Loan servicing refers to the way a financial institution, or a lender, collects the payment for a loan. Loan servicers are responsible for the overall management of a loan once it is issued to a borrower, which entails sending billing statements, updating records, responding to requests and inquiries, and processing payments.

Additionally, loan servicers must comply with many federal and legal requirements, which are dependent upon the type of loan that they are servicing. For example, mortgage servicers must apply payments to the loan on the same day that it is received, disclose the payment amount to borrowers, alert borrowers about missed or late payments, and keep detailed records about payment history.

A cognitive document processor can completely overhaul a loan servicer’s document processing workflow by both eliminating a lot of manual work and providing more accurate and useful information to analysts. An AI-driven intelligent document processor like ADEx, which is pre-trained to recognize and comprehend over 2,000 document types, can not only perform the same tasks as a human employee in a fraction of the time but also extract data to help inform customized servicing strategies to mitigate error and maximize revenue.
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A large portion of servicing a loan, for example, entails responding to borrower variables. Borrowers may update addresses, payment terms, beneficiaries, etc., and a cognitive document processor will be able to catalog these changes by automatically extracting this data from forms and declaration pages. With superior data in terms of both speed and accuracy, servicers can then clear loan conditions more quickly, gain timely approvals, and increase their margins.

A cognitive document processor’s primary purpose is to automate the ingestion, classification, and evaluation of documents with speed and accuracy unattainable by a human employee. While the processing enhanced speed and reduction of manual work is one of the more obvious benefits of implementing an IDP, the increased depth of analysis and comprehensive data extraction can also drastically improve your loan servicing business.
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An AI-driven document processor, pre-trained with a library of thousands of relevant documents, can go beyond simple keyword recognition. It can overhaul loan servicing processes by cognitively comprehending more complex relationships between documents and using that information to present key analytical data in an easy-to-understand way. For example, an IDP can quickly detect fraudulent behavior, which minimizes risks of non-compliance and resultant penalties. Additionally, a cognitive document processor like ADEx can help you gain insight into your own processes by providing a dashboard with detailed reporting and performance analytics. This can help you identify bottlenecks or unnecessary steps in your systems and guide you toward more efficient workflows.

Since the “Great Recession,” the regulations and legal requirements involved in the loan servicing process have become much more stringent. As a result, the amount and complexity of the documentation involved has grown massively. For every loan, a servicer may need to process lien releases, payment records, billing statements, and regulatory compliance documents.
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Many loan servicers have had to increase the number of staff that they employ in order to keep up with the increased workload. These employees are often responsible for the manual maintenance of each loan, which involves updating data, reviewing documents, and verifying records. The amount of manual work involved in loan servicing document processing can give way to decrease in profits and an increase in human error among loan servicing companies.

Absolutely. When legal regulations for loan servicing ratcheted up, financial institutions were required to process more documents than ever. And even though these documents are often unstructured, powerful AI-driven intelligent document processors like ADEx are purpose-built to take in, analyze, and extract relevant datapoints from these documents. This means that the lengthy, labor-intensive processing workflows can not only be automated, but also be made more comprehensive and accurate.

Purpose-built for the real estate industry, ADEx is a groundbreaking tool for document automation by providing end-to-end workflow solutions. Artificial intelligence has been relatively slow to reach financial institutions and lenders, but ADEx already comprehends over 2,000 document types and has, to date, processed over 7 million documents. Unlike other IDPs, which offer generic AI, ADEx offers a turnkey data extraction tool which is built to enable loan servicers to work with less human error, more accurate data, and increase their ROI.