It's no secret that mortgage and real estate markets are experiencing some drastic changes. With a dynamic interest rate environment, margin compression, and heightened competition, there is little room for error.
But while a lot of what’s going on in the housing market might be outside of your control, one of the best things you can do for your business is shift focus on optimization core processes, reducing overhead, and elevating your customer experience.
Unfortunately, one of the biggest mistakes that many loan officers and brokers make is hiring the wrong talent. In particular, loan officer assistants (LOA) can be a huge expense with diminished returns which can drag down your business.
While leveraging a loan officer assistant could be beneficial when loan volume is flowing, there are a number of reasons why retaining one could be detrimental to your bottom line.
Loan Officer Assistant vs Loan Processor
Loan officers (LO) are usually the first point of contact when existing or prospective homeowners are looking at financing options. They help borrowers evaluate mortgage options and educate them on the mortgage application process.
Once a mortgage application is submitted, most of the time borrowers are then handed off to either a loan officer assistant and loan processor.
Loan officer assistants are individuals that work under a loan officer and can discuss loan applications as well as the mortgage process with potential borrowers. They can respond to emails, take phone calls, and act as a resource to borrowers until a loan is closes. In short, their main role is customer service.
Similarly, loan processors (mortgage processors) work with loan officers and loan officer assistants to review borrower applications, request, or collect documentation, and communicate with parties regarding the mortgage application process. Processors are licensed and complete important due diligence and to prepare the file for underwriting.
Reasons Why You Should Stop Using a Loan Officer Assistant (LOA)
The key difference between the two roles is that if you hire the right loan processor, you can eliminate the need to hire or retain a loan officer assistant. It can be a waste of time and money.
First, loan processors are often much more involved and knowledgeable about the mortgage application process. They are also traditionally the main point of contact between the loan officer assistant and underwriting.
Those that work as a loan officer assistant are typically the intermediary between the LO and the processor. While adding another body to your ranks may help you focus on boosting origination volume, the risk is that it can complicate the customer experience by adding too many cooks in the kitchen.
Information must flow through yet another channel which increases the risk for errors and mistakes. One dropped ball could mean a poor experience for a client who could decide to take their business to any one of your competitors.
Second, consider that there aren’t a lot of requirements to become a loan officer assistant. Most of the time, companies only require you to have a high school diploma or GED.
While it may be smarter to hire loan officer assistants on a temporary or contract basis, consider the experience of the talent you are bringing on.
Many companies don’t require assistants to have any experience in the real estate or mortgage industry, which makes them even less effective when it comes to answering borrower questions that require mortgage or real estate acumen.
On the other hand, just because loan processors work more hands-on with back-end processes doesn’t preclude them from also being a contact for borrowers.
A knowledgeable loan processor is worth its weight in gold because not only can they perform all the functions of a loan officer assistant, but they often have more technical skills that are more beneficial to retain.
In some cases, truly experienced loan processors may work at a junior underwriter level. Once mortgage and real estate market conditions improve, developing these individuals and expanding them into an underwriting role could be a major upside.
Consider the fact that the average salary for a loan officer assistant is about $45,000 per year.1 Eliminating that role could be a considerable savings, to which those dollars could be better utilized to fuel marketing efforts or technological efficiencies. Consider hiring an independent contractor processor to lower your overhead cost. Companies that manage mortgage processors could give you the competitive advantage.
Leverage a Mortgage Loan Processor Checklist
Part of the reason many loan officers are hesitant to let go of their loan officer assistant is because they are afraid that they will have to spend more time communicating with both borrowers and loan processors.
However, leveraging the right mortgage loan processor checklist ensures that all parties for any given application are on the same page, streamlining the approval process, and cutting down on both wasted time and money.
Having a dedicated mortgage loan processor checklist helps standardize the application process and workflow. It can also be utilized as an upfront needs list of sorts for borrowers, setting early expectations regarding required documentation.
Those loan officers and brokers that don’t have a dedicated mortgage loan processor checklist may be subject to more back and forth with borrowers, leading to poorer lead-to-application ratios.
Key Takeaways
In the wake of recent real estate and mortgage volatility coupled with a competitive pricing environment, now has never been a more important time to focus on increasing efficiencies and focus on core competencies to increase origination volume.
While many other loan officers and brokers continue to bleed money to cover major payroll expenses, you understand the need to work smarter not harder. For instance, levering a loan processor properly can help save the hassle and headache of paying a loan officer assistant.
When you utilize your mortgage loan processor effectively, not only are you saving money but you also investing in top talent that can be developed into future roles.
Additionally, you are streamlining your customer experience which will help retain clients and boost referrals. Utilizing a dedicated mortgage loan processor checklist can help you overcome some of the mixed feelings about working with less, ensuring all stakeholders are on the same page for every loan touched.
Making the move toward a more efficient mortgage processing workflow will pay dividends in the long run, leaving your competition struggling to keep up.
Sources
1 Glassdoor. (2022, August). Salaries: Loan Officer Assistant (Augustus 2022). Retrieved August 12, 2022, from https://www.glassdoor.com/Salaries/loan-officer-assistant-salary-SRCH_KO0,22.htm
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