Recently, a number of factors have come together to decimate the profitability of the mortgage banking industry. Today, Mortgage Organization are facing pressure from all sides. Interest rates are at historic lows. Technology is reshaping customer expectations. And a global pandemic is stretching remote workforces thin and causing increased demand as more consumers seek to refinance and consolidate debt in these unprecedented times. To regain its footing, the industry must return to mortgage banking fundamentals.
A careful examination of each function within the mortgage organization will determine if there is a better approach that will save money and improve long-term profitability.
Here are steps lenders can take to achieve speed, efficiency, and security in automating the mortgage loan process:
1. Adopt Technologies to Reduce Operating Expenses
- Speed the handling and processing of loan documents, increase accuracy and eliminate costly delays of manual rekeying with content-aware print and capture technology, automated data extraction, document type identification, image correction and clean up blank page removal, and double-sided scanning.
- By leveraging automation using technologies such as API, Microservices, Artificial intelligence etc., significant facelift will be made in the loan origination system and its integrated system.
- This approach saves time, increases productivity, and should result in experts focusing on opportunities with a higher likelihood of closing.
- Optical Character Recognition (OCR) can identify hundreds of mortgage related documents, extracting most any information selected.
2. Accept documents from any input source. Missing documents shouldn’t be a cause for delay.
- Allow the customer to send the needed document any time from any input source: scanner, email, fax, web forms, mobile, and others.
3. Ensure Policies are Consumer-Friendly
- Lending organizations must refocus their attention away from default and compliance, and toward a sound customer experience.
- Lenders should examine existing processes, making sure all steps are necessary and not duplicative – an examination that is especially valuable for mortgage loan originations.
- Mortgage bankers needs to anticipate consumers’ questions by clearly giving the reasons for any payment increase within that disclosure.
- Features such as auto-filling of loan application fields, automated data capture from scanned images, instant document transfer from branches to central offices, and continual visibility into loan status increase accuracy and offer customers the digital experience they desire.
4. Reduce marketing costs
- Significant cost savings can be achieved by implementing Predictive Modelling for next product purchase propensity.
- Lenders should replace mass marketing with targeted promotions to the right customer with the right product message. Increased segmentation both reduces costs and improves results.
5. Examine the Cost of Duplicate Operations and Reviews
- Organizations can find a more balanced, cost-effective approach to quality control audits.
- Conduct a study to determine what control functions, as well as their audits and quality control checks, are costing your operation.
- Simply conducting the quality control audit will not change employee behaviors. It is often more effective to build in a system with positive and negative feedback than to continue correcting errors.
Several recommendations will be helpful in your system’s development:
- Follow the 80/20 rule. To determine which employees are performing better than others, build a system that captures about 80 percent of the items they are doing. If an employee is performing those well, it usually carries over to the remaining 20 percent.
- Track the end result of a function’s effort instead of the intermediate steps, which simplifies set up of the tracking system.
- Allow managers to set standards based on the performance of a very effective employee. The standards will then be attainable and enhance performance of all employees.
Increasing revenue in the current interest rate environment will be difficult, especially in mature markets. To improve profit margins, lenders must make bold moves to dramatically cut costs. If they do, banks can replace the recent trends with a virtuous circle, whereby the reinvestment of profits in technology continually improves efficiency.
Please refer “Insight Report” by Ellie Mae.
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Take Five Consulting is a technology company, based in Virginia U.S., that specializes in the Mortgage Banking vertical especially LOS implementation and application development. Take Five Consulting creates and implement mortgage technology and software specifically for Mortgage Industry.
