5 Ways How Outsourcing Can Help You Through the Mortgage Slowdown and Beyond

Most mortgage companies are still feeling the brunt of the mortgage implosion a couple of months back. It seems that for most players in the industry, it is a choice between "playing it safe and wait until things get better" or "close down shop and move somewhere else". The mortgage industry may still be reeling in the slowdown, but there are other options .

Here are some ways how outsourcing can help you stay ahead at these times and position yourself for a better market condition.

1. Outsourcing boosts your profits.

As with most industries, cutting costs can mean saving your business. Outsourcing some of the back office work such as processing, quality support and clerical or analysis functions can reduce your manpower costs by an average of 40 percent. If you factor in other overhead costs such as office space and utilities, the savings will simply be bigger. It doesn't mean however that you should go out and look for the cheapest outsourcing provider as they will reduce your cost the most.

Many companies get burned with outsourcing deals simply because they chose to stick with the cheapest deals instead of those that can provide the best value and service. The bottomline is to increase your return of investment and focusing single-mindedly on reducing costs will doom your outsourcing endeavors from the start.

2. Outsourcing increases your productivity.

There are those who say that outsourcing may save you some money, but will lead to a loss in productivity. This may be true in some cases as a number of companies suffer losses in the transition stage. However, as a number of outsourcing providers and clients can testify, if outsourcing is done properly it will lead to an increase in productivity. The increase is attributed to the client's mindset and approach towards outsourcing.


3. Outsourcing updates your capabilities and experience.

Having a partnership with an experienced outsourcing provider will open your business to new technologies and bits of knowledge that would otherwise be unavailable to you if you simply work on your own. The mortgage industry in general is relatively a late-bloomer when it comes to technological integration, which has been proven to boost efficiency and productivity. Other sectors especially in the financial services have been reaping the benefits of new technologies and innovations, but quite a number of small and medium sized mortgage companies are still far behind, some even perform the entire loan process manually.

In processing loans, some of the bigger lenders who do it manually, e.g. submitting loan applications and underwriting packages via transboxes and overnight. One major reason is the high cost of technology that small and medium sized mortgage companies simply cannot afford especially at this time. Setting up a secure server running your database and programs, getting connected with decent internet providers and service, and having an IT person in charge of it can easily cost you tens of thousands of dollars in set-up and maintainenance.

It is an imperative for outsourcing providers to run this kind of set-up and to be updated in all aspects of it.

4. Outsourcing expands your marketing network

It is a fact that the mortgage industry thrives on connections with people from other industries. When was the last time that you've closed a loan for a client who is someone within the mortgage industry? More often than not, as a mortgage professional, your client is a friend, referred by someone, or a stranger who works in a different field. It is a part of your daily routine to seek new prospects and expand your network. You've probably sent out emails, made some cold calls, have lunch with a friend's friend in search of a fresh lead.

One route that hasn't been explored much is the outsourcing partnerships. An outsourcing company, as a service provider, is by nature connected to a diverse field of industries.

5. Outsourcing allows you to focus on other core aspects of your business.

It is a common dilemma of most small and medium sized mortgage companies how they are going to split their time, effort and resources between marketing and processing, and not to mention the administrative work such as maintaining an office and managing your people. It is almost an accepted fact that one of the two would have to tale a hit in favor of the other. I've seen a number of mortgage companies who have grown accustomed to shifting their focus between marketing and processing depending on what the current market situation is. This strategy may work, but being able to focus on all core aspects of your business 100% of the time is a key factor in growing your business.

Outsourcing strategies will allow any mortgage company to allocate 100% focus on all aspects of their business. You can focus on your marketing drive while simply supervising the processing operations while the outsourcing provider takes care of the administrative work. Or you can simply coordinate with Infinit-O your expected processing results while you work on getting new applications. The possibilities are limitless but you can have one that suits your style and needs.

A Glass Half-full: An optimistic view of the US “mortgage implosion”

The recent "mortgage implosion" has shaken the confidence of a lot of players, big or small, in the mortgage industry. With the number of lenders closing down their operations increasing by the day, and reports of growing percentage of foreclosures across the United States, it is no surprise that a dark cloud of uncertainty looms over the head of any mortgage professional.

Though these may be trying times for the industry, all is not lost. It is just a matter of finding the silver lining in these clouds of uncertainty. For instance, in a blog by Todd Carpenter in Lenderama (the official mortgage industry blog),

"Most homeowners in today's market have had a 7% or maybe even an 8%+ loan in their past, and I'm not talking twenty years ago either. You are likely more freaked out about this then they are.

If May foreclosures DOUBLED in your state, that likely means they went from something like .2% of all loans, to .4%. It's bad, but jeez, a little perspective is in order.

Most homeowners have good credit. If half your loans are for clients with sub 600 credit scores, then half your clients are in the bottom 15% of all borrowers. Think about that.

Stated Income loans are not the most popular type of loan originated. Neither are Option ARMs, or sub prime loans, or 100% financing."

To add, it is a fact that most people in the United States would need to refinance or purchase a home regardless of the market conditions.

If you take a minute to reflect on these points, you'll see that the key in surviving the “crisis” is by developing and adopting strategies that will fit the times.

Just to pick up from the points cited above, if one would accept that interest rates at 7-8+% are "normal" (as they really are, the lower ones may be the ones considered as “unusual”), concentrate on the 85% of the US population that have above 600 credit score, market traditional loans programs such as the conforming loans and fixed rates and submit loans with full documentation (w/c will not only get your borrower a better rate, but will ensure that they get a loan that fits their financial capacity). On top of that, with the Mortgage Bankers Association estimating the 2007 Mortgage originations at $2.4 Trillion dollars as of their August 24 2007 report, things do not look that "doom and gloom" as all the hype suggest. Gone are the days when loan programs are handed out on silver platters. The current situation calls for more work on the part of the mortgage professional. It is, however, definitely worth the extra effort if it will lead to putting the mortgage industry back on the right track.

An increasing number of mortgage professionals have also taken a bold step by outsourcing part of or their entire mortgage loan processing . Some did so even before the implosion, and the current situation gives more reasons to do so. This approach may also be employed by other industry professionals.

- As a loan originator whose business is centralized around marketing and increasing sales in terms of quality loan applications, one can save precious time away from the laborious task of pushing papers and instead concentrate more on your clients' needs and demands.

- As a mortgage broker, one's capacity to process loan applications is exponentially increased while saving. Imagine processing more loans in less time, and reduce operational costs while at it!

Although one may be hesitant to outsource the tedious but crucial function of mortgage loans processing for varying reasons from efficiency to distance, these concerns will be alleviated when a mortgage professional works with an experienced outsourcing company with an exposure to mortgage processing , backed with the latest in information and communication technology.