It’s All A Process

It’s All A Process

Time to take a look at how you get things done

BY MARY KAY SCULLY | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

January is a good time to do inventory, not just of your education but of your processes and procedures for the year. The truth is, not everyone is always on the same page. Especially with remote work and the effects of 2020, processes have changed and without being in the office to discuss these changes, many employees might not be up to speed. Without clear protocols, it is easy to slip into bad habits or cut corners.

Even where processes are clearly spelled out for loan officers, sometimes they may need an update. One of the many lessons 2020 has taught us is that you must adapt and change to survive and thrive. Many procedures that worked in 2019 have changed drastically to accommodate a challenging economic year. If your processes have remained unchanged, it’s time to reevaluate.

Having clear-cut and up-to-date processes and procedures ensure that every loan is being handled in a safe and compliant way while borrowers receive the service they need.

AVOIDING CRITICAL ERRORS

When processes veer off their normal path, it’s also easy to make errors. According to STRATMOR, 3 of 5 loans originated contain a critical error that could cost the loan officer a referral down the road. Critical errors include:

· Not providing a checklist

· Not asking for documents multiple times

· Not calling the borrower for updates

· Not closing at the expected rate and fee

· Not contacting prior to closing

· Not starting the closing on time

· Not closing in expected timeframe ·

Experiencing problems

· Requiring unreasonable documentation

· Providing inaccurate closing documents

The word “critical” makes these errors sound catastrophic when many of the issues listed above can be fixed with diligent communication. To fix some of the most common critical errors, have a communication process in place and stick to it. Keeping up or following up with borrowers can often make the difference between a successful close and a rocky one.

Any compliance or critical errors cost valuable time, money and ultimately create risk. It is imperative that loan officers are on top of their game and follow the processes set out for them if they want to be efficient, accurate and helpful.

EVALUATING CURRENT PROCESSES

While many times the issue that surfaces is due to miscommunication or mistakes, sometimes it’s specific to the process itself. If that’s the case, it’s time to reevaluate.

Experiencing a critical error in a file not only reduces your chances of a referral, but it also costs your organization money. Having a definitive mortgage process is critical in the regulated mortgage world and essential for productivity, quality and customer service.

Loan volume surges generally strain a process. Add a pandemic, an increase of remote employees and your process may be experiencing a level of instability beyond what is normally seen with a volume surge. It is vital that you review your process and metrics to help identity instability and assess the cause and magnitude. Your LOS may generate reports, but are you sure you know what they mean in the current operating environment?

To start reviewing fall out may not be useful without reviewing where in the process the fall out is occurring, and identifying the reason and fall out type (cancelled, withdrawn, net operating income, denial, etc.). Do take notice of trends. Do some loan officers, processors etc. have a higher number? If so, it could indicate a training issue.

For example, reviewing approvals vs. declines may not be valuable without reviewing the number of change of circumstances per loan, the number of counter offers (i.e. a change of product or program) or the number of non-standard conditions issued at approval. Similarly, reviewing the number of days from approval to close may not be valuable without also reviewing title issues like ordering delay, defect, backlog due to COVID-19; collateral issues like valuation errors or appraisal delays; or even borrower-related delays tied to homeowners insurance, income interruption, unsatisfied conditions or insufficient funds to close.

By looking at these items you may discover an opportunity for education or a clarification of your process and sometimes it will need some alterations. Some will be easy fixes and others will take more time and effort. Masking a metric can be disastrous.

As an example, to reduce the number of holds or suspends, the lender’s operations team has increased the number of non-standard conditions on approvals thus reducing the number of files that are suspended and reducing the number of days from origination to approval. However, the file may need multiple reviews with the possibility the conditions may not be able to be satisfied. The cost of this exercise extends beyond reputational risk and internal expenses – it even may result in secondary market fees and negative customer service impact. Lenders must identify any issues sooner rather than later to ensure 2021 is a more productive and successful year.

INVEST IN PEOPLE

As mentioned, sometimes the process is not the issue – it may just be that loan officers need to be brought up to speed. If this is the case, it is time to put a renewed emphasis on education. Taking the time to make sure everyone is on the same page can make all the difference. People often make errors simply because they were not educated about the procedures in place. Start 2021 with education initiatives that get everyone up to speed to ensure a high quality of production.

NEW YEAR, NEW PROCESSES

Protocols have clearly shifted in 2020 – as has nearly everything else. Start 2021 by reevaluating and redefining processes, if needed, or educating your loan officers to make sure that everyone is well-equipped to avoid critical errors. Most importantly, in this new year, be open to adapt and change – no matter what the year throws at you.

Mary Kay Scully is the director of customer education at Genworth Mortgage Insurance.