Top 6 Lending Automations for Financial Firms

This article covers six popular automations firms can implement to improve their loan cycle process. We’ve picked one from each stage of the loan process: origination, processing, underwriting, closing, post-closing, and servicing.  

Loan Origination

Loan origination is the process of creating a new loan by a lender. Challenges in this stage include risk assessment, regulatory compliance, information management, customer experience, operational efficiency, and fraud detection.

1. Run AUS

The bot, or digital work, can trigger several automated underwriting services within the AUS (e.g., Fannie Mae Desktop Underwriter, Freddie Max Loa Product Advisor) to take abbreviated borrower and property data. It then generates a report that gives immediate approval or immediate denial. This process can provide appraisal waivers if the property has been recently appraised.

Loan Processing

This stage occurs when lenders evaluate the borrower’s application and determine whether to approve or deny the loan. 

2. Loan Setup

The bot enters property data, borrower data, and all other data from the 1003 Loan Application into the designated System of Record. Additionally, the bot can leverage established automation involving QC and fields in some systems.

Loan Underwriting

Loan underwriting is evaluating a borrower’s creditworthiness and determining the loan terms. Credit risk assessment, regulatory compliance, documentation, and fraud detection are some challenges that slow down the process.

3. Adding and Clearing Conditions

Generally, conditions are added by Underwriters when they see areas for correction on a file. There are situations where the bot can identify and auto-create underwriting conditions in the LOS, like loan-to-value ratios and the absence of specific documents. 

The bot can auto-generate conditions after it has completed a process, such as income verification, when the underwriting condition asks for it. The last step in the process is for the bot to clear the condition.

Loan Closing

Loan closing is the final stage in the loan process, where the loan is funded, and the borrower receives the money. Lenders need to manage these challenges effectively to ensure that the loan closes smoothly and provides a positive experience for their borrowers.

4. Credit Refresh

The bot performs risk management and quality control tasks within several days of closing. 

The bot orders a “Credit Refresh” report, reads the report, and determines whether any new line items in the “Tradelines” and “Inquiries (Last 120 Days)” sections are found that were not present when the credit was pulled the first time. 

The bot then indicates that the Credit Refresh task is completed on the pre-closing tracking form and sends a notification to the loan processor and loan officer. Finally, the bot uploads the Credit Refresh report to the borrower’s eFolder.

Loan Post-Closing

Post-closing loan challenges are the issues that arise after a loan has been closed and funded. The common challenges include loan servicing, loan quality control, compliance management, payment default and delinquency, and investor reporting. 

5. Purchasing Suspense (AKA Investor/Post Closing Conditions/STIPS)

Investors will review the post-closing loan package after receiving it from the lender and perform their own QC checks before sending back the Purchase Advice. 

If anything in the package is deemed missing or otherwise not in good order, they will place the loan in a state known as Purchasing Suspense and list certain Conditions that the lender must meet to clear the Suspense. 

In some cases, each investor will publish a list of these conditions on their web portal or transmit them by email to the lender. The bot will navigate to the investor portal (or retrieve emails from the investor) and read/download the list of conditions. 

The bot will sort and filter the list by loan number and date, then enter the conditions into the Purchasing Suspense tracking form in the LOS, so the lender’s post-closing team can begin clearing them.

Loan Servicing

Loan servicing involves managing a loan after funding it. Servicers must have a reliable system, efficient communication, careful evaluation of the borrower’s financial situation, and compliance with regulatory requirements. 

6. Suspense Processing

Bot queries DB for loans with suspense account balances above some threshold. 

For each loan returned by the query, the bot calculates a series of payments to be processed according to rule-based priorities and monthly/quarterly/annual invoice amounts previously recorded in the system of record. 

These payments are added to the A/P Queue and are processed by the Payment bot.

Automate Your Loan Process

Are you ready to automate your firm’s loan process? 

Our deep industry and systems expertise allow us to achieve the highest return on investment (ROI) per automation without fluff—no long-term contracts, accurate project timelines, and paying for exactly what you use. 

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