According to an insights report from STRATMOR Group, origination costs have gotten higher and will continue to do so in 2018. “The data shows that the profitability of mortgage entities is substantially lower than it has been since 2013 or 2014,” Garth Graham, a Sr. Partner at STRATMOR, states. He goes on to say since 2010, the cost to originate a loan has increased by $1,700 in sales and marketing expense and $800 in operations per loan; based on his data, 70 percent of the total increase and total cost has gone to sales and marketing. To combat this, Graham recommends generating an ROI on the investment and having a clear business plan and strategy before pursuing digital tools.
STRATMOR takes a census of industry-based data from lender clients in order to gauge who is bringing in the majority of the revenue. Forty percent of originators are bringing in 80 percent of the business. Graham encourages those who are seeking new technology to understand how those tools will help those particular lenders be more productive. Graham also recommends lenders seek technology that is easy to use, but still provides all the features necessary to perform all the tasks needed. In Graham’s experience, many technology solutions require extensive training before LOs can fully utilize them, so it’s essential sure to know your level of expertise before purchasing advanced solutions.
According to Graham, lenders who engage and collaborate with consumers online and offline will have better success and more opportunities with borrowers. Using an online portal that the borrower finds is easy to use and allows for consistent follow-up can help create more conversions and keep them in the mortgage cycle. Ultimately, getting higher lead generation means staying in contact with the borrower and building trust, which can also lead to increased testimonials that provide more confidence to future borrowers, according to Graham.
Finally, Graham emphasizes three key things to balance when figuring out how to fully leverage your technology; “People, Process and Product.”
“At STRATMOR, we see lenders who might have subpar technology but are successful because they have good people and a well-defined and managed process. But, we don’t see lenders who are able to use technology to overcome poor people and poor processes” Graham states. The key is to use digital solutions related to non-value-added tasks so LOs can focus on tasks that do add value and wouldn’t necessarily be better via automation. Examples of this include following up with clients before closing and being present during the closing, which are tasks that may not otherwise be possible if the LO doesn’t have time to do them.
To read the full insights report from Garth Graham, click here.