Case Study: SCA’s Credit Review Service vs. Full-Time Employment
Objective:
To evaluate the financial benefits of outsourcing credit review services on a per-file basis compared to employing a full-time mortgage underwriter with an annual salary of $75,000 plus additional expenses.
Current Model: Full-Time Mortgage Underwriter
Annual Salary: $75,000
Benefits (30% of salary): $22,500
Vacation (10 days paid): $3,000
Sick Time (5 days paid): $1,500
Occupancy Expense (allocated office space): $12,000
Training Expense: $1,000
Other Expenses (equipment, software, etc.): $2,000
Total Annual Cost: $117,000
Proposed Model: Outsourced Mortgage Loan Credit Review
Outsourcing Fee per Loan File: $375
Estimated Loan Files Per Year: 300
Total Annual Cost: $112,500
Analysis:
Cost Efficiency: Outsourcing can potentially save thousands annually compared to employing a full-time underwriter.
Scalability: Outsourcing allows for flexibility in scaling operations based on loan volume, reducing fixed costs.
Risk Management: Reduces the financial risk associated with employee benefits, training, and occupancy expenses.
Operational Efficiency: Outsourcing can streamline processes and improve turnaround times with specialized expertise.
Conclusion:
Transitioning to an outsourced mortgage loan underwriting model can provide financial savings, operational flexibility, and reduced risk. This model aligns costs directly with loan volume, ensuring expenses are proportional to business activity.
