Why Regtech is a Necessity for Reducing the Cost of Managing Mortgage Loan Quality
This overview of our “Regtech Explained” whitepaper is an invitation to read our latest whitepaper on Regtech. The full whitepaper is free and shows how the mortgage industry has struggled with loan quality for decades and explains that the problem is only getting worse.
Even as more technologies are introduced into the loan process, per-loan costs continue to rise. In 2018, they have reached a staggering $8,475 per loan, the highest level ever recorded by the MBA Quarterly Mortgage Bankers Performance Report.
The burden on originators comes not just from the regulators and the GSEs, but mortgage investors have increased their scrutiny of loans tenfold, to the point that they are now on par with regulator examinations.
While there is clearly a need to compare the data in the LOS or mortgage platforms to other sources, not one LOS nor mortgage platform can compare data from within its system to loan file documents and third-party sources.
The problem is that most “digital mortgages” are not making a dent in loan defects— at best, they facilitate online interactions and information collection, and at worst, they become an enemy to loan quality.
Regtech’s definition, in the mortgage industry, includes “getting it right” within the notoriously complex underwriting process. When underwriting loans, it is important to know what information is needed from the borrower and to ask the borrower for this information all at once and only once. When borrowers are asked to do things a second time, and especially three times or more, they grow increasingly frustrated.
With Regtech innovation, the process of collecting, verifying and validating information can create purified data, which then empowers a deeper level of business rules-driven automation and real-time, in-line quality management.
For the first time, it is possible to achieve predictable data integrity of the loan file and gain transparency to the data and document set. By using purified data and placing automation first, Regtech drives regulatory and investor confidence and takes the subjectivity out of loan origination.
Read the full whitepaper at Regtech Explained.