When considering adopting a new loan origination system, there are some benefits of an LOS that all users should consider. In this post, North Shore Systems outlines the top ten basic benefits of an LOS. All of these can be found using NSS’ system, The CREF Operating System™.
1. Cost-Effectively Automate Your Business Process With the Newest and Most Advanced Software Available Today
Automation provides employees with increased availability to use their time more valuably now that they don’t have to spend time on manual tasks such as data entry and tracking down documents. Human error and frustration are also diminished with automation, eradicating most mistakes as well as eliminating many tedious tasks for lenders. Manually performing these same tasks can often lead to duplicate or inaccurate information being transferred.
2. Reduce Your Loan-Closing Cycle and Expedite Fee Collection
Another one of the major benefits of an LOS is the amount of time it saves a company. As a result of using this software, financial institutions are able to take on more loans without having to add more staff to their teams which results in reduced labor costs. In the long run, implementing an LOS will help the company earn more money than they would have had the capacity to without this software as they are able to process more loans in a given period of time. Loan origination systems allow lenders to reduce the amount of time required to complete and close a loan.
3. Streamline Operations and Integrate Functional Areas With One System
Having everything in one system helps organize and enhance the lending process from the point of first interaction with the borrower to the moment the deal closes. Without an LOS, lenders are forced to find a way to sort through their various spreadsheets, printouts, emails, calls, etc. An LOS organizes and automates all of these documents and pieces of information into one easy to navigate software so lenders no longer have to go digging for a specific piece of information. Rather, it can all be easily found in one central location making it more simplistic and time efficient while allowing for easy and seamless integration. Ultimately, implementing a loan origination system will give lending companies a leg up against competitors who have yet to adopt.
4. Increase Production With Tools for Field Personnel, Brokers, and Correspondents
Lenders are able to complete projects for their borrowers with a faster turnaround time than ever before. A few ways an LOS can increase production are by:
- Digitally verifying the accuracy of documents
- Automating both data collection from the customer and the underwriting process
- Enabling automated workflow models
- Allowing third-party integrations of information to the loan origination system
5. Standardize Underwriting According to Business Rules
With an automated system lenders are able to quickly analyze their customer’s credit history and determine whether or not the borrower is worthy of credit. Thus, automation helps with sorting through the data and simplifying the overall decision process.
6. Take Advantage of Cloud access and Software as a Service (SAAS)
Being able to access the loan process via the internet increases convenience and efficiency for all involved parties. Having an online platform makes the loan process more accessible, especially when on the go or away from the office. With an automated system accessible via the internet, users can easily access and share the data while reducing the duplication of documents. Additionally, there is no hassle of downloading and implementing new software.
7. Interface Electronically With Third Parties, Rating Agencies, and Investors
Another one of the benefits of an LOS is that it gives financial institutions the ability to virtually meet their borrowers wherever they are and whenever they are ready, meaning they could meet from the comfort of their own home, and it doesn’t have to be during typical business hours. Essentially, lenders become much more accessible to their clients once implementing an LOS. With this improved digital lending process, lenders are able to provide a more personalized online experience with better customer service than their borrowers anticipate. An LOS provides electronic forms which help with mitigating the amount of paperwork and errors involved during data collection These electronic forms often pre-fill with previously collected information, making it easier to fill out customer forms.
8. B-2-B Capabilities for Fannie Mae DUS and Freddie Mac MF Programs
Along with sourcing, sizing, underwriting, and then comparing different agency executions of a deal side by side, the LOS can seamlessly create the deal submission for the chosen agency electronically, utilizing API’s to make the calls necessary to:
- Register a new deal
- Get a quote
- Submit waivers
- Run underwriting rules
- Rate lock
- Submit documents
- Close the deal
- Submit the data
The lender’s excel-based underwriting workbooks are integrated, with the ability to push and pull data from it at key milestones. Then the appropriate forms/word-based documents get produced based on the execution.
9. Build and Manage Portfolios and Pools for Securitization and Investment Analysis
Conduit lenders and CMBS/CLO participants can utilize the data points captured during the origination process to build and analyze pools of loans both in the pipeline and in the portfolio. Pool types are used to designate scenario pools vs real deal executions. Different components of the capital stack can be assigned to pools as well. The affect on KPI’s by pool structure changes. Real time performance data, updated by the systems of record, are monitored and can have business rules tied to them for notification and portfolio actions.
10. Provide Data Required to Make Strategic Business Decisions
With an LOS tracking data and status from the beginning of the process, information is captured that can be analyzed to determine success rates for lending programs, hit rates for sourcing new deals by originator/product/region, turn times and deal aging/flow issues, employee workloads, productivity of third party and strategic relationships. When a deal dies, the general and specific reasons can be captured for later analysis and point to issues with pricing, competition, and other factors.
