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Parsing The Data

While STRATMOR has always been a strong proponent of lenders using internal performance data to manage and improve their performance, according to senior partner Dr. Matt Lind, it is only by comparing peer-to-peer performance, i.e., benchmarking, that lenders will gain the most accurate and useful assessment of their competitive performance.

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“Mortgage lenders have utilized virtually the same metrics to assess performance for the past 30 years,” said Lind. “Considering how dramatically our market has changed during this time, STRATMOR felt it necessary to enhance the way lenders can measure performance versus peers. The result is a new approach, one based on a substantial lender-level data that enables lenders to place the efficacy of their operations in the context of peer performance on the same characteristics.”

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Lenders can apply STRATMOR’s new method for benchmarking production or servicing performance to virtually any traditional performance metric, from direct production margin and direct origination expense per loan to loans serviced per servicing FTE and more.

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“With common benchmarking comparisons, lenders are only able to make comparisons to the averages,” Lind continued. “This leads to statements like: ‘My direct retail origination expense per loan is $200 less than average,’ but with our new method, lenders can now determine how a value measures up or down in terms of standard deviations from the mean. The new method enables lenders to better judge performance, which is reflected in statements such as: ‘My direct retail origination expense per loan is equal to or better than 62 percent of lenders.’ The understanding gathered from statements like the latter are much more meaningful to our clients than the understanding derived from internal comparisons alone. The bottom line is that it is significantly more valuable for lenders to be able to measure against peers, rather than to simply measure against internal metrics.”

STRATMOR also details select findings from its 2016 LOS Technology Insight Survey (TIS), specifically, lenders’ opinions on the efficacy of functionality in their respective Loan Origination Systems (LOS). Less than 25 percent of lender participants indicated that the compliance tools in their LOS were ‘Highly Effective’ and afforded them a competitive advantage. Between 40 and 50 percent of participant lenders rated their LOS’ compliance functionality as ‘Adequately Effective.’

Additionally, STRATMOR’s TIS findings show ‘Lead Generation/Management’ as the lowest rated functionality. Only four percent of lender participants stated that their LOS provided ‘Highly Effective’ lead generation capabilities. ‘eSignature’ and ‘Product/Price/Eligibility Decision Engine’ capabilities were also among the lowest rated for effective functionality. A continued lack of functionality satisfaction in these important capability areas will most likely drive lenders to seek alternatives.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Less Than 25% Of Lenders Rate LOS Compliance Functionality ‘Highly Effective’

STRATMOR Group released the September edition of its STRATMOR Insights report, with a focus on the company’s approach to measuring lender performance. While STRATMOR has always been a strong proponent of lenders using internal performance data to manage and improve their performance, according to senior partner Dr. Matt Lind, it is only by comparing peer-to-peer performance, i.e., benchmarking, that lenders will gain the most accurate and useful assessment of their competitive performance.

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“Mortgage lenders have utilized virtually the same metrics to assess performance for the past 30 years,” said Lind. “Considering how dramatically our market has changed during this time, STRATMOR felt it necessary to enhance the way lenders can measure performance versus peers. The result is a new approach, one based on a substantial lender-level data that enables lenders to place the efficacy of their operations in the context of peer performance on the same characteristics.”

Featured Sponsors:

 
Lenders can apply STRATMOR’s new method for benchmarking production or servicing performance to virtually any traditional performance metric, from direct production margin and direct origination expense per loan to loans serviced per servicing FTE and more.

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“With common benchmarking comparisons, lenders are only able to make comparisons to the averages,” Lind continued. “This leads to statements like: ‘My direct retail origination expense per loan is $200 less than average,’ but with our new method, lenders can now determine how a value measures up or down in terms of standard deviations from the mean. The new method enables lenders to better judge performance, which is reflected in statements such as: ‘My direct retail origination expense per loan is equal to or better than 62 percent of lenders.’ The understanding gathered from statements like the latter are much more meaningful to our clients than the understanding derived from internal comparisons alone. The bottom line is that it is significantly more valuable for lenders to be able to measure against peers, rather than to simply measure against internal metrics.”

This month STRATMOR also details select findings from its 2016 LOS Technology Insight Survey (TIS), specifically, lenders’ opinions on the efficacy of functionality in their respective Loan Origination Systems (LOS). Less than 25 percent of lender participants indicated that the compliance tools in their LOS were ‘Highly Effective’ and afforded them a competitive advantage. Between 40 and 50 percent of participant lenders rated their LOS’ compliance functionality as ‘Adequately Effective.’

Additionally, STRATMOR’s TIS findings show ‘Lead Generation/Management’ as the lowest rated functionality. Only four percent of lender participants stated that their LOS provided ‘Highly Effective’ lead generation capabilities. ‘eSignature’ and ‘Product/Price/Eligibility Decision Engine’ capabilities were also among the lowest rated for effective functionality. A continued lack of functionality satisfaction in these important capability areas will most likely drive lenders to seek alternatives.

Progress In Lending
The Place For Thought Leaders And Visionaries

A New Servicing Approach

STRATMOR Senior Partner Michael Grad explored the ways in which economic opportunities inherent in a superior mortgage servicing operation can raise the stakes on the transfer of servicing (TOS) to new providers and/or systems. Recognizing the critical importance of successful TOS, STRATMOR has developed a standardized, “battle-tested” TOS methodology for its mortgage industry clients. As Grad explained, it is not surprising how much of the industry’s focus has shifted to mortgage servicing operations and cost containment over the last several years.

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“Servicing operations have risen in prominence over the last several years for a variety of reasons,” Grad said. “Not the least of which has been the increased scrutiny by both state and federal regulatory authorities which has in turn contributed to a dramatic increase in the direct unit cost of servicing a loan. Likewise, the regulatory imbalance between bank and non-bank servicers – with the latter subject to fewer constraints – has increased the size and frequency of bulk servicing transfers from bank to non-bank servicers. At the same time, the coupling of GSE fee parity between large and smaller lenders with historically low interest rates has made retention of servicing rights far more attractive to many mid-size and smaller lenders. Near-term, STRATMOR expects an increase in bulk servicing transfers as some of these lenders bring their servicing in-house while others sell servicing rights to capitalize on increased portfolio value or offset potentially lower origination income.

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“We analyzed the relationship between borrower retention and the value of mortgage servicing rights, finding that retention rates of 50 to 75 percent can increase the economic value of an MSR by 33 to 50 percent.” Grad continued. “There is significant borrower relationship value at stake when a large servicing portfolio is transferred from one platform to another.  For the borrower, a smooth transfer is one that’s invisible – no interruptions, missed payments or degradation in customer service and most importantly, no errors. Since satisfaction with a current lender is a key driver of the likelihood of borrower retention, mismanaged transfers can directly impact the value of purchased MSRs. For existing owned servicing portfolios, a botched TOS from one subservicer or platform to another can destroy years of relationship value. That being the case, a TOS process and methodology must be established that facilitates the transferring of borrower relationships, while also successfully transferring loan data.”

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Understanding that it is critical to assure such transfers are expertly performed in all their complexity, STRATMOR has developed a seven stage TOS methodology, detailed in Grad’s In Focus piece in this month’s STRATMOR Insights. The process leads to successful borrower-centric, fact-based and disciplined servicing transfers, as perceived by the transferor servicer, the transferee and, most importantly, the borrower. STRATMOR’s TOS Methodology was recently put to the test by a top-tier lender in the transfer of hundreds of thousands of loans from one subservicer to another. On every Key Performance Indicator – from borrower contact, communications and complaints, to payment processing and subsequent delinquencies – the results exceeded the targets established early-on in the project.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Eyeing Future Happenings

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STRATMOR Group released the May edition of its STRATMOR Insights report. This month, STRATMOR Senior Advisor Rob Chrisman looks into the changing credit landscape, and what that means for mortgage originations. As Chrisman explained, after perhaps overcorrecting in the wake of the 2008 financial crisis, underwriting standards are beginning to loosen once again in an attempt to broaden the reach of the mortgage market to more borrowers.

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“STRATMOR data shows that after the financial crisis in 2008, borrowers’ average credit scores rose significantly,” Chrisman said. “It also shows a material decline in those scores, beginning in 2013, driven primarily by non-bank lenders. As of 2016, overall borrower FICO scores averaged 729, the lowest since 2008, before the bottom fell out of the market. Bank originated loans saw average credit scores of 743 last year, as opposed to just 719 for independents. A diminishing pool of higher credit borrowers, who had been fueling the majority of purchase and refinance lending, has shifted market activity to lower credit groups. More generally, the mortgage industry is dealing with slower growth, due to a variety of factors, including demographic and lifestyle changes and home affordability. Looser underwriting standards – with risk-based pricing – are a way for lenders to counter those headwinds.

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“We’re already seeing lenders adjusting guidelines to suit borrowers with higher loan-to-value and lower credit score mortgages becoming more prevalent,” Chrisman continued. “Likewise, lenders – and investors – are advertising programs aimed at opening up credit to borrowers previously unable to access the mortgage market. At the same time, forthcoming reporting changes by credit bureaus are expected to improve the credit scores of tens of millions of borrowers, bringing them into acceptable ranges. Together, these developments hold the potential to unleash first-time homebuyer demand. The question is, will this be enough to boost mortgage originations? Unfortunately, probably not, at least in the near-to-mid-term. Originators have told STRATMOR that housing constraints are a bigger impediment to volumes than a lack of borrowers.”

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This month’s report also features select findings from STRATMOR’s recent Spotlight Survey on perceived benefits and barriers to adoption of the Digital Mortgage. Based upon respondents’ expectations of the top benefits of adoption – increased borrower satisfaction, faster cycle times and increased transparency for borrowers – it is clear that lenders view Digital Mortgage as a way to improve the borrower’s experience. Systems and vendor integration and difficulty in getting loan officers to adapt to new processes and behaviors were both cited as leading barriers to adoption, as was cost.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

LendingQB Earns High Marks In Vendor Satisfaction, Customer Support In Annual STRATMOR Report

LendingQB has earned high marks for its vendor satisfaction and customer support in STRATMOR Group’s most recent Technology Insights survey report.

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Per STRATMOR’s LOS Technology Insights survey, LendingQB included roughly 11% of the respondents amongst loan origination software (LOS) providers, making it the second largest in terms of this survey’s overall lender respondents. Likewise, LendingQB earned an end user effectiveness rating of 93% and exceeded functionality expectations for 22% of its respondents – top marks that surpassed even proprietary systems. Overall, LendingQB achieved a vendor satisfaction score of 96% and the highest marks for user experience among the major LOS providers included in the report.

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“Lenders need more than LOS technology, they need a vendor that is committed to their success,” said Tim Nguyen, President of LendingQB. “We have almost two decades worth of experience in providing SaaS technology to businesses, so we know better than anyone the importance of customer support in a SaaS environment.”

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LendingQB’s LOS is completely web-based and designed to provide lenders a flexible, innovative workflow. Its open-architecture application protocol interface (API) enables lenders to select the tools that best help their efficiency. In addition to the technology, LendingQB provides lenders with a combination of workflow analysis, best practices and training to help fully adopt and optimize the LendingQB LOS.

“The STRATMOR Group Technology Insights survey findings are based on 266 participants ranging in size from under $250 million to $10 billion in annual volume. These results reflect lender opinions on how they view their success with LOS technology when vendors are actively engaged in helping them meets their business objectives,” Nguyen said. “LendingQB’s lean lending strategies, best of breed integrations, and focus on ‘adoptimization’ reflects the level of support lenders need and value in addition to reliable technology.”

Learn more at http://www.lendingqb.com/TopRatedLOS.html.

STRATMOR Group is a mortgage industry advisory firm that offers a range of programs designed to provide lender CEOs and senior executives in sales, marketing, technology and operations with comprehensive performance benchmarking data and a full spectrum of expert mortgage lending consulting services. The firm serves more than 250 companies operating in the sector and provides consulting on strategies and actions to improve growth and profitability, reduce risk or position themselves to make an acquisition or sell the company. For more information, visit http://www.stratmorgroup.com.

LendingQB is a provider of Lean Lending solutions. The Lean Lending solution consists of a 100 percent web browser-based, end-to-end mortgage loan origination system, best of breed integrations with key industry partners and ‘adoptimization’ services that result in faster cycle times and lower costs per loan. For more information, please call 888.285.3912 or visit http://www.lendingqb.com.

Progress In Lending
The Place For Thought Leaders And Visionaries

Are LOS Companies Ready For The Digital Mortgage?

As the industry prepares to gather for the upcoming MBA National Technology Conference in Chicago, STRATMOR Senior Partner Garth Graham presents an analysis of two years of Technology Insights Survey results data to assess the readiness of the current loan origination system (LOS) landscape for the coming age of the Digital Mortgage.

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“When looking at STRATMOR Technology Insight Survey results data, we see lackluster satisfaction with LOSs,” said Graham. “That’s not surprising – it’s old news. But when considered in the light of the pressing demand for digital mortgage capabilities, the areas in which today’s originations systems fall short become even more glaring. When STRATMOR is consulting with clients – typically within the context of reengineering or establishing new origination platforms – we work toward implementing specific digital mortgage functional capabilities organized primarily around sales and fulfillment processes.  Very few can currently be found in a commercial, off-the-shelf LOS. Rather, they’re most often specialized applications that need to be hooked up to the system. Where they are currently available, satisfaction levels pale even behind those of LOSs in general.

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“To be fair,” Graham continued, “the effectiveness of any LOS depends on both the system’s functional capabilities and the skill with which the system is deployed. Regardless of where the fault lies, LOS systems are not delivering what they could. This only becomes more pronounced when one considers the functional capabilities necessary for the digital mortgage process. In light of STRATMOR’s Technology Insight Survey data, technology vendors need to carefully consider where they are in the mortgage technology ecosystem, and how they will compete in the future, because the status quo as of today is insufficient. Likewise, lenders need to determine their current state of technology and from there, develop their own individual roadmap to the future.”

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The 2017 STRATMOR Technology Insight Survey launches the last week in March and will include expanded questions on LOS vendor support and lender opinions on cybersecurity. To participate, click here.

This month’s report also looks at MortgageSAT borrower satisfaction data to help quantify the relationship between certain practices related to the mortgage closing and levels of borrower satisfaction. Seemingly minor events – making contact with the borrower prior to closing, or having the closing begin on time as scheduled – can have a significant impact on borrower satisfaction. Among the majority of borrowers who are contacted prior to closing, for example, average satisfaction scores a 93 out of a possible 100. For the roughly eight percent of borrowers who are not contacted, satisfaction plunges to just 61, a 32-point differential. Likewise, for the 93 percent of borrowers whose closing starts on time satisfaction ranks a 92, as compared to a score of 76 for those whose closing started late.

Click here to download the March 2017 edition of STRATMOR Insights, and to sign up to receive the report each month, please click here.

About The Author

Progress In Lending
The Place For Thought Leaders And Visionaries

STRATMOR Reflects On The M&A Market

STRATMOR Group took an in-depth look at characteristics that maximize seller value in mortgage banking merger and acquisition (M&A) activity. As Senior Partner and M&A specialist Jeff Babcock explained, conditions remain favorable for mid-sized independent mortgage banking companies considering a sale, and there are steps prospective sellers can take to maximize the chances of highly competitive bids from multiple bidders.

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“STRATMOR’s recent experience absolutely confirms that there are still many more motivated, well-capitalized buyers for retail origination platforms than there are such entities available for sale,” said Babcock. “For mid-sized, independent mortgage banking companies, the M&A space remains very much a ‘seller’s market. That’s not to say that independents can – or should – simply wait for a suitor to come calling. Rather, there are ways to proactively position themselves to strategically fit with the most motivated buyers—and thereby realize the level of economic value which reasonably satisfies their financial expectations. STRATMOR’s representation of high-performing sellers in recent transactions enables STRATMOR to provide tangible guidelines as to which characteristics will contribute positively to enterprise value, and which materially detract from a lender’s value and marketability.”

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In a feature length In Focus piece in this month’s STRATMOR Insights, Babcock and fellow STRATMOR Senior Partner and M&A specialist Jim Cameron detail the specific criteria which come into play in maximizing seller value. This includes quantitative metrics around profitability margins, product mix and compensation plans, as well as more qualitative characteristics dealing with corporate culture, management style and company reputation. The article also breaks out the 10 most unfavorable seller characteristics, which tend to deter buyers, reduce a seller’s marketability and detract from its enterprise value. These run the gamut from potential exposure to regulatory compliance issues or overt pending legal matters, to the makeup of sales forces, ownership structures or production processes.

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“The most important takeaway is that lenders should objectively and periodically assess their marketability as part of their strategic planning,” Babcock added. “They should focus in on strengthening those characteristics that build value and build appropriate actions into their operating plans to address any potential negatives.”

This month’s report also looked at a 2016 sample of over 100,000 closed loans using MortgageSAT borrower satisfaction data and found that 81.9 percent of borrowers reported having no problems with the origination process. Of the 18.1 percent who did experience a problem, 13.4 percent reported the problem resolved, and the remaining 4.7 percent said the problem was not resolved. Satisfaction scores varied greatly between these three groups: those with no problems averaged a stellar 95 (out of 100), while those who had experienced a problem that was resolved saw satisfaction plummet to a relatively low 77. Those who saw their problem go unresolved, however, reported the greatest dissatisfaction, with an average score of just 35, increasing the risk of negative feedback by such borrowers to friends, relatives and on social media. STRATMOR’s review of the areas causing problems suggests that a goal of reducing problems to just five percent of originations is achievable. At this level, overall satisfaction increases from a good 89, to an outstanding 94.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Competition For Seasoned Originators Heats Up

According to the latest STRATMOR Insights report, featuring survey data focusing on lender salesforces put out by STRATMOR Group, the industry is looking for good originators. Included were findings from a recent Spotlight Survey that looked into the ways in which lenders were recruiting and retaining loan originators. As Senior Partner Dr. Matt Lind explained, there is significant competition in the industry for seasoned originators, particularly among independent lenders.

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“Due to a multitude of factors, the mortgage industry today is smaller than in recent decades, and both short and longer-term growth prospects are smaller as well,” said Lind. “In this kind of environment, a key strategy for growing origination volume and market share is to recruit seasoned originators while, at the same time, retaining the productive originators a lender has on staff. Findings from STRATMOR’s most recent Originator Census Survey – representing a sample of almost 17,000 retail originators – prove that to be a harder task than one might imagine. The data shows that nearly 60 percent of originators have been with their current company for just two years or less. This simply underscores what any industry veteran knows: originators like to change companies.”

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“This makes recruiting a competitive affair, and retaining seasoned originators more difficult than ever,” Lind continued. “Our Spotlight Survey results suggest that the most intense competition for seasoned originators is seen as coming from regional and national independent lenders, rather than banks or credit unions. STRATMOR believes this reflects the focus of independents on highly-prized ‘Hunter’ loan originators versus the focus of banks on ‘Gatherers’ who can work as well off of bank referrals. In both cases, banks and independents were far more likely to pay incentives to recruit seasoned originators than to retain originators. Likewise, both groups agreed that Increased commissions – along with non-refundable signing bonuses – were seen to be the most cost-effective incentives when it came to both recruiting and retaining.”

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This month’s report also surveyed 2016 MortgageSAT data to examine borrower satisfaction with the origination process across age, gender, income and ethnicity characteristics. STRATMOR notes the possibility of an upward bias in the sample set because the MortgageSAT data for the roughly 100,000 respondents speaks only to the experience of borrowers whose loans have closed, not those whose applications were rejected or who dropped out post-approval because of negative experiences. With that caveat, though, STRATMOR reports that it finds almost equal levels of satisfaction across multiple borrower characteristics.

Satisfaction by gender was virtually identical (90 out of a possible 100) and there was but a one point difference between significantly younger or older borrowers and those in prime home-buying age groups. A slight differential (-3 points) existed between borrowers seeking smaller loans and the national overall average, but not as great as that between the national average and those seeking loans above $750,000 (-6 points). It also seems that borrower satisfaction decreases – slightly – the greater a borrower’s monthly income, probably because higher income groups expect higher levels of service. Finally, the data indicated a four-point difference between the highest and lowest satisfaction scores by ethnic group. Hispanic borrowers rated their experience highest overall, at 92.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Study Says 30% Of Lenders Aren’t Satisfied With Their LOS

STRATMOR Group released its latest STRATMOR Insights report. This month, STRATMOR shared highlights from its 2016 LOS Technology Insight Survey, gauging lender satisfaction with their loan origination systems (LOS). As Senior Partner Dr. Matt Lind explains, while there was a slight uptick in the share of lenders who were “very satisfied” with their LOS over 2015’s findings, there was a corresponding increase in those that were dissatisfied, as well.

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“Last year, the STRATMOR Technology Insight Survey found just over 27 percent of lenders were ‘very satisfied’ with their LOS,” said Lind. “This year, the share who felt this way rose to 28 percent, a very modest increase. However, we find such a low rate of total satisfaction to be indicative of the decidedly mixed – if not downright depressing – results of this year’s survey. The largest group of respondents, 42 percent, indicated that they are just ‘somewhat satisfied.’ While not actively looking to replace their LOS, their responses indicate these lenders aren’t what you’d call ‘raving fans’ either. Over time we would expect many of these lenders to start to actively look for a new system.

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“Worst of all,” Lind continued, “despite the incredible operational disruption that comes hand in hand with a system change, 30 percent of lenders said they were not satisfied with their LOS, an increase from 28.7 percent in 2015. Of these, 19 percent are actively seeking a replacement for their current system and 11 percent are already in the process of implementing a new LOS, regardless of the fact that such a change can consume significant resources and disrupt an otherwise thriving mortgage origination platform. On each of these points, we’ve observed a slight increase over 2015’s findings.”

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This month’s report also revisited the question of quantifying the value of increased borrower satisfaction. Looking at year-to-date MortgageSAT data, STRATMOR examined how a borrower’s likelihood to use his or her lender again (a proxy for a borrower retention rate) varies with a borrower’s satisfaction with the origination experience. STRATMOR found that just under 16 percent of borrowers ranked their overall satisfaction from one to eight on a scale of one to ten, resulting in suboptimal “Likelihood to Use Again” scores. STRATMOR’s research finds that, lenders who are able to increase borrower satisfaction among this cohort could see an estimated additional value of $202 per closed loan or 8.97 bps. This amounts to about a 15 percent increase in net income before tax for the typical lender earning roughly 60 bps on their production. In such a case, a lender originating 50,000 loans – approximately $11 billion – would realize a pre-tax profit pickup of more than $10 million simply as a result of improved borrower satisfaction.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Study: 92% Of Lenders Are Not Surveying Customer Satisfaction

STRATMOR Group, a leading mortgage industry consultancy, released its latest STRATMOR Insights report. This month, STRATMOR shares highlights from a recent STRATMOR Spotlight Survey addressing lender practices and plans regarding the measurement of borrower satisfaction. As Senior Partner Dr. Matt Lind explains, improving borrower satisfaction starts with measuring it, but it seems that many lenders may not be placing enough emphasis on the areas where the most improvement might be gained.

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“In virtually all industries, research shows a strong correlation between increased customer satisfaction and increased revenues and profits,” said Lind. “The mortgage industry is certainly no exception, and our Spotlight Survey results show that an overwhelming majority – 90 percent – of lenders understand the importance of measuring borrower satisfaction after closing, and are doing exactly that. We believe, however, that many focus on post-closing satisfaction because of the ‘halo’ effect associated with getting a mortgage which happens to result in relatively high satisfaction scores that can be leveraged for both referrals and favorable comments on social media

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“On the other hand,” Lind continued, “the low percentage of lenders who survey borrowers after pay-off – eight percent – strikes us as extremely shortsighted, especially regarding to payoffs in which the borrower subsequently chose another lender. Whether the business was lost because of a bad origination experience, a poor customer service experience during servicing, or something else over which the lender or its parent had control, the lender needs to know why. It’s the only way that any existent problems are going to be addressed, satisfaction improved and borrower retention increased.”

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Turning again to data from STRATMOR’s MortgageSAT Borrower Satisfaction Program, this month’s report also examines the post-closing satisfaction divide between loans originated via Retail and Consumer Direct (CD) channels. CD has long been the fastest growing mortgage origination channel, with its share of origination units growing from 28.3 percent in 2008 to 40.4 percent in 2015, after peaking at 46.3 percent in 2012. A better borrower experience is not the reason for growth, however. Based on 2016 year-to-date MortgageSAT data, average borrower satisfaction for the CD channel is 78 (out of 100) versus 90 for Retail. According to borrower survey results, it appears that CD borrowers are typically experience more problems during origination than Retail borrowers and, relatively speaking, are more dissatisfied by or less forgiving of such problems.

Progress In Lending
The Place For Thought Leaders And Visionaries