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How One Lender Reduced Their Borrower Income Analysis Time from Hours to just Minutes

Introduction

As record-low mortgage rates spurred high origination volumes in 2020, lenders across the housing industry looked for ways to fulfill borrowers’ needs in the most efficient, streamlined manner possible. For many lenders, the past year put a magnifying glass on processes that could not withstand the unparalleled volume. And while it was tempting to say hey were too busy to implement new solutions, many companies found that to stay ahead of the competition, new workflow improvements were vital. This case study explores how Stearns Lending was able to implement an accelerated and more reliable origination workflow by adopting CoreLogic’s FactCheck income analysis solution. The tool automates, streamlines and tandardizes the borrower income calculation process. By leveraging FactCheck, Stearns has been able to save its underwriters up to four hours per loan while delivering more reliable borrower income calculations.

 

The Pain Points

For more than a decade, underwriting turn times have increased as new guidelines and documentation procedures add to an already extensive process. But even beyond improving turn times, Stearns was looking for ways to improve the consistency, methodology and overall quality of its underwriting. Prior to implementing FactCheck, Stearns had a different income analysis solution, but it wasn’t integrated into the company’s loan origination system (LOS). This made it difficult to achieve consistent usage of the tool, and as a result, many underwriters were going outside of the system, using their own spreadsheets for calculations. This was particularly time-consuming for underwriters calculating self-employed income. “One of the things that we’ve learned is that when our underwriters have to go outside our LOS to do work, it reduces efficiency, quality and consistency,” said Allyson Knudsen, Chief Risk Officer at Stearns Lending.

Finding a Solution

As one of the largest lenders in the U.S., Stearns operates across several channels, representing 14 different brands with a wide variety of business models. Housing everything from brokerfocused operations and corporate

partnerships to exclusive partnerships with real estate agent/builder/corporate relocation joint ventures, Stearns needed a vendor that could handle the complexity of its business.

“We continue to grow, so it’s really critical when choosing a technology platform that it helps us support all those companies and is adaptable for every one of those different business models,” said Andrew Pohlmann, Chief Marketing Officer at Stearns Lending.

But Stearns didn’t have to go far to find an answer. The company’s strategy is to partner with proven solutions

providers and deepen those relationships, rather than having to manage a large portfolio of vendors. So, when it came time for Stearns to boost its underwriting efficiency, they turned to a trusted partner, CoreLogic, and selected their comprehensive income calculation and analysis solution: FactCheck.

 

Checking the Boxes

Due to Stearns’ size and the complexity of its multiple channels, implementing a solution like FactCheck required working cross the entire organization. All channel presidents were involved in the decision, though for some, that didn’t mean picking he specific solution so much as presenting their channel’s needs and ensuring that the chosen approach—as Knudsen put it—“checked off their boxes.” Some of those boxes included a tool that delivered positive results in the following areas:

Stearns_Case_Study_FactCheck

Speed and Efficiency

Selecting the correct tool could improve both underwriter efficiency while also providing loan officers with more reliable borrower income information sooner in the process. This would ultimately result in a better borrower experience.

Stearns_Case_Study_FactCheck-2

Consistent Methodology

With multiple families of companies, Stearns needed a tool that would be utilized the same way across every team of underwriters. Establishing one specific process for income calculation would reduce risk and ensure more accurate results.

Stearns_Case_Study_FactCheck3

Document Collection

In order to calculate borrower income, Stearns needed a tool that would collect and read the correct borrower documents. “We needed a tool to do the input of the OCR [optical character recognition] for our underwriters and present an income that they can then analyze as part of the transaction,” Knudsen said. “Instead of making their work about getting to that calculation, they needed to be able to use calculations to do their analysis of the overall quality of file and the credit decision.”

Collaboration, Development and Implementation

Stearns proactively worked with its internal teams to ensure that implementation was heading in the right direction. The company hosted listening sessions with groups of underwriters to get their feedback, which was shared with

CoreLogic and played into the iterative process of implementing FactCheck.

“When CoreLogic received our teams’ feedback, they immediately worked with us to adapt to our processes and fully integrate the tool,” Knudsen recalled. “There was never a point where there was any kind of pushback on their part to say, ‘Well, this is the tool we’ve developed, use it the way it is.’ It wasn’t your typical sales process.”

The Stearns team knew that the biggest retooling of their process was going to be implementing a solution round the hardest income to calculate—self-employed borrowers. Since FactCheck automatically identifies new potential income sources, it was a perfect fit for Stearns’ needs.

Noteworthy Results

While the custom FactCheck implementation is still in process, underwriters from across the company have come forward with promising reviews of the tool.

In fact, one Stearns underwriter found that a file that would have typically required upwards of four hours to evaluate ended up taking only 20 minutes. This became a consistent report among underwriters, as FactCheck saved them significant time and reduced manual efforts. This was the goal from the start, and Stearns has now further improved its borrower experience with faster turn times.

 

Conclusion

Amid a high lending volume environment, Stearns’ team knew they needed to improve efficiencies wherever possible FactCheck allowed them to accelerate their underwriting process while providing more reliable income calculations and a consistent methodology. The key to their successful implementation was their close collaboration with the CoreLogic integration team, as well as its own team members. By partnering with an industry leader and trusted vendor, Stearns was able to customize a comprehensive tool to improve its origination process. FactCheck’s automation of the income analysis process allows the company’s underwriters to focus on more complex tasks. This results in overall faster turn times and has led to an even better borrower experience.

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