Premier Member Editorial: Hidden Cost of Re-Engagement–Why Lenders Pay Twice for Abandoned Applications
Tim Nguyen is CEO & Co-Founder of BeSmartee, San Juan Capistrano, Calif.
After three difficult years, there’s finally reason for optimism: rates are at about their lowest point in over a year, MBA projects 11% origination growth in 2026, and lenders are returning to profitability.
But the lenders who thrive in the next cycle won’t be those spending the most on leads. They’ll be those who fix funnel leaks before the wave hits. And right now, one leak still drains growth from nearly every lender’s business.
The Silent Leak: Application Abandonment
Most lenders track submissions, locks, and funded loans but overlook a critical metric: Application Abandonment Rate, the percentage of borrowers who start but never finish an application.
If a borrower never finishes, they’ll never be submitted, locked, or funded. Many POS platforms convert only 60-75% of borrowers, while best-in-class platforms reach 80-85%. That gap represents hundreds of funded loans and millions in revenue.
Despite this, many lenders assume they can solve abandonment after it happens by chasing borrowers back into the funnel. But, that’s where the real cost begins.
The Industry’s Favorite Myth: We’ll Just Re-Engage Them
Let’s start with the truth: almost no public data exists on how many abandoned mortgage applications return to the same lender because most lenders don’t measure it. That means we have to derive a realistic picture from adjacent data.
Mortgage / Home Equity / Digital Banking
Reports from MortgagePoint, Coviance, and MeridianLink show roughly 50% of abandoned borrowers take their business elsewhere, meaning half are gone before re-engagement even starts.
E-Commerce
Even in low-friction e-commerce, abandoned cart recovery campaigns convert only 3-5% of users; a useful floor for re-engagement expectations.
A Realistic Assumption
BeSmartee’s internal surveys show 15-40% of abandoned borrowers eventually return. For modeling, we’ll use 30% as a conservative baseline that’s well below the theoretical 50% ceiling but far above the single-digit e-commerce norm.
Therefore, even in the best case, most abandoned borrowers never come back. And the ones who do are expensive to win back, which is exactly why measuring Re-Engagement Cost per Abandoned Application (RCPA) matters.
RCPA: The Hidden Cost You’re Not Tracking
If application abandonment is the leak in your funnel, Re-Engagement Cost per Abandoned Application (RCPA) tells you how much that leak costs.
RCPA = Total annual re-engagement cost / Total number of abandoned applications
Re-Engagement isn’t just a marketing follow-up, it’s a complex, cross-department process. Because costs are scattered across the organization, most lenders underestimate what they spend. A proper RCPA calculation should include:
| Cost Center | Description |
| Marketing tools and automation | CRM platforms, nurture campaigns, SMS/email tools, and retargeting software |
| Sales and loan officer time | Hours spent chasing cold leads instead of originating new loans, including salary and commission costs |
| Remarketing and incentives | Paid media, offers, and campaigns aimed at re-engaging borrowers |
| System administration | Time spent configuring, integrating, and maintaining follow-up systems and workflows |
| Daily operations and monitoring | Staff time spent reviewing abandonment queues, triggering manual follow-ups, and handling exceptions |
Add these up and you see that re-engagement isn’t a single task, it’s a costly ecosystem devoted to fixing a problem that could have been prevented earlier.
If you’re spending hundreds of thousands annually on these activities and only ~30% of abandoned borrowers return, you’re paying a premium for second chances. Those resources could instead improve borrower experience, boost conversion, or scale partnerships.
The Real Cost: A Simple Example
Here’s a realistic example showing how RCPA exposes the true cost of chasing lost borrowers.
Scenario Assumptions:
• 10,000 applications started annually
• 30% abandonment (3,000 borrowers)
• 30% re-engagement (900 borrowers)
Below is a representative breakdown of annual re-engagement expenses for a mid-sized lender:
| Cost Center | Estimated Annual Cost |
| Marketing tools and automation | $50,000 |
| Sales and loan officer time | $60,000 |
| Remarketing and incentives | $30,000 |
| System administration | $75,000 |
| Daily operations and monitoring | $35,000 |
| Total Annual Re-Engagement Cost: | $250,000 |
With $250,000 spent annually and 3,000 abandoned borrowers, we calculate:
RCPA = $250,000 / 3,000 = $83 per abandoned application
But remember: only ~30% of abandoned borrowers re-engage. That means the effective cost per re-engaged borrower skyrockets:
$250,000 / 900 = $278 per re-engaged borrower
Re-engagement is not cheap. You’re spending nearly $280 per borrower just to re-enter the conversation, and often for a lead you already paid to acquire. And because these costs repeat annually, RCPA highlights a structural drag on profitability that compounds over time.
The Ripple Effect: Why RCPA Is More Than Just a Cost
This hidden cost isn’t only financial; it’s also measured in time and opportunity:
• Time-to-Pipeline Delay: Borrowers who re-engage typically take weeks longer to enter the pipeline. That delay erodes urgency, opens the door for competitors, and makes forecasting harder.
• Lower Conversion Odds: Re-Engaged borrowers are less likely to convert. Their motivation may have cooled, they may have gone elsewhere, or their financial situation may have changed.
• Capacity Drain: Every hour chasing abandoned files is an hour not spent on high-intent borrowers, or building new referral relationships.
This is why the “we’ll just re-engage them” mindset is dangerous. It creates an illusion of control while quietly draining profit margins and slowing down the business.
Fix the Leak Before the Wave Hits
The good news: RCPA is controllable. Reducing it doesn’t require more staff or marketing; it starts with prevention.
Every borrower who completes the application on the first try is one less you have to chase. Every 5-point improvement in completion reduces your RCPA. And every dollar you save on re-engagement can be reinvested into growth.
Here’s how lenders can start measuring and using RCPA today:
• Calculate total annual re-engagement costs. Include tools, people, campaigns, and overhead.
• Divide by total abandoned applications. This gives you your baseline RCPA.
• Track it quarterly. Watch how it changes as you improve your application experience.
• Correlate it with cost per funded loan. As RCPA falls, total acquisition costs should too.
RCPA doesn’t replace metrics like application-to-submission. It complements them, revealing hidden inefficiencies they don’t capture.
Don’t Pay Twice
The next origination wave is coming. Volume will rise. Competition will intensify. The lenders who win won’t just buy more leads, they’ll convert more of the ones they already have.
If your strategy depends on chasing abandoners, you’re already behind. While you pay to win them back, competitors will use that money and time to close new loans.
Application abandonment isn’t just lost revenue; it’s wasted spend and stolen capacity. The question isn’t whether the next wave will come. It’s whether your bucket will still have holes when it does.
(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.)
