3 Steps To Improve Processes in a Tough Housing Market

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From software as a service (SaaS) that has low utilization and lacks an ROI to antiquated processes that could easily be automated — now is the time for mortgage companies to evaluate and implement changes across the business. Here are three ways to reduce costs and increase efficiency.

1. Evaluate your current tech stack and eliminate unnecessary systems and services.

Go through each software expenditure and ask yourself if it is business critical, value add, or something that can be cut. This process will also help identify duplication of tools that offer similar features. To determine how to handle tech in the “value add” bucket, dig deeper to understand the utilization and ROI from the tool by asking the following questions:

  • How frequently is the tool leveraged?
  • What are the benefits of the tool?
  • Is there a direct ROI from the tool, such as revenue or time savings?
  • If we remove the tool, what is the trade off?
  • Did the vendor deliver what was promised?
  • How have issues been handled?
  • Are our expectations being met?

The answers to these questions can aid in deciding whether to cancel, as well as provide leverage in renewal negotiations. For systems in use by internal and support staff, now is the time to make a choice, commit to one, and eliminate the other(s). Staff resistance to change is lower in changing markets.

For company-provided marketing and business development technology, evaluate the level of adoption. If producers and teams are not using the offered systems, determine the ability to shift dollars from a system with low usage to what the salespeople prefer. If the system(s) your production teams are using are more expensive than what you provide, consider subsidizing it rather than paying for it in full.

2. Audit operations and processes and introduce automation.

Even the smallest of inefficiencies — when multiplied across hundreds or thousands of loans — can make a big difference in your bottom line. Evaluating your current processes can identify areas of improvement. For loan originations, start by walking through the process from start to finish and identify each discrete step in the process such as application, document collection, processing, identity and document verification, underwriting, closing, and post-closing. Within each step, take note of how much time they take, which steps contribute to the most friction, where bottlenecks occur, what handoff looks like, and where loans stall. 

Homeowners insurance verification is one example of a process that is both time consuming and inconsistent across carriers. As improving efficiency becomes a priority, lenders are beginning to introduce automation within the verification process, which can help redirect headcount and eliminate uncertainties with staffing volumes. 

Other parts of the process that contribute to the most friction or lead to the most stalled loans are likely the best target for optimization. As you begin to form action plans, tie each proposed optimization to one or two KPIs, such as average loan cycle time, cycle stage length, pull-through rate, fallout rate, or application approval rate. Begin benchmarking the KPIs now before implementing changes.

3. Consider accessible Artificial Intelligence (AI) and ensure your team is leveraging the capabilities to be more efficient.

As AI continues to rise, leaders are understandably wondering how they can use it to streamline tasks and save on expenses. AI can most assuredly find use in the housing industry, but before jumping in, it’s important for companies to review the current state of their technology and understand what they can – and can’t — do with AI. Below are a few ways to start this process. 

Though AI now makes news on a daily basis, it can’t solve every issue in the housing industry. The home purchase and finance processes are still the largest financial transactions most consumers ever make, and there simply aren’t computer-generated ways to handle certain parts of real estate and mortgage transactions. For example, AI can help real estate agents write certain clauses, but it can’t be trusted with the finer points of negotiation and expectation management. In lending, AI could assist a borrower in writing an explanation letter for a change in compensation or past credit issue, but it has yet to be able to determine when one is needed or whether such a letter could be the difference that gets a borrower approved. AI can be useful to companies and producers as a complement or supplement; but it’s not ready to be a replacement.

Housing industry professionals can tap AI to speed up and improve communication by creating templates for teams to leverage internally, such as FAQs. However, all AI-generated material should be reviewed and verified due to its limitations. ChatGPT, for example, might not be updated with the most recent data, so any content referring to market conditions could be outdated. Always ask the system to cite its sources and ensure the material is verified as relevant, accurate, and compliant. While AI can help with content ideation, language, and general concepts, to ensure usefulness and accuracy, it needs to be supplemented with current information, proprietary messaging, and your own insight.

AI can absolutely save time and assist with organization, research, and some usable material, but this  technology still requires human operators to get the best results and most benefit.

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