One of the most crucial processes for a lender to get right is loan origination. Due to the ability of skilled underwriters to use their discretion to reduce risk, many lenders have been reluctant to automate the process. After all, this is precisely why lenders place such a high value on the underwriter position.
This doesn’t imply that these businesses should never experiment with an automated loan origination system; rather, it suggests that they search for particular features that will boost their productivity while minimizing risk. We will now talk about the features of Commercial Loan Origination Software that you should include in your upcoming upgrade.
The Main Characteristics of a Loan Origination System
Lenders should prioritize the following characteristics of a loan origination system:
Multiple Underwriting Standards
The main advantage of manually underwriting accounts is the ability to use discretion when handling new applications. This might appear as giving applicants who have previously worked with the lender favorable terms or giving veterans promotional rates.
Variable underwriting criteria are crucial in an automated system because they enable these discretionary uses to be programmed into the system to guarantee that customers still receive the best offer in most circumstances. Additionally, it allows the underwriting standards to be modified in accordance with interest rates set by the Federal Reserve or the market.
Security and Conformity
Knowing that a system can adequately secure customer and business data to comply with all applicable regulations is crucial for gaining the trust of lenders.
Automating their origination process ensures that customers and lenders can rest easy knowing they aren’t taking on additional risk. There is much less risk with most systems thanks to a partnership between fintech companies and banks that strongly emphasizes data security.
Each account must provide several documents during the loan origination process, including:
- Borrowing request
- Credit history
- Request letter
- Closing papers
A loan origination software must have clear, readable Loan Document Software that makes it simple for staff to get everything for an account in front of them. This is because there are so many files to keep track of. They must also know which documents have been submitted and which are still required to complete a transaction.
Online Loan Requests
No justification exists for a digital loan origination system failing to provide applications that can only be submitted online. Customers value the freedom to apply for financing on their schedule without feeling pressed by a coworker. It is not a quality system if there is one out there that forbids them from doing so.
Lenders and their clients may find having access to automated support inside the loan platform great value. Being familiar with new software can make it simple to become lost and unsure of what to do next. Having built-in support reduces this time and stress by providing solutions immediately.
Lenders require a clear picture of the effectiveness of implementing new changes. A top-notch lending platform will offer thorough analytics that gives lenders access to all their important metrics, ideally with a customizable dashboard that makes it simple for each lender to see the metrics they want instantly.
Integrations for Data from Third Parties
Sometimes, information from a third-party source is required during the lending process. This may be necessary for regulatory purposes, such as identity verification or looking up a credit bureau’s FICO score online.
A loan origination system needs to integrate with other programs or databases.
Although lenders who want to remain competitive must have these Commercial Loan Origination Software features, not all vendors do.