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Six Strategies to Eliminate Processor Bias

This piece originally appeared in the November 2021 edition of MReport, available here.

Within nearly every mortgage team, there is processor bias: a form of discrimination where a mortgage team’s bankers would rather have their loans submitted to one processor over another, usually due to the desire for increased efficiency.

But why is that? Are these preferred processors that much better or have they figured out the secret sauce? The answer usually comes down to two things: systems and organization. They may have clearer spreadsheets, workflows, and naming conventions. They are highly organized and able to prioritize, etc.

However, when processor bias is present, it creates inefficiencies that trickle down to the production team, slowing down closings and limiting the amount of business originators can take on. This not only results in a poor customer experience for borrowers, but lenders can also become less competitive—something they can’t afford to be right now.

Consider that the inventory of homes remains at a record low, down 12% from just a year ago. At the same time, 20% more Americans plan to move this year compared to last year. As they relocate, consumers are battling over the limited number of homes available. In fact, homes are spending, on average, just 17 days on the market. Mortgage teams must be able to keep pace in this new environment, and removing processor bias is a good place to start.

To remove processor bias within the mortgage branch, lenders should consider these six strategies.

Terminate First-In, First-Out Process
Too many processors work on the FIFO (first-in, first-out) method, leading to bottlenecks that back up the system. The easiest and fastest loans get overlooked because other loan applications were ahead of them.

However, the date that a file is submitted should not be what dictates its priority in the pipeline. Processors must be able to quickly review a file and schedule the tasks as necessary. Otherwise, they risk spending time on a loan that takes 45 days to close before handling a loan that will only take seven days.

Allow Parallel Processes
Similarly, working simultaneously on multiple processes can ensure the most efficient loan production system. Often, processors will order title work and then wait for the title to come back before moving to the next step. This is inefficient.

A better practice is to evaluate the file and determine the timeline appropriately. Some items are lengthy while others are ready to be completed concurrently. The best workflow follows both linear and parallel processes.

Leverage Cloud-Based Document Management and File-Naming Systems
Manual or disorganized digital systems do a disservice to processors working to quickly move through files. To ensure processes flow smoothly, access to files and documents requires a specific filing structure for every loan, processor, and team. A uniform naming convention can help team members confidently search for and find what they need.

Furthermore, certain items like payoff statements, rate locks, title quotes, and disclosures have expiration dates. Lenders need a system to alert them and any third parties to update documents when required.

Tap into Automated Task Lists
One of the most significant issues in processing is that of differing, disjointed systems—every employee, loan officer, processor, underwriter, and title company manages their tasks differently.

For a mortgage branch to operate efficiently and profitably, approaching task management from a systems perspective is no longer a “nice-to-have.” Managing workflows and tasks like that of a fast-food restaurant or assembly line is needed. Every step of the loan has a transparent process, so the right person is doing the right thing at the right time.

Employ Time Saving Insights and Dashboards
A mortgage company’s LOS does not provide a full picture of what is needed to push different loans to the next steps and prevent bottlenecks in the pipeline. To combat this, many mortgage teams resort to spending more time in meetings, check-ins, status updates, and reporting. This is incredibly inefficient. While meetings and reporting can provide useful data for management to make effective decisions, the time consumed is outrageous.

Teams must also be able to forecast closings, revenue targets, goals, and production to know when to step up marketing and when to take their foot off the pedal. Historically, spreadsheets have been used to provide this information and are updated manually each day. While spreadsheets can be useful, there is still one huge problem—they require a human to update, and humans make mistakes. Additionally, manually updating spreadsheets still devours valuable time. The solution lies within a system that features dashboards that are automatically updated and accessible to each member of the mortgage company’s team.

Implement an Assembly Line Philosophy
The best teams have a method for managing workflows and tasks similar to an assembly line. Consider Henry Ford. He noticed that when you have one mechanic work on one car at one time, the mechanic needs to have a breadth of understanding, specialization, and knowledge to excel at each specific task. This also slows production.

Ford then realized the need for a specialized workforce. Instead of having one mechanic build the entire car, you make one employee responsible for the engine, another for the wheel hub, another for the interior, and so on. You create a conveyor belt to pull the car from one station to the next, so instead of moving tools, you move the work product.

For mortgage teams, automated task management streamlines processes so that processors get the most done in the shortest time. Leveraging tools like this allows the team to look at a screen and have the work come to them—fully prioritized.

Do you have someone within your processing team who is a rockstar? The processor that every loan officer wants working on their loans because they’re faster and more efficient? While processor bias is common, it leads to organizational inefficiencies.

Instead, teams should focus on eliminating this bias by removing FIFO processes, enabling parallel processes, implementing cloud-based document management and file-naming systems, automating processes and tasks, employing insights and dashboards, and implementing an assembly line philosophy. Those who do will not only deliver better experiences but also increase their competitiveness.

About Author: Adam Batayeh

Adam Batayeh is President of Lodasoft, an award-winning mortgage task automation software designed by mortgage veterans to enhance productivity and quality. The Lodasoft Digital Workflow Platform leverages enterprise intelligent loan manufacturing (ILM) to drastically reduce the cost to originate. Lodasoft enhances workflow throughout the enterprise’s lending lifecycle by implementing task-based automation, identifying training opportunities, and freeing branches and internal staff to focus on growth. For more information, visit Lodasoft.com.
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