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Lenders are constantly looking for ways to increase business and bring in more loans. The intent is to increase income and profitability. Unfortunately, many are finding that increased loan volumes alone do not necessarily translate into more profit.
In many cases, more loans lead to more expense and increased problems, resulting in a decrease in net profits per loan. If some lenders aren’t careful they may originate themselves right out of business.
Loan quality and compliance are not a “nice to have” anymore, or just something to talk about. Quality, compliant loans are a necessity for any lender’s success, no matter what the volume. To originate profitable loans, a lender must be able to quickly identify the things that cause problems, increase costs and drag down productivity. Hiring more people is not a sustainable option.
A lender needs to have the capability to identify what is driving up their costs to originate and also what they can do to streamline their operations to increase employee productivity to do more loans with fewer people. Or, at least, do more loans using their current staff. That’s when the profits rise…
Loan analytics and trending reports will surely help. (Analytics) But, this can get to be a little expensive. However, lenders can use the information already being gleaned from their own required pre and post-closing audits. You’re spending the money to perform these required audits, so why not get the maximum benefits? This is one area where you shouldn’t skimp.
I’ve said it before and I say again. The investment made in performing loan quality and compliance pre and post-closing reviews will pay big dividends. Done right, these reviews will provide plenty of loan data for analysis to identify areas needing improvement and adjustments that will increase productivity, decrease loan processing time and expense, and avoid costly funding delays, indemnifications, and potential repurchase demands. All the information needed is right there, within the loan audit reports and trending information, on any defects found. Take full advantage of this investment.
If not doing so now, it’s time to start paying attention to these pre and post- closing audit results. Using them to adjust processes, correct defects and determine needed training. Before you go out and spend more money to try to identify ways to improve performance, decrease expenses and increase profits you should take the time to review the analytics you already have. You may find there is plenty of information to assist you in achieving your goals.
