their loan.
Expectedly, restructuring is a complex process that becomes simpler through automation. An executive reaches out to the borrower in order to restructure a loan that would otherwise become non-performing. A task-based workflow, then, helps in gathering the documents, getting approvals, verifying the data, completing the restructure, and obtaining all the final approvals needed.
Getting Started With Automation in Mortgage Servicing
These are only three examples of how task-based workflows can accelerate servicing. You could deploy automation in a wide range of servicing activities, such as covenant breaches, loan write-offs, mortgage rollovers, and much more.
However, as a prerequisite, mortgage providers need to have a comprehensive process map that outlines the dependencies and inter-relationships in each workflow. Based on this documentation, you can start building bots, event triggers, alerts, and notification systems that drive multi-stakeholder task-based workflows in mortgage servicing.
Nexval’s team of 1000+ SMEs helps mortgage leaders solidify the foundations of a future-ready servicing function. Speak with our tech experts to know how you can get started.