With new home sales down, inflation and rates on the rise, and consumers’ credit abilities soon to be tapped out, lenders must turn to alternative solutions to stabilize net margins.
Open or Expand New Revenue Streams
Considering non-QM? Forty-eight percent of the private workforce is made up of small business owners, self-employed contractors and gig economy workers who find it hard to get conventional loans. The potential is there. Non-QM is a niche market and is a headache for many small independent mortgage bankers. Non-QM stands for “non-qualified mortgage'' and is a type of mortgage loan that allows borrowers to skip traditional qualifiers like income verification and qualify based on alternative methods. Borrowers can use assets or bank statements as income verifiers. For the lender, the process involves non-agency investors and a TPR firm for a reliance letter.
You may be hesitant to open non-QM as a new line of business given its complexities, but efficiencies exist. Lenders ready to open a new line and much needed revenue stream can make non-QM profitable by outsourcing part of the process. Outsourcers, like Verity, can underwrite to your end investors guidelines (whether that is you or not). Here at Verity, we will soon have the ability to offer one process, being able to underwrite and do the TPR letter. Essentially, Verity will be a one-stop-shop for lenders wanting to lend non-QM.
Outsource Support Servicing Functions
One area that lenders can improve net margins is by lowering support staff that handle back-office servicing functions and investing in income producing staff. Many small, mid-size and large mortgage lenders outsource servicing functions like document review, verification of borrower documents, etc., so that their resources can be invested in income producing employees. When you outsource with mortgage BPOs like Verity, you can scale up and down on demand – making you immune to market fluctuations. On average, our lenders cut their labor costs 60 percent by outsourcing support services.
RPA stands for robotic process automation – commonly referred to as bots. With RPA, you can automate highly manual, repetitive processes. As an example, a top 10 U.S. mortgage lender deployed Verity’s custom RPA solution for fraud detection, enabling them to reduce process time from 24 minutes to 15 seconds, saving them $1mm+ a year and counting as they scale. It took six weeks to develop.
Developing a bot may sound expensive or like a technical nightmare, but current solutions are very affordable and require little technical know-how. To create your own bot, clients provide a detailed wish list and/or videos of processes that are highly manual and repetitive. Verity evaluates and provides a roadmap for automation. Verity then develops and maintains the automation for the length of the engagement.
If you are ready to explore our labor outsourcing or automation that can help you crush margin compression, get in touch with a mortgage BPO like our experienced team here at Verity.