One of the critical pieces of technology in today’s era is a mortgage loan origination system or LOS. The loan origination technology is widespread in the lives of closers, funders and the rest of the support staff that is in charge of origination and fulfilling loans. As the LOS platform is one of the crucial investment that a bank makes, it’s evaluation and preference is important for fruitful results of the firm. While choosing a LOS can be a terrifying task you can always nail it by considering a few things like functional, technology, strategic, compliance, financial, business, time, nonfunctional, and interfacing factors.
Selection of a perfect LOS is a unique mixture of art and science as over 20 vendors offer LOS platforms. The common points that the LOS platform vendors target are segments that are based on cost and time appetite, IT ownership preferences, size, channels, business models, etc. The assessment and selection of a LOS platform that caters to the needs of the organization mandate matching the functionality, scale, ownership model, cost and timelines with the needs of the originator.
What Does Loan Origination Cover?
LOS covers manual processes that are different for each loan type and application. It typically covers steps like :
- “Loan shopping” for the customer
- Filling out forms
- Submitting documents
- Undergoing credit and background checks
- Evaluating an application
- Discussing loan terms if allowed
- Concluding the loan application process
- Approving the loan application
Process of Loan Origination Solution
LOS aids you regardless of you being a bank, NBFC, credit union, microfinance company or a financial institution. It further supports automating a loan origination cycle starting from lead generation to customer onboarding.
Here is a simple illustration of the LOS process:
What are the benefits of LOS?
The core task of loan origination software is to centrally manage and automate the various stages of the loan providing cycles such as loan application, documentation, verification, credit approval with automated underwriting. LOS speeds up processing and approval of loans faster. It further streamlines lending operations and strengthens client relations.
LOS provides adjustable, swift, and an enterprise-class origination platform that responds to business needs in loans. It helps banks to fulfill the expected service levels without forfeiting the cost. Furthermore, to deliver significant return-on-investment the system becomes more agile to be competitive.
With the help of LOS, financial firms can yield instant, automated decisions to applicants that belong from various origination channels considering the powerful decisioning, dynamic features, highly customizable applications, and extensive third-party integrations. To quickly sum up the pros of loan origination system:
- Faster processing of the loan origination cycle right from lead management to closing
- Better customer service due to faster response time, multichannel communication systems
- Real-time monitoring of the loan process
- Greater transparency within the organization
- Improved flexibility to introduce new loan products compliant with regulatory guidelines
- Greatly reduced defaults ensuring optimum returns