The mortgage subservicing industry is undergoing a significant transformation with the integration of advanced technologies like Artificial Intelligence (AI) tools and automation. Far from a wave of the future, AI has already revolutionized multiple industries by improving risk assessment and decision-making through processes such as predictive analytics, which forecasts market trends and assesses loan default risks.
This groundbreaking innovation can enhance the lenders’ ability to manage risks proactively, rather than reacting to market trends after the fact. Additionally, bots and automation are pivotal in improving the customer experience (CX) with AI-powered chatbots offering personalized advice and 24/7 assistance and automation streamlining back-end processes like payment processing and document management. Let’s look at the specifics of how mortgage bankers, banks, credit unions, and portfolio investors can more efficiently manage mortgage loans.
How is AI being used today?
While AI may seem like a new tool, with all the recent news stories and opinion think pieces about ChatGPT, LoanCare has been utilizing and perfecting these tools and advanced algorithms for many years to help its lender clients cut costs and improve customer service. These tools are already hard at work assisting employees by handling mundane and repetitive tasking that can free up human employees for more specific, complex, and time-sensitive issues. Using them in this way greatly boosts efficiency and productivity, as well as providing lenders with greater visibility into their mortgage portfolios. The real-time analytics that AI can provide offers insights into individual loan performance and overall portfolio health, crucial information when it comes to risk management and compliance.
Perhaps the most exciting thing about AI in the mortgage servicing industry is that it allows each mortgage loan in your loan portfolio to be tracked in detail while controlling the cost of doing so. No longer will it require a staff member to find the time to analyze and research accounts. AI can look in-depth at monthly payments, monitor customers’ financial health and ability to repay, and much more 24/7/365, without the need for breaks, off days, or other time away from work.
The Future is Now
While implementing these technologies presents challenges and the need for skilled overseers, the future of mortgage subservicing will unavoidably be tech-driven. The industry is moving towards more sophisticated AI models and greater automation, aiming for seamless integration with existing systems and a balance between technology and human interaction in mortgage servicing. And considering how much time can be saved by utilizing AI, lenders sidestepping its potential benefits are setting up their competitors for success rather than themselves.
The speed, accuracy, and sheer potential of AI can no longer be ignored in the mortgage space. By leveraging machine learning algorithms and vast datasets, AI systems can now predict market trends, assess risks, and help lenders make more informed decisions.
Why Hire a Subservicer to Manage Your AI Goals?
Historically, each financial institution has used internal staff and resources to service their mortgage loans. However, as powerful as AI can be, utilizing these tools correctly and efficiently requires substantial investment and know-how. For this reason, in-house teams often cannot reach the scale needed to control the costs that advanced AI requires. Even if a lender wishes to handle everything internally, it requires large-scale investment and oversight that eats into the profits that AI could generate. LoanCare’s experience can bring lenders the benefits of AI while avoiding the substantial investment costs and compliance risks that a new, inexperienced team might inadvertently create.
These benefits can be substantial and near-immediate, our services work swiftly to generate new opportunities for mortgage bankers, banks, credit unions, and home loan portfolio investors. These can include:
Predictive Analytics for Market Trends
Predictive analytics, a subset of AI, plays a crucial role in forecasting future market movements. AI can research vast amounts of data and use it to predict interest rate changes, housing market trends, and even regional economic shifts. This information can be invaluable for lenders and investors who rely on accurate, up-to-date market predictions to make informed loan decisions regarding individual applications. In addition, it can help you determine broad company strategies and increase the value you bring to the marketplace.
ChatBots and Automation to Enhance CX
Customer service is another area where AI has already made significant inroads. Bots and other related automated systems now handle many customer loan interactions, from answering basic queries to assisting with loan application submissions. These important, but repetitive, actions work to supplement your in-house staff. Every inquiry or issue that a chatbot can handle for a customer is one less action that your staff must handle.
These systems are always available, regardless of the hour or day. Moreover, these systems can learn from each interaction, continually improving their service quality. Your borrowers also appreciate the increased depth and availability of support. Of course, as homeowners, the status of their loan payments, escrow accounts, and other data relating to their loans are critically important to them. And there are other benefits to happy and informed customers. For example, homeowners happy with their mortgages are more likely to return to their current banks or credit unions for new products such as HELOCs or refinancing.
Even in instances where AI is not actively needed for direct intervention, its related tools – such as LoanCare’s newly optimized homeowner web portal and mobile app – give homeowners the power to manage their accounts on their own terms, leading to a more robust customer experience.
Streamlining the Loan Servicing Processes
Automation has shortened and simplified many back-end loan processes within loan servicing. Tasks such as account updates, and document management – which all once required manual intervention in virtually every stage – are now nearly fully automated. This not only speeds up behind-the-scenes processes dramatically, but also reduces the likelihood of human error, improving overall efficiency.
Personalized Financial Insights
AI systems can analyze a customer’s financial behavior and offer personalized advice. For instance, they can suggest refinancing options when it’s most beneficial for the customer or offer tips on improving credit scores. This personalized approach helps homeowners and builds their trust in the lender’s services. These insights go beyond identifying risks, they also provide your business with potential leads to cross sell and upsell products like HELOCs to extend your relationship well beyond the original life of the loan and solidify your portfolio recapture strategy.
Risk Management and Compliance
While the benefits of AI are clear, its implementation is not without challenges. Concerns around data security, privacy, and the need for skilled personnel to manage and interpret AI systems appropriately are significant hurdles. Additionally, mortgage companies must take care to navigate the industry’s strict regulatory landscape, ensuring that their use of these new tools complies with existing laws and guidelines.
That said, AI and automation are invaluable for risk management and regulatory compliance. They can identify patterns indicative of loan fraud, flag potential compliance issues, and ensure that all transactions adhere to the laws on the books. This capability is absolutely essential in an industry where non-compliance can have severe consequences.
Should I Use AI-powered loan servicing or subservicing?
LoanCare believes that anyone responsible for managing home loans must take advantage of today’s AI tools responsibly. All banks, credit unions, loan officers, et al, are responsible for customer relations and regulatory compliance, and AI can turbocharge a lender’s ability to meet these necessary demands. How yesterday’s loan was handled will ultimately impact today’s profits and tomorrow’s success though successfully selling additional services to your customers. Partnering with a dedicated and experienced subservicer like LoanCare is an important step in committing to the advantages of AI and your desire for your homeowners to have a superior and beneficial experience.
The future of mortgage subservicing will assuredly be tech-driven. As technology evolves and improves, we can expect even more sophisticated AI models, more intuitive customer service bots, and even greater automation of complex loan processes. Industry experts are already studying and analyzing how best to integrate these technologies into existing systems so that AI systems work harmoniously with the human element of mortgage loan servicing. AI is not meant to replace, it is meant to enhance, giving greater power and insight to your customers, teams, and company as a whole. Our goal is to help you profitably finance your customers’ dreams by allowing you to loan money efficiently and ensure that the loans perform. The home loan industry is not for the faint of heart, and your loans must perform in a new realm of higher interest rates and more stable home prices. Cost and risk reduction are both key to your success.
At LoanCare, data integrity and the marriage of advanced analytics with human-centric solutions are at the core of everything it does, with the end goal being to place customers in the driver’s seat on their borrowing journey. With systemic guardrails in place to protect borrower data and proven solutions designed to take lenders’ analyzing power to new heights, LoanCare provides clients with the tools they need to provide a more seamless and positive CX, while staying at the forefront of market trends and insights.
To learn more about LoanCare’s commitment to reducing risk and harnessing the power of data, contact the team. Follow the latest LoanCare news and updates on our LinkedIn page.
