Magazine article Mortgage Banking

Technology

Magazine article Mortgage Banking

Technology

Article excerpt

Direct origination, when a firm makes a mortgage without loan officer contact, has grown in importance. Once a way of handling affinity clients, V.I.Ps, or simply those who were not geographically located near a branch, direct origination is now an alternative form of lending that is both profitable and effective. It is especially useful when combined with telemarketing and analysis of an existing servicing portfolio.

Why have these types of operations become so popular? The answer is simply a changing attitude towards the information asset. It is not just the cost of using originators, or the inconvenience of local funding. Rather, it is the ability to target, contact and close prospective borrower via computers. In addition, this type of information management gives a competitive advantage to mortgage bankers, distinguishing them from those who have to wait for the customers to come to them.

In a period of large-scale servicing runoff, the efforts made to stem the tide have never been more effective than in the past quarter. By searching the database for likely refinance candidates, mortgage bankers can make a first strike, and try and retain the loan. Further, those calling in for payoff information can first hear about the services offered by the firm through intelligent call direction. Many of those who did not do a lot of origination, and consequently had few or no branches for borrowers to come in to established direct origination operations quickly to advantage themselves.

At other times, when servicing departments are not so busy, managers can employ their idle staff to make calls, as prompted by their computer. This is an advantage of excess capacity and should be put to use in whatever way is practical. Lean times can just be an indication that more innovative marketing practices such as this are needed to retain volume through increased market share.

What these firms learned in the process was not surprising to their technology people. An individual taking an application directly onto a computer screen would end up with a more complete and accurate application. No elements of the pricing choices would be left to change. Details that the borrower needed to know about were distributed directly by a representative who was being fed lines by the computer. This is a function of advanced workflow technology. Rather than just data gathering, many lenders who opened direct origination operations built input screens that analyzed data as it was entered, instructing the customer service representative about what else to ask for, and clearly displaying a non-negotiable price. …

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