Jim Cameron of STRATMOR Group: Disruptions to Productivity and Staffing to Impact ‘New Normal’

Jim Cameron is a senior partner with STRATMOR Group, a mortgage advisory firm, where he specializes in benchmarking and performance measurement, strategic planning and managing STRATMOR’s workshop program. He has 30 years of leadership experience in the mortgage industry and was instrumental in working with the MBA to develop the industry-standard benchmarking program known as the MBA and STRATMOR Peer Group Roundtables (“PGR”) Program. He regularly lends his moderator skills and expertise to MBA and other organizations on such topics as accounting and financial management, mergers and acquisitions strategies and industry trends. He can be reached at Jim.cameron@Stratmorgroup.com.

MBA NEWSLINK: What have you seen over the past year with operation executives’ perception of productivity?

JIM CAMERON, STRATMOR Group: One of the most significant things I’ve seen—or rather, discovered—is that operations executives tend to overestimate productivity. For example, at two recent workshops we hosted, we found that operations leaders believed their processors were handling an average of over 38 applications per month, while the actual number was fewer than 28. It was the same with closed loans, where leaders estimated their closers worked 64 loans per month instead of only 44 in reality.

NEWSLINK: Why the disparity?

CAMERON: First off, the people we surveyed were seasoned executives who know what they are doing who have a great feel for their numbers. That said, there are likely two reasons for the disparity.

First, because of staffing shortages, lenders have hired for many roles that support production that aren’t being included in the employee count. For instance, processing includes a host of functions, like loan set up, disclosure desk or loan coordinator. Many lenders have peeled off some of the tasks associated with these roles to new hires who have less experience, and managers aren’t really taking these additional bodies into account when measuring productivity.

Second, lenders are also not taking overtime into consideration. If you look at productivity data from the PGR program, it appears that there is an increase in productivity in 2019 and 2020. But it is very difficult to determine how much, if any, of that increase is due to increased productivity, or simply due to the fact that more hours are being worked.  One way lenders can address is this by using full-time equivalent employee calculations based on total hours worked rather than the number of employed full-time workers.

NEWSLINK: Where do home lenders see the biggest bottleneck in the loan origination process?

CAMERON: Operations executives at one of our recent workshops confirmed that Processing is the biggest bottleneck. This is despite huge investments they’ve made in the front end that have enabled applications to flow through sales more efficiently. But the application flow often was bogged down in the processing area. The second biggest bottleneck has been underwriting, where positions have been harder to fill—especially over the past several months.

NEWSLINK: What is holding up processing?

CAMERION: One of three key factors holding up processing is the tendency for experienced processors to be promoted, leaving inexperienced, newer staff to handle processing functions. Another factor is how processors have taken over some of the tasks that have traditionally been handled by underwriters. Finally, the use of disparate systems that don’t integrate well is causing loans to slow when they reach the processing area. All of these factors make a processor’s job harder than ever. Between training newly hired processors, helping out with underwriting, and dealing with substandard technology, they’re being spread pretty thin.

NEWSLINK: What can be done to reduce the processing bottleneck?

CAMERON: With interest rates recently escalating and the hiring boom apparently cresting, some of the issues tied to inexperienced processors will take care of themselves. In addition, with underwriters operating within normal capacity, some of the functions handled by processors might move back to underwriters.

But that still leaves disparate systems straining loan production. Lenders need to ensure that there is a tight, two-way integration between their loan origination system and customer relationship management, point of sale and lead management systems, or their problems will continue.

NEWSLINK: What long-term implications will the work-from-home (WFM) model have on loan production?

CAMERON: Most mortgage operations executives agree we’re headed toward a new normal that will include a higher percentage of remote workers across every major job category.

NEWSLINK: What does that mean for lenders?

CAMERON: With a permanent work-from-home model, lenders are no longer constrained by geography when hiring. In addition to gaining a larger pool of available workers, lenders are likely to see regional variations in supply and demand for labor being muted, less compensation volatility and declining compensation costs overall. At the same time, however, they may see greater turnover, as it becomes easier for employees to switch jobs and easier for employers to replace those positions to better manage excess capacity. We really don’t know exactly how it will all play out, but it will definitely be interesting to watch.

(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 msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)