This is part 2. Check here for the first part to this blog.
The True Cost of the Disclosure Desk
Among our survey group, the monthly cost of a fully staffed disclosure desk ranged from $30,240-$70,560 with mean of $44,352. At that amount, a 60% waste rate equates to an average of $26,611 in monthly costs, or $319,932 annually.
Also factor in the number of cures still needed by this supposedly thorough, clearly inefficient process. By eliminating the 60% inefficiency rate, a lender could not only improve the efficacy of generating disclosures but also drive down monthly cure payments through improved quality of the data within the delivered disclosures.
The lenders in our survey incur an average of $35,800 in cure costs per month. This could be significantly reduced by improving the process.
Let’s assume that an improved process increased accuracy 25% through automatic data validation, technology to interface systems, and complex business rules. The expected annual savings would total $100,000. The waste of the average disclosure desk then could be $419,000 or more in any given year between inefficiencies and ineffective review.
Eureka! Finding the gold
Uncovering the ineffectiveness of your disclosure desk requires examinations of each individual step and asking “what, why, and how?” Why is that step being performed? What is the cost of that step? What value does that step add to the process? Why is the reviewer taking that particular action? How can that step be error-proofed in order to be eliminated?
Working in conjunction with a team of business analysts and development engineers, Ellie Mae has created the two high-level guidelines for making the disclosure process an effective and quality-driven component in the life of the loan.
1. Error-proof the process
Many of the tasks performed by disclosure desk today are those of inspection. Up to 35% of the individual action items involve verifying the presence and/or the accuracy of data entered by the previous supplier in the supply chain (Loan Officer, Processor, etc.).
Implementing Business Rules around the entry of data and eliminating the possibility of inaccurate data where possible are the two most impactful steps necessary to create an error-proof system.
Here are specific examples of rules that can be written within a loan origination system to help demonstrate quality and completeness on the loan file.
2. Emphasize a culture of training and quality
While the disclosure desk itself has grown out of the necessity for quality, it has proven to be ineffective and inefficient in its evolution. Leveraging technology and a cultural shift to accommodate a more impactful disclosure process will not only provide internal efficiencies thusly reducing costs and creating opportunities for higher volumes without introducing higher personnel costs, but also produce higher quality loans with shorter run times.
Leveraging rules and automating validations without user intervention will put the process on the path of maximum efficiency. By implementing some of the basic suggestions above, the disclosure desk function could easily morph into a “spot check” based on dashboard and “traffic light” indicators alerting for inconsistencies and/or errors within the loan file.
As part of becoming a quality-driven culture training, expectation setting, and constant measuring with rewards need to become part of the process of moving from an inefficient and low-quality state to a loan process that constantly delivers quality experiences efficiently.
Simply put, there’s Gold to be found in measuring the current process for efficiency and effectiveness – constantly work toward enhancing and error-proofing – and be certain to measure the results and reward the folks performing the work.
And finally, never stop improving. Constant improvement must be part of the process. There’s always more gold that could be unearthed.