How to troubleshoot purchase loan processing issues

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Despite low home inventory, many lenders are still maintaining a healthy mix of purchase lending activity. The Mortgage Bankers Association estimates a 9% increase to reach a new record purchase volume of $1.73 trillion for 2022. As mortgage lenders begin to rely more on purchase volume to support their growth, l The focus is on increasing the efficiency of processing these loans.

Why are purchase loans a challenge for mortgage processors?

Purchase loans create unique challenges for lender processing, compliance, underwriting and financing teams, especially when it comes to closing the loan. With refi transactions, lenders typically work with a small group of hand-picked title companies and settlement agents.

These agents are well controlled and integrated into the lender’s process and systems. By sending a large volume of loans to this small group of providers, other important aspects of the relationship are easier to manage, such as due diligence, data management, and performance scoring.

Now here is a purchase contract. The borrower’s real estate agent opened an escrow with his preferred provider. This vendor is new to our organization, so they must go through our vendor management process. Their data must be collected, verified and re-entered into LOS by the contractor, and accurately filled in disclosures.

This scarcity of volume forces processors to constantly go through a repetitive process to collect and verify data from their LOS system. Licensing alone requires in-depth local knowledge of practices and sources that can be used for verification. Repeated entry creates duplicate records and other technical challenges for LOS system administrators.

Use of new technologies and new approaches

Forward-thinking lenders are already adopting new technologies to help their processing teams solve the challenges of document/data collection and verification. It is likely that your organization already uses a data service provider to obtain information from borrowers. Employment, income and asset verifications used to be a huge challenge, but now this data is instantly available in most cases and integrated with your LOS.

The same technology, approach and benefits can also be made available to your internal teams who work with third-party vendors. Instead of waiting for documents such as E&O, Wire and Licensing to come with the title package, this information can be obtained instantly and earlier in the process.

This was our goal when we created Closepin. To help thousands of local closing agents manage their own information securely, while providing lenders with an API-based solution that can distribute verified data where it’s needed.

Now title and settlement agents have more control over their data and lenders can consume that data in a standardized, LOS-compatible format. This eliminates input errors and hours of back and forth communication to verify information that was previously only provided via PDF documents.

LOS administrators and their vendor management partners can now properly track and assess a large network of third-party title and settlement agents as seamlessly as they do with other types of vendors. These are the steps that help lenders achieve the larger goal of creating a consistent, fully digital and integrated experience for their borrowers and internal teams.

Talk to your team

Chances are your vendor managers, compliance officers, and loan processors are stuck trying to manually manage thousands of incoming PDF documents, while using various third-party sources to verify data from title and settlement agents. .

This presents a challenge for many lenders as regulators continue to increase requirements for monitoring and managing vendors, while the lender seeks to reduce the number of steps that need to be taken to meet the growing demand for a faster transaction. Most teams managing this process manually could be quickly overwhelmed.

By equipping your teams with tools and data sources that instantly give them the data they need to do their jobs, your organization can increase both efficiency and compliance.

For more information on the Closepin API visit https://www.closepin.com/ to request a free process consultation.

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