My post last week, "The Evolution of Origination Processes and Lender Operations Models",  sparked some enlightening comments.  

It appears the "assembly line" approach is not as prevalent as I expected, at least not at the origination level.  As some of you pointed out technology has assisted loan officers with performing many origination and processing tasks at the point-of-sale.  Point-of-sale underwriting and processing has it's benefits:

  • Loans are underwritten quickly and loan officers can obtain conditions upfront
  • Disclosures can be generated immediately, ensuring loans are compliant
  • Supporting documentation is obtained from borrowers at application or shortly afterward
  • Files can be imaged, reducing paper and improving productivity
  • Better customer service

So if the loan officer is performing much of the front end underwriting and processing using technology – lap tops, websites, PDAs and cell phones, is it necessary to maintain a traditional branch office?  Do loan officers really need to have an office to perform their duties as an originator?  Do processors and underwriters need to have an office to perform their jobs? 

Some might say that employees can’t collaborate and solve problems unless they are working together in an office.  Another argument is employees won’t do their jobs unless they have management oversight, and this can’t be done unless everyone is housed under the same roof.

Early this month, I consulted with a fellow that created a business model that all but eliminated branch offices. 

He had one small office to accommodate a marketing person and a processor.  The branch supported around 30-40 loan officers who were located within 50-70 miles of the office.  They rarely came to the office.  All of the originators performed the tasks mentioned above on their own, delivering a complete image file to the processor.  She reviewed the digital file to ensure it met “Good File Delivery” and then submitted it for final underwriting validation.  The branch manager monitored loan officer activity through an LOS and loan quality through the image technology.  A key benefit to the loan officer was a higher commission split. 

I’d like to hear further comments on this business model.  If you are a loan officer, would this work for you?  If you are an owner of a mortgage bank or brokerage using this model, let us know how it is working.