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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 56 August 2023 F E A T U R E S ince the Fed began hiking interest rates, many mortgage lenders have been forced to dramatically cut headcount. Despite these reductions, the latest Mortgage Bankers Association's (MBA) Annual Mortgage Bankers Perfor- mance Report found that mortgage process- ing costs hit $10,624 in 2022, for an average per-loan loss of $301. Unfortunately, it's no easier to call the bottom (or top) of the mortgage market than any other complex market. So, now is not the time to make wholesale changes to your technology stack. However, you can use tech- nology to automate specific workflows while establishing a playbook for when it's time to go back on offense. A practical playbook contain three major parts: » An assessment of current processes and technology » Identification of risks and opportunities to achieving peak performance when the next wave of refinancings or purchase mortgages arrives » Trigger points for when to start imple- menting each upgrade based on your strategic objectives Let's take a closer look at what each of those parts entails. Phase 1: Assess Current Processes and Technology B ecause of the feast/famine cycle of the mortgage industry, many lenders have evolved wildly inefficient tech stacks: out- dated instances of loan origination systems, point solutions that fit clunkily together, manual workarounds, and emergency fixes that have become permanent. There's no time to update technology when you can barely handle the volume of applica- tions, as many lenders experienced in 2020 and 2021. And there's no appetite to invest in new technology when revenue slows to a trickle. But at some point, most lenders realize they must address skyrocketing tech costs and process inefficiencies. Current market conditions provide an ex- cellent opportunity to take the first step: deeply analyze your systems and processes. The goal is to identify hidden risks and opportunities. Assess each solution's capabilities and de- termine whether you need to maintain every feature or subscription to keep your current functionality. Lenders can often reduce the number of solutions they're paying for and simplify processes. It's also a great time to examine configu- ration rules, vendor and custom integrations, and data requirements, which can reveal op- portunities to increase efficiency and reduce spending. Phase 2: Rank Priorities by Cost and Impact O nce you've identified the opportunities and risks that your current technology and processes present, it's time to prioritize them by cost and impact. The theory here is simple, pursue projects with the highest impact and lowest cost first. For example, suppose a lender knows their loan officers rely on many manual workarounds with their current origination software. They know this is inefficient, but they're hesitant to adopt a new system, which would introduce a painful learning curve that could be disastrous if the market picks up. A savvy partner can point to alterna- tives—refactoring the existing platform to introduce new functionalities and features (like e-sign and e-notarization) and eliminate common workarounds. Refactoring tends to be less risky than adopting a new platform (smaller learning curve) and less expensive. Another way an external partner might help as lenders rank the cost and impact of technology upgrades is by helping assess the total cost of various implementation strate- gies, incuding offshore, onshore, near-shore, or off-shore supplemented by experienced consultants overseeing the work. When you start with a deep dive and overview of risks and opportunities, you can also include opportunity cost in your calcula- tions. For example, suppose an internal team L L O Y D B O O T H is an Enterprise Solutions Executive and S T E V E W O L F E is an SVP of Banking and Fintech at CI&T, a global digital specialist. A PLAYBOOK FOR MORTGAGE LENDERS IN CAPITAL PRESERVATION MODE As workforces are cut, the use of technology to automate specific workflows can be benficial, while establishing a playbook for when it's time to go back on the offense. B y L L O Y D B O O T H & S T E V E W O L F E