How enterprise content management and case management help lending

Ongoing technology innovation — in storage, big data management, web services, document digitization, cloud computing, and mobile — now provides all the IT building blocks needed to integrate core data processing systems with digital documents and case management oversight in mortgage origination, underwriting, closing, onboarding, and servicing. Lenders are rapidly moving toward automating many data-driven and document-driven processes in the lending process, but few are fully digital from application through servicing processes for data and document management.

The key challenges in becoming fully digital include:

  1. Large numbers of data elements and documents that pass from entity to entity
  2. Paper documents moving asynchronously with digital data-driven processes managed by the loan origination system (LOS) or servicing system
  3. Workflows with dozens of nonstandard paper documents entering the process from multiple sources at different times

Semi-automated mortgage lending is getting better

The graphic above depicts the entire lending lifecycle: loan account origination, account processing, funding and onboarding, and loan account management (servicing and collections). Processes and technology are managed in the middle, as are the interaction between customer activities and lender activities.

Most mortgage lenders have partially automated the processes shown above. Although automation varies from one lender to the next, a popular starting point is at the point of application. Many start collecting initial data from applicants online, which is easy to automate.

In recent years, the industry has made progress toward digitally transforming the process in many areas. First, electronic signature consent forms and initial mortgage loan disclosures are increasingly common. Second, in loan processing, some lenders scan a few or all the documents; others scan few or none of them unless received digitally. Finally, borrower verification documents for income, assets, liabilities, and identity are increasingly being received in data formats not requiring manual data entry, often from trusted third-party sources.

During these processes, data moves into and out of the loan origination system (LOS), while loan processors and underwriters tend to move documents manually as LOS processes are executed. Lenders have made steps to provide secure digital access to loan processing statuses and documents such as the appraisal and draft closing packages. In-person (branch, title company, or attorney office) digital loan signings that eliminate paper-based wet ink signatures are increasingly common, although the volume of wet ink signatures on paper documents remains high by comparison.

However, paper-based or non-machine-readable documents remain a major source of processing inefficiency.

First, much of the data required to decision the loan request is embedded in trailing documents provided by the applicant at a later time. Second, most documents are in multiple nonstandard formats, arrive from different sources at different stages in the process, and may have missing data or data inconsistent with data in the LOS. Third, paper-based documents are often photocopied or passed via email, but if the document data content changes, there is no mechanism for all workers to receive current document versions.

In this semi-automated environment, full document digitization is difficult. That’s where enterprise content management (ECM) can help. The right solution empowers lenders with case management capabilities and integration between the LOS and ECM system, allowing them to become fully digital.

Fully digital mortgage lending

The graphic above summarizes how dynamic case management can manage workflow for lending employees by integrating the data-centric customer POS, back-office LOS and servicing systems with the document-centric ECM. In practice, numerous subsystems integrate with the core systems and case management system to complete end-to-end digital lending.

For example, the digital closing process can occur remotely, in a branch office or other location. Some lenders add mobile notary capabilities to loan signings where the borrower must be identified and authenticated during the signing process.

In all these cases, these systems create and distribute digital documents securely to all participants. After signing, digital documents are sent to an ECM system or other digital document archive.

Integration of core systems with case management is far superior to disconnected systems where the loan processor uses dual monitors to type data from a static document into the LOS or servicing system. Case management leverages application programming interface (API) or web services integration, business process management (BPM) software, configurable business rules management system (BRMS) capabilities, analytics, and task design models, empowering lenders to improve the way they manage unstructured work.

Mortgage lending is a dynamic, unstructured, knowledge-intensive process that requires significant amounts of data and documents during processing. It also requires variations of documents depending on the loan type, property state, investor, and other factors. Case management can automate the correct mix of documents required for each loan in this dynamic environment, and do this in sync with the LOS and mortgage document vendors that produce product-level, state-level, and investor-level loan document packages.

Next steps

Mortgage lenders need an action plan for envisioning and acting on implementing a loan completion system to add workflow-driven digital document and data management to the mortgage post-closing and servicing lifecycle. When evaluating how to automate loan onboarding and servicing, lenders need to consider three key actions. They are:

1. Prioritizing goals

Evaluate and rank your strategic goals for your servicing business. Determine which servicing processes provide the best opportunity to re-design.

2. Evaluating systems and processes

Determine the best way to re-design those processes. Assess the capabilities you have today, and identify what do you lack or need to optimize targeted servicing processes. Also, evaluate which technologies you’ve already invested in can be re-used or expanded.

3. Planning

Identify and be clear about your success criteria, and the business case ROI for your initial projects. Also, consider how you can invest once to leverage your investment across other servicing processes.

To deliver the service consumers now expect in the digital age, you need to leverage innovative solutions that give you the tools you need to make faster, more-informed decisions. That’s why enterprise content management and case management are so important.

Craig Focardi

Craig Focardi

Craig Focardi, CMB, is a Senior Analyst at CELENT. With a multi-disciplinary background in economics, finance, technology and marketing, Craig leverages his banking industry experience to advise and consult on business-led technology strategy and investment for financial institutions, technology providers and technology investment firms. Craig's coverage areas include digital lending strategy, market sizing and technology selection across the credit lifecycle for all consumer credit products. Complementary coverage areas include analytics, digital content management and core system transformation. His advisory engagements have included core lending and banking system vendor selection for financial institutions, market feasibility and go-to market assessments for technology vendors, and technology provider acquisition due diligence for FinTech investors. Craig began his career in economics and finance and marketing in the mortgage industry for lenders and IT vendors, including The Federal Home Loan Bank, The PMI Group, Wells Fargo, and CoreLogic. Craig then spent 16 years as a banking industry analyst at TowerGroup and CEB prior to joining Celent.

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