Success in the Secondary Market

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MarketWise Advisors, LLC. independent study shows savings of $48.85 per loan and one day faster purchases

In the mortgage industry, an industry historically impacted by cyclical loan volumes, changing regulations, varying documentation and increased complexity, every task we automate and optimize is a step closer to better efficiency, quality and profitability. With interest rates at record lows and peak volume, we are seeing a race to hire originators, processors and underwriters to keep up. At the same time, many lenders are faced with retaining talent and keeping employees engaged at a time of high competition and uncertainty.

As lenders look for ways to meet today’s market demands they can employ people for the short-term, but need to deploy and leverage technology to scale for the long-term. These technology solutions should quantifiably reduce redundancy, errors and costs almost immediately – opening up resources to fund more loans in less time. To help lenders accomplish this in the correspondent channel, Ellie Mae streamlines Encompass loan delivery to correspondent investors including Wells Fargo, Chase and Flagstar.

A recent independent survey demonstrates how lenders are delivering loans from within Encompass to save a significant amount of time and money without additional training, onboarding or process changes.

Loan delivery within Ellie Mae’s Encompass delivers significant savings and automation

In May of 2020, MarketWise Advisors, LLC (MWA) independently evaluated the loan delivery process from lenders delivering loans from Ellie Mae’s loan origination system, Encompass, to their correspondent investors. MWA surveyed loan delivery, shipping, secondary marketing, and investor professionals using Encompass and found significant end-to-end savings, efficiency and improved ROI when loan packages were delivered directly from the loan origination system to the investor.

MarketWise Advisors’ Study Findings:

Lenders save an average of $48.85 per loan

Lenders were surveyed about the loan quality, purchase conditions, time to funding, staffing requirements, and pricing when delivering loans to investors from Encompass. Lenders delivering loans to participating investors from within Encompass experience improvements in loan quality, delivery and purchase times resulting in financial benefits in three main areas:

1. direct operational time savings

2. improvements to data quality

3. reduction in back and forth between lenders and investors.

Operational Savings of $23.42 per file

The study found that lenders delivering loans through Encompass save an average of 39 minutes per loan file. By delivering data and documents directly from the loan file to an investor, lenders reduce the need for manual entry or checking of data, packaging of documents and logging into additional platforms to deliver a loan. This time savings enables lenders to fund more loans in less time resulting in $23.42 of operational savings per loan.

Calculating the Average Savings Per Loan

MarketWise determined that lenders experience four main operational benefits including immediate delivery from Encompass to investor, pre-review and editing of loan data to investor requirements, elimination of manual data entry and reduction in time spent packaging documents for delivery. These individual savings are detailed in the chart below.

Quality and Funding Speed Benefits of $25.43

Lenders additionally save costs related to improved data quality, faster investor reviews and purchase. When lenders deliver consistent, complete packages through Encompass, they reduce errors and conditions resulting in higher first pass rates, better purchase times and more lending opportunity. On average, the compression in funding time helps save lenders one day of warehouse line carry costs or hedge costs, saving $25.43

Additional Financial Benefit to Lenders

The data quality and speed to purchase led to additional benefits not included in this analysis. By delivering better quality loans to investors, lenders may also experience better execution and pricing.

Investor & Market Efficiency

The study also found that investor loan delivery within Encompass not only serves and benefits lenders, it adds an end-to-end value throughout the mortgage value chain (from lender to correspondent investor to consumer) which can benefit the industry.

Correspondent investors see 44% higher first pass rates, 1-day faster purchases and significant levels of operational savings per loan. When investors review and purchase more loans in
less time, this frees up lenders to more liquidity and resources to lend to more borrowers. And when customer service and technology are improved on the back-end, this lends to a better overall experience from consumer to lender to investor.


“As an industry operating on thin margins with the need to respond quickly to housing and financial market changes, technology is a key driver to decrease the cost of manufacturing a mortgage loan. The more we rely on electronic data exchanges to remove the manual steps of loan delivery, the more we can drive down costs and inefficiencies, ultimately improving the home lending process.

There is a long runway to decrease cost and compress transactional time; Encompass Investor Connect is a step in the right direction. It lowers costs by $48.85 per loan for lenders and. with improvements to the investor process, can approximately reduce the overall cost of a loan by 3-4 basis points.”
- Jordan Brown, CEO MarketWise Advisors LLC

Encompass Investor Connect loan delivery from Encompass to investors enables a streamlined transaction process from the lenders’ loan origination system to the correspondent investor, reducing the time and cost of selling a loan in the secondary market by removing manual tasks, data input and accessing multiple portals resulting in:

· Reduction of 39 minutes per file spent on packaging and assembling data and documents

· More consistent loan packages with fewer conditions

· Up to 40% higher first pass rates for lenders (44% for investors)

· Purchases made one day faster

In addition to individual lender savings, there is an end-to-end transactional benefit for our industry as a whole. When investors receive more consistent, better quality loans, they can review and purchase loans faster to free up liquidity and resources for lenders to increase lending. Lenders in turn can reach more borrowers, faster which helps lead to a better experience for borrowers, lenders and investors.

For lenders looking to succeed in the secondary market, using technology to automate and optimize loan delivery and communications with investors is key. Push your technology to the limits and open up your teams to drive relationships, innovation and growth. Doing so now will help drive down costs and improve efficiencies regardless of the interest rate market and projections ahead.

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