5 Ways Outsourced Loan Fulfillment Powers Growth & Agility for Local Lenders

As competition increases, the practice of outsourcing expert services continues to become more and more normalized. Across industries, 54% of companies turn to outsourcing to fill a gap in critical processes; in the financial sector, that statistic rises to 71%.

Historically, larger institutions have been 66% more likely to opt for outsourced services. But with significant growth in the work-from-home economy, small and midsize lending companies are now in a better position to take advantage of outsourced expertise than ever before.

Consider five ways that outsourced loan fulfillment services can bring stable growth and top-notch service specifically to local lenders.

1. Better speed and efficiency 

Outsourced loan processing services can be the key to reduced closing times, particularly during seasons of peak market saturation. A lender’s in-house team can easily be overwhelmed by an influx of loan applications, causing backlogs that produce delays for borrowers. The right outsourcing partner helps smaller lending companies maintain a consistent and efficient underwriting speed by allocating more or less resources to processing tasks as needed.

Recently, loan closing timelines have been averaging around 52 days, according to the Ellie Mae Origination Insight Report. Lenders who can slim that number down see an increase in consumer satisfaction, especially among homebuyers in hot markets. In today’s marketplace where online reviews can make or break a business, a reputation for speed and efficiency among borrowers can greatly impact growth.  

But not all outsourcing partners are equipped to optimize speed and efficiency. Choosing a tech-enabled fulfillment platform makes all the difference in streamlining both communication and administration. Our free loan outsourcing ebook goes into more detail on the importance of a technology-based fulfillment partner.        

2. Access to top expertise

Competition within the lending industry continues to grow, with mega-lenders like Quicken Loans and loanDepot collectively doubling their market share in the past five years. Small and midsize lenders likely feel the burden to create a positive brand image in greater proportion, since the company must exceed––or at least hold up to––the big guys in the eyes of consumers. 

This is where high-quality service can set a lender apart from the competition. Best-in-class, expert-driven service has the power to influence the conversation around your brand. Part of that service includes utilizing experienced professionals at every stage of the process––including loan fulfillment. 

By outsourcing fulfillment services, lending teams avoid a “jack of all trades, master of none” scenario. If lenders ensure that loan administration details are taken care of by outsourced experts, in-house teams have the freedom to focus on what they do best, such as personalized customer service or lead generation.

However, not every outsourcing service values experience and expertise the way it should. At Maxwell, our fulfillment professionals have an average of 22 years experience within the mortgage industry. Plus, our comprehensive guide can help lenders weed out subpar fulfillment options and connect with the experts who can increase the overall quality of service provided to customers. 

3. Agility through a variable cost model

The lending market will always be unpredictable in terms of demand. To best perform in the midst of that instability, lenders should endeavor to keep costs as variable as possible. Outsourcing is one way to do just that. 

Personnel—including recruiting, engaging, and retaining talent—add significant fixed costs to a lender’s business model. In times of overwhelming demand, such as the 2020 refi boom, those fixed costs may be offset by enough income to make sense. But when loan demand decreases, suddenly fixed costs like labor exponentially reduce profitability.

Outsourced fulfillment services increase agility both by offering quick onboarding during high-volume periods and by eliminating the strain of excess personnel during low-volume periods. That level of cost flexibility can give local lenders a competitive advantage in a variable market. 

4. Capacity to work on high-ROI tasks

According to Pareto, the Italian economist who coined the 80/20 principle, 80% of outcomes are produced by 20% of causes. While the principle is theoretical, most lending companies can pinpoint the 20% of lending tasks that produce 80% of corporate returns. Those tasks would be considered high-ROI. 

Time is a finite resource, and a lending team only has so many hours in a day. Smart company executives help their team pinpoint the high-ROI activities that increase profitability and reduce tasks that could be considered “busy work.”

By outsourcing the processing and underwriting of loans, an in-house lending team can spend more time on tasks that leverage individual strengths and target business growth. This produces a sustainable environment of consistent returns rather than a business model that’s vulnerable to time waste. 

5. Cost-effective services

Smaller lenders understand the need to reduce costs per loan. Typically, the ability to standardize costs has been a luxury reserved for large lenders with the resources and scale to withstand the ups and downs of market cycles. 

Outsourced fulfillment services help level the playing field. The right outsourcing partner can help lending companies streamline costs, which in turn improves the per-unit profitability of each and every loan closed. 

There is, of course, a cost to outsourcing services. But labor typically accounts for 40% of total servicing costs when handled in-house. So when examined over time, the costs of outsourcing are likely to stabilize or even reduce the servicing cost per loan. In fact, across industries, 70% of businesses who turn to outsourcing do so to reduce costs.  

Bottom line

Because mortgage processing and underwriting are complex and nuanced, it’s often far easier for lenders to outsource those processes to top experts who have been vetted and sourced by a trusted partner. Doing so gives small and midsize players a consistent competitive advantage through market cycles. 

Interested to see how outsourced loan fulfillment can help your lending business? Our Definitive Guide to Outsourced Loan Fulfillment Success offers expert insight to help you understand:

—How outsourced fulfillment can help your lending business

—Business considerations to take into account before jumping in

—6 areas to vet potential partners

—Insider advice from industry experts with 20+ years of experience and customer testimonials

Download our free ebook “The Definitive Guide to Outsourced Loan Fulfillment Success” to learn how to use outsourcing as a powerful competitive advantage.

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