STRATMOR: 30% of Lenders ‘Dissatisfied’ with their LOS
STRATMOR Group, Greenwood Village, Colo., said results of its recent Loan Origination System Technology Insight Survey found while 28 percent of lenders are “very satisfied” with their LOS provider and have no plans for replacement, 30 percent are “dissatisfied.”
The company’s Insights Report (http://www.stratmorgroup.com/wp-content/uploads/STRATMOR-Insights-December-2016.pdf) also noted 42 percent of respondents are “somewhat satisfied” with their LOS provider.
“Such a low rate of total satisfaction to be indicative of the decidedly mixed–if not downright depressing–results of this year’s survey,” said STRATMOR Senior Partner Matt Lind. “The largest group of respondents, 42 percent, indicated that they are just ‘somewhat satisfied.’ While not actively looking to replace their LOS, their responses indicate these lenders aren’t what you’d call ‘raving fans’ either. Over time we would expect many of these lenders to start to actively look for a new system.”
The percentage of respondents “very satisfied” with their LOS represented a slight uptick from 2015 (27 percent); however, the percentage of respondents “dissatisfied” also increased (from 28.7 percent). Lind said of those responding “dissatisfied,” 19 percent are actively seeking a replacement for their current system and 11 percent are already in the process of implementing a new LOS, “regardless of the fact that such a change can consume significant resources and disrupt an otherwise thriving mortgage origination platform.”
The report also revisited the question of quantifying the value of increased borrower satisfaction. Looking at year-to-date MortgageSAT data, STRATMOR examined how a borrower’s likelihood to use his or her lender again (a proxy for a borrower retention rate) varies with a borrower’s satisfaction with the origination experience.
STRATMOR found that just under 16 percent of borrowers ranked their overall satisfaction from one to eight on a scale of one to ten, resulting in suboptimal “Likelihood to Use Again” scores. Lenders who can increase borrower satisfaction among this cohort could see an estimated additional value of $202 per closed loan or 8.97 basis points.
This amounts to a 15 percent increase in net income before tax for the typical lender earning 60 bps on their production. In such a case, a lender originating 50,000 loans–approximately $11 billion–would realize a pre-tax profit pickup of more than $10 million “simply as a result of improved borrower satisfaction,” Lind said.
