Technology Launches To Automate Non-Delegated MI Underwriting

Staircase, a company building an integrated, digital infrastructure to accelerate tech-enabled mortgages, has launched MI Underwriting, a new tool that gives private mortgage insurers the ability to automate the underwriting of non-delegated mortgage insurance (MI) policies for lenders instantly and at half the typical cost.

In the delegated channel, the lender underwrites the loan for MI and then submits it to the mortgage insurer. With non-delegated MI, lenders typically submit a full package of information from the borrower—including pay stubs and tax returns—to the insurer who then processes the information manually to make an underwriting decision according to its guidelines.

For lenders, non-delegated MI underwriting often provides rescission relief for eligible loans. But it takes longer—anywhere from two to eight hours—for an insurer to underwrite a loan policy. Staircase’s MI Underwriting tool fully automates the non-delegated underwriting process by pulling documents and data directly from lenders to allow insurers to make instant policy decisions. The Staircase product includes manual quality control where needed but also enables mortgage insurers to route exceptions to their existing internal processes. The result is mortgage insurers can become 100% fully non-delegated which provides them with higher margins than delegated underwriting.

MI Underwriting comes with built-in quality control reviews and costs just $50 per loan file or roughly half the cost of the current industry average.

“Our MI Underwriting product empowers mortgage insurers to produce non-delegated MI policies faster, more accurately, and less expensively so they are able to achieve higher margins,” said Staircase Co-founder and CEO Adam Kalamchi. “Just as importantly, MI Underwriting delivers instant mortgage insurance decisions that can help insurers grow market share while allowing their lending partners to increase closing rates. It’s a total game changer for the MI industry.”

MI Underwriting leverages technology from Staircase Loanboarding which uses machine learning tools to transform raw loan documents into structured data. Loanboarding automatically classifies more than 120 common loan document types, extracts 600 different loan data points, and reviews loans for exception handling and quality control.

The breakdown of delegated versus non-delegated MI underwriting shifts based on market dynamics. “If there’s more risk in the market, lenders often prefer the second set of eyes offered by non-delegated underwriting. Staircase MI Underwriting enables insurers to now provide this option quickly and cost-effectively,” Kalamchi said. “It’s a win for both private mortgage insurers and lenders.”