Insights Jul 30, 2021

How machine learning helps Lenders close more loans

For Lenders, originating and closing a loan can be tedious and time-consuming. Documents need to be exchanged, negotiations can take days, and a significant amount of time and resources are hard to recoup if a deal falls through. And many deals do fall through at every stage of the origination process.

Thankfully, as Lenders use RealAtom to receive loan requests, the platform’s machine learning algorithm helps lenders to focus on the deals that they can actually close by building a lending profile and prioritizing viable deals based on Lenders’ past and present lending history.

What is the HIT ratio in loan origination and why do we care about it? 

CRE debt finance is not a transaction-reach business. While larger players do thousands of transactions, some lenders close 10-30-70 loans per year. That does not sound much, right? Why would they need to be efficient? This is when we get to talk about the HIT ratio. The HIT is the number of applications lenders review vs the number of loans they close. The ratio can be as dramatically low as 3% for Life Companies, and an average of 5-10% for banks and other CRE lenders. 

Imagine, as a lender you would have to review $100 million in loan applications to close $3 million in loans. What a waste! Instead of focusing on the clients who consistently deliver deals lenders can close, originators keep scouting the entire market year after year. And if a lending firm wants to grow loan volume, they just hire new originators. No wonder we’ve seen lately a wave of LifeCos selling their mortgage units. No one can sustain this kind of inefficiency for a long time. 

The reason we have this antiquated process in CRE loan origination is because no one can analyze the top of the funnel.  Because so far, all applications have been getting buried in emails. Lenders manually have to record closed loans in their internal systems, but not the applications. So all that data on profiles of the customers issued quotes, document exchanges, etc. of the loan requests originators review, but do not close, is dead on arrival.

Using Machine learning to build your lending profile

Thanks to the RealAtom platform, you can now take control of your funnel. As you might know, many CRE and Small Business Lenders use RealAtom’s two-sided platform to receive loan applications from their clients, borrowers, and brokers. When ALL your clients apply to you through RealAtom, the platform learns the details of each loan request that goes through your pipeline. It records the details about customers, properties, your team activities on the platform and it knows which loan requests you passed on, at what stage, or which you’ve closed. 

All of that data, along with the current lending criteria that lenders update when needed, goes toward building your lending profile. Your unique lending profile becomes a tool that sifts through your loan applications for the most viable deals, ultimately cutting weeks from the loan cycle. Since every loan package is different, you deserve a tool that efficiently articulates what you need and what you are offering.

Manually updating your lending profile

When things change in real-time, you can manually update your lending criteria and it will be added to the matching algorithm. Add as many details to your RealAtom profile as you want so that you see at the top of your funnel the most qualified inquiries from brokers and borrowers who meet your criteria. 

Some filters you can include on your account include:

  • Loan Type
  • Loan Size
  • Lender Type (Banks, hedge funds, etc.)
  • Loan Purpose 
  • And much more

These filters streamline your applicant pool and ensure that you focus first on the most qualified leads.

Make your market about you – to close more loans

Your profile is unique to you and your business, so it should work for you. But on RealAtom it is only one of the tools you can use to make your workflow more efficient, save time and ultimately increase your HIT ratio. 

Special communication tools such as direct chatting and document requests within a deal file make the process much more streamlined. For example, you no longer need to wait for a tax return or document to be faxed over or arrive through the mail.

Now, you can request any document directly through your dealroom and your counterparty can upload it directly through the RealAtom portal.

You can rest assured that your data and documentation are safe and secure. Your profile also assists in risk management because you can assign user-specific access to both internal and external parties with your sensitive data.  

RealAtom is the only integrated online platform with a focus on CRE lending. We know that the best business deals are built on strong relationships, and a powerful RealAtom profile will set you apart and enable you to make significant headway when it comes to closing more loans.

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