The onset of the COVID-19 pandemic orchestrated the home-buying and refinancing wave as the Fed reduced its interest rates to a record low. The Mortgage Bankers Association forecasts an annual mortgage market of $2.5 trillion between 2022 and 2024—a 40% increase in value over the 2010–2019 period. However, many lenders are failing to leverage the full potential of this surge in demand as they are struggling to scale operations on time.
Fast and Efficient Mortgage Processing Is the Need of the Hour
Mortgage processing is a lengthy, capital and labor-intensive process, with several repetitive workflows. Many banks and lenders who fail to update their legacy processes pay in the form of high costs and time-consuming procedures. According to a McKinsey report, many mortgage operating models have origination costs of $7,000–$9,000 per loan and a mortgage cycle of over 45 days, leading to poor customer satisfaction.
Several fintech lenders are out to solve this problem. With the technology that they develop, they are able to take advantage of mortgage process outsourcing (MPO), freeing up time to focus on customer experience. This has encouraged several major banks and non-bank lenders to invest in third-party technologies.
Mortgage Process Outsourcing (MPO): More Than Just Cost Savings
MPO is helping lenders undergo this digital transformation. The early model of outsourcing mortgage processing was designed to utilize a low-cost, skilled workforce to stay ahead of the cost curve. Over the years, practices in outsourcing mortgage loan processing have evolved. Its providers have expanded to decision-making tasks, such as loan and title insurance underwriting.
New-age MPO partners help you stay ahead of competition by applying artificial intelligence (AI), machine learning and robotic process automation in mortgage processing. Mortgage process outsourcing has evolved beyond process solutions—it now offers solutions to the lenders’ business problems.
The benefits of mortgage process outsourcing massively outweigh the costs. Here’s how:
Many lenders miss out on demand waves due to their inability to scale operations. Scaling is an issue because mortgage processing requires a skilled workforce. By the time staff are hired and trained, the opportunity is often lost.
Competent MPO service providers have skilled staff trained in the latest regulatory requirements, with mid-level and senior-level managers handling the workload. What’s more, most providers have customizable service fees. You can scale up during seasonal demand and scale down during off-seasons, optimizing infrastructure and staffing costs.
Beneficial for Organizations of All Sizes
There is a misconception that outsourcing is a luxury only large corporations can afford. The truth is, MPO providers also cater to small- and mid-sized businesses. If you are unsure of the current metrics on workflow, timelines and component costs, your MPO partner can draw up a close estimate after an initial discussion. As a small business, you can benefit from professional, trained staff, a set process with performance measures and digital infrastructure right from day one.
Apart from the time and cost savings it offers, the benefits of mortgage process outsourcing also include profound insights on the trade and the opportunity to grow rapidly in a competitive market.
Access to the Latest Digital Infrastructure
A digital-first approach is a no-brainer in today’s world. Mortgage processing has several stages and documents. The latest digital tools make it easier to access documents securely and track a file’s status from any location. However, building and maintaining your digital infrastructure requires huge investments and resources. An MPO service provider takes care of these details with technical expertise.
According to a McKinsey report, most successful digital-first lenders (referred to as ‘digital attackers’) have 25% lower costs and 30% shorter mortgage cycles compared to legacy institutions.
Big Data can Optimize Products and Processes
Big data analytics convert data into actionable insights. Companies use these insights to discover trends, identify anomalies and risks, optimize products and processes and improve pricing models. New-age MPO providers have gone a step further by using AI to automate processes.
One of the key benefits of mortgage process outsourcing is the ability for providers to equip big and small organizations with the power of big data analytics, CoBots and Robotic Process Automation.
Get a Competitive Edge with Better Customer Satisfaction
Mortgage process outsourcing service providers ensure optimize loan application processes by improving complaint resolution times and 24×7 call center support. MPO managers continuously improve processes to reduce turnaround times, which in turn adds value and boosts customer satisfaction.
Customer satisfaction gives you a competitive edge among first-time home buyers. According to a 2019 McKinsey survey, banks received 20–30% lower customer satisfaction scores compared tp non-bankers. Exceptional customer experience was found to be the leading deciding factor for first-time homebuyers when choosing a lender, followed by the best rate.
Improve Profit Margins
Mortgage companies operate on minimal margins as mortgage processing services are capital intensive. MPO providers absorb infrastructure, staffing and technology costs for a reasonable fee, undertaking complex, time-consuming tasks such as accounting, tax monitoring and underwriting. This leaves you with time to focus on more strategic objectives such as expansion, new product development and managing compliance risks. The MPO provider will back your expansion plans by scaling operations and improving cost efficiency.
The mortgage industry is currently riding the home-buying and refinancing wave. You need flexibility and efficiency to take advantage of this opportunity effectively. With more than 15 years of experience in offering flexible, digital solutions for outsourcing mortgage processing, HelioNext can provide your business the competitive edge needed to tap into the upsurge in demand. Transform your mortgage business with our unmatched expertise—get in touch today.