Getting Approved For A Mortgage Loan – “Mortgage applications are different for every customer and can take several days, especially for those who do not have all the required documents in hand. Reducing this seemingly lengthy process to just one hour for the majority of applicants is a significant leap forward for a more seamless experience for mortgage customers,” said Dinesh Suresh, head of digital strategy for consumer secured loans at OCBC Bank.
OCBC is breaking this cycle by offering the potential of a mortgage loan approval service within 60 minutes. The upgrade is possible using the FICO Origination Manager. The solution is a digital end-to-end loan application and acceptance pathway that leverages automation and direct mortgage processing that starts online.
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“The central element was a decision system that could tie together all the threads of a loan application and weave them into the fabric of an online ‘self-service’ application channel,” said Suresh.
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Before the implementation, the status quo was that all new home loan applications were manually entered into the bank’s mortgage origination system called CLOUDS (Consumer Lending Origination Uber Decisioning System). Once approved, an offer letter was created for the customer to sign. All this took time for the customer and the process created friction for OCBC.
The mortgage application process required the submission of various documents showing employment, income, financial assets, property details and payment records.
To streamline the process, the team had to integrate MyInfo, Singapore’s one-stop e-government information platform for citizens, manage personal eKYC (Electronic Know Your Customer) on apps, automate policy decisions and enable manual bank review. cadre.
The integration of MyInfo into the process meant that customer information was pre-populated and mapped to the correct fields in the CLOUD. It also meant that OCBC did not have to obtain physical documents to verify the customer’s identity or obtain a separate photograph. eKYC is essentially done at this point, but OCBC has also integrated its own dedicated real-time digital KYC to ensure full compliance with its system and standards.
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Loan sizing decisions are based on many factors, such as the regulatory total debt service ratio (TDSR) and loan-to-value (LTV). Income is verified against tax returns submitted to the Inland Revenue Authority of Singapore (IRAS), as returns are also integrated into MyInfo, and property valuations are determined using API links to third-party valuers.
After all the calculations are done and a decision is offered, the FICO solution sends the application directly to the purchasing manager for review and finalization. This is to ensure that the dates, estimates and prices appear correctly before the PDF offer letter is sent for the customer’s digital receipt.
Suresh pointed out that OCBC’s CLOUDS is still the bank’s mortgage origination platform. “FICO Origination Manager – a technology that ingests data sources, manages business rules and automates mortgage application decisions,” said the decision brain in CLOUDS.
Aashish Sharma, senior director of risk lifecycle and decision management at FICO, added that the arrangement also provides an opportunity to standardize the bank’s processes for greater efficiency and future-proof it.
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“This solution is designed to achieve the bank’s business results, including increasing efficiency and reducing transaction cycle time. With this in mind, each role had a unique user interface that allowed them to manage their work quickly and efficiently. The FICO solution is integrated with the bank’s user authentication system to ensure a seamless onboarding experience.”
“The modern consumer gravitates toward companies that can make doing business as convenient as possible,” said Tomasz Klinger, director of decision and data at Home Credit China. “You don’t often see this kind of banking innovation in mortgages because they require a lot more data collection and accurate analysis. “Creating a 60-minute mortgage application service is the type of proposition that will get consumers to refer the bank to their social circle.”
Suresh insists that the bank will continue to offer all channels when it comes to loan applications, so nothing will change if customers want to approach a branch.
“However, it is important to note that even though our branches remained open during the Singapore Circuit Breaker, customers appreciated the digital option for their loan application. Thanks to our digital process, S$700 million worth of loans have been signed using this online ‘instant mortgage’ process. The new approach is about offering customers choice, security and convenience through fast, simple and seamless travel.” Most home buyers have heard that they need to be pre-approved or pre-approved for a mortgage if they want to buy a property. These are the two main steps in the mortgage application process. Some people use these terms interchangeably, but there are important differences that every buyer should understand. Prequalification is only the first step. This will give you an idea of how big of a loan you might qualify for. A pre-approval is the second step, essentially a conditional commitment to give you a mortgage.
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“The pre-qualification process is based on information provided by the consumer,” said Todd Kaderabek, residential broker at Beverly-Hanks Realtors in downtown Asheville, NC. “Pre-approval is verified consumer information – like a credit check.”
Getting pre-qualified means providing the bank or lender with an overall financial picture, including debt, income and assets. The lender will review everything and estimate how much the borrower can afford. Prequalification can be done over the phone or online and is usually free of charge.
Prequalification is quick, usually taking one to three days to receive a prequalification letter. Note that loan pre-screening does not involve a credit report analysis or an in-depth look at the borrower’s ability to purchase a home.
The initial preparation phase allows you to discuss any mortgage goals or needs. The lender will explain the different mortgage options and recommend the most suitable type.
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Discrimination in mortgage lending is illegal. You can take action if you believe you have been discriminated against because of your race, religion, sex, marital status, use of public assistance, national origin, disability or age. One such step is to file a report with the Consumer Financial Protection Bureau or the US Department of Housing and Urban Development (HUD).
Again, the predetermined amount is not certain because it is based only on the information provided. This is only the amount expected by the borrower. A pre-approved recipient does not carry the same weight as a more thoroughly vetted pre-approved recipient.
However, pre-qualification can be useful when it comes time to bid. “A pre-qualification letter is almost a must for an offer in our market,” Kadeřábek said. “Sellers are savvy and don’t want to sign a contract with a buyer who can’t honor the contract. One of the first questions we ask a potential buyer is: Have you met with the lender and determined pre-qualification status? If not, we recommend options to lenders. If so, we request and retain a copy of the initial qualification letter.”
Getting pre-approved is the next step and is more complicated. “Pre-qualification is a good indicator of creditworthiness and borrowing capacity, but pre-approval is the definitive word,” Kadeřábek said. To be pre-approved, the borrower must complete a formal mortgage application and also submit all necessary documents to the lender for an extensive credit and financial background check. The lender will then offer pre-approval up to a certain amount.
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Going through the pre-approval process gives you a better idea of the interest rate that will be charged. Some lenders allow borrowers to lock in the interest rate or charge a pre-application fee that can be several hundred dollars.
Lenders will provide borrowers with a conditional written commitment of an exact loan amount that allows them to search for homes at or below that price level. This gives borrowers an advantage in dealing with the seller because they are one step closer to getting a real mortgage.
The benefit of completing both steps – pre-qualification and pre-approval – before looking for a home is that it provides an idea of how much the borrower has to spend. This avoids wasting time looking at very expensive properties. A mortgage pre-approval also speeds up the buying process itself and lets the seller know the offer is serious in a competitive market.
After the home is selected and made an offer, the borrower will provide the lender with a copy of the purchase agreement and any other documents required as part of the entire underwriting process. The lender hires a certified or licensed third-party contractor to perform a home appraisal to determine the value of the home.
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Your income and credit profile will be rechecked after initial approval to make sure nothing has changed, so this isn’t the time to go out and finance a big furniture purchase.
The final step in the process is the loan commitment, which the bank issues only after approving the borrower and the home in question—which means appraising the property at or above its sale price. The
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