Magazine article Mortgage Banking

Doing the Right Thing for the Wrong Reason

Magazine article Mortgage Banking

Doing the Right Thing for the Wrong Reason

Article excerpt

TELLING A MORTGAGE LENDER THAT technology shouldn't be deployed to improve efficiency is counter-intuitive to the way mortgage companies think and operate. After all, who wouldn't want a more efficient and effective operation? But technology can provide a larger prize than smooth operations.

Every day brings the industry closer to an ideal state of faster, more accurate and profitable origination, underwriting, closing and archiving process. Each technology advancement helps contribute to the concept of totally paperless processing.

Yet many technology decisions are being made for the wrong reasons. Almost all technology decisions and investments are justified on the basis of cost savings and increased efficiencies. There is a greater need and more profitable payout when the implementation is motivated by a desire to increase sales.

How can technology increase sales?

Mortgage lenders all fish in the same pond. In the environment of a post-refinancing boom, two strategies are usually followed to get more business: Add more originators to the pool and trim prices. Adding more originators is costly, while cutting prices hurts margins--both have a negative impact on the bottom line. Rather, when the emphasis is placed on better service, easier interface and faster closing, several positive things happen.

Assuming price parity, brokers want to deal with a lender that they trust, that they know will work with them and has the tools to be more effective and efficient. This is the advantage of delivering better service and being easier to do business with.

Increase broker traffic

Technology that provides additional portals encourages broker traffic. Internet-based solutions, Wireless fidelity (Wi-Fi) communications and other technological advancements now enable brokers to originate loans from anywhere. The critical differences between technology vendors and their solutions are the ease of access and the after-entry effectiveness of processing.

Getting from paper to paperless

Few industry professionals doubt that an eventual outcome from loan origination, underwriting and archiving will be a paperless environment. No industry professional will claim that we are near this goal. Paper is, and will be, an integral part of loan processing for a long time. This does not mean that mortgage lenders aren't already enjoying the benefits of electronic processing.

Many of those enjoying the greatest benefits are the early adopters that set many of the standards used today. …

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