The Machine that’s coming for the Robots
Move over RPAs, there’s a new solution to underwriting woes
April 14, 2021, 1:50 pm By Brandie Young
Last year, the market’s wish for record-setting volume was granted – but at a cost. The only way to capture that volume was to hire, hire and then hire some more. Outsourcers were at capacity and talent pools quickly drained. Those available were able to command record-setting compensation. Mortgage lenders had no choice but to throw money at this problem, which is neither sustainable nor profitable.
Now, as the volume slacks, mortgage lenders are reassessing their cost structure. A big issue is the cost of underwriting, which has escalated dramatically both in total expense and as a cost per loan. Based on 2020, many mortgage lenders are now exploring technology. More specifically, how technology could leave them less exposed to excessive underwriting costs and make them “market ready” for any volume.
Over the last several years, robotic process automation (RPAs) were hailed as holy grail solutions that would automate mortgage manufacturing. While there was a lift in some areas, there wasn’t much change among underwriting that brought a significant economic benefit.
But don’t blame the robots. RPAs are rigid and designed to handle repeatable tasks. The type of tasks conducted the same way every time, without exception. They were not built to be dynamic or adaptive – think auto assembly line.