Mortgage Automation System
An All-Around Overview
ScienceSoft combines 17 years of experience in banking and financial software development with deep practical knowledge of the lending and real estate domains to help mortgage lenders design and build effective mortgage automation solutions.
Mortgage Automation Software in a Nutshell
Mortgage automation helps digitally transform manual, paper-intensive mortgage processes to accelerate the mortgage loan cycle and free up the teams for high-value, strategic tasks.
Mortgage automation systems enable automated generation and processing of mortgage documents and facilitate document exchange between the parties involved in a mortgage deal. They provide end-to-end traceability of transactions and help maintain compliance with the latest legal regulations.
A mortgage automation solution can also provide advanced analytics to ensure accurate mortgage-related decision-making and prevent mortgage fraud.
Such software enables automated processing of various types of mortgage loans:
- Residential and commercial mortgages.
- Fixed-rate and adjustable-rate mortgages.
- Private and institutional mortgages.
- Forward and reverse mortgages.
- Conventional mortgages, including high-balance loans and jumbo loans.
- Government-backed (e.g., FHA, VA, USDA) mortgage loans.
- Interest-only mortgages.
- Construction loans, and more.
Main integrations: CRM, accounting software, a treasury management system, a BI solution, and more.
Implementation time: 10–15+ months for a custom mortgage automation system.
Development costs: $400K–$2M+, depending on the solution’s complexity.
Annual ROI: Up to 840%.
In mortgage automation projects, ScienceSoft creates software with unique functionality bound to the specific needs of each mortgage lender. Below, we share a list of features that form the core of a mortgage processing system and help automate up to 90% of mortgage-related activities.
Automated processing of mortgage applications
- Automated extraction of data from mortgage applications (a borrower’s information, a requested loan amount, co-borrowers, details on the property a borrower wants to purchase, etc.) and documents on a borrower’s income, owned assets, and existing liabilities (e.g., bank statements, recent tax returns, proof of current employment).
- Support for structured and semi-structured document formats (JSON, XML, PDF, digital image, etc.).
- Conversion of paper documents into a pre-defined digital format using optical character recognition.
- AI-supported validation of data provided by borrowers against the data available in public data sources (e.g., credit rating platforms).
- Alerts to mortgage loan officers on missed or mismatched borrower data that require manual processing.
- Geography-based KYC/AML verification for borrowers.
Automated mortgage underwriting
- AI-powered assessment of borrower credit risks based on the analysis of a borrower’s credit history, spending patterns, income sustainability, and more.
- Borrower segmentation based on the credit risk level.
- Configurable mortgage loan limits (e.g., max loan amount, min income to qualify for a loan) for each borrower segment.
- Automated decision-making on mortgage loan approval or rejection based on a borrower’s risk score.
- Configurable multi-department mortgage approval workflow.
- AI-based recommendations on alternative mortgage terms (down payment amount, mortgage insurance, interest rate, etc.) to propose to the borrower in case of the initial application decline.
- Automated generation of pre-approval letters listing the available mortgage amortization scenarios and their submission to the borrower (via email or a customer portal).
Automated mortgage closing
- Automated calculation of a down payment, an escrow deposit, APR, and closing-associated fees, including a loan application fee, a credit report fee, an upfront mortgage insurance premium, a flood determination fee, an owner’s title fee, a real estate commission, etc.
- Template-based creation of mortgage amortization schedules.
- Automated generation of the closing disclosure documents: a good faith estimate, a truth-in-lending disclosure statement, a HUD-1 settlement statement, and other.
- Configurable mortgage document approval workflow (collecting approvals of internal stakeholders and a borrower).
- E-signing of mortgage documents.
- Automated generation of a deed of trust, triggered by receiving the pre-agreed down payment from a borrower, and its submission to the local title registration authorities to finalize the transfer of property ownership.
- Centralized storage of mortgage-related documents.
Mortgage payment control
- Automated multi-currency payments to property sellers.
- Automatically generating monthly mortgage payment invoices and sending them to borrowers.
- Tracking mortgage repayment transactions by period, borrower, type (down payment, principal payment, interest payment, service fee, property tax, etc.), status (due, partially paid, fully paid), and more.
- Support for multiple mortgage repayment methods: bank transfer, credit card, check, etc.
- Scheduled auto-deduction of a monthly mortgage payment from a borrower’s payment method.
- Automated reconciliation of received mortgage repayments.
- Alerts to mortgage loan officers on missed repayments.
- Personalized omnichannel reminders to borrowers on due mortgage payments.
Mortgage debt recovery automation
- Calculating late payment fees and applying them to the debtors’ invoices in case of past due mortgage payments.
- Scheduled generation of missed payment notices, demand letters, and notices of default and their submission to the debtor.
- Automated reporting of a borrower’s delinquency to credit bureaus, triggered by non-payment for a particular period.
- Rule-based mortgage forbearance, modification, refinancing, or transfer upon a debtor’s request.
- Automated foreclosure workflow.
- Automated evaluation of foreclosed property based on available data on its condition and market prices for the real estate.
- Calculating costs of a foreclosure proceeding and reallocating them to the debtor.
Mortgage loan trading automation
- Rule-based generation, confirmation, and closing of mortgage loan purchasing and selling orders.
- Calculating capital gains and losses under the mortgage loan trading activities.
- Configurable mortgage loan portfolio structures.
- AI-powered assessment of loan portfolio risks.
- Automatically created schedules on mortgage investment and debt maturity dates.
- Scheduled and ad hoc payments for the purchased mortgage loans.
- Monitoring due and received payments on the sold mortgage loans.
Mortgage processing task management
- Automated assignment of mortgage origination, servicing, and debt collection tasks to the relevant employees based on their qualification, availability, location, etc.
- AI-powered tasks prioritization based on their urgency, expected value, financial losses associated with task non-completion, and more.
- Configurable dashboards with task-specific KPIs and real-time updates on the task progress.
- Notifications of the assigned tasks to the mortgage team members.
Mortgage analytics and reporting
- Calculating and tracking essential mortgage performance metrics, such as closing cycle time, pull-through rate, average mortgage loan value, application approval rate, delinquency rate, and more.
- Scheduled and ad hoc mortgage loan reporting to credit bureaus and other required financial regulators.
- Template-based creation of monthly and annual mortgage statements.
- AI-powered forecasting of mortgage demand, mortgage default rate, mortgage-related cash inflow and revenue based on the analysis of historical data on mortgage applications, borrower payment behavior, market-available data on current and projected mortgage rates and property prices.
A customer self-service portal
- Borrower self-registration, managing and updating essential personal or business information.
- Uploading the required mortgage documentation.
- A mortgage calculator to model mortgage loan prices against various mortgage terms.
- Template-based creation of mortgage applications.
- Notifications to borrowers regarding the updates of mortgage loan statuses, due repayment dates, expiring documents that need updating, etc.
- Instant messaging.
- A virtual assistant to help borrowers solve technical, transactional, and security issues.
Security and compliance
- Compliance with the Fair Housing Act (FHA), the Equal Credit Opportunity Act (ECOA), the Home Mortgage Disclosure Act (HMDA), the Dodd-Frank Act, CFPB standards, the TILA-RESPA Integrated Disclosure Rule (TRID), the Mortgage Credit Directive (for the EU), other relevant global and country-specific mortgage regulations.
- A full audit trail for mortgage-related activities.
- AI-powered fraud detection.
- Data encryption.
- Configurable data retention and deletion policies.
- Multi-factor authentication.
- Role-based access control.
ScienceSoft’s best practice: Built-in customer portal functionality is optional for a mortgage processing system. However, this module can help facilitate borrower onboarding and ensure a fast and smooth lead-to-close cycle with minimal manual efforts. If you already have a customer portal, ScienceSoft can integrate it with mortgage software. If not, we can power your mortgage automation system with borrower self-service capabilities.
- For accurate borrower risk scoring and automated input of up-to-date borrower information when generating mortgage documents.
- For data-driven planning of mortgage product promotions and consistent communication with borrowers.
Credit rating platforms
of the selected credit rating bureaus (e.g., Experian, TransUnion, Equifax)
- For facilitated assessment of borrower creditworthiness and prompt submission of mortgage reports.
Mortgage insurance systems
of the selected mortgage insurance providers (e.g., Arch MI, National MI, Enact)
- For data-driven modeling of mortgage amortization scenarios and automated calculation of mortgage insurance fees for borrowers.
Land registration system
of a local property registration authority
- To simplify and speed up the registration of deeds and transfer of title.
The mortgage company’s bank accounts
- To timely make payments on mortgage-related transactions.
- For facilitated reconciliation of mortgage payments.
When used by banks, a mortgage automation system can be integrated directly with a core banking system.
- To plan the optimal hedging strategies for the mortgage loan portfolio.
- To initiate mortgage loan purchasing and selling.
Mortgage loan trading platform
- For seamless mortgage loan trading process.
To eliminate time-consuming and error-prone manual efforts across the entire mortgage loan cycle.
To ensure automated mortgage processing in accordance with global and country-specific regulations.
To get an accurate assessment of borrower credit risks and intelligent recommendations on the optimal mortgage terms for each client.
Smooth integration with the required systems
To provide a seamless flow of mortgage-related data among the lender’s teams, borrowers, and external partners and avoid double data entry.
Make sure your mortgage automation system provides scalability to smoothly process an increasing amount of mortgage applications and high-volume close documents to support your business growth.
The costs and timelines of implementing custom mortgage automation software vary greatly depending on:
- The scope and complexity of a solution’s functional capabilities, including AI-based features.
- The number and complexity of integrations.
- Non-functional requirements, including security and compliance requirements.
- The volume and complexity of data to be migrated from spreadsheets or an existing mortgage processing system.
- The sourcing model (full outsourcing, partial outsourcing, or all in-house), team composition, tech stack, etc.
From ScienceSoft’s experience, a custom mortgage automation solution of average complexity costs around $400,000–$1,500,000. Large financial institutions looking to build a complex mortgage automation system powered with advanced analytics should expect to invest $2,000,000+.
Despite the substantial upfront investments, a custom mortgage automation system can bring up to 840% annual ROI for large companies.
Up to 50% decrease
in operational costs
in the mortgage team productivity
in the mortgage loan cycle time
Off-the-Shelf Mortgage Automation Software ScienceSoft Recommends
Encompass by ICE Mortgage Technology
Banks and credit unions involved in mortgage operations.
- End-to-end traceability of mortgage transactions.
- Configurable multi-department closing workflows.
- AI-powered mortgage analytics.
- Pre-built mortgage report templates in Tableau, Power BI and Qlik.
- Automated mortgage loan trading in the secondary market.
- Compliance with HMDA, FHA, ECOA, and more.
- Ready-to-use APIs to integrate with popular CRM software, credit rating platforms, mortgage trading platforms, land registration systems, and more.
- A borrower self-service portal.
The software may not provide compliance with mortgage regulations of all the countries you operate in.
Mortgage Cadence Platform
Private mortgage lenders.
- AI-powered analysis of borrower credit risks.
- Automated processing of mortgage applications and borrower documents.
- Side-by-side comparison of mortgage pricing options for borrowers.
- Automated generation of mortgage closing documents.
- Real-time tracking of mortgage-related payments.
- Rule-based compliance checks.
- Embedded Power BI for mortgage data analysis and visualization.
- Instant messaging for mortgage teams.
The platform integration with your corporate systems may be costly and effort-consuming.
Point by Calyx
- Automated borrower pre-qualification and risk scoring.
- Template-based creation of pre-approval letters and mortgage closing documents.
- Documents e-signing.
- Real-time monitoring of the mortgage loan status (pending approval, closed, partially repaid, fully repaid, etc.).
- Customizable compliance rules.
- Pre-built integrations with 200+ partners providing credit reporting services, title verification services, insurance services, and more.
- Role-based access control.
- Seamless mobile access.
Customer portal functionality requires integration with Zip, a separately licensed Calyx’s product, which drives the solution’s TCO.
You need a solution to automate specific mortgage workflows, e.g., borrower credit risk scoring based on custom formulas, creating and processing mortgage documents in user-defined languages, or calculating property taxes based on country-specific tax rates.
You need flexible mortgage software that is easy to evolve with new features or innovative techs when required (e.g., OCR-enabled convertion of paper mortgage documents to a digital format).
You need software providing compliance with up-to-date mortgage regulations, including region-specific regulations and case-specific standards (e.g., Fannie Mae and Freddie Mac requirements for mortgage securitization).
You need a highly secure solution offering advanced cybersecurity mechanisms (e.g., intelligent fraud detection).
You want smooth and cost-effective integration of the mortgage automation software with your business-critical systems, including legacy tools.
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. We help financial services providers design and build effective solutions to innovate their mortgage-related workflows. Being ISO 9001- and ISO 27001-certified, we apply a mature quality management system and guarantee that cooperation with us does not pose any risks to our customers’ data security.