When you are managing a business, it is easy to look outward for help; however, not every function is right for outsourcing. In this paper, Verity outlines the six key benefits derived from mortgage knowledge process outsourcing and describes many of the functional areas where outsourcing makes sense for lenders. We have incorporated the comments and the outsourcing experiences of three leaders in the mortgage industry.
• E. H. "Sonny" Bringol, Jr., Chairman & President of Victorian Finance, LLCThese three lenders use Verity Global Solutions as their KPO partner. We appreciate their participation in this paper, and the insights they have provided about their KPO experiences. Their comments are italicized for clarity.
KPO resources operate as a 24/7 extension of the lender’s team. Running behind the scenes, KPO resources keep the loan process moving forward, performing many of the essential non-customer facing tasks that are needed by a lender. This approach allows lenders to work reasonable hours and reduce or eliminate overtime, while still allowing the lender to scale and close the maximum number of loans possible. Highly skilled KPO resources generally cost a third to half of what a U.S. based resource would cost.
“Our production nearly doubled by moving time consuming, repetitive tasks away from our processors. In fact, some of our top processors get about 60 loans per month closed utilizing this practice. Verity has enabled us to achieve individual employee production numbers that were not achievable before.”
David Hand, Mortgage Operations Manager, CF Bank
At CF Bank, underwriters now spend less than an hour making credit decisions, a process that previously took about three hours. With KPO staff providing complete underwriting setup and quality control processes, the need to hire additional hard to find underwriters was virtually eliminated.
“After Verity reviewed our loans at setup, it reduced the number of conditions and the amount of time in underwriting. This allowed our underwriters to increase their capacity of funded loans by more than 25%.”
David Hand, Mortgage Operations Manager, CF Bank.
“The challenge of fluctuating busy seasons while hiring and retaining top talent often threatens our business growth.”
Weldon Riggs, Senior Vice President of First Savings Bank
Taking on additional loan volume generally means the lender must hire additional people. The cost of recruiting, onboarding, and retaining people is a high cost to mortgage companies. Other considerations include office space and supporting technology, which can be a considerable CAPEX expenditure. Employee benefits, including the ever-increasing cost of health insurance, makes the decision to outsource vs. hiring new employees an easy one. KPO eliminates many of these expenses and challenges.
KPO enables lenders to scale more efficiently while maintaining a lower cost base. It provides lenders room to expand without the typical pain associated with recruiting and hiring full-time employees.
First Savings Bank needed to hire additional quality control employees for the upcoming busy season. Instead of adding the headcount, they were able to outsource the pre-closing and post-closing QC functions, thus avoiding the rapid hiring and firing that often comes with loan volume fluctuations in the mortgage industry.
You are no longer constrained by normal U.S. business hours and, of course, the overtime hours. KPO services are available 24 / 7 so that loans continue to be worked around the clock. That has huge benefits for lenders.
“With KPO underwriting support, my employees may submit a file Wednesday night and come back first thing on Thursday morning and have a complete file and task list to close out the loan. This enables work to happen 24/7 behind the scenes while employees are still able to go home on the weekends and return more refreshed and ready to tackle the day. In addition to cost savings, the enhanced operational efficiency created cleaner files from the beginning. It streamlined our operations, which resulted in a quicker turnaround time to fund the loans.”
H. "Sonny" Bringol, Jr., Chairman & President of Victorian Finance, LLC
By outsourcing repetitive, time consuming tasks, your team has time to focus on what they do best – processing, underwriting and closing loans. Mortgage KPO staff can perform many of the non-customer facing tasks at a reduced cost.
“If you look at each individual task that goes into producing a loan, if those tasks are assigned correctly to either the outsourced team or my internal team, we achieve maximum cost competitiveness and the shortest time to close. I want my team performing higher value and strategic work, focusing on the borrower experience. Outsourcing supports us with an assembly line production of time consuming, repetitive work.”
Weldon Riggs, Senior Vice President of First Savings Bank
Outsourcing requires stringent performance standards that focus on clean and complete files, and accurate disclosures and documents. Lenders are experiencing fewer defects and loan touches and staying more compliant than ever.
“After six months of working with outsourcing, Victorian Finance was able to clear up 95% of all severe findings.
After an additional year working with our outsourcing partner, we haven’t had a severe finding in eight months. Victorian has been able to focus on fixing moderate and informational findings, making us more proactive and compliant.”
H. "Sonny" Bringol, Jr., Chairman & President of Victorian Finance, LLC
One of the concerns mortgage employees may express before using KPO is the fear that they will lose their jobs to outsourcing.
“In fact, the opposite is true. With outsourcing, more menial tasks and busywork are outsourced, meaning the in-house staff is utilized for higher value work focused on the borrower experience and credit decisions. One of the benefits of outsourcing has been that our employees are happier and more fulfilled because they get to do the job they were hired to do, without the more mundane tasks. When their work is done, employees can leave the office on time, spending more time at home with family, and enjoying a better work-life balance even during volume spikes. Happier employees who can take the time away from work to rest will come back more refreshed and ready to take on the day the next morning. Due to the 24/7 flow of work from the outsourcing team, employees can take a vacation, use sick leave, and thoroughly enjoy their weekends before returning to work, with a checklist ready of what is left to complete.
During the busy season, rather than rapid hiring and subsequent layoffs when the industry slows down around the holidays, each business can turn the throttle on for outsourcing, to help increase production and avoid the need for more hiring within the company. Rather than employees worrying about outsourcing taking their jobs, they feel a better sense of security, knowing they are needed and will be fully utilized despite the season.”
H. "Sonny" Bringol, Jr., Chairman & President of Victorian Finance, LLC