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Lenders continue to look for ways to stem the rising costs of producing a mortgage. One of the main factors contributing to these rising costs is the increased costs of compliance. One main approach to reducing this cost is through the better use of technology. Yet, would it surprise you to find out that compliance ranks fourth on the list of where lenders spend their technology investment dollars? (Tech Dollars)
Mortgage lending is still a production driven business. Let’s face it, without production nothing else really matters. In a highly competitive business, most lenders say they invest mainly in technology to help drive new business. Lenders originating through consumer-direct channels seem to lean more toward marketing and sales technology as compared to those using traditional retail loan originators. Regardless, most lenders are concentrating their technology investments in business growth.
Increased production without quality and compliance can cause a lender more harm than good. If not careful, a lender can originate itself right out of business. Loan quality and compliance are major factors in controlling the time and expense of producing, processing and closing a loan, as well as in its “saleability” and performance.
An investment in technology that will help ensure quality and compliance will pay dividends by reducing delays, eliminating defects, expediting loan deliveries and purchases, while minimizing defaults, potential indemnifications, and repurchases. All will lead to reduced costs, increased income, and much better customer service.
So, an investment in compliance technology is an investment in the growth of a lender. The lender will have money for further investments in the things needed to increase their production, with the confidence that this production will also be profitable.
As an alternative, a lender may choose to maximize investment dollars by outsourcing some of the functions needed to ensure compliance, like the required pre and post-closing QC audits. This ties the compliance dollars spent to the level of production, minimizing fixed overhead and technology costs, generating more money for continued investments in the things that can help to grow the company.
This is something that should be seriously considered with investment dollars limited and the increased demand for more compliance. A lender needs to grow, but growth without increased profits is just an exercise in futility.
Spend your investment dollars wisely so you get the biggest bang for the buck, but don’t forget that compliance plays a major role in your success.
Stay compliant my friends.
