The cost of compliances in mortgage origination has soared to the roof. Mortgage lenders will agree that a big chunk of their operational costs comprises quality control and compliance. Lenders are hiring experienced staff to comply with the regulations. Also, audits and follow-up audits add to the cost, shrinking lenders’ margins. Small lenders are the worst hit, according to a survey by Mortgage Bankers Association. Small lenders witness an increase in compliance costs by 43% since 2010.
Why have the compliance costs increased, and what is the way out for the small lenders?
Often there is a lack of cohesiveness in the process workflow. Multiple teams work in isolation, for example, the processing team and underwriting team may be working independently of each other. This leads to overlapping work, the need to add data multiple times, and a bad experience for the customers, as they share the same information multiple times with different departments.
Streamlining the process
When your mortgage processes are streamlined, it will lead to improved efficiencies, eliminate redundancies and reduce turnaround times for the borrowers. When processes are integrated, it leads to cost savings. Lenders often adopt a fragmented approach when outsourcing their mortgage processing. This approach may lead to duplication and multiple touchpoints for the borrowers.
Even if you want to outsource just a part of the mortgage processing services, say pre-underwriting or loan origination, choose a vendor that has structured processes and methodologies in place to avoid duplication.
A holistic approach to managing compliance
With stringent compliance regulations and regulations changing all too often, having a knowledgeable staff is important. However, that’s not enough, as they should also keep abreast of all the changes. For small lenders, it becomes challenging to hire such staff. The solution is hiring an outsourced mortgage partner that has embedded compliance in their processes
Outsourced mortgage services providers like GrowQ have embraced a holistic compliance approach, where compliances are embedded in the processes. Our team has in-depth knowledge about compliance concepts and state and federal regulations. Also, they are trained periodically to refresh the key concepts, changes, and more.
Better Quality check and control mechanisms
To avoid remediation costs associated with state and federal audits, a good practice would be to have internal controls and an internal audit system in place for early warning in case an issue arises. For example, when reviewing a borrower’s data, GrowQ will trail missing documents, flag a file if the borrower has been changing jobs too often, or there is a mismatch in the records. These early signals will help lenders save from costly mistakes and prevent remediation costs.
The GrowQ edge
GrowQ has an experienced team with a deep understanding of regulatory requirements. Our stringent verification and review processes and quality checks ensure greater accuracy, transparency, and improved compliance. Our flexible business models ensure you pay only for the services used and protect your profit margins.
Get in touch with us today to know how we can help you protect your profits.