Recent insights from Novus Strategy reveal that a significant portion of mortgage processing issues can be addressed immediately, without waiting for future data reforms. According to the consultancy, 86% of identified friction points in the mortgage journey could be improved through straightforward changes that lenders can implement now. This is important for enhancing the efficiency of mortgage applications and improving customer experiences.
TL;DR: 86% of mortgage processing friction can be resolved with quick wins; lenders and borrowers alike will benefit from streamlined operations and faster approvals.
What Are the Main Friction Points in Mortgage Processing?
Novus Strategy highlighted several key areas where inefficiencies arise in the mortgage process. For instance, some lenders have claimed they can underwrite cases in under 10 minutes but fail to account for the time applications spend waiting in an underwriter’s inbox. This lag can significantly extend the overall processing time.
Another major issue is the handoff process, where cases and tasks are transferred between individuals or teams. One lender reported that while they could issue offers within 25 days, half of that time was consumed by these handoffs rather than actual underwriting. Misrouted cases, particularly those involving varied income types, can also lead to delays of 3-4 days as cases are redirected to the appropriate internal teams, despite the underwriting itself taking only about 43 minutes.
How Can Lenders Improve Efficiency?
To tackle these inefficiencies, Novus Strategy suggests that lenders should consider adopting digital identity verification solutions. Currently, some lenders check a customer’s identity multiple times—up to 12 times per transaction—which not only prolongs the process but also frustrates borrowers. By implementing digital ID checks, lenders could streamline this aspect of the application process, significantly reducing unnecessary delays.
These changes do not require waiting for broader reforms in the home buying process. Instead, lenders can redesign their mortgage journeys now, preparing for future advancements in data management.
What This Means for Borrowers and Brokers
For borrowers, these improvements could lead to faster mortgage approvals and a smoother application experience. This is especially important in a competitive housing market, where delays can mean missing out on potential properties. Brokers, too, stand to benefit as they can provide their clients with more efficient service, enhancing their reputation and potentially increasing their business as a result.
As lenders begin to implement these changes, borrowers should watch for improvements in processing times and overall service quality. This shift may also prompt lenders to reconsider their current practices, leading to more competitive offerings in the mortgage market.
Frequently Asked Questions
What should I look for when applying for a mortgage?
When applying for a mortgage, look for lenders that prioritize efficiency and transparency. Check their processing times and inquire about their use of technology, such as digital ID verification, to ensure a smoother application experience.
How can I speed up my mortgage application?
To speed up your mortgage application, ensure that you have all necessary documentation ready and consider using lenders that utilize digital technology for identity verification and processing. This can help minimize delays caused by manual checks.
