Time To Reassess?

by: Bill Dolan, CMB, AMP

Mortgage interest rates continue to escalate skyward with a national 30-year fixed rate mortgage teetering at the 5% mark, the highest level since 2018. At the same time, the Mortgage Bankers Association (MBA) recently reported a net profit gain of only $1100.00 per mortgage in the fourth quarter of 2021 compared to a reported profit gain of $2594.00 per loan in the third quarter of 2021. Couple this with an average cost-to-originate reaching close to $9500.00 for year-end 2021 and it is not a pretty picture forging ahead into 2022.

The question that needs to be asked is, ‘How do I reduce my overall mortgage cost and trim my expenses?” Cost cutting is the measure used by financial institutions and companies to reduce its expenses and improve profitability.

When facing an economic downturn, many look to enact cost cutting measures that may include employee layoffs, reducing employee pay, closing branch facilities, downsizing offices, and streamlining supply chain and professional services such as marketing and advertising.

It is important however, to not throw the baby out with the bath water. You don’t want to overcut costs leaving you unprepared for increased demand or in a position where you may incur additional costs. Believe it or not, implementing outside professional services can be a cost cutting method where many functions performed in your backroom operations can be outsourced and far less costly allowing you to reduce employee labor and employee benefits, a real cost killer today.

Your cost cutting might be driven by a desire to price your products or services more competitively, to improve financial performance, or to better serve your customers. The decision is NEVER simple. But if you can reduce your costs while maintaining or improving your quality, then that is a no-brainer.

Did you know that SCA offers services that will help you reduce those backroom expenses within your mortgage operation? Just to name a few:

•  Pre-funding Quality Control                         • Post-Closing Reviews

•  Quality Control                                                 •  HMDA Analysis Reviews

•  Credit Reviews                                                 • Compliance Reviews

Its time to take a real look at your backroom operations and to partner with SCA and your organization to reduce your expenses and improve profitability.

For a free consultation to discuss these and other consulting and technology services that SCA provides, contact Bill Dolan, Director, at (617)694-2617 or visit our website at www.scapartnering.com