How Are Mortgage Lenders Restoring Profits In Dodd-Frank Act?

Restoring Profits in The Dodd-Frank Era? How do we do that? Where did the "profits" go? And what exactly is the Dodd-Frank Act?

July 21, 2010 -  [H.R. 4173] "To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail," to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."

The 2008 Financial Crisis, which generated the Great Recession of 2009, was kicked off by the failure of many banks around the globe after the sub-prime mortgage implosion. It sent the world's financial markets and institutions into a tailspin. When the dust settled, there was a popular demand for protection for borrowers, the tax-paying public, and even Mortgage Lenders that this debacle never is repeated. Thus, was born the Dodd-Frank Act. And a deluge of regulations to give the act some teeth.

Of course, this created additional Compliance Costs for much of the Lending Process. Significant costs. And those costs couldn't be easily absorbed, so there needed to be a way to offset them. But how?

How Mortgage Lenders Make Lending Process More Profitable?

If it seems like the odds are stacked against Lenders making a profit with the double whammy of Dodd-Frank and Covid 19, well, that's one way to look at it. But on the other hand, there are ways to turn this adversity into an advantage if you know just what to do. How about trying:

• Improve the process to control costs - Streamline your workflow, starting with a hard look at your existing procedures. Even in the best of shops, there are usually some savings to be had. Is everyone working at maximum efficiency? Is everyone up to date on their training? Are there some things that can be outsourced? Outsourcing can often save up to 40% over in-house work. That savings quickly adds up. When considering outsourcing, make sure you take a deep dive into the qualifications of your potential partner. Not all outsourcing firms are equal; many may be too specialized and not set up or experienced in mortgage processing.
• Use technology to Increase customer loyalty - Think of this as a way to use the newest tech to make more connections with your existing and potential new customers. Your firm can be available to customers more of the day using today's tech tools. And today's borrowers are expecting that convenience. Streamline the process by using AI and moving to a digital mortgage way of doing business. That will reduce costs. And if you're not really sure if this is the right time to go all-digital, stick your toes in the water by trying out an outsourcing firm that is all digital. Make online access to loan information instantly available. Offer electronic document submission to borrowers. And start using 24/7 customer support.
• Scalable processes based on customer requirements - One of the critical advantages of a partnership with a Mortgage BPO is their ability to scale resources to fit the need and instantly do that. Imagine the savings when a new position doesn't require advertising, hiring, training, payroll taxes, vacation time, etcetera. And that new position can be shed when there's no longer a need for additional workers, or conversely, add another position when the market is hot and extra hands are really needed.
• Strategic partnerships to maximize time - And a strategic partnership with a capable, experienced mortgage outsourcing partner offers all many advantages. And they can handle all the Mortgage Loan Processing, not just the application but also the closing and post-closing. Leaving you and your team more time to be selling those mortgages.
• Outsourcing Mortgage Processing - Can be a lifesaver for your overstretched, overworked staff, especially if processing mortgages takes away time from selling mortgages.

What Have We Learned?

In the scramble to start Restoring Profits in The Dodd-Frank Era, lenders and brokers knew that ultimately the Act would benefit everyone in the mortgage process. After all, defaulting on a mortgage costs everyone, not just the borrower. Lenders lost money on the default as well. But formulating a way to offset the additional expenses that the Act created was not only necessary, but it was also vital. Among the various fixes, outsourcing all or part of the mortgage process makes a lot of sense. There are many options in outsourcing, and it's not a one size fits all proposition. If you need help with your bottom line, take a hard look at Mortgage Process Outsourcing and see if it will suit your needs.