I saw a good article in Housing Wire recently (you can see it here). Its focus is on the likelihood that in spite of the ongoing refinance boom driven by low rates, the fall-out rate (preapproved loans that never close) is going up. The reason? If your production process is too slow, your borrower (already more or less working from home and stuck in the house) is still shopping for better rates. Odds are, as time passes, someone will come up with a better number.
Now, add in the fact that, although refinance is taking up almost 66% of the origination market at the moment, the recent surprise announcement by the FHA of what amounts to a refinance fee could cost the typical refinance borrower as much as $1,400. Will the GSEs back down on this? Maybe. But the reminders are there: this refinance boom won’t last forever.
Of course, we lump almost anything that isn’t selling, closing the sale or possibly underwriting as “production.” Let’s just say everything from ensuring accurate loan estimates or tax estimates, rapid (and accurate) valuation, title, due diligence and doc prep are the details that turn into devils if your process isn’t seamless, accurate and rapid.
Nobody likes to think about these things when the getting’s good—and by all accounts, refinance volume is fantastic right now. But the wise lender is also taking notes about where their weak points are in the production process. Maybe you don’t have time right now, but at some point, you will. And then, things like borrower experience, fallout rate and closing time will be what determines the majority of your market share.
By all means, this is a time for closing loans and collecting as much revenue as possible. But it’s also possible to have an eye on where your process needs improvement…and then act on it when you do, again, have the time.
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