As the refi beat goes on certain things become
more apparent....
1) It has never
been harder to process a loan. The
time involved due to the myriad of risk and database checks are mind blowing;
but smart and essential nonetheless. But we have a panic driven industry that
is rushing the implementation of all this deferred maintenance before the
technology is available to efficiently integrate it into a smooth working
system. Most firms barely made it through the desert of 2008 so it is likely
they are working off an outdated operating system. The few remaining mortgage
IT firms do not have the immediate fix or silver bullet to solve our
issues. You will spend as much money integrating their solution with unlimited
downtime during a refi boom that it makes the option of
growing your own actually palatable. (This assumes you are a true bank or
mortgage banker who is concerned with secondary, maybe hedging, loan delivery,
lines, etc).
So your OPS leadership is looking at past history and trying to
figure how many people do I need to process a loan to close? Can it really be
that today's loans are 3X more time consuming and I need truly experienced OPS veterans
(10 yrs++) with designations as a majority of the staff? Of course the
technology and the higher grade people and the time required all add up to
2x-3x the cost to produce. Sure we can scan now and don't copy as much. Sure
that means we pick up speed and efficiency and save FedEx costs. SO yes that
counteracts the above, but then we overlay appraisal issues on every file and
no AVM usage. To that we add all full doc,
guidelines that are changing weekly, mega-restrictive MI, etc. and we are back
to 3X more time and cost.
So our service sucks relative to the past; our OPS people want to
just rollover in bed and never come back to work; our customers’ expectations
of flexibility and turn-time; our
margins, though much better than a year ago, are eaten up by our increased
costs to produce; we have lost premium pricing yet are hit with more bumps than
a disco on seemingly every scenario...all challenges that can be met with the
right mind set of team members living in the reality of today, thankful to be a
survivor and a thriving, and willing to look at themselves to become an agent
of change.
2) REALITY: Each
LO gets a limited amount of resources in the form of processing and line
capacity. The amount is dependent on their past history of volume and of
efficiency/pull thru. If you
funded an average of 8 loans per month on 10 apps, you should be given the
ability to increase by 50-100% that capacity -- so 16 funds for 20 apps in this
market. The keys to that philosophy is that
the 4 "no's" are discovered very early in process and hopefully never
hit UW/close at all. Plus, those that do close we underwrote and closed once
without changing rate/point terms or loan amounts and never changing
programs.
Giving LOs the understanding that they have
limited resources is important because it manages the expectation set for the
LO and therefore their customer. If the LO knows "I have only so many slots to work
with" then they will be choosy during times like these when loans are
like shooting fish in a barrel. They won’t waste the time on hard to
work exception loans, especially refinances. They won’t take loans that
they know don't have at least a 75% chance of succeeding. They will take
control of their customer and say “you are one of the lucky loans
I chose to take on this month; in order for this to go smoothly you
will need to get me this list of documents timely, we will need to decide
today the program, rate and terms and not look back." If they can’t be
immediately helped or choose to be high maintenance, quickly and firmly suggest
other alternatives, where they will then likely be tortured and frustrated and
come back with their tail between their legs.
3) This is not a Part-Time business anymore! It is full time in
every way. Of course you have
all the NMLS courses and
continuing Ed required as a start. But the guides, compliance forms, rate
changes, term modifications all require you to be looking everyday at serving a
referral base and a database of past customers. You need to be working out scenarios,
pricing out a deal, structuring a package, validating a DU finding, massaging a
credit report, every day or you will be stale, inefficient, mistake prone and
miserable. This results in a drag down on
processing with crappy loans that don't work, pissed off customers with wrong
and un-met expectations, and a drag on peer LOs because they end up bearing the
brunt of the PT questions since the PT doesn't remember how to do their job.
Are there rare exceptions? Sure but they need to be managed all
the time. Too many times these PTs
are friends we are too close too who are living on their past glory years.
Folks this is a different business now. Those old habits could actually be
detrimental. These old war heroes spend a lot of time around the office complaining
how tough it is to get a loan through, they beat up OPS, and they suck your
energy and never will return to their glory years.
The right spot for these people is to attach themselves to a
highly organized producer who has expressed interest in management and who has
a team forming with assets etc. The PT agrees to take a lower
commission, hand over leads (with a well defined process) and get out of the
way. This way the customer has the right expectation and information and OPS
has a solid application that works with the right expectations attached.
In a world of ever shrinking resources
of OPS and Line capacity, triage-ing each
application up-front and seeing where
your problems come from is essential. Get out of reacting mode and into pre-emptive strike mode. It will help when the
volume drops too, and your resources are again limited and time/money is precious.
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