Speed Meets Insight: Automated Underwriting vs. Manual Review with Blooma

Key Takeaways:

• Automated underwriting systems reduce loan processing time from days to hours while maintaining accuracy
• Manual underwriting remains essential for complex deals requiring human judgment and specific circumstances
• Blooma's platform automates routine tasks, freeing underwriters to focus on strategic decision-making
• The future lies in human-AI partnerships that combine speed with expertise
• Real-time portfolio monitoring provides continuous risk assessment beyond traditional auditing cycles

With the growth of technology, you can now cut your loan approval time from days to hours while simultaneously improving accuracy and reducing risk. In commercial real estate lending, where responding first often means winning the deal, this can make all the difference. Forward-thinking lenders like you are also embracing this through intelligent automation.

The underwriting process sits at the heart of every successful CRE transaction, determining not only whether a loan gets approved but also how quickly lenders can capitalize on opportunities. 

Today’s lenders face a critical choice: continue relying on traditional manual underwriting methods that consume valuable time and human resources, or embrace automated underwriting systems that deliver speed without sacrificing the nuanced judgment that makes great underwriters irreplaceable.

• Manual underwriting relies on human expertise, judgment, and manual review of documents.
• Automated underwriting utilizes technology, algorithms, and AI for faster, data-driven assessments. 

Blooma’s advanced platform represents the evolution of this critical process, supporting human underwriters with intelligent automation that transforms how CRE lenders evaluate opportunities and manage risk.

This article compares these two approaches, showcases the power of AI-driven automation, and highlights why a human-AI partnership represents the future of smarter, faster CRE lending.

Traditional Manual Underwriting: The Human Touch and Its Challenges

The manually underwritten process has long been the gold standard in commercial real estate, where experienced underwriters painstakingly gather, analyze, and evaluate loan applications alongside supporting documentation, including financial statements, property records, and comprehensive market data. This traditional process relies heavily on:

• Individual expertise
• Institutional knowledge
• The underwriter's ability to assess risk based on years of experience reading financial documentation 
• Understanding market dynamics.

A manual underwriter thoroughly examines every detail of a commercial loan, including financial documents, third-party reports, tax returns, and market data. In complex scenarios such as non-stabilized assets, unconventional deal structures, or borrowers with unique financial profiles, this human touch proves invaluable in ways that no automated system can replicate.

However, manual underwriting presents significant challenges that impact both efficiency and scalability:

• Time-Consuming Operations: Manual data entry, document verification, and analysis result in lengthy processing times that can extend loan approval timelines from hours to days or even weeks. The extended timeline becomes a costly bottleneck that prevents lenders from responding quickly to market opportunities.
• Error-Prone Processes: Despite the best intentions, human error inevitably creeps into repetitive tasks that involve large volumes of data. A misread credit score, incorrect DSCR calculation, or overlooked detail can lead to poor lending decisions or missed opportunities.
• Inconsistency Across Teams: Different underwriters may interpret the same financial information differently, leading to varied decisions across a portfolio. One underwriter might interpret comparables or cash flows differently than another, creating inconsistent lending standards and potential compliance issues (read more about the Federal Housing Administration’s underwriting guidelines.)
• Resource-Intensive Requirements: The traditional process demands significant human resources to handle routine tasks that could be automated, increasing operational costs and limiting scalability as loan volume grows.

Automated Underwriting: The Blooma Advantage in CRE

Automated underwriting systems leverage technology, algorithms, and AI to process loan payments and applications and assess risk quickly and accurately. 

These systems represent a massive shift from traditional methods, utilizing machine learning and data analytics to streamline what was once a completely manual process.

Blooma’s approach includes:

• AI-Powered Data Automation: Blooma's platform automates the extraction, validation, and processing of data from diverse documents, including financial statements, offer memorandums, and property documents. This eliminates hours of manual data entry that typically bog down the underwriting process, allowing loan officers to focus on higher-value activities rather than routine data verification tasks.
• Streamlined Workflow & Insights: The platform streamlines crucial CRE tasks like deal sizing, asset/borrower analysis, and pipeline management. Blooma's machine learning models analyze historical data, market trends, and lending profiles to provide data-driven insights for confident decisions. Rather than relying solely on basic metrics, the system evaluates comprehensive risk assessments across multiple data points.
• Real-time Monitoring & Portfolio Intelligence: Unlike traditional methods that rely on annual or semi-annual audits, Blooma extends beyond origination by continually monitoring loans after they've been distributed. This portfolio intelligence provides real-time updates on loan health and portfolio performance, enabling lenders to move beyond the limitations of periodic reviews that often leave them in the dark about their portfolio's true condition.
• Intelligent Deal and Asset Analysis: Blooma utilizes AI to rapidly analyze comparable assets and assess the potential of a loan application, offering a clear view of opportunities and potential red flags before significant time is wasted on non-viable deals. 

What benefits can lenders get from leveraging Blooma?

• Efficiency and Speed: Underwriting automation significantly reduces processing time, enabling faster approvals and shorter closing times, which in turn lead to increased deal velocity. In a market where responding first often determines success, this speed advantage becomes a critical competitive differentiator.
• Accuracy and Reliability: Algorithms analyze relevant data with precision, minimizing human error and leading to more reliable outcomes. The automated system promises consistent application of lending rules, regardless of volume or complexity.
• Consistency and Objectivity: Data-driven decisions are based on standardized criteria and comprehensive data analysis. This ensures fairness and transparency across the board. 
• Improved Risk Management: Real-time risk assessment, predictive analytics, and stress testing capabilities help identify and mitigate risks proactively, giving lenders a comprehensive view of their portfolio's resilience. This ongoing monitoring capability extends far beyond traditional auditing cycles, providing continuous insight into loan performance.
• Scalability: Automatic underwriting systems can efficiently handle increased loan volumes without significantly increasing overhead. This translates to growth without proportionate increases in headcount. 
• Enhanced Borrower Experience: Faster approvals and streamlined processes lead to higher borrower satisfaction and a more competitive offering in the marketplace, ultimately driving customer satisfaction and repeat business.

The Human-AI Partnership: The Future of Underwriting

The question isn’t whether AI will replace human underwriters. Instead, the focus should be on how intelligent automation can amplify their expertise and effectiveness. 

Blooma’s platform exemplifies this philosophy by boosting human capabilities rather than replacing them.

• Focus on Strategic Tasks: By automating routine data collection, extraction, and preliminary analysis, Blooma frees experienced underwriters to concentrate on complex, nuanced cases that require human judgment, relationship building, and strategic thinking. This approach reduces human error in repetitive tasks while ensuring human experts remain central to the final decision-making process.
• Deeper Insights, Better Decisions: When underwriters receive comprehensive, AI-processed data and insights, they can make more informed decisions faster. The combination of technological efficiency and human expertise creates a powerful synergy that improves both speed and accuracy.
• Evolving Role of the Underwriter: Rather than diminishing the underwriter's importance, automation elevates their role from data processor to strategic advisor. Underwriters can focus on building relationships with borrowers, negotiating terms, and applying their experience to complex scenarios that require nuanced judgment.

Choosing the Optimal Underwriting Strategy with Blooma

Blooma’s platform seamlessly integrates into existing workflows, boosting current systems rather than requiring complete replacement.

Some strategic factors to keep in mind include:

• Loan Complexity: Utilize Blooma for streamlined processing of standard deals, while allowing human underwriters to focus on complex transactions that require specialized attention.
•  Resource Optimization: Deploy human expertise where it delivers maximum value, such as in relationship building, complex negotiations, and handling unique circumstances that fall outside standard parameters.
• Growth Planning: Automated systems support scaling operations without proportional increases in staffing, enabling lenders to pursue aggressive growth targets while maintaining quality standards.
• Customer Satisfaction: Faster processing times and more consistent decisions enhance the borrower experience, resulting in higher customer satisfaction and stronger referral networks.

Smarter Underwriting, Accelerated Growth

For mortgage lenders serious about accelerating their commercial real estate lending business, the question isn’t whether to embrace automation. It’s how quickly they can implement intelligent systems that amplify their competitive advantages. 

Automated underwriting systems like Blooma deliver the speed and accuracy that today’s competitive market demands while preserving the human judgment that distinguishes exceptional lenders from the rest.

By automating routine tasks and providing comprehensive data analytics, Blooma empowers lenders to achieve greater efficiency, improved accuracy, and superior risk management. 

The result is a more agile organization capable of responding faster to market opportunities while maintaining the rigorous standards that protect against unnecessary risk.

Explore Blooma’s platform to discover how AI-powered underwriting can transform your lending operations and drive sustainable growth in an increasingly competitive marketplace.

People Also Ask (FAQs)

• What is the difference between manual and automated underwriting?
  • Manual underwriting involves human underwriters personally reviewing and analyzing all loan documentation, financial information, and risk factors. Automated underwriting uses computer algorithms and AI to process applications, analyze data, and make preliminary lending decisions based on predetermined criteria and machine learning models.
• Is manual underwriting better?
  • Manual underwriting excels for complex scenarios, exceptional circumstances, and borrowers who don't fit standard profiles. However, it's slower and more resource-intensive than automated systems. The most effective approach combines both methods, utilizing automation for routine processing and human expertise for complex cases.
• What is automated underwriting?
  • Automated underwriting is a technology-driven process that uses algorithms, AI, and data analytics to evaluate loan applications quickly and consistently. It analyzes relevant data to make preliminary lending decisions.
• Do banks still do manual underwriting?
  • Yes, some financial institutions continue to use and request the manual underwriting process for complex loans, unique borrower situations, and cases where automated systems can't adequately or accurately assess risk. Many lenders employ hybrid approaches, combining automated processing with human oversight for optimal results.