Automation & Technology
Reducing the friction in loan delivery
If you’re familiar with the traditional loan delivery process, you know that it often requires a lot of manual work and multiple follow-ups for both the mortgage lenders selling the loans and the correspondent investors purchasing them. The friction in this process between lenders and investors has become especially apparent in recent months as the industry struggled to keep up with unprecedented loan volume from historically low interest rates.
Hiring additional staff to meet today’s market demands is an approach many lenders are taking, but historically that has been a short-term solution. At ICE Mortgage Technology™, our mission is to automated everything that can be automated within the mortgage process. And to help both lenders and investors improve their processes, we developed Encompass Investor Connect™ to streamline loan delivery from Encompass® to correspondent investors, including Amerihome, Chase, Flagstar, New Rez and Wells Fargo.
MarketWise Advisors, LLC recently conducted an independent study that indicates this new loan delivery process drives efficiencies that benefit the entire mortgage value chain. Based on the survey results, technology like Encompass Investor Connect can reduce the cost of a loan by 3-4 bps for lenders.
Efficient delivery, fewer conditions, faster funding and improved ROI.
The survey included loan delivery, shipping, secondary marketing, and investor professionals using Encompass and found significant end-to-end savings, efficiency and improved ROI when loan packages were delivered directly from the loan origination system (LOS) to the investor.
The study found that lenders save an average of $48.85 per loan.
Lenders who are delivering loans to participating investors from within Encompass have seen improvements in loan quality, as well as delivery and purchase times, resulting in financial benefits in three main areas.
1. Direct operational time savings of $23.42 per loan file
Lenders have saved an average of 39 minutes per loan file by delivering loans through Encompass. Through the system-to-system connection between Encompass and investors, lenders have reduced the need for manual entry or checking of data, packaging of documents, and logging into additional platforms to deliver the loan. This time savings resulted in $23.42 of operational savings per loan.
2. Improved data quality and funding speed savings of $25.43 per loan file
When lenders deliver consistent, complete packages through Encompass, they reduce errors and conditions resulting in fewer conditions or stipulations, better purchase times and more lending opportunity. On average, the faster funding time helps save lenders one day of warehouse line carry costs or hedge costs, saving $25.43.
3. Reduction in back and forth between lenders and investors
The study found that investor loan delivery within Encompass not only serves and benefits lenders, it adds an end-to-end value throughout the mortgage value chain (from lender to correspondent investor to consumer) which can benefit the industry.
By delivering better quality loans, lenders were able to reduce the time spent following up with their investors. And when investors review and purchase more loans in less time, this frees up lenders’ resources to lend to more borrowers. And when customer service and technology are improved on the back-end, this lends to a better overall experience from consumer to lender to investor.
What your peers are saying
We gathered several industry experts to discuss the study results in our recent webinar, “Improving quality, funding and ROI with Investor Connect”. In the webinar, Julie Messina, Vice President and Secondary Marketing Manager at LHM Financial Corporation, shed some light on how Encompass Investor Connect has helped drive efficiency and standardization for her shipping team – allowing for less touches, time savings and reduced costs.
Also on the webinar panel, Chuck Martin, SVP of Correspondent Operations at Wells Fargo Home Mortgage, shared how Encompass Investor Connect is truly a win-win for both lenders and investors. Investors can now use Encompass Investor Connect as a foundation to streamline their funding process and continue to build on it over time to further lower costs, improve borrower experiences, better use their data, and pick up more capacity.
Based on the survey results, MarketWise Advisors believes that technology like Encompass Investor Connect enables savings that could be used for the company’s profitability or passed along to the borrower for more competitive pricing. Watch the on-demand webinar to learn more key data points from the survey.
Ready to see how Encompass Investor Connect could benefit your business? Contact your ICE Mortgage Technology account manager to get started today.