Jason Wilborn of Accenture: Perfect Timing

Jason Wilborn is Operations Delivery Manager with Accenture Credit Services, Rancho Cordova, Calif.

Jason Wilborn

In 1986, a series of February storms hit Northern California, dropping upwards of 11 inches of rain over a two-week period. Levees were stretched beyond their limits and many failed, 3,000 homes were damaged, 895 homes were destroyed, the Sacramento Valley looked like an inland sea.

Another wet season hit in 1995, then again in 2017. Each time the deluge was better handled than the last. Fast-forward 35 years after the 1986 disaster and another series of storms hits the same region and dropped nearly the same amount of rain in a two-week timeframe. Yet this time, the flooding was highly localized and neither the levees nor the damns were stretched to the same capacity as in 1986.

How was this accomplished? First, the state surveyed how the water behaved, how it flowed, where it backed up when there was too much of it, how long it took to drain, and what was the effort needed in the clean-up. Once that data was compiled, the state was able to strategically strengthen its infrastructure by strengthening existing dams and reconfiguring its existing levee system to allow for better water flow and higher water levels. The state created contingency drainage capacity to relieve pressure on the system at the right time and right places, while also tactically deploying its assets to make the clean-up more effective.

Presiding over all of this is a comprehensive monitoring system that feeds real time data to authorities allowing them to quickly adjust the levers needed to control the situation. Oftentimes the difference between successful management of a situation or failure is measured in seconds, not minutes and not days.

In November 2008, the Federal Reserve introduced Quantitative Easing 1 (including The Troubled Asset Relief and Home Affordability Relief Program (TARP +HARP)). Mortgage rates tumbled from mid 6’s to a then unheard of 4.875% and mortgage volume spiked. Cycle times elongated, rate extensions were “covered” by the lender and there was a rush to hire mortgage personnel to handle the volume. Everyone was so busy that all we could do was complain about the inefficiencies in the process.  The levees were stretched. 

The deluge lasted for several years until rates spiked in the summer of 2013. Rinse and repeat; a similar pattern again starting in 2020. Each time rates trend higher, or move lower, the industry finds itself in the same position; unable to react to the market.

Why? How does a state as large and bureaucratic as California make the necessary adjustments to its infrastructure (even if over time) to better handle both the dry times and the wet times, but our industry struggles to do the same?

Investment in the dry times is the difference.

Think with me for a minute. Regardless of your position in the industry, we were all asking “why do we do it this way,” or “can we update our policy to make this better,” or “why is the system so slow today,” when the volume was more than we could handle. Then, too often when the volume wanes, the questions fade as well. Innovative thought process is replaced by fear of being laid off, strategic operations planning is usurped by louder voices with a sole focus on cutting costs; the clearly recognized need to update not just how we do things but why we do things gets lost in volume induced cycle time compression

The thought process of “we can’t make any changes right now because we are too busy,” gets replaced with “we won’t make any changes because we are too slow,” and so we wait for the perfect time to fix what is broken and that time never comes.

Our path to more effective management of our business has corollaries to how California improved its flood management. First, we MUST understand our data. How does the pipeline behave when at capacity? How do the loans flow through our process and pipeline? Where are the bottlenecks that had the most impact on cycle times? Was there a delay between process milestones, i.e., was it a system issue or a people issue? Finally, what did the clean-up look like when the storm passed?

Some lenders, even large ones, were decimated after the volume subsided. The flood of loans had been masking root-level business model issues (e.g., too dependent on refinance volume, reactive over staffing, unsustainable compensation models, etc…), and did so much damage to their cashflows and operations infrastructure, that by the time they reached the clean-up phase they were unable to salvage their business.  

Only when the ‘storm’ data is understood, can we begin to make plans and take actions that allow us to better manage the ebbs and flow in our business. Whether that is workflow adjustments, system integrations, dashboard reporting, real time predictive analytics, or strategic staff sourcing, just good old-fashioned butts in seats; the better we as an industry understand business behaviors the smarter, we can be at pulling the levers that allow us to better control the situation.

NOW is the time we should revisit what didn’t work when volumes were high. The opportunity to think outside of the box relative to engaging new partners, new systems, and to properly implement policy changes is now.  The imperative for a proactive, funded, and holistic approach assessing your business model is upon us.

At Accenture, we build and scale intelligent operating models to drive sustainable growth with speed, certainty, and security. The time to strengthen your infrastructure for the next wave of volume is now.

(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.)