Staircase debuts tool to automate non-delegated mortgage insurance underwriting

Mortgage tech startup Staircase says it has launched a tool that enables mortgage insurers to automate the underwriting of non-delegated mortgage insurance (MI) policies for lenders at about half of the typical cost.

Staircase’s mortgage insurance 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 firm said.

To underwrite a non-delegated loan, the lender collects all the documentation, including pay stubs, bank account statements and tax returns. Once the data and documents are submitted to the mortgage insurance company, their underwriters determine if the loan meets their underwriting guidelines.

While borrowers have the advantage of tapping into a large pool of underwriting talent at the mortgage insurers they choose, the downside is that non-delegated underwriting takes longer than delegated underwriting.

In the delegated channel, the lender underwrites the loan for mortgage insurance and submits it to the mortgage insurer. While delegated underwriting can make the entire mortgage approval process faster, the lender may be open to more rescission risk.

“Our mortgage insurance underwriting product empowers mortgage insurers to produce non-delegated mortgage insurance policies faster, more accurately, and less expensively so they are able to achieve higher margins,” said Staircase co-founder and CEO Adam Kalamch.

Mortgage insurance underwriting costs $50 per loan file, roughly half the cost of the current industry average, according to the firm.

Cost cutting is available through Staircase’s Loanboarding, which uses machine learning tools to automatically classify more than 120 common loan document types to extract 600 different loan data points and review loans for exception handling and quality control.

Staircase, founded in 2020, raised $18 million in Series A funding the following year, led by Bessemer Venture Partners with participation from five ventures, including Avid Ventures and Clocktower Technology Ventures as well as angel investors.

In April, the company rolled out Amazon Web Service blockchain-backed digital infrastructure called “Staircase Persistence,” which it claims enables lenders to safely store collected mortgage data while processing loans faster.

The startup introduced Staircase Language earlier this year, which allows any company in the mortgage industry to translate data into another language, including the real estate finance industry’s standards.

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