The Future of Mortgage Lending is Autonomous and it Starts Now
Introducing Capsilon Instant Underwriter, the mortgage industry’s first autonomous underwriting solution
We’re thrilled to announce that Capsilon Instant Underwriter, the first autonomous underwriting solution for the mortgage industry, is now available and is in production after months of beta testing.
Many people are familiar with autonomous technology for consumers, perhaps most notably in the car industry, but its place in enterprise is less well known. Forward-thinking companies in every industry are leveraging autonomous technologies that intelligently connect people and technology, freeing up operations from costly, manual, unscalable work. In the mortgage industry, autonomous technologies have a particularly important home.
A watershed moment for our industry
The launch of Capsilon Instant Underwriter represents a watershed moment for the mortgage industry, with the introduction of autonomous technology that fundamentally changes how mortgage originators work, helping mortgage originators underwrite mortgage loans in minutes, with greater consistency and less risk.
Over the past decade underwriting productivity has plummeted from an average of eight loans a day to just over one loan a day (1.1 to be exact). Much attention has been paid to the front-end experience, but as we looked across the back-office, it became clear that the motherload of a lender’s back office expense and risk is in underwriting.
Introducing Underwriting 3.0: autonomous underwriting
Underwriting has not been a place where technology has moved the needle. Some solutions have tried to help with elements of an underwriter’s job, but all have fallen short of solving the real business problem. Today, many underwriters still spend 80% of their time simply checking to make sure they have correct data to work with.
We built Capsilon Instant Underwriter to do the grunt work for underwriters. It automatically collects loan data and evidence, performs underwriting calculations and analysis, and assesses eligibility based on guidelines, overlays, and a lender’s business rules.
It’s a cloud-based software solution that essentially automates all these costly, manual, error-prone underwriting tasks so companies can focus their high-value staff to deliver a better customer experience and perform more complex knowledge work.
A powerful marriage of people and technology
Despite the typical connotations of the term “autonomous”, autonomous underwriting involves a much better marriage of technology and people. It frees up time for loan officers, processors and underwriters, that is typically spent gathering loan data and documents, comparing info to ensure data is accurate, or in spreadsheets, performing manual calculations and analysis.
Capsilon’s autonomous technology:
- Ensures that loans are complete when they get to underwriting
- Ensures that all data is present and perfected
- Runs income, credit, and asset analyses in seconds and show results
- Runs through all rules and checklists, highlighting any checklist failures
Straight-forward loan solutions can be handled autonomously (touchless) and more complicated scenarios are handled semi-autonomously (low-touch).
- Autonomous: Straightforward loans where the borrower and the loan that s/he is applying for meet criteria and no issues are flagged - the software passes loans through without the underwriter needing to review them.
- Semi-Autonomous: Underwriters resolve any issues that the software flagged, review the results of the analyses, run additional scenarios within the software, and make judgments on whether the borrower should get the loan.
Autonomous underwriting marries technology with highly-skilled people who can now perform at their highest capacity. Employees who have tested the software say it’s a “game-changer.”
Capsilon Instant Underwriter Beta: Learnings and Results
Over the last few months, we did extensive beta testing on real loans to detect errors and train our systems so we can ensure near-perfect accuracy, near-perfect execution, and the highest security standards. The results were both compelling and surprising.
Here’s what we learned:
- No mortgage automation solution will succeed without quality data
The reason why this type of solution hasn’t been available in the past is because of data issues. It’s very challenging to get software to create a source of truth data set for mortgage. Capsilon Instant Underwriter solves the data challenge; it runs on Capsilon IQ, the AI-powered platform that builds an automation-ready trusted data set for each mortgage loan. Over the last year, we’ve made significant upgrades to IQ to ensure we have automation-quality data for our underwriting solution.
- Automation enables the production of virtually error-free loans
- The elimination of manual data entry, calculations, and checklists removes a huge amount of risk from the process
- Nearly 50% of the manually underwritten loans had errors “caught” by Capsilon Instant Underwriter
- More than 10% of the manually underwritten loans had severe errors and a high risk of repurchase
- Autonomous underwriting can deliver unprecedented velocity
When we started building Capsilon Instant Underwriter, our goal was to help mortgage lenders increase underwriting velocity to eight plus loans a day in its initial phase. Through this process, for example, we discovered that a forty-minute manual income analysis could be automated to completion in seconds. We believe autonomous underwriting can deliver an 8-10x increase in underwriting velocity today, with unprecedented velocity as the software matures.
Autonomous underwriting changes the economics of mortgage lending
Capsilon Instant Underwriter is the first of many autonomous solutions that can be deployed across the enterprise… and we’re just beginning.
With the relevant data sets readily available, every step can benefit enormously from deploying autonomous technology, enabling companies to:
- Dramatically lower costs and free your mortgage operations from costly, manual, unscalable work
- Be flexible to changing market conditions (scales up or down without people changes)
- Intelligently connect people to technology so your people are more powerful
Ready to transform your mortgage lending operations? Schedule a personalized demo.