The mortgage industry has seen a lot of changes as well as challenges in recent years. According to a recent (Q1 2018) Mortgage Bankers performance report published by MBA, average monthly closings per sales employee dropped to 4.8 loans from 5.9 units in the fourth-quarter 2017 and 5.0 loans in the first-quarter 2017. Couple this with the rise in origination fees – Origination fees climbed to 53 basis points from 46 BPS in the fourth-quarter 2017 and 45 BPS in the first-quarter 2017. With decline in volumes and rise in costs, wholesale lenders are finding it difficult to maintain profits.
These wholesale lenders have had to reinvent many of their processes to suit the changing times. One of the things that they are working on intensely is to ensure that they leverage technology and move more towards eclosures.
A significant proportion of mortgages originated nationwide are done by brokers and brokers are the preferred route for consumers as well, as they are able to understand client/borrower needs and match them with a lender who can offer competitive rates and terms. Brokers also save borrower’s time and efforts to finding the best possible property and the best possible rates.
- Wholesale lenders do tend to work a lot with brokers and they must ensure a pleasant loan experience for their broker clients. As a part of this pleasant loan experience, Wholesale lenders must quickly move towards eclosings and ensure that data is digitized quickly and accurately available in the lender LOS system.
Although, this sounds easy on the surface, there is a catch to it. Brokers do not have affinity towards any specific wholesale lender. They are open to dealing with anyone and everyone who are able to provide them with better services and at the right rate of interests and terms for their borrowers. There are ‘n’ number of brokers as well as wholesale lenders. So it becomes a priority for both parties to entice one another for their services.
For example, from the wholesale lender’s standpoint, the broker is able to provide them with large volume of loans at any point of time which is lucrative for the wholesale lender. While the amount may fluctuate each time, it could be difficult for them to generate these volumes on their own. As a business model, they depend on the broker to generate this volume of loans.
From the broker’s standpoint, there are some things that play an important part in the overall experience with the wholesale lenders, such as:
- Timeliness of reponse
- Completeness of interactions
- Faster decisionmaking ability
If wholesale lenders need to provide quick and accurate responses, helping a broker on-board and retain a borrower client, data in digital form needs to be available in their LOS as early as possible. Only then can the underwriting team process this information and provide a response back to the broker. With faster responses, and complete interactions, brokers can expect to satisfy their borrowers quickly and close loans faster. If not, borrowers will quickly move on to other wholesale lenders who can meet their demands.
To improveresponse time, wholesale lenders need to leverage technology and bring about more efficiency in their existing processes. The most common cause of delays are:
- Excessive amount of paperwork that needs to be manually reviewed
- Redundant procedures at multiple stages
- Time taken to retrieve documents from multiple systems
- Requires coordination between various offices
Due to the advent of e-closing, it has become easy to expedite transactions, making it easier, faster, and cheaper for buyers, sellers and borrowers to conduct business as a result.
With e-closings, lenders can fund loans faster and catch and rectify all errors without having to spend tedious amount of time in sending these documents back and forth between the concerned parties. All paperwork can be eliminated and instead stored in a digital format available for perusal at any point of time as required. Other added advantage also includes elimination of expensive storage spaces in offices.
If lenders intend to go the e-closing way, wholesale lenders must quickly and accurately capture digital documents in the Loan Origination System. With the help of OCR and ICR for bulk processing, this is easy to achieve. With a complete data set, Underwriters can efficiently condition the loan and reduce any requirement of resubmissions for final loan approval.
As a wholesale lender, the faster you help the broker close, the more they continue to work with you. Visionet recently published a white paper talking about how bulk processing in mortgage can be made simple. Download the white paper now.
Alok Bansal is Managing Director of Visionet Systems Inc. and has 21 years of experience in managing strategy and global BPO operations. He excels in optimizing and leading the growth of financial services companies who are looking to take their mortgage operations to the next level.