How can Correspondent lenders manage challenges in pre-purchase reviews

How can Correspondent lenders manage challenges in pre-purchase reviews

The correspondent lender, when acquiring loan portfolios through its channels faces several challenges. One of the main areas of concern is the turnaround time required for due diligence, verification and regulatory compliance checks in on-boarding of bulk loan portfolios. The correspondent lender also needs to make sure that all the loans in the portfolio are of good quality, as even a few bad loans can mean a direct loss..

The due diligence process typically includes a  full portfolio QC. It is usually time consuming and it can also be very expensive. Especially so,  when the loan portfolio consists of thousands of loans. And a single loan can have as many as 80-1000+ documents associated with it, which need to be verified  – a monumental task. So, is there a way for correspondent lenders to on board large loan portfolios without worrying about costs and time involved in these detailed pre-purchase reviews?

Digitization of loan documents and using technology to expedite bulk processing of the entire loan portfolio is by far, the most effective way to overcome the challenge of turnaround time and accuracy, both. Optical Character Recognition (OCR) technology for digitization of documents has been around for many years. Though OCR has had accuracy issues in the past, recent advances in technology have ensured up to 99.5% accuracy in digitization.

Using bulk processing technology, the entire portfolio can be auto-indexed and stacked, and can be made ready for a detailed QC. Leveraging AI (Artificial Intelligence) and ML(Machine Learning) based technology platforms, correspondents can quickly index, stack and perform quality control on the entire portfolio of loans in quick time. Thousands of mortgage documents across locations can be quickly made available and using detailed QC checklists, can be verified for any errors. This saves precious time, effort and therefore costs.

Quality Control and the cost of bad loans

The QC process can do with some technology help, which can  help deliver accurate analysis and ensure that there are no bad loans in the portfolio. QC processes must be stringent as any lapses in validation of the quality of loans can have dire financial consequences for the correspondents – a paralysis of sorts. A digital QC platform that is configurable, data-driven and scalable in nature is necessary to avoid the incidence of bad loans in the portfolio.

What about the cost of automation technology platforms?

While it is true that automation can streamline operations and reduce both time and effort, it can also mean high, upfront investment into technology enablement. However, using a ‘Pay-as-you-go’ model can help derive the maximum benefits of technology at minimum risk and cost. In such a model, the client incurs only cost based on the volume of work, while the technology development, updates and maintenance costs are borne by the technology provider. This creates a very attractive proposition which can deliver positive ROI from day 1.  Visionet’s VisiLoanReview or VLR makes this option available for lenders.

The First-time-right Advantage

Getting things right the first time is crucial to avoid wastage of time and efforts and to enable reduction of cost. And in order to get it right the first time, the technology partner of the correspondent lender should have a good grasp of the business, industry and process. Correspondents need to make sure their technology provider is able to maintain quality while pushing the costs down.

Visionet has been around in the mortgage domain for over 2 decades and has worked with over 75+ mortgage companies, making a significant difference to their business operations. Industry first ZERO COST technology, along with our world class service infrastructure makes it possible . With VisiLoanReview, we are uniquely positioned to address the challenges and pressures faced by correspondent lenders. Sign up for a demo now to realize how this can be of value to your business today.

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Alok Bansal

Alok Bansal is Managing Director of Visionet Systems Inc. and has 21 years of experience in managing strategy and global BPO operations. He excels in optimizing and leading growth of financial services companies who are looking to take their mortgage operations to the next level.

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