Many lenders are still relying on outdated, manual systems to meet borrower expectations, resulting in slower pipelines and increased risk exposure. It’s time for a change.
Automation as a Risk Mitigation Strategy
Automation isn’t just about speed, it’s also about risk mitigation. By incorporating automation into the loan process, lenders can identify discrepancies, enforce disclosures, and detect potential compliance issues well before closing. Automated systems can track deadlines and keep teams aligned without the need for manual file chasing.
This shift transforms compliance from reactive to proactive. Lenders can now manage risk in real time, documenting every decision to provide borrowers with a smoother and more secure experience.
A case study from 2024 on machine learning-based compliance software showed that document processing time decreased from 7 days to 1.5 days, while accuracy in identifying compliance issues improved from 78% to 93%. Manual efforts decreased by over 70%, allowing employees to focus on strategy rather than administrative tasks. Similar efficiencies can be achieved in the lending industry through automation, enabling teams to dedicate more time to addressing borrower needs and delivering personalized experiences.
The Consequences of Inaction
Failing to modernize compliance workflows in today’s environment is risky. In 2024, mortgage originators had to issue $115 million in refunds across more than 130,000 loans due to unlawful fees and improper disclosures. Since 2021, redlining enforcement has led to at least $140 million in remediation. These incidents are not minor errors but rather institutional failures in compliance. When compliance falters, borrowers face confusion, delayed closings, unexpected costs, and a loss of trust.
Manual processes increase exposure by slowing down reviews, complicating audits, and raising the chances of human error, particularly in an industry with constantly evolving regulations.
Compliance teams are feeling the pressure. In 2025, over 60% of compliance officers spent up to seven hours per week tracking regulatory changes. One-third of lenders are planning to expand their risk and compliance departments due to mounting regulatory demands.
However, simply increasing headcount is not a sustainable solution. Compliance teams require smarter tools to alleviate the burden, keep up with changing requirements, and focus on strategic oversight.
The Industry is Embracing Change
Forward-thinking lenders are investing in compliance processes that prioritize technology in their business models. From automated pre-close audits to AI-powered document validation, new tools are revolutionizing how companies manage and assess risk. These solutions enhance efficiency, transparency, and reduce repurchase risk, positioning lenders to adapt to regulatory shifts. By combining human expertise with scalable technology, lenders can achieve better outcomes for borrowers, partners, and regulators.
Craig Ungaro is the Chief Operating Officer at AnnieMac Home Mortgage.
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