Wilqo’s Tom Morelli on Where Technology Is Driving ROI–and Where It’s Not

Tom Morelli is Chief of Staff at Wilqo

As the industry changes, so does the cost of doing business. According to Freddie Mac’s 2024 Cost to Originate study, average origination costs have gone up 35% over the past three years, leaving origination costs incredibly high.

Compliance has become more complex and customer expectations continue to grow, so lenders are having to spend more time, effort and resources than ever before to keep up. While some of these rising costs are unavoidable, there are plenty of areas where lenders can save or even expand their capacity without using additional resources.

In general, as mortgage technology has evolved but not solved core issues, lenders are constantly bolting additional solutions onto their LOS to keep up. This not only adds to their tech spend but may also cause more harm to their efficiency than good. The more steps there are in a process, the longer it takes and the more it costs.

Especially as we approach a new year, it’s time for lenders to take a critical look at their business–and especially their tech–to see what’s driving ROI and what’s costing them in the long run.

Time

Before lenders begin to assess their tech stack, they should look at their process for inefficiencies and time savings. Mortgage lending as it is today is full of waste and unnecessary bottlenecks, the majority of which go unnoticed or are not visible given system constraints.

If you look at how legacy tech is set up, it forces a largely linear process, each milestone hinging on the one before, even though it does not have to. There is so much work waiting around to be completed when, in reality, many of the tasks in a loan can run concurrently, drastically reducing the time it takes to get a loan from application to close. There is a plethora of efficiencies that can be gained when it comes to wait time if lenders look internally then align with technology that enables this parallelization of workflow.

In association with waiting time is the opportunity to accurately assess handle time, which is all about setting a process expectation then understanding why the process can take longer or shorter than the expectation. Reflecting on this data can uncover employee-specific corrections that can be made, as well as highlight any processes that could be better optimized. Some employees may be working quickly because they figured out a better way but never shared their process, while others may be taking too long because of an issue with the loan or a hangup in certain steps of a process. Having visibility into handle times is a key piece of the efficiency puzzle that lenders should not overlook.

To save time, lenders should also ask themselves how much redundancy there is. Are multiple people being prompted to complete the same tasks? Is it taking upwards of 10 clicks to get somewhere that should be more accessible? Every unnecessary extra step costs time. Even something as simple as an extra click adds up when you think about how many people are spending that extra time on multiple loans.

It’s critical that lenders reach decisions quickly–both in approvals and in the fallout. The less time lenders are forced to spend on loans that ultimately do not close, the more time they have to serve borrowers who are actually benefiting the business. It’s not only about time, but it’s also about cost, too. These two go hand in hand. When lenders spend time working on loans that won’t make it to close, that costs them money and resources they could be using on more profitable business.

Automation

Automation is another area where lenders should consider time-saving opportunities. Even though they are in a digital format, how many tasks or processes are still largely manual? Tasks like keying in data or managing documents can cost a lot of time. Lenders must look at which tasks could benefit the most from automation and which ones don’t need it. Automation for automation’s sake does not create efficiency, but automation with a clear goal and benefit can make a world of difference. The critical question to ask is: What would make the mortgage truly digital, rather than just paper on a screen?

Borrower Experience

While time savings are the obvious draw of technology and automation, they bring other benefits to areas like the borrower experience. Lenders should never underestimate the importance of a borrower-friendly interface. Does your borrower-facing tech make it easier to do business with you, or does it add to the difficulty? Clunky, outdated portals not only slow borrowers down, but can make it incredibly frustrating to do business with you. Borrowers should be treated as a true party to the loan, with the option to be as hands-on or hands-off as they want to be, and technology makes the difference in giving borrowers easy access to timely information.

Every single touchpoint with a borrower shapes their experience, for better or for worse. Requesting documents borrowers have already sent in can diminish their confidence in their lender and sending updated documents again and again because of lender delays only adds to their headache. A great borrower experience makes the difference for repeat business or referrals, so it’s costly to overlook the borrower experience when it comes to technology and its workflows.

Compliance

Another area that’s costly to overlook is compliance. Errors may not have immediate consequences but can be expensive when they emerge down the road. No one wants a surprise when it’s time to service the loan or sell to an investor. Many compliance errors have implications for multiple loans, too. Even the smallest mistake can make a big mess if that error appears on dozens if not hundreds of loans.

Proactively approaching compliance saves wasted time down the road, but can go far beyond avoiding catastrophe. When compliance is a first priority, it can go from being a mere safeguard to a strategic advantage. High compliance standards help build a trusting reputation. Lenders that do not consider how technology can support those efforts may be missing out on a strategic differentiator.

Business Intelligence

The last place for lenders to assess is business intelligence. Lenders have so much data at their disposal. Is their technology helping them put that data to use? Data reveals indisputable inefficiencies and cost-saving opportunities​​ if lenders shift their mindset. It’s important to look at where they want to go and not just where they’ve always been. Data paints a clear picture of the here and now so lenders can see exactly what actions will help them reach their goals. Growth happens when lenders use their data insights to challenge existing processes, allowing them to move faster and work smarter.

Origination costs are high but they don’t need to be–in fact, they shouldn’t be. The right technology should be driving ROI instead of driving up costs. Lenders need to take inventory of where there is opportunity for improvement and consider how technology can help get them to where they want to be. The lenders that optimize now are the ones that will see the benefit to their bottom line and lead this industry into the future.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)