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   ARTICLE   |   From Scotsman Guide Residential Edition   |   February 2018

Operations Keeps the Ball Rolling

Strong processors are critical to a healthy referral and repeat-business pipeline

r_2018-02_fellman_spot.jpgAsk a group of CEOs who the most valuable employees are in their mortgage offices and, more than likely, most will say it’s the mortgage originators, which makes perfect sense. Originators are highly trained sales professionals and are, typically, the first and last individuals to interact with any given borrower — at least within a single transaction.

What about repeat customers who come back because of the way their initial loan was processed, however? When referral and repeat business comes into a lender’s office, many times it’s the operations team that played a significant role in cultivating that relationship. They are the ones who make the dream of homeownership that Realtors and originators sell to borrowers a reality.

Originators in the best companies benefit from the support of a great operations department made up of people who are trained to make good on the promises made to borrowers. Together, the originators and operations team arguably are most responsible for sustained growth in any lending enterprise.

Operations defined

Compared to other business sectors, the mortgage industry is fairly straightforward. Lenders are in the business of financing homes and providing families with a pathway toward homeownership — fulfilling the “American Dream.”

Real estate agents and mortgage originators have made a living selling this idea to borrowers, and borrowers have bought into the dream. They understand the value of owning a home and the long-term benefits that provides, but they need originators and lenders to help make it happen. The originator is the gateway to the financing that will make a new home achievable. The level of integration and cooperation between the mortgage originator and the operations staff, however, is often the deciding factor in achieving success for the borrowers.

From the operations team’s perspective, mortgage originators and underwriters are customers. The operations team is tasked with ensuring that those working to fulfill the promise of the loan application have what they need to deliver excellent service and keep the loan moving smoothly toward the closing table. Lenders and originators should embrace this approach.

As a loan file moves through the process, the operations team should treat each person they interact with as a customer. This humanizes the process. It’s no longer just about a loan file, a stack of paper or a specific transaction. It’s about a relationship.

The power of commitment

In today’s market, there is pressure on companies to automate systems and processes, to remove as many human touches as possible, and to keep the focus on speed of delivery and maximizing profits. It’s a transactional approach to lending. While it works well for some organizations, the benefits tend to come at the cost of a good borrower experience. This is not a recipe that leads to repeat or referral business.

A lender’s approach to its business is often revealed within its explanation of services (EOS). Every operations team has an EOS, which describes what they believe, why they believe it, what they are tasked with accomplishing and what they stand for.

Mortgage originators and lenders are now recognizing the value of winning customer loyalty and the positive impact that it can have on sales pipelines. 

A closing department, for example, may adopt a goal that calls for every mortgage to close on time, without exception. The department’s EOS will go into granular detail about why and how this goal matters. As a result, the operations staff has a very clear understanding of what is expected of them and how they serve the mission of the company.

The operations department also may view its activities as being a key driver of referrals for the company, a belief that also should be reflected in its EOS. This vision also should be shared with originators to give them the confidence and trust to seek out new or repeat business.

That referral business will only materialize, however, if borrowers go through the origination process and come out the other side feeling that they have had an exceptional, positive experience. When originators know that their borrowers are not being treated as “one-off” transactions by the operations team, they have the confidence to form more productive, long-term relationships.

Metrics matter

So what can lenders and mortgage originators do to ensure that their operations department is supporting repeat business and referrals? First, leverage the power of the EOS. It’s an effective tool that a department can use to concretely define its role and impact within the company.

Second, everyone working at the company must understand the customers they serve, whether that is an internal or external customer, or both. Companies that train their employees to meet actual customer needs, as opposed to just the requirements for a specific process, will support the building of stronger relationships and a better business overall.

Third, lenders must put an emphasis on measuring and monitoring key performance indicators (or KPIs). It is very difficult to improve efficiencies, or any process for that matter, without the right metrics in place. After all, you cannot manage what you do not measure. Successful companies know what metrics to monitor and how to utilize those data points to hold employees accountable for the numbers they are generating. This accountability breeds efficiency and excellence.

Performance tracking

Among the numerous metrics that can be tracked, for example, is underwriting touches. A company could set a goal that their underwriters do not touch a loan file more than twice during the approval process. There are many reasons for adopting such a goal, but the overarching objective is to promote high efficiency in underwriting.

KPIs also can be established as a measure of operational efficiency in the area of clear-to-close (CTC) performance. The focus could be on increasing the percentage of loans that are cleared for closing seven days in advance of the scheduled closing date. Loans cleared to close seven days out should create higher levels of satisfaction among borrowers, Realtor partners and originators, compared with loans that simply meet the existing requirement for a delivery of a Closing Disclosure form three days prior to closing.

Track the seven-day CTC percentage daily, monthly and annually. When most loans are cleared to close seven days in advance of the deadline, it’s far easier to accommodate those occasional deals that require more time. Another key metric to track that is tied closely to the CTC is the percentage of loans for which the government-mandated Closing Disclosure form goes out five days in advance of closing.

•  •  •

The mortgage industry is transactional in nature. Over the years, originators have focused on managing transactions: originating loans and putting families in houses. Mortgage originators and lenders are now recognizing the value of winning customer loyalty and the positive impact that it can have on sales pipelines.

The operations department is in a perfect position to support this loyalty, because it’s the team that delivers on the promises the real estate agents and loan originators are making. Experienced lenders understand this and empower their operations teams with the proper tools and metrics while, at the same time, skilled originators tend to gravitate toward companies that embrace this approach.


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