The Challenges of Processing Purchasing Loans

Banking CIO Outlook

Data collection and verification are some of the challenges associated with processing purchasing loans. By providing the teams with tools and data elements, organizations can also engage their teams.

FREMONT, CA: When it comes to closing a purchase loan, lenders face unique challenges in processing, compliance, underwriting, and funding. In refinance transactions, lenders generally work with a smaller pool of hand-picked settlement agents and title companies.

Agents are well-vetted and integrated with the lender's processes and systems. A large volume of loans sent to this small pool of vendors makes it easier to manage other aspects of the relationship, such as due diligence, data management, and performance scorecards.

Here is the purchase agreement. A real estate agent for the borrower has opened escrow with their preferred vendor. Due to the fact that this vendor is new to the organization, they will need to go through various vendor management processes. Processors must collect, verify, and enter their data again into the LOS and accurately populate disclosures with their information.

In order to collect and verify data for their LOS system, processors must continually follow a repetitive process. Licensing alone requires a deep understanding of local practices and which sources can be used for verification. For LOS system administrators, repeated entry creates duplicate records and other technical challenges.

Utilizing new technologies and approaches: In order to solve the challenges of document and data collection and verification, forward-thinking lenders are already adopting new technology. There is a good chance that the organization already uses a data service provider to obtain information from borrowers. Once a huge challenge, employment, income, and asset verifications are now available instantly in most cases and integrated with the LOS.

Third-party vendors can also benefit from the same technology, approaches, and benefits. Rather than waiting for documents such as E&O, Wire, and Licensing to be included with the title package, this information can be accessed instantly and earlier. Title and settlement agents now have more control over their data, and lenders can consume it in a standardized and LOS-friendly format. With this feature, organizations can eliminate entry errors and hours of back-and-forth communication to verify information that was previously only available via PDF files.

As with other types of vendors, LOS administrators and their vendors can now track and evaluate a large network of third-party title and settlement agents. Lenders can accomplish this by taking these steps to create a consistent, fully digital, and integrated experience for their borrowers and their internal teams.

Engaging the teams: Managing thousands of PDFs manually and using a variety of third-party sources to verify data from title and settlement agents isn't easy for vendor managers, compliance managers, and loan processors.

Many lenders face this challenge as regulators continue to increase requirements for oversight and vendor management while the lender strives to reduce the number of steps required in order to meet the growing demand for faster transactions. Manually handling this process could quickly overwhelm most teams.

Organizations can increase efficiency and compliance by providing their teams with tools and data sources that instantly provide them with the data they need to do their jobs.

Data Management