As the refi beat goes on certain things become more apparent....
1) It has never been harder to process a loan. The time involved due to the myriad of risk and database checks are mind blowing; but smart and essential nonetheless. But we have a panic driven industry that is rushing the implementation of all this deferred maintenance before the technology is available to efficiently integrate it into a smooth working system. Most firms barely made it through the desert of 2008 so it is likely they are working off an outdated operating system. The few remaining mortgage IT firms do not have the immediate fix or silver bullet to solve our issues. You will spend as much money integrating their solution with unlimited downtime during a refi boom that it makes the option of growing your own actually palatable. (This assumes you are a true bank or mortgage banker who is concerned with secondary, maybe hedging, loan delivery, lines, etc).
So your OPS leadership is looking at past history and trying to figure how many people do I need to process a loan to close? Can it really be that today's loans are 3X more time consuming and I need truly experienced OPS veterans (10 yrs++) with designations as a majority of the staff? Of course the technology and the higher grade people and the time required all add up to 2x-3x the cost to produce. Sure we can scan now and don't copy as much. Sure that means we pick up speed and efficiency and save FedEx costs. SO yes that counteracts the above, but then we overlay appraisal issues on every file and no AVM usage. To that we add all full doc, guidelines that are changing weekly, mega-restrictive MI, etc. and we are back to 3X more time and cost.
So our service sucks relative to the past; our OPS people want to just rollover in bed and never come back to work; our customers’ expectations of flexibility and turn-time; our margins, though much better than a year ago, are eaten up by our increased costs to produce; we have lost premium pricing yet are hit with more bumps than a disco on seemingly every scenario...all challenges that can be met with the right mind set of team members living in the reality of today, thankful to be a survivor and a thriving, and willing to look at themselves to become an agent of change.
2) REALITY: Each LO gets a limited amount of resources in the form of processing and line capacity. The amount is dependent on their past history of volume and of efficiency/pull thru. If you funded an average of 8 loans per month on 10 apps, you should be given the ability to increase by 50-100% that capacity -- so 16 funds for 20 apps in this market. The keys to that philosophy is that the 4 "no's" are discovered very early in process and hopefully never hit UW/close at all. Plus, those that do close we underwrote and closed once without changing rate/point terms or loan amounts and never changing programs.
Giving LOs the understanding that they have limited resources is important because it manages the expectation set for the LO and therefore their customer. If the LO knows "I have only so many slots to work with" then they will be choosy during times like these when loans are like shooting fish in a barrel. They won’t waste the time on hard to work exception loans, especially refinances. They won’t take loans that they know don't have at least a 75% chance of succeeding. They will take control of their customer and say “you are one of the lucky loans I chose to take on this month; in order for this to go smoothly you will need to get me this list of documents timely, we will need to decide today the program, rate and terms and not look back." If they can’t be immediately helped or choose to be high maintenance, quickly and firmly suggest other alternatives, where they will then likely be tortured and frustrated and come back with their tail between their legs.
3) This is not a Part-Time business anymore! It is full time in every way. Of course you have all the NMLS courses and continuing Ed required as a start. But the guides, compliance forms, rate changes, term modifications all require you to be looking everyday at serving a referral base and a database of past customers. You need to be working out scenarios, pricing out a deal, structuring a package, validating a DU finding, massaging a credit report, every day or you will be stale, inefficient, mistake prone and miserable. This results in a drag down on processing with crappy loans that don't work, pissed off customers with wrong and un-met expectations, and a drag on peer LOs because they end up bearing the brunt of the PT questions since the PT doesn't remember how to do their job.
Are there rare exceptions? Sure but they need to be managed all the time. Too many times these PTs are friends we are too close too who are living on their past glory years. Folks this is a different business now. Those old habits could actually be detrimental. These old war heroes spend a lot of time around the office complaining how tough it is to get a loan through, they beat up OPS, and they suck your energy and never will return to their glory years.
The right spot for these people is to attach themselves to a highly organized producer who has expressed interest in management and who has a team forming with assets etc. The PT agrees to take a lower commission, hand over leads (with a well defined process) and get out of the way. This way the customer has the right expectation and information and OPS has a solid application that works with the right expectations attached.
In a world of ever shrinking resources of OPS and Line capacity, triage-ing each application up-front and seeing where your problems come from is essential. Get out of reacting mode and into pre-emptive strike mode. It will help when the volume drops too, and your resources are again limited and time/money is precious.