In the UK, the housing market slowed down in October, with the number of mortgages granted to home movers down 20% on a year ago, according to data from the Council of Mortgage Lenders. This is an unsurprising reaction following a predicted economic slowdown in both the US and UK markets, leading to apprehension and caution across the board. But rather than hiding away waiting for the market to change, mortgage lenders worried about risk should look for ways in which they can save time and money in order to minimize as many ill-effects as they can.
Working out risk takes time
This is a challenging time in the property market for borrowers and lenders alike. A key part of the lending application and its risk lies in the property risk evaluation process, resulting in a mortgage decision in principle on both the consumer and property. The decision making process for this evaluation is often cumbersome and slow, relying on human judgment and lines of old code to weigh up and cross reference a number of important variables to inform decision making. And, the problem is that the lines of code hinge on complex business rules which can only be updated manually. These business rules are the processes that help offer the right service to the right person based on a set of predefined criteria.
Lenders have traditionally been slow to adopt technologies that automate at least part of this process and are instead conducting manual valuations or making manual changes to the code outlining the business rules, with hours of intensive editing required from software teams.Not only is this a time intensive task, it often means a slow delivery of a valuation. And, if the housing market does slow down, this can ultimately mean less lending and fewer customers in the long run.
Let someone else worry about it
Having been through one recent recession and with another looming, the focus has been on understanding the devil in the detail to avoid risk. Yet, clever technologies can actually limit risk and create enormous time and cost savings if they are implemented correctly. Platforms that help businesses to define and embed business rules engine for mortgage support services can provide the necessary functionality, scalability and ease of use necessary to navigate the complex rules and regulations required in mortgage-related processes. And, the argument can be made that the worst risk is from human error itself, which these platforms help to mitigate.
It’s not just a pipedream; some vendors are forging ahead with this technology in the belief that lenders will adopt it. The EDM Group, a provider of digital mailroom services, has recently announced that it selected has selected Progress® Corticon® as the embedded business rules engine for its Mortgage Support Services’ Property Risk Hub, PRISM. Spencer Wyer, Global CTO, EDM Group has remarked: “PRISM empowers lenders to carry out a decision in principle in 30 seconds, available 24×7 across all sales channels. This significantly reduces the number of properties needing manual valuation, saving thousands of pounds a day and taking potentially a week out of the mortgage application process.”
EDM Group’s customer, Nationwide Building Society, the UK’s second largest mortgage lender, is the first organization to have deployed PRISM to enhance its performance and processes. The business rules engine plays an integral role in PRISM, providing the necessary functionality, scalability and ease of use necessary to navigate the complex rules.
Neither a borrower nor a lender be
Unless they actually adhere to such maxims and lock themselves away, mortgage lenders are going to have to tackle the problems facing their industry. Being able to build, manage and change the rules governing the complex decision-making at the heart of mortgage lending is the key to agility for mortgage lenders. A powerful and agile tool is needed for lenders to stand out among the competition and deliver excellent and certain customer service in an uncertain time. Such tools are out there but the next step now is having the foresight and willingness to embrace them.