Residential Magazine

These Unsung Mortgage Heroes Can Reduce Costs

Third-party processors can help originators navigate this difficult market

By Pallav Talwar

Amid speculation of an approaching recession along with high inflation and a cold labor market, the mortgage industry has shown commendable resilience. For this sector, it isn’t just about merely surviving challenges but emerging stronger from them.

“Lenders, brokers and third-party processors must work in harmony, leveraging each other’s strengths to fortify the industry against emerging challenges.”

The mortgage industry has a rich history of weathering economic storms, regulatory changes and market fluctuations. But today’s rapidly changing landscape demands more resilience than ever. This calls for a tactful approach to navigate not only the predictable market cycles but also potential shocks like global financial crises or unforeseen natural disasters.

At such times, building a robust foundation is a must. A strong foundation can withstand the tremors of change while committing to provide access to homeownership opportunities for individuals and families. Efficient processing solutions can be instrumental in strengthening your foundation and helping you effectively navigate the mortgage market.

Client satisfaction

Mortgage processing is a labor-intensive and time-consuming process. From application compilation, document verification, appraisal and property review to underwriting analysis, title examination, conditions fulfillment and final approval, there are numerous steps involved. For an organization looking to increase efficiency without hiring more staff and adding more resources to streamline the process, partnering with a third-party provider can be vital.

Third-party mortgage processing companies are the unsung heroes of mortgage businesses trying to reduce costs and optimize operations. Their expertise and services play a pivotal role in supporting lenders and originators, ultimately contributing to the industry’s stability. According to a 2019 McKinsey & Co. survey, only 42% to 67% of borrowers express satisfaction with the mortgage process, with banks often trailing behind nonbank lenders by 10 to 20 percentage points.

Why do you need to care about borrower satisfaction? The short answer is to gain more clients. The better the experience you’re able to offer your clients, the more likely they are to recommend you. Partnering with a third-party processor can enable you to focus on strengthening your customer relationships while they take care of your daily operations.

Streamline operations

Efficiency and speed are two cornerstones of an agile mortgage industry. Mortgage processing companies excel in helping lenders and brokers streamline their operations. By leveraging the latest tools like business intelligence dashboards and a dedicated workforce, these companies can significantly reduce the time it takes to process mortgages.

Let’s say you process roughly four loans a month given how much time processing requires. When you work with a processing company, you can work on at least six or seven loans a month because your paperwork is being taken care of while you secure more business. Quicker loan processing times not only lead to improved borrower satisfaction but also make the industry more resilient in a competitive market.

In a rapidly changing environment, borrowers and loan originators alike demand a mortgage process that keeps pace with their expectations. Third-party mortgage processing allows lenders to meet these demands head-on, gaining a competitive edge and fortifying their position in the market.

Cost-effectiveness is another area where third-party mortgage processing companies shine, particularly during challenging economic conditions. In times of economic uncertainty, lenders must closely monitor their expenses to ensure long-term stability. Outsourcing mortgage processing can be a strategic move in this regard.

By partnering with third-party processors, lenders can access cost-effective solutions that minimize overhead costs associated with in-house processing. For instance, an experienced mortgage processing partner would know the importance of reauditing loan documents. Identifying and rectifying errors after an audit can potentially increase gross margins and profits by reducing the risk of investor suspensions and repurchases.

Specialized expertise

The ever-evolving regulatory landscape presents a significant challenge for mortgage lenders and brokers. It is a processing provider’s responsibility to ensure compliance with a complex web of solutions. Third-party mortgage processing companies excel in this area by offering specialized expertise in compliance and risk management.

These companies invest heavily in staying up to date with regulatory changes, ensuring that their lender and broker partners always remain compliant. By mitigating potential risks and facilitating adherence to regulations, third-party processors shield against legal and financial threats. This allows for more stable operations by minimizing disruptions caused by regulatory noncompliance.

“For an organization looking to increase efficiency without hiring more staff and adding more resources to streamline the process, partnering with a third-party provider can be vital.”

Market conditions can be unpredictable with fluctuating lending volumes. By outsourcing processing tasks, loan originators can quickly adapt to market fluctuations without the need for extensive internal restructuring. In situations when the Federal Reserve increases interest rates to meet its inflation targets or when the unemployment report presents discouraging numbers, the housing market feels the heat. Third-party processors can seamlessly adjust their services to meet their clients’ needs.

In the age of data, the ability to harness information for smarter decisionmaking is paramount. Many third-party mortgage processing companies offer advanced data analytics and reporting capabilities like credit risk assessment, loan origination analysis and market research, to name a few. Lenders can gain valuable insights into their operations and portfolio performance, helping them make data-driven decisions.

These insights enable lenders to identify areas for improvement, optimize their processes and proactively address potential issues. In doing so, they can stay ahead of challenges rather than merely reacting to them.

Collaborative efforts

Looking ahead, it is increasingly evident that the mortgage industry’s resilience will hinge upon the strength of its collaborative efforts. The partnership between third-party processing companies and industry professionals will play a pivotal role in shaping the mortgage ecosystem of the future.

Collaboration is the bedrock upon which industry resilience is built. Lenders, brokers and third-party processors must work in harmony, leveraging each other’s strengths to fortify the industry against emerging challenges. This symbiotic relationship can result in a seamless mortgage process that not only meets but exceeds borrower expectations.

The role of third-party mortgage processing companies is poised to evolve further, becoming even more adaptive and responsive to industry needs. Their ability to rapidly adapt to the latest tools and processes, regulatory changes and market dynamics will be a critical asset in future-proofing the mortgage industry.

The outlook for the industry is bright if lending professionals recognize the vital role of collaboration and embrace the evolving capabilities of third-party processing companies. Together, they can build a resilient mortgage ecosystem that not only withstands the tests of time but also paves the way for continued growth and innovation. ●


  • Pallav Talwar

    Pallav Talwar is the CEO of Aritas Mortgage Solutions, a people-first knowledge process outsourcing company specializing in simplified mortgage processing for its clients. Aritas Mortgage’s approach is designed to help boost efficiency, streamline processes and reduce turn times. Over nearly two decades, Talwar has personally empowered numerous law firms, title companies, bankers, brokers and lenders with strategic outsourcing solutions. Reach Talwar at (727) 250-0924.

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