Tips for brokers looking for a smoother process for customers and lenders
As the cost to produce a mortgage remains high, margins for mortgage brokers continue to tighten. While everyone waits for a major rate drop to help spur more business, everyone is looking for ways to improve their bottom line.
One way that brokers can help improve margins is by adopting new technologies to make processes more efficient. And while it can be tempting to hold off on major tech purchases due to the upfront cost, one expert believes the investment is worth the payoff.
Spencer van Erkel (pictured top), mortgage product manager at Plaid, said that manual work is causing a strain on brokerage bottom lines. The more processes that are manual, like chasing documentation, the more it adds stress to the staff and makes it harder for smaller brokers to compete with larger companies with more advanced automation.
“While volume is low, and the average cost to produce a mortgage is high, some companies deprioritize technology investments for short-term savings,” van Erkel told Mortgage Professional America. “Unfortunately, this hesitation to innovate opens the door to long-term inefficiencies that cost brokers time and money anyway.
“A notable strain on margin right now really comes down to manual work, specifically in document collection required for verification. Choosing to invest in digital verification can serve as more than just an efficiency play for brokers, but also a path to compete and discover new profit. We regularly encourage brokers to operate with a long-term mindset, with the goal to identify new efficiencies early on in origination that will carry through loan closure.”
Challenges in verification
One of the biggest issues in the ever-growing digital world is the continued manual processes that have to work with digital solutions. This can be especially challenging for brokers working with multiple lenders, van Erkel notes.
“The headline here is that everything around us is getting more digital, but traditional verification methods are inherently analog,” van Erkel said. “To get the most out of modern tooling and systems, you need digitally native data flowing through your workflow.”
When brokers rely on static PDFs and manual uploads, each missing or outdated document triggers another round of outreach to the borrower. That slows deals, increases touchpoints, and raises the risk of errors that can surface far downstream in underwriting or in post-close audits. Van Erkel said real-time data that the customer permits to be shared changes that picture.
“One major change is speed,” he said. “Manual document uploads are static and fixed. If you need more information from the borrower, you have no choice but to go back and request more information. Consumer-permissioned bank data works differently. Brokers can refresh the information when needed without waiting on the borrower to dig up new paperwork. Real-time digital data also provides so much more functionality for much lower costs.”
Compliance with the GSEs
Another part of the automation is making sure all the data is not only compliant for the lender, but also for Fannie Mae and Freddie Mac for loans to be sold on the secondary market.
“In practice, GSE-aligned data means the digital verification reports brokers pull are already formatted to flow directly into automated underwriting systems like Fannie Mae’s DU and Freddie Mac’s LPA,” van Erkel said. “For brokers, that translates into fewer conditions from their wholesale lender, faster closings, and less back-and-forth with the borrower.
“Because that data carries representations and warranties relief for the lender downstream, wholesale partners are increasingly incentivizing brokers to use these digital verification tools, whether through better pricing, faster turn times, or both.”
From van Erkel’s perspective, that alignment is central to a sustainable tech strategy for brokers that want to stay on their lenders’ preferred lists.
Better processes for the borrower
But the technology also helps at the front end of the process with the borrower. Potential homeowners have plenty of questions about the mortgage process, and the more complicated that process is, the more likely they are to give up on it. That experience is a major driver of borrower drop-off during applications, which van Erkel notes is a problem that hits broker pipelines directly.
“There is truly frustration on both sides–for borrowers and brokers,” he said. “To address drop-off during a loan application, brokers should be intentional about introducing the right steps at the right time. Prompting a borrower to securely connect their bank account when it makes sense can drastically speed up the application process and remove frustration that leads to drop-off.
“Right now, we’re powering up to 80% conversion in lending flows – a metric we attribute to trust, since Plaid is used by more than half of US adults with a bank account.”
Despite those benefits, some more traditional brokers still hesitate. The biggest misconception, van Erkel said, is that having a borrower log into their bank account through a secure portal creates more friction than simply emailing sensitive documents.
“What our customers see instead is faster time to close,” he said. “Real-time data replaces manual document uploads and provides a clearer picture of borrower risk upfront. That, in turn, helps brokers make more confident decisions and reduces unpleasant surprises late in the process.”
The impact is measurable. Plaid has helped a leading online lender pre-approve loans with digitally verified assets 29% faster than those without.
Van Erkel said embracing real-time data is less about chasing the latest shiny tool and more about building a coherent, long-term technology strategy. That starts with moving verification off of manual, analog rails and onto digitally native, consumer-permissioned data.
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