by Tyler Sherman | CEO, Motivity Solutions
Do you rank your top producers solely based on units or volume? Changes to loan officer compensation rules have drastically altered the dynamics between employee and employer. A natural, synergistic bond once existed between the loan officer and the lender. Both parties were aligned to maximize price and minimize revenue loss during the loan transaction. However, this paradigm has now shifted to a one-sided relationship where the lender is stuck with the majority of the financial risk on every transaction. Each revenue loss that occurs between the lock and the closing is borne solely by the lender.
In the aftermath of the mortgage meltdown, investors, regulators and borrowers are all demanding more transparency and accountability from lenders. To effectively create this, lenders need to broaden their focus.
Volume is still important, but quality and customer satisfaction also play an important role as loan officer performance is being assessed. Scorecards are the optimal business intelligence tool to provide this assessment.
Michael Brady :: CIO/EVP
Howard Sackson :: EVP / COO / CIO
FIRST CALIFORNIA MORTGAGE
A truly effective scorecard is a comprehensive balance of the following metrics.
- Volume: Tracking this end result is important; however, all of the activities that lead up to the result are also valuable information. In other words, the actual outcome is ultimately the result of an accumulation of activities that drove that result. What activities took place and how many were required for a successful outcome?
- Quality: Loan officers should also be accountable for the thoroughness of the prequalification process as well as completeness of the files that they submit to processing. These quality metrics include pull-through ratios, number of conditions per file, number of lock extensions, cycle times and how many loans achieved a “first submission” approval rating.
- Customer satisfaction: It is imperative for the lender to conduct surveys to determine loan officer performance from a customer-satisfaction perspective as well as from their peer employees. Is the loan officer easy to work with? Does he or she represent the company well and adhere to policies? These are critical performance factors that provide a clear, overall picture of total performance. If you are still measuring your sales team based on volume alone, the wrong people are likely being recognized.
For all these reasons and more, lenders should leverage technology to automate the creation of these scorecards, as they can expect immediate return on investment from their use. Once the lender has this visibility, targeted and effective training programs can be instituted to continuously improve performance and change behaviors accordingly.
This unprecedented level of visibility allows lenders to track the activity of every loan originator. The technology even translates these scorecards into dashboards that can be viewed by upper management. As lenders look for more control over their loan process, they are finding that this is simply not possible if you first don’t have a total picture of everything that’s going on within your lending institution.
Why is this loan originator score-card technology so important? We take a look at that next week.