Today’s mortgage market environment seems to be mimicking the weather in much of the U.S. recently: As we enter the summer doldrums, originations have stalled. The competition to win new business is heating up, and at the same time, originators are incurring greater fixed costs to ensure they are compliant with ever-changing regulations. While both factors can create a market squeeze, savvy originators are taking this time to rethink their business operations and look for new opportunities. I see five key things that mortgage companies should be doing to improve and transform their businesses:
1. Improve Your Customers’ Experience
For starters, make sure you understand what the customer is expecting, and be familiar with what your competition is offering. Are competitors offering something that your company isn’t? What sorts of things are drawing mortgage customers in? We’ve found that one of those things is regular communication. It’s important that originators maintain steady contact with their customers so they are aware of the status of their mortgage transaction at all times.
2. Establish Flexible Capacity
Originators who can easily adjust to the ebb and flow of mortgage volume are better able to capitalize on available market opportunities. The flexibility to ramp up or ramp down based on market demand saves time and money. Flexible capacity, when used in geographically distributed regions, can also ensure that work is being managed across different time zones to make 24/7 operations a reality. This makes it easier to scale and achieve more in less time.
3. Build a Regulatory Knowledge Base, and Have Ready Access to Compliance Experts
The originator’s processing team needs to be continually updated about any changes in the regulatory guidelines. It makes sense to create an easily searchable knowledge base with all the latest guidelines so that teams can refer to specific sections when they need to. For better exception handling, mortgage companies would also be well advised to have ready access to a panel of experts who can provide counsel on demand.
4. Control Fixed Costs
With the volume swings seen over the last year, maintaining good control over fixed costs is paramount for firms looking to be profitable. At the same time, in the interest of ensuring compliance, we see some companies putting large teams of regulatory experts in place. Doing so can significantly add to fixed costs, yet there often are no rewards or profits realized for assembling these large teams. A better course might be what we see as an increasing trend: Companies are opting to engage with specialized third party firms that can offer transaction pricing and pay-as-you-go models. Taking that route can help keep fixed costs under control, yet it still ensures regulatory guidelines are being met.
5. Improve Process Efficiency
A smooth, trouble-free mortgage transaction makes for a better customer experience. Perhaps it’s time to review some of your processes and see if there are areas in which you can improve and, in turn, improve the customer’s dealings with your firm. Many lenders are finding that a business process management company can quickly assess their processes and recommend areas for improvement. Working with a mature yet nimble business process management service provider can help originators achieve these goals easily and for a lesser cost. Some of these providers offer short pilots to assess their capabilities before you need to commit to an engagement.
Nicolle Nelson is vice president of business development at SLK Global, a business process management firm.