Making the real estate industry more efficient

Blog

Why It Makes Sense To Outsource The Pre-Approval Process

Blog 52

In a post last month, we suggested that when it comes to business process outsourcing (BPO) consideration should be given to outsourcing steps as well as whole processes. The examples we provided of steps ideally suited for outsourcing focused largely on steps performed by the settlement agent. With this post we will look at a step that every lender has to perform, the pre-processing/ pre-approval of potential borrowers, and look at some of the benefits outsourcing this one step can bring.

For purposes of this post, we’ll define the pre-approval step as the first step in the mortgage process that primarily involves data collection and indexing. Loan Officers or Loan Processors work with the potential borrower to collect the required income and asset documentation. Credit reports are run, W-2s and pay stubs are collected along with the initial loan application, federal tax returns and bank statements. This collected information is entered by the Loan Officer or Processor in your loan origination software and sent to underwriting for pre-approval. This step is completed when underwriting provides the pre-approval. Weeks, or possibly months, later, after having found the home of their dreams, the borrower returns to complete the remaining steps to close the loan.

By outsourcing this pre-approval step to a firm such as String, lenders can realize a number of benefits including:

  • Focusing your staff and resources on your core business

By outsourcing the labor- intensive data collection and indexing work of the pre-approval step to a BPO provider, you can free up your staff’s time. Instead of running down documentation from potential borrowers and uploading such into your LOS, your Loan Officers can focus their time and effort on generating new business.

  • Reduce Overhead

An outsource provider’s staffing expense is, in most cases, significantly less than the expense to maintain similarly trained staff in house. This cost savings is passed on to you, resulting in reduced staffing expense. In addition, while the outsource provider’s staff acts as an extension of your team, you are not responsible for leasing and maintaining office space for these additional team members.  That falls on the outsource provider. As such, you benefit from adding staff without having to add office overhead expense.

  • Scalability

The goal of most lenders is to grow their base of potential borrowers. Yet a rapid influx of potential borrowers looking for pre-approvals could overwhelm in house staff and negatively impact customer service or, worse yet, limit a lender’s ability to grow. With most outsource providers maintaining extra staff capacity, any influx in your business can be met with immediate access to additional processing staff. Conversely, if your business levels decline, staff can be removed with none of the hassles of having to lay off in house staff.

  • Improve Turnaround Times

Outsource providers often operate their teams on a 24-hour/ 365 day a year schedule. With this level of coverage, documentation provided by your potential borrower today can be entered in your LOS and sent to underwriting immediately. With documentation available sooner, pre-approval decisions can be made faster, resulting in shorter turnaround times.

  • Improve Customer Satisfaction

With faster turnaround times realized through outsourcing, your potential buyers will be pre-approved in a timelier manner. While your competitors are still collecting and entering data, your potential borrower will already be out looking for the home of their dreams.