The challenges lenders faced in 2018 — rising interest rates, strong home-price appreciation, and tight housing supply — will persist into 2019, requiring lenders to respond strategically to thrive and stay profitable.
Within this environment, three factors are critical:
Lenders started out the year in the red, reporting a loss of $118 per loan in the first quarter of 2018. Results in the second and third quarters were better, but high costs to originate — now sitting at $8,174 per loan — are a real threat to lender profits.
The surest way to combat those high loan costs is finding efficiencies in the process, and tech innovation is key. However, not all technology is equally effective and lenders must be careful to choose wisely.
The right technology investment can make LOs more efficient and improve back-end processes, reducing the time to close and increasing partner referrals. But the wrong technology can tank efficiency by creating multiple systems of record, requiring additional back-end processes to identify which system a document originated from.
“There is immediate and long-term value when lenders mobilize the mortgage process using the right technology,” said Joe Wilson, SimpleNexus CMO. “A mobile-first approach delivers convenience, efficiency, and increases the productivity of loan officers while improving the borrower experience.”
2. RECRUITMENT AND RETENTION OF LOAN OFFICERS
Loan officers are the lifeblood of any origination shop, providing the primary source of revenue. To support current LOs and attract new ones, lenders need a strategy that goes beyond promising great service and rates — they need to offer a better quality of life by providing the right tech tools.
Mobile origination technology enables LOs to access their loan pipeline, order credit, run pricing, view appraisals, and send pre-approval letters from their mobile device — all while syncing in real-time with a lender’s LOS.
With the right technology, LOs can spend quality time at home with family and on vacation and still take the necessary actions on a loan in a matter of seconds, preserving the “always on call” aspect of their job without sacrificing their quality of life.
“SimpleNexus empowers loan officers to do more without being tied to the office,” explained Ben Miller, SimpleNexus president and COO. “Our digital mortgage platform turns loan originators into mobile originators, enabling them to close loans faster and stay productive anytime, anywhere.”
3. REFERRAL RELATIONSHIPS
A lender’s main source of revenue is the LO, and the LO’s main source of revenue comes from referrals, so an effective lender strategy must include helping LOs to nurture referrals.
Nothing beats face time, and when loan officers are untethered from the office they can spend more time building relationships, which makes mobile technology essential. LOs should be active in their community, meeting prospective borrowers at a Realtor’s office or social event. Mobile technology extends the LO’s reach and brings lenders more customers.
The right technology should make it easy for LOs to set up referral partners on the lender’s platform and give Realtors transparent loan status updates. SimpleNexus lets LOs co-brand its platform with partner information and include their custom links.
It’s hard to overestimate the value of this kind of connection. A loan officer currently using SimpleNexus, Dave Hosterman, has used the app to recruit over 1,200 referral partners, a network that currently sends him 30-35 new referrals each week. The best part is that Hosterman is able to easily manage this network and the referrals through his mobile app.
“A lender’s technology should not only keep LOs efficient but also enhance partnerships with Realtors,” said Matt Hansen, SimpleNexus CEO. “By providing real estate partners with an easy-to-use app they can share with their borrowers, you increase your referral opportunities significantly.”
THE BOTTOM LINE
A profitable lending strategy must address these three key areas: revenue, recruitment/retention of LOs and referral relationships. Each of these areas affects a lender's bottom line and a strategy that only addresses one or two is incomplete.
SimpleNexus is a proven solution with built-in efficiency that reduces time to close, lets LOs work from anywhere and makes it easy to build new partner relationships — a winning strategy for 2019 and beyond.