Originations have been on a roll over the last few years, primarily driven by refinance transactions powered by record low interest rates. Recently, as rates have increased it’s become more difficult to find borrowers that benefit from a refinance.
So with refinances starting to wane and purchases beginning to pick up, a change in strategy may be in order. National Mortgage News recently reported that housing starts are expected to top one million in 2013, so builders are certainly confident that buyers will step forward. What do we have to do to help that process along, and how do we meet the service level demands?
With everyone using the same set of investors and with rates still universally low, it is becoming harder for lenders to differentiate themselves from competitors.
In those situations, service is king. Providing great service is hard, especially while the market is ebbing and flowing like the tides at a Florida beach resort. It can seem like you are understaffed one minute and overstaffed the next, all the while spending valuable time and resources finding the best and most knowledgeable people. That can get expensive.
One way that lenders can gain more control over their costs and processes is by using outsourced loan origination fulfillment, and it is a strategy that is making more sense every day. The reason? Simply that high service levels are available with the right providers, while costs are confined to the actual value received.
In short, you pay for what you use, rather than incurring the fixed expense of permanent staff and the costs of finding, training and keeping them. For many, it is the perfect strategy to deal with the peaks and valleys while maintaining a comfortable core staffing level.
There are two basic approaches outsource fulfillment companies take in their business models. Because there are a great number of experienced lending people distributed about the country, many companies sign them up as contractors and assign work to be performed remotely online.
The less typical model is the one Wingspan Lender Services follows, which involves actually hiring these knowledge workers, placing them in a company facility and having the work performed onsite. We find this method better suited and more consistent with our experience as a diversified mortgage services provider.
When considering outsourcing, another business practice item to look for is the vetting process for operations personnel. Outsource companies generally perform background checks and require work sampling for quality control. Other companies take the screening process much farther, with testing, face-to-face interviews and evaluations.
For example, we’re hiring folks with typically three years of front end experience. Whichever approach makes you most comfortable, you certainly want to make sure that more was done in the vetting process than merely looking at a resume.
Another plus of using outsource providers is that you can pick and choose the bits of the process you require, whether it be underwriting, processing, closing or all of the above. The flexibility and immediacy with which such solutions can be scaled serve to make mortgage fulfillment outsourcing a highly viable alternative when looking at the balancing act coming in the second half of 2013and probably into next year.
