The mortgage application and process for obtaining a loan and getting it approved is a process that hasn’t seen much innovation since the Dodd-Frank Act overhauled the mortgage industry after the 2008 financial crisis.

While some parts of the loan process have moved to digital, most borrowers still sign closing documents using pen and paper and the risk of human error while applying for a mortgage is high.

One wrong click from the loan officer and your loan could be wrongfully denied and you’ll be forced to repeat the same steps to start the process again.

The time for innovation in the mortgage industry is now, which is why we’re going to explain how mortgage automation in economic downturns is shifting the traditional process for getting a mortgage.

Automation in a Recession

Some of the most successful companies started while the rest of the nation felt the effects of recessions and depression. 

Companies like HP, Disney, and General Motors pioneered their respective industries and the economic downturn at the time didn’t stop them.

These case studies show that, even in downturns, there’s opportunity everywhere to innovate and invest in technology.

Mortgage Automation

The mortgage industry is becoming more competitive each day as lenders continue to fight each other for market share and establish themselves as the go-to lender for consumers. The only way to rise above the competition is enhanced efficiency and offering a better user experience to borrowers.

Several different processes can start to become automated, including:

Robotic process automation. Tedious steps in the mortgage process have the potential to be automated with robotic processes that use bots to carry out repeatable digital tasks for lending.

Rules-based systems. These systems use data to trigger actions in the lending process without intervention from mortgage professionals.

AI and machine learning. Artificial intelligence uses software to learn the problem-solving abilities of the human mind to automate simple tasks in the mortgage process.

Loan Origination Automation

The steps in originating a loan are outdated and ripe for automation as well. Lenders are popping up who allow you to fill out your information online and get an interest rate quote and amortization schedule within minutes.

Leveraging this technology as a lender means more qualified leads and closings, giving you an advantage over traditional mortgage companies who continue to use outdated methods.

Other tasks in the loan origination process that have the ability to be automated include:

• Obtaining eConsent from borrowers
• Quality assurance
• Automated notifications for loan updates
• Reviewing loan documents for accuracy and completeness
• Ordering services like automated underwriting, closing fee calculations, and appraisals

Investing in Technology as a Lender

Economic downturns tend to present opportunities for mortgage lenders. The Federal Reserve may choose to reduce interest rates during downturns, spurring refinancing activity for borrowers with higher rates.

While no one can predict recessions with certainty, lenders investing in mortgage automation in economic downturns are the companies that can meet the demand and leverage technology to better serve the needs of their customers.

Final Thoughts

Economic downturns significantly affect retail stores, restaurants, and other businesses that operate primarily with in-person purchases and consumption. 

Luckily, mortgage companies can run their business without the need for in-person interaction. However, most lenders fail to automate their business which slows productivity and leads to a loss of market share.

Companies that invest in technology in downturns are the ones that will rise to the top and separate themselves from their competitors.