Operational efficiency means that your business runs the way it was meant to run. It means that the firm accomplishes what management has set out to do, and it doesn’t waste resources along the way. In the mortgage industry, this results in satisfied customers, more closed loans, higher profitability, and regulatory compliance.
The two best metrics for measuring operational efficiency are Velocity and Productivity.
In a recent article entitled, The Key to Increasing Your Lending Team’s Productivity. we looked at how knowing their productivity rate helps lenders assess the effectiveness of their people and process. How many loans is your team closing each month? The higher the ratio of closed loans to staff members, the more productive your origination business is.
Two keys to productivity that we looked at were maintaining low labor costs and cross-training employees. But productivity alone does not guarantee operational efficiency.
A team can be highly productive, but if they can't close loans quickly they won't be closing as many loans as they could. They will often lose out to lenders who have higher loan velocity.
In another recent article, 5 Ways High Performing Lenders Set Themselves Apart, we examined the necessity of innovation and teamwork. These are essential if loan velocity is to be both achieved and consistently maintained. It takes good people and the right technology to close loans quickly.
So, what is the key to achieving and maintaining efficiency in the lending business? Productivity depends upon having good people and velocity is often a factor of the right technology. But without a solid, thoughtfully designed process in place, neither productivity nor velocity, on their own, will guarantee efficiency.
Process is the key to operational efficiency.
Find out more by participating in our annual benchmarking study. Call us today to find out more.
DENVER; Oct. 9, 2018 – TopLine Federal Credit Union (TopLine) selected Mortgage Cadence, an Accenture (NYSE: ACN) company, to modernize its mortgage operations using Mortgage Cadence’s full product suite.
TopLine has replaced all legacy systems with Mortgage Cadence’s Loan Fulfillment Center, Borrower Center, Document Center, Imaging Center, and Collaboration Center, paving the way for increased lending profitability and a better borrower experience.
Collaboration Center — Mortgage Cadence’s newest offering — is a secure, private network that connects the people, data and systems involved in the loan origination process. It includes automatic document comparison and secure real-time messaging that provides easy access to title agents and other third parties. By eliminating tedious, labor-intensive tasks to simplify the mortgage process, Collaboration Center helps to increase efficiency through a streamlined workflow.
“We selected Mortgage Cadence as our comprehensive mortgage solutions partner knowing they are committed to innovation and are dedicated to providing superior service to help us get the most out of our technology,” said Tom Smith, president and CEO of TopLine Federal Credit Union. “We are excited to launch our new highly automated digital platform to provide our members an entirely paperless and seamless experience – from application through closing.”
Paul Wetzel, executive vice president and managing director of product management at Mortgage Cadence, said, “We’re thrilled to have TopLine as an early adopter of Collaboration Center, our newest offering that helps to improve productivity and minimizes time to close, two of the critical lending KPIs that drive profitability. We look forward to an enduring, collaborative relationship that benefits the credit union and its members through the most innovative services and best possible loan experience.”
About Mortgage Cadence
Since 1999, Mortgage Cadence has been providing the best people, process, and technology for enterprise and mid-market lenders who desire to deliver an exceptional borrower experience. From point-of-sale through post-closing, Mortgage Cadence offers reliable software and dedicated people, supporting lenders every step of the way.
About TopLine Federal Credit Union
TopLine Federal Credit Union is Minnesota’s 13th largest credit union with assets of more than $450 million. Established in 1935, the not-for-profit cooperative offers a complete line of financial services, including mortgage, investment advisory and insurance agency services from its five Twin Cities metropolitan area branch locations —as well as by phone, mobile app and online. To learn more, visit http://www.TopLinecu.com.
Recognizing that high-performance lending depends on the interplay of people, process, and technology, Mortgage Cadence solves for inefficiencies in the origination process. They knew the creation of an experience that made it easier for borrowers to shop, compare, and apply for a mortgage, while simultaneously creating a lending experience that increased efficiencies through automated workflows, would provide the industry with the most innovative lending solution on the market.
As part of their comprehensive approach to revolutionizing the mortgage process, Mortgage Cadence developed Borrower Center, an intuitive online origination platform, to meet these needs.
Rather than a standalone portal, Borrower Center is a native element of Mortgage Cadence’s Loan Origination Systems, Enterprise Lending Center and Loan Fulfillment Center. As an innate feature of the LOS, Borrower Center creates a fully integrated and comprehensive digital experience that automates vendor services, runs AUS, initiates loan estimates, and generates pre-approvals.
Traditionally, summer is the peak of the new home buying season, but currently the industry is struggling. While the MBA has not revised its most recent annual loan volume prediction downward, competition for overall profitability through new mortgage business comes down to high performance lending.
This shouldn’t surprise anyone, as the Mortgage Bankers Association (MBA) told us in October, 2018 that this would be a tougher year for lenders. Overall, MBA now expects mortgage business to decline 3 percent from last year to about $1.6 trillion in 2018. The refinance share will fall off dramatically but purchase money business is expected to increase to about $1.2 trillion this year. MBA said earlier this year that it expects to see rates rise another four times this year. Since then, the Fed has already raised rates once. There’s an upside to rising rates, however. They spark FOMO (fear of missing out); buyers don’t want to miss their chance at a low rate.
This means that all lenders must target purchase money business to at least hold on to their historic volume numbers. This will be increasingly difficult, as Freddie Mac increased its expectation for mortgage interest rates in February, moving the dial on the 30-year-fixed rate mortgage to 4.6 percent, on average, for 2018.
The need to be competitive in the mortgage lending business has never been greater. Fortunately, depository lenders have an advantage in this area as their existing customer base is a ready-made prospect database for mortgage lending, if they can tap it. Historically, this has been very difficult to do.
Six years ago, we began performing an annual study to determine exactly what impact technology could have on a lender’s ability to be a high performance lender, not just from existing customers, but from the greater community the institution serves. In the process, we learned a great deal about how lenders define their success and how, as a segment of the overall mortgage lending industry, these firms performed competitively.
In all, we found five critical measurements, five key performance indicators (KPIs), that when taken together tell us – and lenders – exactly how any lender is performing. Even better, we aggregated the data from a number of institutions, all using the same technology in their lending departments, to arrive at a set of benchmarking data that, once understood, places lenders on the path to high performance lending. This research is now known as the Mortgage Cadence Benchmarking Study.
Knowing where you stand in regard to the five KPIs we are about to define in any given year is very important. It is a good management tool that informs decision making and reveals the institution’s progress on its mission and objectives.
Understanding performance over a period of years is even more valuable. It shows how management and staff react to market forces, and how well the institution is able to adapt its business to those changing forces and continue down the path of high performance lending.
But without benchmarking data to compare the institution’s performance to the broader set of competitors, it only reveals part of the story. There are many good reasons every institution should be benchmarking their lending performance against a larger industry dataset. And that’s what our study does: if understanding your own performance over a period of time is valuable, then comparing your performance to that of your peers over the same period of time is invaluable. This is especially true in a year when we know competition for a limited number of new purchase money mortgage transactions will be fierce.
The battle for this business will not be a one-year phenomenon. Market forecasts through 2020 predict that 75 percent of all mortgages through that time will be for the purchase of a home. This marks the beginning of a new mortgage lending era, foreshadowing an end to the historic boom-bust refinance cycles that dictated strategy and tactics for more than 30 years.
Unfortunately, benchmarking data is difficult to come by. Studies comparing and contrasting lender-to-lender performance are challenging because gathering data from a homogeneous set of lenders is difficult, both in terms of finding such a set and in getting those firms to give up the required information. While there are some excellent studies performed by national trade associations, they often compare very different institutions, rendering their results less useful.
Our study addresses this by focusing on a homogeneous set of lending institutions that all submit data to a regulator that makes that information public. In addition, we went back to the lenders in our study and asked for additional information to complete our data set. Since there were only a few data points required to complete our analysis, we enjoyed a high degree of participation from the lenders.
We know that there are three factors that influence the performance of a lending institution: their people, their process and their technology. The way the lender combines these three critical elements will determine their performance lift. Getting them right results in high performance lending. The benchmarks are guideposts that help the leader move along the path to this goal.
Our study isolates the technology variable to further expose the correlation between performance and the other two factors, over which the institution has complete control. Our study, therefore, used a large pool of data from a set of lenders all operating under the same business model and using the exact same technology. We believe there is no better apples-to-apples performance comparison available anywhere in the industry.
Given the commonalities of lenders in our study, one would expect every lender in the study to achieve a similar level of performance. While we might expect some slight variation between institutions, perhaps based on customer size or geographic location, we might expect overall performance to fall fairly close to a common baseline. Instead, we found that differences in the way these institutions organized their staff and their process workflows led to a wide variance in performance levels between institutions.
In fact, after performing the study for 6 years, we found that some lenders are surpassing their peers in high performance lending, even when competitors are operating under the same business model and using the same technology. We needed to find out why.
After analyzing the data, we found a number of metrics that were indicative of the performance of an institution, but five stood out as the best predictors of the institution’s ability to continue down the path of high performance lending. We now believe that these five key performance indicators are of critical importance to management and so for the last six years we have been collecting benchmarking data to help lenders understand how well they are performing relative to their peers.
In this section, we define each of these critical KPIs.
Stated simply, this is a measure of the time to close, from the moment the application is received until the loan is signed at the closing table. To be clear, this is not the only time that speed matters. Our Borrower Survey, for instance, revealed that the amount of time it takes for a loan officer to return a call to a prospective borrower who has not yet completed a loan application was a critical measure of the borrower’s willingness to follow through on the loan app. However, for this study, the amount of time the loan was “in process” was found to be a critical performance indicator.
As mentioned earlier, borrower share, or the ratio of applications taken to total customer base in the same calendar year, is an indication of how well the lender is doing serving the prospective borrowers who are already customers of the institution. This is a largely untapped resource for most lenders and holds the key to uncommon success in a highly competitive environment, such as these firms are lending in today.
This is the ratio of closed loans to applications taken and is a key driver of the institution’s profit. Lenders will tell you more than half of the total cost to close has been spent by the firm by the time the application is taken. That represents the money lenders must spend on advertising, marketing, public relations and sales staff to prospect, sell and close a full application for a new loan. If that loan is not closed, those funds are lost and the cost to close ratio increases for all other loans in the pipeline. On the other hand, the more loans the lender can pull through to close, the lower the cost to close and the higher the profitability.
Calculated simply, productivity is the measure of closed loans per mortgage production employee per month and it is the primary profit driver for every lending operation we studied. In fact, we now believe that productivity is the single most important metric in any mortgage lending operation and it is the primary driver of profit. Get this one right and cost to close falls in line and declines.
This was borne out in our discussions with lending executives, where we found productivity to be the KPI most indicative of profitability. If we know a lender’s productivity we have a very good idea of how profitable the institution is. According to our most recent study, the average productivity for lenders in our study in 2017 was 3.34 loans per employee.
Cost to Close is the total cost of manufacturing a single mortgage loan. While the Mortgage Bankers Association put the total cost to originate for mortgage banks at nearly $8,000 per loan in 2017, our study revealed that our lenders, on average, experience a cost-to-close of $5,291 per loan in 2017. Better, but there is still a ways to go.
Arguably, these five metrics are macro-level measures that are really designed to offer two advantages to management. First, four of the five are quick and easy to calculate, offering a swift measure of the health of the institution. Some will argue, perhaps persuasively, that cost to close is more difficult to calculate. While true, if a good measure for the productivity KPI is available, cost to close becomes much easier to estimate accurately. We have the tools to do so. Once productivity is known, cost to close is easily and accurately estimated.
Second, the results institutions find by measuring these metrics will always lead to important questions, or at least they should. These KPIs are macro-diagnostic in nature, revealing areas where management must continue down the micro-diagnostic path to configure their companies for high performance lending.
What our 6th annual benchmarking study data told us was that a set of high performing lenders were consistently outperforming their competitors on every metric we tracked, despite competing for the same basic client base, offering the same basic loan products and using exactly the same technology.
Mortgage Cadence to integrate Finicity's asset verification solution with its loan origination software platform
DENVER and SALT LAKE CITY; May 31, 2018 – Mortgage Cadence, an Accenture (ACN) company, has signed an agreement to integrate Finicity’s Verification of Assets solution with its loan origination platforms, enabling clients to streamline and accelerate the loan process by generating a verification report with a single click, shaving up to six days off the traditional closing timeline.
The integration of the Finicity solution with Mortgage Cadence’s loan origination software platform is designed to further streamline and enhance the borrower experience. Borrowers consent to the use of their financial account data through a short online process, which then rapidly generates a verification report.
“Our goal as a financial data aggregator is to find best-in-class partners who are also committed to data access, quality and insights, and ultimately a better experience for borrowers,” said Steve Smith, Finicity CEO. “We’re excited to work with Mortgage Cadence to accelerate and improve the digital loan process.”
A leading provider of real-time financial data aggregation and insights, Finicity offers solutions that help lenders digitize and modernize the lending process, reducing friction for borrowers while providing better, cleaner data that reduces verification time to minutes instead of days. Upon consumer-permissioned account identification, reports can be generated in as little as 30 seconds.
“Our agreement with Finicity simplifies yet another important step in the mortgage process for both borrowers and lenders, getting everyone involved in the transaction to the closing table more quickly and with fewer steps,” said Brian Benson, executive manager of Services Center at Mortgage Cadence.
Finicity is an authorized, integrated provider of asset verification reports within Fannie Mae’s Desktop Underwriter®, giving lenders a validated asset report through Fannie Mae’s Day 1 Certainty™ initiative. Because Finicity is also part of Fannie Mae’s single source validation (SSV) pilot, Fannie Mae can use transaction data from Finicity reports to validate assets, income and employment. A broader rollout of SSV is planned later this year and will build on Fannie Mae’s Day 1 Certainty initiative. Finicity is also an authorized Freddie Mac asset validation report provider, and the two organizations are working together on new methods to validate income from payroll deposit data from bank statements.
About Mortgage Cadence:
Since 1999, Mortgage Cadence, champions of the lending process, have been providing the best people, process and technology for enterprise and mid-market lenders who desire to deliver an exceptional borrower experience. From point-of-sale through post-closing, Mortgage Cadence offers reliable software and dedicated people, supporting lenders every step of the way. For more information about Mortgage Cadence’s products and services, visit www.mortgagecadence.com.
Finicity enables a financial data-sharing ecosystem that is secure, inclusive and innovative. Through its real-time financial data aggregation and insights platform, Finicity provides solutions for financial management, payments and credit decisioning, while also leading the development and promotion of industry standards. The company has developed more than 16,000 bank integrations, with the vast majority through connections that provide access to formatted bank data, improving information access and accuracy. Finicity was awarded API World’s 2016 Finance API of the Year and is a 2018 HousingWire Tech100 winner. To stay up to date on all Finicity company and product announcements, visit the website at www.finicity.com.
Associated Bank, the number one lender in the state of Wisconsin, uses the full Mortgage Cadence suite to increase velocity through an automated workflow.
DENVER; April 12, 2017 – Accenture (NYSE: ACN) has extended the capabilities of its Mortgage Cadence subsidiary with the acquisition of BeesPath Inc.’s ClosingBridge platform, which facilitates simple, secure communications and file exchange for real estate finance transactions.
The ClosingBridge platform will be provided under the Mortgage Cadence product suite and will be branded as Collaboration Center. In its first phase, the platform — which manages the communications between borrowers, co-borrowers, real estate agents, sellers, attorneys, lending staff, title agents and settlement agents on mortgage transactions — will be offered as a standalone product. In subsequent releases, Collaboration Center will be incorporated into Mortgage Cadence’s existing product portfolio.
Todd Hougaard, president of BeesPath, will be joining the Mortgage Cadence team to help speed the integration and rollout of the solution and to spearhead product advancement going forward.
“Taking an innovative approach to a long-standing challenge in mortgage — unsecure communications involving borrower data and information — BeesPath has created an elegant, all-digital solution that securely connects all parties involved in the closing process,” said Michael Detwiler, Mortgage Cadence’s chief executive officer. “ClosingBridge is another strategic addition to our forward-looking Mortgage Cadence platform.”
Founded in 2004, BeesPath provides web-based tools designed to bring all the people, workflow and information related to a loan transaction into one secure place, facilitating the efficient closing of loans by enabling easy communication, delivery, sharing and tracking of all loan details. BeesPath developed and released the ClosingBridge platform in 2015 to facilitate simple, secure communications and data exchange for real estate finance transactions.
“We are proud to welcome Todd and the Collaboration Center technology to the Mortgage Cadence product suite with near-immediate client availability,” said Trevor Gauthier, Mortgage Cadence’s president and chief operating officer. “Thanks to this exciting acquisition, our lenders will be able to provide their borrowers with the peace of mind that all collaboration regarding their transaction is being handled swiftly and securely for better compliance, efficiency and structured communication between all parties. In addition to accelerating our digital strategy, this asset acquisition puts more functionality into our clients’ hands sooner, enabling them to close loans more quickly while having the assurance that the loan communications are secure.”
Since the TILA-RESPA Integrated Disclosure (TRID) Rule took effect in October 2015, the added time needed to ensure the borrower has its closing disclosures within three business days of closing has created new pressure for lenders, title agents, and settlement agents. The acquisition of BeesPath’s ClosingBridge platform brings an immediate solution to the Mortgage Cadence product suite to help address the need for these parties to securely communicate, share documents and transfer data.
“Collaboration Center is highly complementary with Mortgage Cadence’s successful loan origination technology suite, and Mortgage Cadence is the company best positioned to get this into the hands of lenders and title agents, who will benefit tremendously from this solution,” Hougaard said. “I’m thrilled to be a part of this talented team and help drive this user-friendly and secure solution forward.”
About Mortgage Cadence
Mortgage Cadence, an Accenture company, has been working with lenders since 1999, offering a one-stop shop mortgage technology solution designed for point-of-sale through post-closing. In a time when efficiency, speed and the customer experience are paramount to the success of lenders, Mortgage Cadence offers reliable software and dedicated people, supporting lenders every step of the way. Visit www.mortgagecadence.com for more information.
Integration Accelerates Mortgage Closing Process with Leading eSignature and Digital Mortgage Platforms
DENVER; May 24, 2016 – Mortgage Cadence LLC, an Accenture Company (NYSE: ACN), is announcing an all new integration with award-winning electronic signature and Digital Transaction Management (DTM) provider DocuSign, Inc. (DocuSign®), and the vaulting, transaction and transferable records services of eOriginal, Inc. This new integration helps to expedite the mortgage origination process while creating a more streamlined, reliable and secure digital experience for borrowers, lenders and investors.
With Mortgage Cadence’s proprietary Document Center solution, documents are generated dynamically in just seconds based on loan-level data and are then delivered for electronic signature using DocuSign. Lenders and borrowers alike are now able to securely review and electronically sign disclosures and closing packages in minutes – anytime, anywhere, on nearly any device.
“DocuSign and Mortgage Cadence share a vision for a digital future where the hassles, costs and lack of security from the reams of paperwork required to apply for, process and close a mortgage are a thing of the distant past,” said Georg Gerstenfeld, Vice President of Real Estate Solutions at DocuSign. “The integration of DocuSign and eOriginal into Mortgage Cadence’s Document Center advance us towards that digital future today by empowering anyone to transact business all-digitally.”
eOriginal extends the Mortgage Cadence loan experience by allowing lenders to deliver a fully electronic mortgage process built around its best-of-breed solution, which was recently certified as a Fannie Mae eMortgage solution provider.
“With a new generation of homebuyers and increasing demands for transparency from regulators and investors, we have reached a tipping point in the digital transformation of the mortgage industry,” stated Stephen Bisbee, CEO and president of eOriginal. “Working with great partners like Mortgage Cadence and DocuSign, we have paved the way for an outstanding end-to-end solution that offers a practical migration path for adopters while addressing an acute need for data exchanged between counterparties.”
All signed documents are tracked, retrieved, and stored in the Mortgage Cadence Enterprise Lending Center or Loan Fulfillment Center, ultimately driving additional tasks and keeping the lender on-platform and focused on the lending process. DocuSign and eOriginal will help enable the following benefits:
“Most borrowers today – whether millennials or baby boomers – are accustomed to doing just about everything online,” said Trevor Gauthier, president of Mortgage Cadence. “In order to increase borrower satisfaction, lenders require tools that allow them to originate and close mortgages digitally. Integrating with DocuSign’s and eOriginal’s best-in-class eSignature and eClosing solutions, along with our proprietary loan origination and document preparation and delivery solutions, allows us to provide an incredibly robust service to our clients and their borrowers – a testament to our dedication to the mortgage industry.”
About Mortgage Cadence
Mortgage Cadence has been partnering with lenders since 1999, offering the industry’s only true one-stop-shop mortgage technology solutions designed for point-of-sale through post-closing. In a time when efficiency, speed and the customer experience are paramount to the success of lenders, Mortgage Cadence offers the most reliable software and dedicated people, supporting lenders every step of the way. Visit www.mortgagecadence.com for more information.
About DocuSign, Inc.
DocuSign® is changing how business gets done by empowering anyone to send, sign and manage documents anytime, anywhere, on any device with trust and confidence. DocuSign and Go to keep life and business moving forward. For more information, visit www.docusign.com, call +1-877-720-2040, or follow us on Twitter, LinkedIn and Facebook.
Copyright 2003-2016. DocuSign, Inc. is the owner of DOCUSIGN(R) and all of its other marks (www.docusign.com/IP). All other marks appearing herein are the property of their respective owners.
eOriginal offers an end-to-end digital mortgage solution — from signature to notarization and recording through warehousing and custodial services — that addresses the gaps that have long hampered broader adoption of digital mortgage platforms. eOriginal is spearheading the collaboration to deliver a fully digital process that includes eNotarization, eRecording, eWarehousing, eCustodian services and integration with Mortgage Industry Standards Maintenance Organization (MISMO) compliant SmartDocs and Forms. Well-designed for disruptive lending markets, eOriginal already is delivering its lending and asset management platform to the student loan, vacation ownership and vehicle finance industries, among others.
Integrated with eOriginal’s eAsset Management Platform and the newly released DatalyticsTM solution, the eMortgage platform will empower greater data transparency, better analysis and regulatory compliance capabilities throughout the mortgage loan process. For more information, visit http://www.eoriginal.com.