Record Keeping & the Mortgage Crisis

When the dust settled after the 2008 subprime mortgage crisis, the financial sector, the media, and the federal government all came up with interpretations of the disaster. Eventually, we all heard different versions of the same story: bad loans got bundled in with the good, and when the bad loans failed, they took down the rest of the market down with them.

If you did a little deeper, there were also some underlying administrative failures at the banks, failures that could have been prevented with better record keeping. Here are some of the preventable problems that contributed to the mortgage crisis.

1. Lack of human oversight

Once a loan application was in place, there was no guarantee another human being would ever look at the forms again. Often automated signatures replaced the role of a human loan processor. This lack of human interaction with the actual document allowed many faulty loans to go through.

Whoever invented the “robo-signature” did so with the best of intentions. This technological advance was meant to help speed the process along, and get people their loans faster. While this process might have sped things up in the short term, it ended up making the loan process far more complicated in the long run. By completely removing themselves from the process, the bankers made it easy for simple mistakes to go unnoticed.

Proper document management has the same basic idea at its core: The less time an employee spends processing paperwork, the more productive they can be. Instead of cutting out time spent examining a document, professional document software takes away time spent dealing with filing cabinets.

2. Poor communication with customers

Loans are complicated. When people call and ask questions about the process, it should be clear who handled their application. Then the organization will know who best to answer the question.

With professional document management, documents can be assigned to a department or an employee, for consistency and accountability.

3. No chain of accountability

After a federal investigation, some large banks were found to have failed at basic administrative tasks. Many loans were found to contain basic errors, evidence of the fact the loans had never been reviewed.

Professional document management streamlines the workflow related to any document. Using document management software, financial institutions can insure that the right document gets to the correct employee. Contact us at one of our offices for help incorporating document management software into your business routines.

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