Automate Mortgage Loan Processing for Non-Traditional Borrowers
Executing a loan for a non-traditional borrower can be risky because you may be dealing with someone that has a unique employment profile. Compared to the time associated to assess traditional borrowers who have W2 employment, non-traditional borrowers are much less attractive. As a result, non-traditional borrowers are often underserved because of the extra work required to process their applications. This conundrum has left a gap in the market where potential borrowers with viable, albeit more time-intensive applications, don’t get proper consideration.
Lenders who have the ability to process loans for non-traditional borrowers with more efficiency and confidence could carve out a niche serving this category of borrower. This is where automated processing for non-traditional mortgage documents can be an advantage.
Common types of non-traditional borrowers
There are many types of non-traditional borrowers. Two common types include self-employed borrowers and borrowers seeking a non-qm (non-qualified mortgage) loan.
On the heels of the pandemic, workplace expectations, and a desire for flexible schedules, young professionals are exploring self-employment at a higher rate than ever before. By extension, mortgage lenders should expect a higher quantity of self-employed applicants to seek mortgage loans, as millennial and gen-Z applicants become primary consumers in the housing market.
Using the traditional method of manual loan execution and underwriting, a self-employed mortgage loan application can take exponentially more time to evaluate than a traditional one. Due to this increased complexity, many mortgage lenders tend to avoid or deemphasize this type of non-traditional applicant.
However, with tools and solutions like intelligent document processing, non-traditional mortgage documents can be handled efficiently. Intelligent automation makes it so, essential data like income and the risk assessment of a candidate can be identified and verified faster. With speedier loan decisioning, more loans can be given to non-traditional borrowers increasing their market share. This can become a significant advantage to your business over other lenders who still prefer to avoid or deprioritize self-employed applicants.
Borrowers seeking Non-QM Mortgage Loans
What is a non-qualified mortgage loan?
A non-qm loan is a loan not backed by the Consumer Financial Protection Bureau (CFPB). This U.S. government agency is the authority that sets the parameters of a “traditional loan,” which include:
- Payment history
- Credit score
- Down payment
- Interest rate
A non-traditional borrower may require a non-qm loan because they do not meet the above qualifications.
Since the CFPB does not back them, a non-qm loan offers flexibility, including:
- A loan duration other than thirty years
- Interest-only payments
- Loans that may exceed the CFPB’s price thresholds
- Loans with negative amortization
Through automation for non-qm loans, these formerly complex processes can be simplified. Namely, the speed at which a lender can process a non-qualified mortgage loan applicant’s bank statements, income verification, asset portfolio, and cash flow models.
Improve your mortgage loan processing for non-traditional borrowers with automation
Lenders can increase efficiency, reduce costs, and mitigate the risk of accepting a non-traditional borrower’s application through automation. In doing so, lenders can originate more loans, make the lives of their underwriting departments easier, and increase revenue for their business.
Instead of avoiding non-traditional applicants, or making them a lower priority, with automation lenders can expect a similar turnaround time as with traditional borrowers, making them just as attractive.
The underserved community of non-traditional borrowers, which is growing by the day, can become an impactful business pipeline for lenders who can efficiently process their applications through automated mortgage document processing.
Connect with one of our mortgage automation experts to find out how Ocrolus can help you transform your mortgage loan processing.