Cost-Per-Loan Best Practices Circa 2026

Navigating a market with razor-thin margins is a challenge. The latest MBA data shows the average independent mortgage bank lost $28 on every loan originated in the first quarter of 2025, with losses even steeper for smaller lenders. Despite this, some of the savviest lenders are not just surviving, but thriving. This powerful discussion will reveal how top-performing mortgage professionals are driving down their average cost per loan by finding hidden efficiencies in everything from commissions to technology and equipment. Attendees will gain exclusive insights into strategies for boosting productivity and improving pull-through rates.

Transcription: 
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record. 

Jake Vermillion (00:08):
Good afternoon everyone. As Bailey mentioned, we've been touching on this very topic throughout the morning. We heard in our very first panel this morning Rola from Rate talking about smart underwrite and the type of savings that they've seen from automating underwriting. We've heard Freddie Mac talk about the LPA automations that they've had their lenders take advantage of to save as much as $600 a loan and reduce turn times. We've even heard Chad Smith talk about the technology that they're leveraging at Better to create what he called—which I really liked—optionality: the idea that by depressing the cost of origination, you can either pass back profit to the P&L or you can choose to pass on savings to your customer. And then just in this last panel, we actually heard a slightly different approach that should be paired with what we're going to talk about in this panel, which is the idea that, frankly, cost of origination has been a relatively stubborn number for the last couple of years.

(00:58):
We're going to talk about some of the stats out of the MBA in just a moment, but there are opportunities for lenders to not just work on reducing costs, but actually adding revenue to every loan and to every customer that they work with. The reality is, out of the last 13 quarters, 10 of them lenders have for the most part been unprofitable. After eight quarters of consecutive losses, we did snap into profitability in Q3 of last year, but unfortunately, we snapped back into losses in Q1 of this year. We've since pulled ourselves out of that, but the reality is that the gap between those most profitable and those least profitable lenders is still pretty vast. Thankfully, I have with me two seasoned executives from originators, sales extraordinares and leaders in their own right, to be able to walk through this with us.

(01:41):
Let me introduce our panelists. I have right next to me, Jay Promisco. Jay is a proven leader with more than 25 years of experience in the financial industry. He's held senior roles where he's driven growth, advanced technology, and supported originators nationwide. He's known for leading his sales teams to perform at a high level, and he brings a deep expertise in both sales leadership as well as mortgage banking. ¹ Please help me in welcoming Jay Promisco. Beside him, we of course have John Loyacono. John is a veteran mortgage lender with more than 20 years in the industry. ² He's led top-ranked teams in Florida and California. He served as the president of NAREP in South Florida, and most recently he helped make his team in Los Angeles the market leader in 2021 as well as 2022. He's now with Certainty Home Loans and we're going to dive into some of his operations today. Please help me in welcoming John Loyacono. Thank you. Jay, I want to start by asking you this because I've been in this industry for eight years—and I've been around it for my lifetime for those who know my dad—but this has been a conversation that's been unfolding for many years now. It's a persistent conversation on the conference circuit. Has it always been this way, or is there something about the challenges of today's market or the structure of our landscape as lenders today that's precipitating this need to constantly address the cost of origination?

Jay Promisco (03:04):
Look, I would like to go back to the good old days for some of you in there; it was a whole lot easier. Life was a lot easier when we had trans-boxes and a big stack of paper on our desk. To be blunt, it was the cheapest that we ever originated loans. What's changed dramatically since the end of '21 is, number one, there's too many lenders in this space and not enough loans going around. According to the MBA, it's going to be a $1.9 or $2 trillion market. That all sounds good, except your average loan size is twice as much as it was eight years ago. So the number of units we're doing is significantly smaller. Now, not to offend anybody else in the room—if you're a vendor, I apologize in advance.

(04:00):
The thing that has added a tremendous amount of cost to our origination are vendors, automations, digital transformation, and unique tools that our originators need—and our originators need everything under the sun. What was different even in '05 is loan originators traveled around in their car with a bunch of business cards and sought out offices. Now I need a Ferrari or Lamborghini CRM and all these other different things. I need different bond loan products. I need all these things that we didn't need back then. The landscape has changed in two ways. There's just been this race to find efficiency in mortgage, and we haven't gotten there yet. All we've done is add cost. Every single piece of technology we've added has added costs; it has not taken it out of the origination process for most lenders.

(05:03):

There are some vendors that do a better job of this that actually bring a return on investment, but some of these things are just big, shiny objects. And the second elephant in the room: I remember when TRID came out and everybody said loan originators are not going to make any money anymore. They make twice as much money today than they did in '05. So we have a three-pronged problem. I have a really incredibly small market and an incredibly competitive landscape. I've got originators that demand a very high commission. And then there is this technology stack thing which is a mess. At some point this will be solved, likely sooner than later, with the use of artificial intelligence and a bunch of different things, but today the industry is a mess.

Jake Vermillion (06:01):
John, you and I were talking about this a bit earlier. You told me that back in the day, this business was a high-touch business, and today you described it as a high-tech and high-touch business. Can you speak to that and what that looks like for you over at Certainty Home Loans?

John Loyacono (06:14):
Sure. Jay brought back some memories. I can go back to the days of just being on your kitchen counter and helping you go through your LOEs, structure the loan with you, and bring the grandma on the loan. Life was much easier then. When you think about where we are today, it's always been a high-touch business. Quite frankly, it's always going to be a high-touch business. The gentleman earlier said it best: when you're dealing with a purchase transaction, no one can ever underestimate the glue that our mortgage professionals are to the buyer, the realtor, and the title company. That's a special person. That's why we still have an industry today with human beings; we're going to continue that because this business will forever require human beings to do this job. But to his point, we're at a crossroads in our industry now where if you don't keep up with the Joneses from a technology perspective, you will lose out on the potential future.

(07:17):
I read somewhere 9 million millennials are going to be buying homes in the next five to seven years. They don't want to talk to anybody. To me, this is a race to digital arms. But how do you do that while not stacking up costs? Loan originators are making three times as much. I started making 18 basis points at Ameriquest and I thought I was rich 25 years ago. You have to create efficiency and work with vendors that want to help you create efficiency. You need great leadership to determine what the shiny toy is and what can really bring you an ROI. If you can do that effectively, I think our business has a great future ahead of us. But we are in a crossroads right now with that high-tech, high-touch philosophy.

Jake Vermillion (08:11):
Absolutely. You both touched on the fact that technology is a significant part of the cost calculation for lenders. Is it just the technology itself, or is it the fact that lenders are onboarding technology and struggling to get adoption from the team members that ultimately would see the productivity lift promised to justify that additional expense?

Jay Promisco (08:32):
I think it's twofold. Yes, there's a function of adoption. You could probably ask any of the CRM vendors in here and they would say adoption statistics are terrible. You have this beautiful thing that's going to create revenue and put dollars in loan officers' pockets, and they don't use it because they think sending out a postcard every month is going to help out. But the other thing that I think is missed is people are so focused on the front end. When you look at cost to originate, it's not just loan officer stuff. It is the entire process of doing a loan. Number one, did you underwrite the loan correctly? You find that out now with the agencies pretty quickly.

(09:26):
There are other trap pieces of cash in your organization. How long is it taking you to sell loans? How long are your loans sitting on your warehouse lines? What does your curtailment look like? All those costs get added into it. If you're an executive doing a cost to originate analysis, you're probably not including your repurchase loans and your scratch-and-dent exercise into your cost to originate, because that affects it. I think what is more prudent is getting back to the basics. I'm manufacturing a loan. If I was manufacturing a car and I had a 5% defect rate, I wouldn't be able to sell any cars. People wouldn't buy the car because it would blow up.

(10:19):
You can find a basis point at every single stage of the loan. You end up with an extra 10 basis points, and 10 basis points is life or death right now. The integration of technology is exceptionally complicated. It's getting better because some vendors are creating API structures making it easier to integrate into different LOSs. I remember even four years ago, an integration would take six to eight months and cost you $300,000, and then maybe it would work, maybe it wouldn't. If I was a vendor trying to provide a technology solution, I would be looking at the mortgage process holistically from start to finish, seeing how you can improve the whole process. The quicker I can get a loan originated, processed, underwritten, sold, and actually keep it sold and not foreclosed on, the better. That's how you reduce your cost to originate.

Jake Vermillion (11:29):
Absolutely. John, I want to pivot there a little bit. Jay and I were talking earlier and he was explaining to me that when we say cost of origination, there are different definitions of what exactly that is. Depending on your definition, it's going to change what metrics you're looking at to determine where you need to make improvements. For you, when you're sitting with your team, how often are you having conversations around cost? Are those contained within departments, or is it a combined conversation? What metrics are you actually looking at to suss out when you need to make a decision, and how do you communicate that?

John Loyacono (12:04):
There are traps in every aspect of this business from A to Z. As such, we have these meetings together. We are a smaller office, so we have the benefit of doing that, but when we have these cost meetings, we look at it end-to-end and we have everybody in the room, including marketing, because marketing is a big part of cost. When you have three or four department heads in the room, we can look at it holistically as one. If you tell sales to just do their job this quarter and you'll figure out what to do with ops later, something else is going to happen next quarter that you have to go back to sales for. To be able to do it from A to Z in one shot is how you have to take it on as a business.

(12:51):
If you're a business owner, you have to look at it that way because there are cost measures that, because of the high-tech approach we're heading into, are going to affect the platform overall. Some of the efficiencies we're creating are not only on the front-end sales side, but also on the back-end ops side. You have to have those discussions together because if you don't, the left hand isn't talking to the right, and that's where the concept of creating efficiency causes inefficiencies.

Jake Vermillion (13:22):
Well, let's walk through the process the way a loan would, starting with origination. I think we often talk about cost of origination, but oftentimes those conversations become about fulfillment, manufacturing, or the back end. When you look at the data from the MBA, the productivity delta between salespeople and sales support team members has widened over time. Sales is slipping off in terms of their productivity, and it's a direct reflection of whether or not lenders are profitable in that given quarter. John, let's start with you. Since you're in the trenches every day, what are the best practices you're teaching your loan officers? How are you making them cost-conscious, and what are the key levers you pull regarding the way they approach customers and referral partners to bring costs down?

John Loyacono (14:16):
Mobile technology is at the front of our minds. Regarding sales leadership and our salespeople, being able to have a mobile app that not only sends out links to apply, but also prices loans, runs AUS, locks loans, and changes pre-approval letters while you're at your kid's soccer game or sitting on your couch is vital. That creates efficiency and productivity. In the old days, I would probably do two applications a day; today, if you embrace front-end technology, you can probably take five or six. Right now is the time to make our folks across the industry believe in that. We're kind of in that four-foot wave.

(15:04):
I have a friend who taught me it's like surfing. There are a lot of 12-foot waves, but every now and then there is a four-foot wave and you have to just sit there and wait for the next wave to come. It's coming, hopefully tomorrow, but when it comes, we have to be ready. The ones who are used to doing it the old way are going to continue to do it the old way. For me, being a boutique lender that has brought on very seasoned professionals, it's always a challenge getting the folks that did it the old way to embrace the new technology. A lot of that efficiency started on the back end, and I'm trying to bring that into the front end. I think it's just as critical to create efficiencies from a tech perspective on the front end in order to scale. When this boomlet comes, those that embrace that technology will be able to do one more loan. That brings down your overall cost because you're not adding extra bodies. Refis are coming, and everyone here has had an LO say, "I need a third assistant." Do they really need that assistant, or can they use what we have spent a lot of money on to help bridge that gap? That has been the key.

Jake Vermillion (16:37):
Jay, you're an experienced sales leader. We have an interesting line of sight at Mortgage Champions because we've been training lenders for 30 years. We see the best practices that lift conversion and pull-through, reduce fallout, bring down turn times, and increase file quality. A lot of that is leveraging technology to get to that customer quicker and understand them better. But we're still seeing that some of the old-school KPIs—time spent on the phone, number of questions asked, rapport built—have a huge impact in improving conversion and reducing costs. Where have you seen that, and what would you advise lenders to be doing with their people, not just their technology?

Jay Promisco (17:23):
This is kind of a funny joke, but I don't know if I should bring it up or not.

John Loyacono (17:28):
It's four o'clock. I think we can have a joke.

Jay Promisco (17:32):
Is legal or compliance in the room? I'm going to get myself in trouble. We talk about conversion rates. Originator companies spend a tremendous amount of money on credit reports for borrowers that will never buy a home. They don't even belong in the room. Now a joint credit report cost is $180 or some stupid thing like that. If you did that 10 times in a day, it adds up. Figuring out a better way to make sure the funnel you're working in has a higher propensity to qualify is key. Everyone deserves to apply for a loan, but for some companies it's wanton—just pull all the credit reports you want and we'll figure it out later.

(18:33):
If your conversion rate is 10% and you pulled 10 credit reports, I just spent $1,800 to get one loan in the door. That's not a good business. There's technology today that can pre-qualify and gauge interest. When I was a loan officer, a borrower would say they were ready to go, you'd pull credit, and then because of trigger leads, 10 other people called him. I just wasted money there too.

(19:05):
Figuring out a better sales funnel is super important, as is focusing on markets where you can succeed. Don't try to boil the ocean. Being licensed in 48 states is great, but the cost of licensing goes to your cost to originate. Being very specific—penetrating a market to get 35% market share there rather than 1% in 50 markets—is a better way. Companies are trying to boil the ocean, but there are not that many loans out there. Every loan officer wants every loan to work, but they're not all going to work. I've used Total Expert forever, and they have a phenomenal way of making sure that by the time a customer gets to you, it's real and it's worth taking the application and talking to them.

Jake Vermillion (20:17):
Cost of origination has a long history as a term, but we're starting to hear senior leaders use language from Silicon Valley, like CAC and LTV (Cost of Acquisition and Lifetime Value). Retention and recapture are arguably the straightest paths to bringing down your cost of origination in today's market. How should we think about the role of recapturing past customers to get more transactions as part of solving this problem? John, let's start with you.

John Loyacono (20:53):
It starts with the core of adoption. Getting the first transaction is easy; retaining the second one is hard, let alone the third one. When you have such a competing landscape and multiple channels going after the same loan, you have to bring urgency to your sales force so they understand that the first one is easy, but the second one is really what you're judged on. If you can get the third, you have a career here. Companies are listening to vendors to try to get an ROI.

(21:46):
Total Expert is a Ferrari if you have the right people knowing how to use it. It starts with training them. Most importantly, find the people who are doing it great and put them in front of the room. I've always believed in asking, "What is he doing that I'm not?" That's how I came up in the nineties. The work-from-home environment has created some constraints. While it created some benefits from a cost-per-loan basis regarding brick and mortar, we've lost some of that water-cooler discussion where you see how someone is doing three extra loans this month and ask them why. Trying to bridge all that together is a lot. We are licensed in every state, but we're only doing business in 22 right now. I want to get really good at where we are and grow as the market allows. There's only so much that pizza dough can go around. I say that with two Italians up here; this is the best panel ever.

Jake Vermillion (23:07):
We sent the wrong team member; we've got an Italian on our team as well. I'll send him next time.

Jay Promisco (23:12):
Let's talk about recapture for a second. One out of six loans in America is held by one entity. That's a lot. If you've ever seen their platforms, the thing they do the most is use the telephone.

(23:36):
Old school. "Set it and forget it" is one of the worst sayings in mortgage. I'm just going to put all these guys in the CRM, send them emails and recipe calendars, and think they will come back to me. If you closed 60 loans last year, you're telling me you don't have time in a month to call 60 people? Rocket is calling 600,000 people a day, eight times a day. It's annoying, but at some point, people just do what Rocket wants.

(24:14):
In this business, these guys are out to kill you and take food out of your family's mouth. They think those loans are theirs now. A lot of independents have started selling loans to these big aggregators because their pricing was good. That's because they think they can recapture it and refinance it two or three times. My one piece of advice: all the fancy technology is fine, but you have this thing called a telephone. Pick it up.

(25:04):
Keep in touch with your borrowers. While you were taking their application, you found out about their kids and their dog; call and check in. This is a relationship business. People would much rather do business with somebody they know and trust than some guy at a call center who just got done working at Jiffy Lube. Use the telephone. If you're a sales leader, you should be counting the number of calls your people are making. If they're not making the calls, you will not have recapture because your borrowers are going to cheat on you if you don't keep in touch.

Jake Vermillion (25:54):
We have 20 seconds left. What is going to ultimately solve this? Is it leaders leading their people to work systematically and embracing technology, or is it AI?

Jay Promisco (26:06):
You want me to take that one?

Jake Vermillion (26:07):
Go ahead. What's going to ride in on the one horse?

Jay Promisco (26:09):
In my view, in two years, a native language model replaces the loan origination system. I've seen technology over the last couple months that will blow your mind. The AI voice agents I hear are hard to detect as not being human; they're incredible. If I can take an originator with a database of 3,600 people and use an AI agent to call them—and I know a firm that does this—it sounds just like a person and gets them interested. They are the best salespeople in the world because you can't offend them. They'll make the calls and get them transferred. At some point over the next few years, there's going to be a discussion on how to get an AI bot licensed.

Jake Vermillion (27:18):
Already happening, in my opinion.

Jay Promisco (27:21):
Manufacturing a loan is going to look totally different in two years, and I think the sales process looks totally different in a year or two as well.

Jake Vermillion (27:40):
Gentlemen, thank you for honoring me with this conversation. I appreciate you both. Thank you.