mortgage automation

As the housing market takes a breather, most mortgage and real estate companies are turning their attention to reducing costs. And few processes are more costly or time-consuming than document management.

When it comes to improving efficiency, shortening the time between receiving loan documents and making use of them stands at the top of the list. Fortunately, there are many document management software options for streamlining operations, including products that leverage optical character recognition (OCR), AI and machine learning technologies. Yet there are just as many broad and bold claims being made about them. How do you know what to believe? Or better yet, how do you test these technologies?

To help, we list three important questions to ask when evaluating these claims. Before you begin comparing vendors though, you’ll need to ask yourself a few questions.

Know Thyself

Mortgages may be a commodity of sorts, but every company is unique in terms of their business goals and how they get things done.

Before looking for document analysis technology, first ask yourself, “What specific problems are we trying to solve?” To answer this question, you must know what your requirements are on a high level. What workflows and documents are you using? What data needs to be extracted? And how do you intend to use that data? Which systems will be involved?

You’ll also need to know what your decision factors are. For example, how much are you prepared to spend on implementation and ongoing cost of ownership? How quickly do you plan to implement the solution? Is there an upcoming deadline for an audit you need to prepare for?

Once you know what your needs are, you can evaluate vendors by asking the following three questions:

What will I actually get?

Simple question, right? Not exactly. If you’ve done any research into document technology vendors, you’ve encountered mountains of happy marketing lingo and hyperbole. What you need are facts, so this question demands a few follow up questions.

For example, will they do a live demo with you? Will they use documents you provide? What results will you get, and how are they measured? How granular are those results, how confident can you be with them, and what tools help you evaluate them?

Keep in mind that the mortgage and real estate markets aren’t static. What works today may not work as well tomorrow. So, what is the vendor’s approach to confirming results on an ongoing basis? The minute you hear, “you can set it once and forget it,” it’s probably time to look elsewhere.

How does the system improve itself?

Now we’re getting into the nitty-gritty. The key here is understanding if and how results are improved over time, which is what you really want. You’ll also want to know how the accuracy of the results are measured and whether those measuring tools are available to you.

If you find the vendor uses machine learning, deep learning, transfer learning or convolutional neural networks to constantly improve results, you may be on the right track. If the vendor is using these technologies in a layered approach, that’s even better. But then you should ask whether the vendor built these technologies or licenses them. If they’re licensed, the vendor may not be able to explain how the system improves itself.

What can I do with the results?

This is the time to find out whether your needs will be simply met or surpassed. For example, how easily are the results available for you to use with other systems, such as your system of record, data visualization software or reporting tools? What can you do to improve the results? How easy is it to implement changes to increase the number of documents recognized or the amount of data that can be extracted?

Finally, you’ll want to know how proactively the vendor adapts to change. After all, new document types and data needs are constantly evolving with new lending requirements, investor guidelines and market demands. How often is the technology updated? How frequently does the vendor make new releases available? How are they preparing for anticipated market changes? Are they willing to spend the time with you in a true partnership?

Gauging Future ROI

If you do this exercise thoroughly, you’ll have all the information you need to make a smart decision. Ideally, you‘ll be able to gauge future ROI in the form of quantifiable and qualitative savings.

Quantifiable savings is determining the amount of time in human process hours you’ll save by leveraging the solution, as well as how much you will shorten process cycles by reassigning staff to other areas. Qualitative savings can’t be measured as easily, but are equally valuable. It’s what you gain through outcomes such as enhancing risk management, using extracted data to feed data analytics initiatives and improving the customer experience.

At the end of the day, finding document technology that fits and is “real” is not an easy task, but it’s an essential one. At Paradatec, we’re always ready to answer your questions about our AI-based document technologies—plus we have real case studies showing they work. To learn more, please contact us at info@paradatec.com.

Three Ways AI and the Cloud Help Lenders Reduce Costs

The consensus is out—industry experts say 2022 is going to be a great year for purchase loans, possibly even a record breaking one. And looking around, it’s hard to argue. Rates remain historically low and the economy continues to rebound from the COVID-19 pandemic.

Yet appearances can be deceptive. The reality is that mortgage lenders will have more challenges in the year ahead than they’ll know what to do with, perhaps none larger than the cost of loan production. In fact, according to the Mortgage Bankers Association, independent mortgage bankers saw their expenses rise from $8,668 in the second quarter of 2021 to $9,140 in the third quarter—the second highest amount on record.

Of course, lenders can only do so much to manage costs. But one of the most effective is cloud-based, AI-driven document automation. Here are three reasons why:

1. Faster Processing

The MBA is currently projecting that purchase loan volume will grow to a record $1.725 trillion next year. However, purchase loans are invariably more complex and therefore more costly to produce than refinances. Lenders must also deal with a growing number of compliance requirements and a longer sales cycle driven by low housing inventory.

Lenders may not have much control over these obstacles. But they can get a handle on one of the largest cost centers involved in mortgage production: document management. In fact, a growing number of lenders are leveraging AI technology that automates mortgage document indexing and data capture by being able to read an entire page of information in a fraction of a second.

By instantly extracting data from a borrower’s pay stubs, tax documents and bank statements, AI-based document automation is already helping lenders accelerate the underwriting process and free up pipelines. In post-closing, it can also verify all key data and signatures in a loan file and extract critical data for federal reporting requirements and custom reports in just minutes.

2. Better Scalability

Sadly, the majority of document processing providers still augment their technologies with significant human assistance. It’s very challenging to scale any technology that also depends on people—especially if it involves scaling your own team, which is too often the case.

In fact, several of our clients came to us after attempting to use optical character recognition technology (OCR) to capture loan data. But because these tools were not nearly as fast or accurate as they were led to believe, they needed to have their teams do more of the work as they attempted to scale their operations.

The good news is that modern AI technology that automates document processing requires little and sometimes no human involvement. That means lenders don’t have to hire additional processors as purchase loan volumes grow. Even better, this technology can be hosted in the cloud, where there are practically no limits to its scalability.

3. Zero IT Costs

Today’s AI-based document automation technology isn’t just faster and more scalable, but lenders don’t have to sacrifice their own technology resources to get it, either. There’s no need to install any software, and no need to pour extra resources into data storage or IT support.

Paradatec’s AI-Cloud is a perfect example. It’s easily the fastest, most powerful AI-based document indexing and data capture automation technology on the market, and incredibly easy to implement and use. All lenders need to do is upload any number of loan files to a secure unique website address and our technology does the rest.

AI-Cloud delivers the same powerful, AI-based text analysis and machine learning tools that are being used to process more than two million loans a year, helping lenders convert information trapped inside loan documents into pure streams of actionable data. It also includes our AI library of more than 850 loan documents, which potentially enables lenders to start automating document processes in as little as a few hours.

Unfortunately, we’re kind of alone in what we’re able to do. Many technology and service providers claim to provide AI-based document automation. But when it gets down to brass tacks, there’s no “there” there.

That’s why we offer free blind tests of AI-Cloud—so you can see for yourself. Or just drop us a note at contact@paradatec.com, and we’ll be happy to show you how to reduce your loan production costs next year—and increase your potential.

Our Clients Love Us

From originators to servicers, BPOs and external due diligence firms trust Paradatec to streamline document processing.

We asked a number of vendors, including the Paradatec team, to help us perform an extensive due diligence process that included an out-of-the-box, blind test with our own loan samples and proof of concept test. Paradatec was the clear winner based on our comprehensive vetting process.

Steven Davids

Senior Vice President of Correspondent Lending, Northpointe Bank