Outsourced Mortgage Processing for a Mid-Size Mortgage Lender

Supporting mortgage processing and underwriting activities for a mortgage lender as it scaled annual loan volume from $1.2 billion to $2.0+ billion at a rapid pace.

Overview

A leading US mortgage lender saw the value of total loan originations grow from less than $1.2B in 2019 to over $2.0B in 2020

Amid the unprecedented market forces that spanned across all industries in 2020, our client was able to nearly double their origination volume. 

How were they able to leverage market trends in their favor? Were they able to add capacity to service a higher loan volume without detracting from profitability? 

Continue reading as we explore how our team at Assivo provided the people power this mortgage lender needed to navigate the turbulent markets of 2020 and remain a dominant player in the field.

The Challenge

After initial fears of a major market contraction in early 2020, the mortgage market actually rebounded significantly throughout the year, resulting in higher mortgage demand across the country. 

Mortgage demand had already spiked +18% from the previous year’s levels by June 2020, according to CNBC. In fact, a record-breaking $4.3 trillion in mortgages was originated in 2020, topping volume levels not previously seen since 2005. In just the fourth quarter alone, mortgage lending reached an all-time single-quarter high of $1.3 trillion in total lending. All in all, the total number of originated closed-end loans grew by 67.1% between 2019 and 2020, representing an increase of 5.3 million

While this would seemingly be an attractive benefit to mortgage lenders at the time, many–like our client–realized that they did not have the capacity among their internal team to support the rising demand. They did have a team of in-house mortgage processors, but these specialists were struggling to keep up with demand and could not support the volume that was coming in. 

Additionally, even if they were able to build up capacity over time through traditional hiring efforts, they feared the transitive market opportunity could pass by the time they were able to bolster their team. 

Their team knew they needed to find a way to build capacity quickly to support business growth–but in a sustainable and flexible manner.

The Solution

The client approached Assivo in mid-2020. The lender came to the realization that they lacked the in-house manpower to take advantage of the market trends and rising mortgage demand. 

To help them keep up with the volume, Assivo staffed an initial large team to assist with the loan origination process, including: 

  • Origination 
  • Servicing
  • Quality Control
  • Finance/Accounting Support

At all stages, we collaborated directly with the CEO, the CFO, and their underwriting and servicing professionals to tailor the solution to their unique needs. 

The lender’s team was at capacity during business hours, processing as much volume as they could during the day. As volumes started to rise, their turnaround times started slipping, dragging on customer satisfaction. 

Based on the Assivo team’s strategic geographic location, we were able to work the overnight shift for the lender, offering the lowest risk and highest ROI to the client. With this structure, we were able to integrate and add value quickly. 

Their specialists would walk in each morning to most of the work being completed by our staff using their lending criteria. They simply needed to check the work for quality control, finalize, and submit it. 

From there, we expanded to all 3 shifts, providing 24-hour support for the lender. By taking care of the rote, tedious work, our team was able to remove a large bottleneck for the lender, helping them process through loans more quickly while maintaining their accuracy.

The Result

After our initial engagement, the client discovered that they could outsource nearly 70% of their work for producing mortgages, with their in-house team supporting the remaining 30% of the workload. 

Assivo helped the lender optimize their labor stack. The client was able to retain their highest-performing US employees for essential tasks like important decision-making, tasks that require critical thinking, and interacting with their borrowers to enhance the customer experience. With the grunt work off their plate, we helped the client promote a better work environment for their in-house team with more satisfying and fulfilling work. 

Further, as we mentioned at the beginning, our client was able to double the value of their total loan originations from 2019 to 2020 by working with Assivo. This also includes nearly doubling the number of total loan originations they performed each month, from about 275 loans per month in 2019 to over 500 loans per month in 2020. 

Overall, the biggest benefits to the client were two-fold–both from a cost perspective and on a capacity level. The assistance with capacity came immediately, and the cost benefits were second. 

While other competing lenders expanded their internal hiring efforts to keep up with the jump in demand, they were met with higher fixed costs to cover payroll and other expenses related to supporting an in-house team. Once mortgage demand normalized and origination volumes fell, they still had employees to pay, leading many of our client’s peers to go through painful layoffs and high personnel costs. 

Instead, the client paid Assivo per loan origination. This structure allowed the client to convert fixed expenses to a variable costs for nearly 70% of their work. As a result, once the correction settled in, our client didn’t have to cut staff or downsize since a large portion of their costs were relative to their volume–unlike their competitors. For instance, by Q3 ‘22, the volume of mortgages secured had already shrunk to 1.97 million, down 19% from just the prior quarter and nearly 50% down from Q3 ‘21. 

The Assivo team is flexible, quickly scaling up or down in line with demand. So even though mortgage volumes have compressed since the height of 2020, our client has been able to retain their profitability in recent years through their new variable cost structure. 

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