The typical time to process a mortgage application on W2 loan is 30-45 days. With AI one has to wonder why it cannot come down to a week. Before the process required the loan officer talking to the client to explain the documents required, the processor to analyze the documents and identify any missing documents, and then the underwriter who validated the information and would approve the loan.
With AI today, all that can be seamlessly done in mere minutes with the onus of the quick turnaround time on the applicant.
W2 loans are the simplest mortgage loans to approve as the income is consistent. W2 income aggregates to income in the IRS tax returns and can be cross-checked for consistency. Bank statements show consistent income from W2 and validate the pay-stubs are real.
Why delays in processing?
A lot of time is spent by the processor to move data into bank software to ensure everyone has the golden record of data for the application. The same data the processor enters, is used by the underwriter to analyze the loan and make a decision. Mistakes, oversights, or missing data can slow the transfer of file between parties and add days as the applicant has to provide missing files.
Much like self-checkouts, with AI, the process for W2 loans can be streamlined.
Workflows that can be automated with AI:
- Document data input. Use OCR to extract fields and values and input into application. No human data errors
- Cross document validation to ensure W2 stubs match the bank statements
- Aggregate income data to align to Form 1040 income
- Bank statement analysis for income vs spending by aggregating transactions
- Analyze demographic information for special loan programs available to borrower
- ID validation for name, address, and legal status
- Property appraisal scanned for risks, address, and valuation
Each step of the process removes manual entry work and small checks from the loan officer and processor. Validating that all the data and is there, and the data is sufficient for an initial approval, the loan can go to the underwriter for a more granular approval look. The initial steps with AI take seconds and can reduce the backlog of underwriters and processors and loan officers waiting on each other to complete work on incomplete files and then waiting on the borrower to provide documentation.
A well written process for W2 based mortgage approval can reduce approval time significantly. Less waiting, faster close, more satisfied customers. This is the combination of combined automated workflows that AI can excel at to simplify costs and drive efficiency.