“Ah! the clock is always slow; It is later than you think; Sadly later than you think; Far, far later than you think”. 

This quote is from a 19th century poet also known as the Canadian Kipling, Robert Service.  He is a very humorous poet.

As I read this quote I thought of the time it takes to process a loan from start to finish.  We’ve come a long way, but it still takes up to 30 days to get a loan funded after the loan application is taken by the loan officer.  It’s interesting that one can walk into a car dealership, get near a 100% loan and drive off the lot with the car dropping 10% to 20% in value immediately.  As we review mortgage companies during our warehouse audits, we find some companies are able to shorten the time frame from loan application to loan purchase.  The results are better customer service, improved productivity and increase profits.

What are some of those key items those companies do?

1. Point of Sale Power:  Allow loan officers to obtain an underwriting decision at the point of sale.  In other words, allow loan offices to use DU/LP to get the initial underwriting decision and findings.  Additionally, allow loan officers to generate disclosures, order credit, and obtain all necessary documentation to underwrite a loan. 

2. Front End Paperless:  Great companies are imaging the file right after the point of sale. After the loan officer completes the application and obtains DU/LP approval, the loan is converted into an image file.  Paper files are history.

3. Good File Delivery:  Files are processed, underwritten and funded based on “good file deliver”. In other words, things don’t happen unless the files, information and requirements have been met.  If they’re not met, they are returned to the party that didn’t meet “Good File Deliver”.  We find many companies have not defined this and loans are touched over and over again before loans are fully processed or underwritten.  When loans are touched multiple times, processing times is lengthened and loan cost increased. 

4. Saleable Loan at Funding:  Funders should never fund a loan unless it is a saleable loan.  We find some companies still fund loans without all the key conditions required by investor to purchase a loan. When a loan does not meet all the requirements of an investor, it can create delays (sometimes long delays) for loan purchase. 

If you’re a mortgage banker and looking to leverage your warehouse lines and maximize your return on capital, loan processing velocity is critical.  Operators need to look at every task and process to shorten the time frame from point-of-sale to loan purchase.