It is common knowledge that mortgage volumes are down and that lenders are searching for ways to reduce their costs to originate. The strong M&A market is a direct illustration that the herd is being culled and may be a case for only the strong will survive. Over 75% of today’s production costs are people related. Why so high? One must look at the heart of the problem, the inefficient LOS.
Survival of the Fittest
According to the MBA and STRATMOR Peer Group Roundtable (PGR) benchmarking program, the average number of loans per underwriter per month is about 34. For Closers, it was just over that number at close to 35. In our view, this is the reason so many lenders will not survive.
“The average applications per retail underwriter per month was 34 for the mid-sized independents. This translates just under two files per day,” Rob Chrisman, daily mortgage news commentary said. “Survival of the fittest… and of those with the lowest cost to produce to outlast competitors.”
MortgageFlex customers average about 50 plus loans per underwriter per month, that is over 40% higher than the national average. On the closing side is where the real difference matters. Our lenders are in the 70 to 80 plus per month/closer.
The Big Difference
Many of these systems are single threaded and do not have true workflow automation. They are not rules-based and auditing loan quality throughout the process. Because compliance validation is not an external service, we check compliance as the data is entered. This allows the user to avoid creating the problem that otherwise would have to be caught and corrected later. If you are checking compliance just before drawing documents, so many of the errors are still evident and other errors may have been introduced due to the first error. Errors can be compounded because of the flawed process.
Any operational efficiency expert will tell you that the most cost-effective approach to error correction is to not create the error in the first place. However, if an error is created, best to fix it at the time it is created, not days or weeks later. The cost to cure magnifies the longer you are away from the creation of the error.
Imagine operating in a platform where you can even have two loans up at once or two users working on different aspects of the loan manufacturing process. The equivalent would be if the iPhone could not multitask. It is time that lenders demand more from their technology providers. Come see why MortgageFlexONE is the ‘New Peak of Efficiency.’