In a prior post, we discussed how a frictionless transaction experience increases the likelihood a seller will return to do business with an investor. Now, we turn our focus to the role investors can have helping sellers improve the quality of their loans, which will further strengthen the relationship and foster repeat business between the two parties.
Most professionals welcome feedback from their colleagues and management at the end of a project. Asking and answering questions like “What worked well?,” “What could we have done better?,” “What results did we see?,” helps the team avoid making the same mistakes twice or alternatively said, helps them reproduce favorable outcomes.
Investors and their sellers should have similar conversations, sharing information throughout the acquisition process to ensure both benefit from the engagement. However, it’s far more common that the communication between investor and seller is often as closed as the loans being negotiated for sale. More often than not, investors finalize their due diligence review by agreeing to buy a group of loans and provide little visibility back to the seller about the reasons the rest of the loans were not selected. Inadequate technology is directly correlated to why investors find it difficult to provide sellers transparency into loan file reviews.
Clunky, manual solutions prominent in closed loan acquisition delay an already time-sensitive review, leaving little time to share feedback. They also don’t capture the granular detail about the quality of a seller’s loans, or offer a concise way of analyzing and reporting the information.
By infusing automation and a deep set of business rules into data and document processing, as well as due diligence, investors can quickly and easily identify trends or patterns associated with a particular seller’s loans. This reportable information can be shared with the seller to understand the sources and causes of defects in their origination process and provide them insight to correct them.
Good data
Before you can assess the trends, you need to start with good data.
The industry’s doc processing solutions now leverage automated document recognition (ADR) and automated data extraction (ADE) technologies to help improve the speed and accuracy of reviews. Leveraging machine learning, sophisticated data extraction programs and rules-based automation these solutions can classify and extract more information using automation than ever before. The result is data accuracy of upwards of 99% that can be used to power due diligence reviews on loans investors intend to purchase and investor confidence.
Good visibility
In addition to helping an investor get to accurate, purified data, automation also provides complete transparency to loan file defects for both investors and sellers.
With the right technology, as conditions are found sellers can receive real-time notification and view results right in the system via a dedicated rebuttals page to understand and track to resolution for the investor. Sellers can also review these initial findings for common threads in a comprehensive summary report available within the portal.
Long term visibility comes from the rich, automated reporting functionality available within an investor’s closed loan acquisition technology. This makes it easy to slice and dice information to quickly share with sellers. Investors can surface trends such as “During the last six months credit scores for FHA borrowers did not meet the standard requirements 65% of the time with Seller A.” Once this information is shared with sellers, they can discuss findings and trends pointing to people, technology or process issues with their origination staff and correct course.
Raising the bar on loan quality must be viewed as a team effort, as both seller and investor seek to benefit. Quality feedback, backed by good data with a high degree of visibility, is what great, fruitful relationships are built on. This can only be achieved at the scale required in closed loan acquisition using automation.
Learn more about the LoanLogics solution for closed loan acquisition, LoanHD Investor Module for Correspondent Loan Acquisition, in this product video.