June 10, 2024
3 Minutes
The Hidden Culprit of Slow Underwriting: Why processing bad data is the Real Villain in Lending
Prudent AI

When we first entered the lending market, we often heard that inefficiency in the underwriting process is the leading cause of lengthier lending timelines, high operating costs, and a poor borrower experience. But, after speaking to a lot of industry lenders and underwriters, we've realized it's a myth.  

The underwriters have been the victims all along. The real problem occurs well before the underwriting stage, leaving the underwriters with nothing but a tremendous amount of pressure. Underwriters, who are already torn between the “don't give out a bad loan” and the “meet your monthly target” commandments, are now given the added responsibility to check every bit of data that comes with a loan application. If you're wondering where the actual problem occurs, it is at the pre-processing stage of the lending process.  

Reason behind the processing bottleneck

The abundant inflow of loan applications and the lack of intelligent document processing creates a bottleneck, leading to a scenario where loan applications coming out of the pre-processing stage often have incorrect data, missing data fields, and missing documents. And the burden to fill these gaps falls in the hands of underwriters. In most cases, underwriters often have to reach out to borrowers or loan officers for missing information, a process that's extremely frustrating. According to a survey, 66% of underwriters feel that it's time-consuming and non-productive to chase after the documents.  

The first step towards automated underwriting

The perfect solution to this problem is to apply the document automation solution early in the loan origination process.  Getting this right can remove the processing bottleneck, enabling the automation of the processing stage from data and document collection to analysis and decision-making. Thus achieving the holy grail of Straight Through Processing (STP).

This is possible with the automation of key areas in the loan origination process such as smart document processing, error and edge case handling, and data decision interface. The main outcome of all this should be to enable underwriters to focus on accurate credit judgments instead of chasing data. This not only reduces processing time, but also lowers the cost of processing loans.

Prudent AI's mortgage technology solution leverages the power of AI and machine learning to cover all these areas, providing a seamless experience to lenders and borrowers while ensuring speed, accuracy, and judgment.  

The future of Prudent AI

We're aware that achieving STP doesn’t happen overnight. There are multiple governing factors for the success of STP in lending. This includes factors like the maturity of the market, the adoption rate of lending intelligence solution, and the technology maturity to achieve end-to-end automation. We're positive the shift will happen over the coming years.  

But, at this moment, we're confident that our technology can automate a significant portion of the processing pipeline. Several top lenders in the US have already automated their processing pipeline with Prudent AI and receptive to further advancements in other areas of the loan origination process.  

Now that we know who the real villain is, it's time to lift the burden off the shoulders of your underwriters and act on the pre-processing problem.  

Prudent AI
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