Bringing Back Profitability In Lending

In today’s mortgage market, lenders are struggling with constantly changing rates, rising LO compensation, low productivity, and margin compression.  With paper-thin margins Mortgage Bankers are looking for solutions that will help turn the profitability tide.

One of the main barriers for lenders as they look to address these challenging market conditions is their inability to easily access data across multiple systems and sources to make timely and informed business decisions.

What they need is a dynamic way to easily create reporting and analytics through access to the vast array of information in their LOS, general ledger, hedging and servicing systems.  Lenders are not looking for more data.  Mortgage Bankers needs a single platform that absorbs all data sources and provides analyzed visual data of the entire organization near real time to gain profit intelligence. 

Mortgage Bankers would benefit tremendously from a solution that converges the mortgage banking loan origination system, general ledger, payroll, contact management, warehouse, quality control, secondary marketing, and servicing data to provide a complete picture of their lending operation, with focus on providing the insights needed to manage differently while driving profitability.

Leveraging all the data from multiple sources allows Mortgage Bankers to make well-informed decisions in real-time. The ability to identify and eliminate performance problems, waste, and revenue leakage is crucial, especially in today’s challenging lending environment.  Bringing profitability back to lending requires close attention to these key and detailed metrics.  

For example, it’s just not good enough to measure loan officer performance based on production volume once a month when you calculate commission. To effectively manage a sales force, lenders need to measure loan officer profitability, down to the loan level.

By measuring revenue and compensation, and then calculating contribution margin at loan level, lenders can see a clear picture of a loan officer’s contribution to profitability. By consistently stack-ranking sales people, sales, teams, channels, and branches, Mortgage Bankers can see patterns more quickly, and take steps to respond to them to gain a competitive advantage.

It’s not enough to simply see the scoreboard. You need to dig deeply to see the actual patterns. For instances, if a lender had several poor-performing branches.  Before deciding to shut them down, it’s important to identify loan officer performance and seek options to cull the weak performers without abandoning the handful of solid performers.

Once they identify most profitable loan officers, they need to ask themselves which product gives the best return and which branch is creating the most opportunity for the product. How do they find an answer for this? For sales, volume and revenue are key views. For operations, turn times matter. For secondary, gain on sale, SRP are important, but so are time to fund, investor suspensions, and warehouse dwell time. 

Everyone tracks operations caseloads. Do you know with certainty which processors turn profitable files most quickly? Can you identify your current best performer at a glance when a production spike has you scrambling to assign loans? Do you know which loan officers get great service from underwriting, and why? Can you see which branches are making it happen, and which may need help this week? Do you understand the connections among profitability, turn times, credit standards, and your operations team?

If you can’t answer yes to each of these questions, you are likely relying on gut feelings and one-dimensional views of your business when you make important decisions about compensation, workload assignment, and process improvement.

The key is being able to identify whether profit, volume, mix, productivity, cash flow, secondary gain, loan servicing metrics and any other key metric are on target, near real time with one click.  Determine how good is your data? Identify data integrity issues and dirty data near real time with one click.  Reduce costs by identifying sub-par performance by product, department branch, and channel near real time with one click.

Up until now, easily gaining access to this information across multiple systems and resource was a daunting and ineffective task, significantly limiting a Mortgage Bankers ability to gain profit intelligence.

In today’s highly competitive mortgage market with fluctuating rates, increasing cost to originate, margin compression, and heightened competition, understanding lender, branch and individual LO profitability is critical. Teraverde’s Coheus Profit Intelligence is the first solution of its kind that absorbs all data sources and provides analyzed visual data of the entire lender’s organization near real time. 

This allows the lender to take this actionable intelligence and make swift business decisions to gain a competitive advantage in the marketplace. 

With applications like Coheus, effective management teams can watch for patterns by analyzing data. This is done by listing lender credit by branch, loan officer, product and other factors, patterns emerge that can be investigated and turned into action to correct bad practices and reinforce effective ones.

As seasoned industry executives, we have seen and worked through major challenges in the mortgage lending and banking industries. We know what works and what doesn’t. Our experience allows us to accurately identify the appropriate business solutions the first time, transforming lender profitability. 

We specialize in increasing profitability by identifying the most profitable products, loan officers, branches and channels. Identify whether profit, volume, mix, productivity, cash flow, secondary gain, loan servicing metrics and any other key metric are on target, near real time with one click.

With our enterprise profit intelligence platform, high-powered industry insights, superior workflow management, robotics process automation, and visual classification, Teraverde clients have experienced a significant reduction in costs, and increased performance, while bringing back profitability in lending.  

Coheus goes beyond cost per loan – Coheus lets users look at revenue, costs and profitability per loan by product, loan officer, channel, and branch.  Also how long it takes for each step in originating a loan, and identifies variations among employees, departments, and branches.  Along with looking at the credit box, employees, channel and branch for loans that default or pay off unexpectedly.  Coheus helps model and explore the possibilities of channel, product, funding, process and technology innovation.  It provides profit intelligence that can be used for constant improvement of process and profitability.

Coheus drives Mortgage Banking profitability one lender at a time. Here is an example of Coheus in action. A Mortgage Banker was alerted to a spike in delinquent loans, took action, saving $4.2 million of delinquency and repurchase costs. 

Another Mortgage Banker reduced time to close by 16 days, reduced # of missed scheduled closings to less than 1%, reduced hedge costs by $2 million, increased daily underwriter loans underwritten by 40% and improved customer satisfaction by 10%.The time is now to bring back profitability in lending.