Automated Upfront Fee Collection Can Save Lenders Thousands
What would you say if we told you that lenders across the country are losing out on around 5-10% of their upfront fees every year? We’re talking Appraisal fees, Application Deposits, Lock In and Prepaid Commitment fees just to name a few. Fannie Mae has forecasted that purchase mortgage originations will increase by 6.3% in 2022 at $3.25 trillion. Some quick math tells us that lenders could lose millions this year if they don’t address these unpaid fees. So what’s the solution? Automation.
Lenders today likely have some variation of this approach to fee collection: The lender calls the borrower to request their financials or credit card information, scribbles them down on the side of their 1003, on a sticky note, or on an authorization form, hands it off to someone in Operations to manually process, and then upload the receipt to their LOS.
Here are four reasons that this process is problematic and ultimately impacting lenders’ bottom line:
- High regulatory risk. Nothing is worse than an uncomfortable conversation with a regulator. Hanging onto that financial information is risky. Why manage that data if you don’t need to? We don’t have to tell you the negative implications of compliance concerns. PCI headaches are real – eliminate them.
- Inefficient use of lenders’ time. Tracking down financials is a waste of everyone’s time. Seriously.
- Poor customer experience. More than four in five Americans used some form of digital payment in 2021. Why not give them the PayPal experience when working with your company? PayPal had 19.3 billion transactions with $1.25 trillion in volume during 2021. They have nearly perfected online money transfers! Considering the generational shift in home buying, it’s important to remember that these tech-savvy buyers consistently express higher trust in digital solutions.
- Negative impact on conversions. Every lender knows they should be collecting upfront fees because it gives the borrower an incentive to close the deal. Will it be the end-all, be-all way to keep them in your pipeline? Of course not. But it will keep you in the running to win the sale because there’s been a level of investment. If you’re using a third party to collect your fees, consider how that may be pulling your borrowers away from your brand.
Automating the upfront fee collection process reduces regulatory risk, saves lenders time by removing the manual process, provides borrowers with a fast and easy way to pay their fees, and ultimately sets the lender apart from their competitor’s over-the-phone payment method.
LenderLogix set out to fix this and worked with their LOS partners to create a best-in-class mobile payment service called Fee Chaser. Right from within the LOS, Fee Chaser allows loan officers to send borrowers a text message and email with a unique link to pay their fees. The borrower then opens a web browser, inputs their credit card information into a secure payment processor and they’re done! Everyone gets a receipt once the payment is made, and it’s automatically uploaded to the eFolder. It’s really that simple.
Lenders who use Fee Chaser receive more than 50% of their payments within 15 minutes of sending the request and report capturing at least 10% more upfront payments. If you’re ready to put your upfront fee collection on autopilot and ensure that you’re not leaving money on the table, learn more about Fee Chaser here.
LenderLogix is a team of FinTech innovators with more than four decades of firsthand experience in mortgage lending and real estate. They pinpoint moments of friction in the loan origination process and design customized software and APIs for mortgage lenders that enhance the experience for borrowers, Real Estate Agents & lenders alike. As former originators, they have a deep understanding of the lending industry and customize their software to provide clients with solutions that complement their current processes, not hinder them. The team also understands that lenders work around the clock, so they offer white-glove service and support options whenever they are needed. On average, LenderLogix is able to save lenders up to 40% more time in their day, increase their conversion rates up to 60%, and realize hundreds of thousands of dollars in unpaid upfront fees. Visit www.lenderlogix.com to learn more.
