Millions of people have been able to fulfill their ambition of becoming home or business owners, thanks to seamless to the streamlined mortgage industry. However, it wasn’t always easy to borrow loans or streamline the mortgage industry as it is now. 

This sector has evolved a lot from its beginning when it comes to simplified loan processing, a wide variety of loan availability, and reduced paperwork. Its development has been evidence of the flexibility of financial institutions and the always-shifting demands of borrowers.

The Old Ways: A Look Back

For many years, mortgage finance was defined by forms, long procedures, and many mishaps. The approaches used prior to the development of new strategies have drawbacks that make the process complex and dangerous.

1. Paperwork Purgatory

Not long ago, getting a mortgage was a long journey through a labyrinth of procedures and formalities. First-time loan borrowers would be tied up in heaps of documents, completing each form with great care and thereby revealing a lot of information about their financial situation. 

It was common for approvals for transactions/appropriations to take a very long time, weeks or even months.

1. Limitations of Traditional Methods

Indeed, traditional approaches to mortgage financing not only took a lot of time but also entailed critical errors. Inefficiency, coupled with a strong likelihood of human errors due to handling most tasks manually, led to the frustration of both mortgage companies and consumers. 

However, accessibility was limited since many who intended to own a home faced challenges resulting from a lack of easy access to banks.

The Need for Transparent and Simplified Mortgage Processes

The 2008 financial crisis was a reminder of the potential risks of using complicated and opaque lending procedures. 

Specifically, the subprime mortgage crisis highlights the need for more transparency in the entire mortgage business, better risk management, and greater authorities scrutiny. This event facilitated these hopes and calls for change, leading to the creation of a more efficient and consumer-oriented mortgage.

Major Changes that Have Changed the Mortgage Industry In the Past Couple of Years

The year 2008 majorly changed the mortgage industry for good. Several individuals were involved in the mortgage market, such as professional bankers, brokers, and correspondents. Some of the strict regulatory practices were in action to prevent predatory lending. However, it ended up causing well-documented and deep-rooted chaos in 2008. 

Buyers in today’s market should understand there is a wealth of information available to avoid pitfalls and signing bad loans. Here are some changes that are in effect to avoid problems: 

1. The minimum credit could be as low as 620 to apply for a loan before 2007. However, now it needs to be between 680-700. 

2. The max debt-to-income ratio needs to be little as well for applying for a loan. 

3. IRS Form 4506 is important to apply for a loan. This was not a necessity before 2007. 

4. Earlier, gifting as a source of funds was allowed; however, in today’s scenario, it is not allowed. 

5. It is essential to verify your job within 10 days, but earlier, the time period to verify the job was 30 days. 

6. In the present scenario, it is no longer permitted to spend around 45% of your income or salary on debt. 

Impact of Technology on the Evolution of the Mortgage Operations

With the rise of digital platforms and the Internet, individuals are turning to the Internet to refinance their loans. On the Internet, they can connect with a lender offering the best mortgage rates and terms from the comfort of their homes. 

According to the ICE Lender Survey, nearly all lenders (99%) think that fintech can revolutionize the mortgage industry by simplifying the mortgage process (78%), reducing the time it takes to close a loan (70%), and eliminating the need for manual paperwork (67%). 

Besides, the report included the borrower’s viewpoint as well, like: 

• 55% of applicants thought that it has made the process simpler. 

• 49% of applicants appreciated the reduced amount of in-person interactions. 

• 63% of applicants would prefer applying for a loan online because it is more convenient and streamlined and reduces in-person meetings, which can be time-consuming and hectic to schedule. 

Digital mortgage platforms can automate many manual processes, like data entry and document management. Borrowers can also use the platform to keep track of the progress of their loan application and obtain the necessary tools to work with their loan officer. 

Digital mortgage platforms can also assist with enhanced security and compliance, real-time communication between all the stakeholders involved in the mortgage process, conditional and quick approvals, electronic signature, reporting and analytics, and better connectivity between systems. 

Besides, AI and ML technologies are also influencing and simplifying mortgage operations. A report from Gartner highlights the increased implementation of new technologies, which has increased from 4 to 14%.  

Let’s see how AI is reshaping the mortgage industry: 

1. Automated requests and review of documents through rule-based AI. 

2. Automated loan origination process through a series of AI rules and conditions. 

3. Improved efficiency in the mortgage process through workflow tasks, like document requests, eSignature, etc. 

4. Seamless communication between borrowers and lenders through automated check-ins. 

Conclusion

Modern technology that improves accuracy, simplifies processes, and provides unmatched client experiences is driving a revolutionary change in the mortgage industry. 

SBL Corp offers a list of services to streamline the mortgage finance industry and reduce mortgage companies' workloads. From bookkeeping, financial reporting, and image editing to custom model development, chatbot design, and user experience, you can outsource some of your tasks to our experts. 

SBL Corp is positioned to transform the mortgage businesses with its broad experience and creative approach. Connect with us today and implement the transformation in your operation to achieve your desired agility.