What are Ways to Reduce Cost of Loan Production by Over 50%
by Alok Bansal
Today’s business environment of higher interest rates, declining loan applications, and higher cost of compliance is a challenge to all lenders. Over the last 18-24 months, with volumes declining and compliance costs going up, the average cost to produce a loan has swelled to $9,000. Most service providers are reporting a net loss on each loan that they originate.
When times are tough, you need to strategize your moves. The aim is to remain ahead in the race, without increasing your cost of acquisition. Also, since the loan volumes are down, lenders must keep “Faster Closure”, and “Profitability” as the focal point. What steps can lenders take to reduce the cost of producing a loan, while ensuring faster closures? We recently launched an eBook that highlight 6 ideas that the lender can think of implementing, which will give them quick ROI and help them reduce cost by over 50%.
Speed up ‘on the go’ bulk processing
Within the Mortgage industry, there are several instances where originators must process loans in bulk. For example, a wholesaler trying to process multiple files uploaded by brokers across the states at one go; a correspondent lender selling loans in bulk to the principal (and indexing those loans per stacking orders handed down by the principal)
Much of this work would be impossible without OCR. You can imagine – a pull of2000 loans, with each loan file consisting of up to 500 pages – that all must be reviewed,indexed and analyzed. This one batch can consist of up to 1,000,000 pages! There is no way a manual indexing can finish this job.
Similarly, for a wholesaler, especially during season, it is impossible to manage the indexing and processing load in time without using an automated tool like OCR.
Investing in technology comes with upfront costs and ROI on the investments are not certain and take time. If you can use a proven OCR tool in a ‘pay per use’ model, then you don’t need to worry about any upfront costs, nor do you need to wait for any development time.
You can directly start using the technology to digitize loan applications in quick time and reduce cycle time by at least 50%.
For more ideas like these, go ahead and download our eBook ‘6 ways to reduce cost of loan production by over 50%’. We are sure you will enjoy it
Meet with us at MBA Annual at Booth #360 (Schedule a meeting) and find out how you can make a positive impact to your business with proven technology.