Deeper Thoughts
An Amazing Number – August 17th 2021

Issue #86: An Amazing Number

We were doing some research recently for a white paper we’re writing when we came across a staggering number. Especially since data can be a little harder to come by in the real estate financial services space because there are so many larger, privately held companies. Regardless, for us here at LodeStar, this fact jumped off the page.

According to a Fannie Mae survey published at the end of 2019 (pre-pandemic), 44% of the mortgage lenders it had polled want to see the front-end consumer experience (online applications, primarily) improved. Only 18% said they feel back-end operational efficiencies are most important.


A very recently-published ICE Mortgage Technology survey of mortgage lenders (May, 2021) suggests that sentiment continues on today, with 90% of the lenders polled stating they believe technology can help improve the mortgage application process, citing benefits that include simplifying the entire process, reducing time to close and minimizing data entry. Let’s say that again. 90% of the lenders polled suggest that there’s an almost transaction-wide benefit to investing in front end technology and that it will actually boost the production and “back end” processes.

Perhaps it will. But why not just invest in some of the very good production/operations technology out there instead of putting the entire focus on an online application system? (We here at LodeStar are quite partial to one particular cost calculator!)

It does appear that this is, indeed, starting to happen—especially with talk of margin compression inevitably heating up with the purchase market.  We’ve been tremendously busy this year, as are a number of our peers in the operational/closing technology space. 

But…18%? It’s still jaw-dropping. It will be interesting to see if any of the other 82% are in the chorus bemoaning the shrinking margins that seem to be coming.

There are definitely plenty of good solutions available. Whether it’s a TRID closing calculator, document management software for mortgage companies, or, of course, a modern LOS (for those who have not made that investment in years), there are any number of ways a lender can shore up its margins. Let’s see if the numbers—especially the number of lenders who think operational efficiencies are best improved by a better online application platform—start to change with declining net profit.

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