4 Ways to Improve Loan Officer Productivity for More Profitable Lending Teams
Chelsea Mize
A shift towards a purchase-heavy market means a decline in profitability for mortgage lenders. 2018 has proven to be a tough year for lenders fighting to stay profitable in the face of margin compression and industry challenges.
According to HousingWire, the first quarter of 2018 was the worst quarter for independent lenders in terms of profitability in years, with lenders reporting negative profits for the first time since the Dodd-Frank compliance diminished profits in 2014.
Luckily, Q2 saw lenders pull into the black for the first time this year, thanks, in part, due to mortgage lenders reducing expenses by more than $1,000 per loan on average.
But lenders aren’t out of the woods yet. Loan production costs are still soaring at $7,877 per loan in Q2, up from the historical average around $6,266 per loan.
The onus is on lenders to continue to prioritize reducing expenses to improve their profit margins and stay in the black.
More than anything else, increasing productivity on your team is the quickest way to improve your profit margin and create momentum going into Q4 in order to close out the year strong and mitigate the financial impact of Q1.
We’ve outlined a few key steps than mortgage executives should follow to improve loan officer productivity and increase profitability.
1.) Identify Inefficiencies
Take a week or two to observe your team’s processes. Track and make note of how much time your team spends on administrative tasks, as well as any other tasks that divert your team’s attention from revenue-focused opportunities.
You will likely notice a number of process issues that take up an alarming amount of your team’s time, leaving little time to do the tasks that directly contribute to revenue.
2.) Troubleshoot Your Process & Implement Change
Borrower follow-up, reporting, and tedious customer service tasks are all examples of activities that can be managed with a restructured process and supplemental technology.
Don’t be afraid to start over from square one to restructure your lenders’ workflow. If your process isn’t working, sometimes a complete overhaul is the best way to create something more effective.
Though implementing a new technology during a tumultuous quarter might seem counterintuitive, bringing on mortgage technology might be the most impactful way to restructure your process and reduce administrative tasks quickly.
A digital mortgage technology like Maxwell dramatically reduces the time that lenders spend on menial tasks like sending follow-up emails, collecting documents, collaborating with real estate agents, pulling credit reports, and more. Lenders in Maxwell’s platform currently close loans in an average of 22 days (that’s 45% faster than the national average)!
An swift digital mortgage deployment will yield positive ROI almost immediately, so the up-front cost of the software is quickly justified by the near-immediate boost in productivity.
3.) Increase Sales Quotas
One you’ve re-vamped your team’s process, it’s time to increase sales quotas to ensure that freed-up time is devoted to selling.
Increased quotas encourage your team to embrace your new process and technology. If it’s impossible to reach their new quotas with their old, inefficient processes, then there’s all the more reason to adopt a new process that extends their productivity.
4.) Evangelize Your New Workflow Internally
No one likes change. And when it comes to adopting new technology, changing your process can be a particularly hard pill to swallow. There’s a learning curve to any new technology, and it seems as if the technologies that have revolutionized how we work and live tend to be the most difficult to learn.
Just think about how foreign it felts to navigate your first smartphone after a decade of Nokias and Motorola Razrs. The transition didn’t take place over night, but as soon as you were comfortable working your shiny new device, your life changed and the world was perpetually at your fingertips.
Mortgage technology is the same way. It may seem intimidating at first, but an open mind and a bit of effort will go a long way to completely revolutionize your team’s productivity for the better.
The best way to get your team on board with any new process is to evangelize internally. Whether that means onboarding your top performers with new technology first and letting their positive results inspire the rest of your team or incentivizing your team with rewards for early adopters, give them a reason to want to change their process and incorporate mortgage technology into their day-to-day.
Sometimes all it takes is reminding them what’s at stake. What if they knew real estate agent satisfaction would increase, resulting in more consistent referrals? What if they could double the number of loans they close in a month? Help them focus on the profitable light at the end of the technology tunnel and watch their productivity soar.
Mortgage Technology: The Quickest Road to Increasing Profitability
Plain and simple, you need to stop wasting your loan officers’ time. That is, you need to maximize the amount of time loan officers are selling, while ensuring that they are selling only the most profitable products to the most valuable customers.
You can do it without mortgage technology, but it will be slower and more difficult to pull off.
For a mortgage executive, the single largest benefit of a digital mortgage solution is internal cost reduction, according to the 2018 MBA technology profile.
As of 2017, only 3% of the $7000+ loan production expense is invested in technology, while 66% is spent on people-related costs.
Profitability remains at an all-time low because, while the industry has become increasingly complex, the processes and workflows have not adapted.
You need to quickly re-frame ROI with a technology investment in mind. In the short term, targeted investments in core capabilities that reduce cycle times are critical for a successful impact, including:
- A borrower portal for efficient customer interaction
- Accurate borrower data from the source to reduce processing time
- Clear and centralized communication to enhance borrower engagement and reduce administrative tasks for lenders
For more on how to increase lender profitability in a purchase-driven market, check out our eBook “3 Steps to Profitability”:
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