Lenders are looking to take advantage of anticipated downtime by upgrading their internal processes as 2022 proves to be a difficult year for the lending industry. Lenders compete for time and resources all the time. The last two years have been spent completing, shipping, and funding loans. There was no time for customer service or cost-cutting.

Suddenly, the brakes slam on, and they slam on hard. The rate of increase is rapid. And almost every problem that fat margins used to hide is now visible. The cost per loan and the client experience are two factors that are both influenced by the lender’s business model.

Compensation costs are the most significant hurdle to long-term profitability and a flexible business model. According to the MBA Quarterly Mortgage Report, compensation accounts for nearly two-thirds of the cost of originating and closing a loan. The key to long-term profitability is to boost employee productivity.

Jonathan Corr, the former CEO of Ellie Mae (now ICE Mortgage), spoke colorfully about lenders’ preference for labor over automation. Lenders frequently use human spackle to patch up cracks and leaks since it is a quick fix. There is no reason to have all that human inefficiency and waste. The time it takes to close a loan is also lengthened by human spackle. Closing a loan will take a lot less time, cost less, and provide a better client experience if human spackle is eliminated.

Lenders must look for ways to reduce, automate, outsource, and optimize various aspects of their processes. To read more on other technology stacks and ways of improving your business model as a lender, click here


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