Case study

The challenge

A leading US mortgage lender wanted to optimize loan closing time within its retail and wholesale underwriting channels. The company also wanted to reduce operating costs, lower cycle times and improve pull-through rates. While initial underwriting approval typically takes 72 hours from when a loan is submitted, this process can take longer if the processor submits incorrect or incomplete documentation to the underwriter. Traditionally, an underwriter reviews whether each document in the package is needed for loan approval, and these extra reviews can potentially increase the denial rate and decrease loan processing efficiency. Processors’ lack of clarity around documentation requirements posed another challenge for the lender. Determined to solve these challenges, the company engaged its long-term strategic services partner, Cognizant, to help implement a solution that would position it for loan processing success.

Our approach

To optimize the company’s loan closing time within its retail and wholesale underwriting channels, Cognizant conducted a detailed due diligence review to identify bottlenecks in the loan processing pipeline. Upon further evaluation, we suggested a process redesign to move the pre-underwriting process to a direct to underwriting (DTU) team at one of our shared offshore centers. After the lender agreed to our initial proposal, we began a test project with only six FTEs. Then, after reviewing the program’s overall success, we extended the work to a full-time process. In coordination with the loan processing team, the DTU team serves as a standardized 24x7 checkpoint to ensure each loan file includes the correct documents before it goes to an underwriter for review. The DTU team eliminates ambiguity for the processors by creating automated sheets with written descriptions of the purpose and use case for each loan document.

Moving loans through faster

The improved productivity and overall efficiency of the loan origination process boosted the final approval cycle time by 37%. What’s more, our client realized its vision of optimizing loan closing time within its retail and wholesale channels. Currently, the DTU team processes over 18,000 loans via more than 150 FTEs handling business across all 50 states. Decreasing the number of times each loan is touched during the underwriting process from 3.8 to 2.6 helps the lender deliver loans with 99.8% accuracy, exceeding the company’s 98% expectation. By coordinating with a DTU team and eliminating unnecessary documents from loan files, the lender reduces review time for underwriters and its loan turnaround time. As a leading national mortgage lender, the company continuously strives to optimize closing time for its customers, and the DTU team at our shared offshore center helps make this goal a reality.

28% increase

in loan approval rate year-over-year

20% decrease

in cost per loan year-over-year

76% increase

in file submissions to underwriters