Mortgage lender profitability has been all over the map the last few years, with ups and downs like primary election polls. Fortunately, 2015 showed an uptick from 2014 in per-loan earnings, as reported in National Mortgage Professional, going to $1,189 per loan from 2014’s paltry $747.
2016 is showing marked improvement, with 2Q per-loan profits of $1,686 per the MBA, thanks in no small part to rising home prices, higher loan amounts and greater markups. Still, expenses for each loan continue to rise, due largely to regulatory pressures. According to the STRATMOR Group in 2015, direct production expenses have increased annually by an average of $400 per loan since 2009—or over $2000– a rate that is unsustainable for the industry’s long-term health. In the event volume drops off, it is inevitable that margins will quickly shrink.
What’s to be done?
In a word: technology. Technology has been a phenomenal labor saver over the last twenty years, and it is coming through for lenders now more than ever before, thanks to new innovations and industry collaboration. But loan origination systems are different in the ways they approach efficiency, and some are designed to make lenders more productive than others in ways that wring the maximum benefit from every dollar invested.
How does this happen? It starts at the beginning when the LOS roadmap is established. Most technology is designed (understandably) by technologists. But as those who have worked with software engineers can tell you, the end result can be all about the technology and not about its users. Screen design and workflows that make perfect sense to an IT person might make zero sense to the loan professional. So the development process often goes through endless workarounds and redesigns that end up with a compromised final product.
Important Tip: Don’t Settle and Do Your Homework
Mortgage companies don’t have to settle for an LOS that doesn’t completely understand their business – and I mean completely. PCLender was created by experienced mortgage bankers, and it shows. For starters, the system is pre-configured with a set of process defaults based entirely on industry best practices, as determined by decades of hands-on lending experience. This means that our LOS is ready to do business right out of the box, not after months of configuring the application to make it productive.
Mortgage bankers know that systems must provide the right information to the right user at the right time. PCLender offers the industry’s most advanced SaaS architecture with parallel workflows, rule-based engines and sophisticated logic that identifies missing information, information that is out of range and when tasks must be completed because of the data in the loan. And, best of all these tools can be configured as hard stops or merely warnings for various users.
At the same time, we’ve built integrations with the industry’s elite vendors, creating an automated and seamless environment so that your staff can work with high-value third parties without leaving the platform. Hours are saved over the course of the loan process.
Our lending experience shines through once again in the multi-channel design of PCLender, blending retail smoothly with consumer direct, wholesale and correspondent production. As mortgage companies change direction and expand into new origination avenues, they can do so with the confidence that their LOS can handle everything along the way with tools specifically designed for efficiency.
And with the inevitable concerns about regulatory compliance, we’ve built complete reporting capabilities into the system so that you’re always ready for an audit. Likewise, each department has productivity tools specifically designed by mortgage professionals to make life easier for secondary marketing, warehousing/shipping, interim servicing, etc. No wasted time, no wasted steps.
Today’s environment requires that lenders of all sizes stay lean, mean and focused on keeping origination costs under control. But that doesn’t require sacrifice when it comes to features and user-friendly conveniences. In fact, just the opposite is true; productivity is enhanced when convenience levels are high and stress factors are low because time is saved in the process.
As mortgage bankers, we understand this key concept – stay productive while maintaining superior loan quality and compliance. Fortunately, it is possible to do this while not settling for anything less than the best, most intuitive loan origination software solution available anywhere. If you’re not a PCLender client, let us show you how to pick up your productivity and increase your bottom line. It only takes one demo to see the difference when the technologists are also mortgage bankers.
Get productive. Get profitable. Get PCLender.