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Refinancing Application Process

By: Hyperscience
Published: June 23, 2020

It’s Time to Automate

Homeowners monitoring mortgage rates saw an opportunity to refinance last year, and as a result refinancing applications increased 192%. As a mortgage processor, high demand for your product is a great problem to have, right? But when it causes backlogs, delays, and frustrated customers, this can cause a major issue for your business. 

What’s happening and is there a way to avoid this backlog?

Mortgage refinance loan applications are at an all-time high. 

We’re talking really high — there haven’t been these kinds of refinancing numbers in 8 years. There are a number of factors driving the surge right now but the largest ones are the uptick in unemployment and a looming recession. Both elements are compelling some homeowners to take advantage of the savings and get equity out of their homes, especially with rates at near-historic lows.

Processing companies can’t keep up with demand.

It’s been over ten years since the last housing market crisis in 2008 when CEOs from the finance industry were called before Congress to talk about lending practices. Since then (and with the passing of the Dodd-Frank Act), the loan processing and underwriting portions of the application process have become more regulated and increased compliance measures for financial organizations.

The problem with demand spikes is that manual reviews of the documentation takes time. With more demand comes more backlogged applications, which can mean customers don’t know if they’ve been approved or not. Some paperwork can be outdated by the time an application is reviewed, or prospective applicants aren’t notified of missing information for weeks, which is tough for customers and lenders alike.

The real culprit is the files

As part of a refinancing application, customers need to submit a number of formal and informal documents. These can include:

  • Signed disclosures
  • Bank statements
  • Pay stubs
  • Proof of down payment
  • W-2s
  • Tax returns

Backlog happens because applicants submit less-than-ideal documentation. Pay stubs look different at every company. Other documentation is saved in different file formats — PDF, JPG, Word, email, and online forms. Some documents are scanned poorly and some are handwritten. Some applicants send in only partial documentation, not realizing that critical information is missing.

Is automating applications really possible?

A loan application is an automation nightmare with multiple document formats, varying levels of photographic quality, and frequent gaps in required information. But Intelligent Document Processing [IDP] solutions are designed exactly for processes like this — and exactly for times like this, allowing lenders to optimize their loan processes to ensure they’re able to both match demand and maximize their employee resources.

IDP solutions like Hyperscience utilize a variety of tools to analyze data from all types of documents and can efficiently extract relevant data, verify documentation, and categorize it for further processing. Automated loan processing allows companies to move away from the manual, error-prone, and time-extending process that creates backlogs with applications. Instead, organizations are equipped to both effectively serve their customers and meet a surge in demand without creating bottlenecks in the process.

Where does human-in-the-loop processing come in?

The Hyperscience Platform is powered by machine learning (ML), meaning machines are still learning their jobs too and require humans to work with them to ensure that the information is processed correctly. At Hyperscience we call this meaningful automation. Human-in-the-loop processing allows the software to learn to process a new class of documentation correctly and ensure all the relevant data is extracted correctly. With software supporting your employees and vice versa, you’ll be able to work through more applications faster and more accurately, creating a better experience for your customers.

Learn how to process packages of refinancing documents with ease using Hyperscience in our latest expert led AutomationX demo.

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