Lori Brewer: The Road to Recovery Will be Paved with Data
Lori Brewer is an entrepreneur and technology leader whose forward thinking has given rise to award-winning fintech applications including incentive compensation management platform CompenSafe and business intelligence platform LimeGear. With more than 20 years of mortgage banking experience, Brewer is founder and CEO of Inc. 5000 company LBA Ware, Athens, Ga., and a recipient of the Mortgage Bankers Association’s Tech All-Star award. For more information, visit https://www.lbaware.com.
More than a decade of U.S. economic expansion officially ended in February amid a brutal downturn caused by the coronavirus pandemic. Now, after nearly three months of business closures and travel restrictions, states are beginning to open back up. Early indicators suggest the economy may soon turn a corner, but the shape and duration of its recovery is unknown. All along, increased mortgage demand has been a bright spot in our otherwise dim economic picture — but massive unemployment, rate volatility and more stringent requirements for loan applicants are contributing to an atmosphere of growing unease for lenders.
In a time when everything spells uncertainty, data gives lenders something to hold on to — and a path forward. What performance metrics are most critical for lenders to keep an eye on right now to help their businesses survive the recession and what’s likely to be a protracted recovery?
Real-time performance metrics inform better business decisions
As workers return to the office, will lenders find the time to address the capacity issues that have plagued operations for the last several months? Will mortgage rates drift higher as the economy recovers, bringing an end to the refi boom, or will rates stay as low as the GSEs predict? Will months of quarantining create enough pent-up purchase demand to feed pipelines all year, or will mortgage delinquencies keep lending standards tight and the purchase market competitive?
Lenders don’t have a crystal ball to answer these questions, but what they do have is a wealth of untapped data repositories that can be leveraged to make better business decisions. Let’s look at some examples:
- Pipeline data
Fallout is a clear indicator of potential income loss. Reviewing fallout data at each milestone stage in the pipeline (e.g., application to processing, processing to underwriting, etc.) can help lenders identify and correct causes of lost business.
Example: Beth, a branch manager, reviews her pipeline data every morning. For the past few days, she’s seen a slowdown in new locks and borrower engagement. After checking her competitors’ rates, she concludes she is being rate shopped. She decides to revisit her fees now rather than waiting a month and potentially losing more business.
- Production mix data
Production mix data is a critical tool for identifying growth and risk opportunities. Keeping close tabs on not just loan purpose, but also loan type can illuminate opportunities to maximize profitability as market conditions change.
Example: Regional manager Reggie regularly tracks conventional vs. government loan mix at each of the branches he oversees. With all the recent changes to investor guidelines, Reggie is worried that volume could suffer at one particular branch where government loans represent the lion’s share of business. Since the branch has several originators who are licensed in multiple states, Reggie authorizes the branch manager to purchase conventional loan leads from outside the local market.
- Team performance metrics
Compensation is the single largest loan production expense for most lenders, so managing team performance in a way that maximizes the return on individual is essential. Lenders who wait to evaluate key performance indicators (KPIs) until the annual review cycle might be overlooking the opportunity to correct costly performance issues.
Example: Sonny is president of an independent mortgage bank that employees nearly 500 people, including 150 mortgage loan originators. His team has been working from home since late March, when states began issuing stay-at-home mandates. Now those orders are being lifted, and Sonny is considering a new work policy that offers his team the choice of working at home or in office — but he wonders how his team’s productivity is affected by working away from colleagues and amid the distractions of home life. He zeroes in on turn times, productivity and loan quality as KPIs and compares team performance to this time last year.
In all cases, lenders need real-time data so they can identify trends and address concerns on a daily basis. And to keep data review from becoming a full-time job, lenders need to receive metrics in a visual format they can absorb in minutes, not hours. By arming themselves with timely and easy-to-digest information, lenders will put themselves in the best possible position to navigate the road to recovery, no matter how many twists and turns it takes.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)