Now that business intelligence has a foothold in the mortgage industry, we’re starting to hear more and more questions about return on investment. How do you know if you’re getting your money’s worth? How much should mortgage business intelligence (MBI) cost? Is the system paying for itself in increased revenue, or are you losing money?
Let’s be honest: the mortgage industry has always struggled with detailed cost analysis. I’ve talked to a number of lenders about how they analyze cost per loan. Many take aggregated quarterly or yearly totals from their accounting systems and then simply divide them by the number of closed loans in that period. Some don’t even go that far, literally shrugging off unit labor cost figures as unobtainable.
But are they? Are loan level costs really that mysterious? Anyone that’s worked in loan operations understands this viewpoint. The journey of a loan file through operations is rarely linear, and the number of touches on a file and the time elapsed between touches is nearly impossible to track. You might be able to track a single file or group of files, but tracking them all consistently and accurately has been impossible until the advent of MBI.
MBI systems have finally given us the functionality necessary to closely track the lifecycle of each and every loan in a given pipeline. Imagine not only being able to quickly and consistently identify your most labor intensive loans, but also to easily trace common characteristics to find the source of these files such as a particular loan program, branch, or loan officer. You’ve just found an opportunity for pinpointed training and process improvement, or a strategic shift in product mix, either of which can reduce loan level costs.
I recently had lunch with Todd Pierson, founder of The Mortgage Firm. He explained the return on his MBI investment this way: “It’s improved our ability to work. I don’t have to interrupt people anymore to get information. We have great workflow, good energy, and my key people are working in highest and best use mode all the time, without having to get distracted. How do you put a price tag on that?”
Any good technology provider will have a value assurance model, and superior MBI systems will include prebuilt dashboards and reports to monitor loan level costs using “field auditing” or “audit tracking”. This is the ability to track how and when a given data field has changed and who changed it, giving you a complete history of the values that have been entered into that field during the loan file’s lifecycle. These field histories provide the necessary data points to paint a much clearer picture of loan level costs.
If you’re looking for a simpler formula, ask yourself how many additional loans MBI is helping you close each month. If you’re closing a dozen or more additional loans per month with MBI, revenue from the first two or three of these should cover the cost of a well-priced MBI system.
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