Mortgage operations executives are encountering challenges not only with maintaining productivity but measuring it as well, according to the March 2021 Insights Report from mortgage advisory firm STRATMOR Group.
In his article, “People, Productivity and Compensation: 2021 Mortgage Ops Challenges,” STRATMOR Group Senior Partner Jim Cameron detailed these and other challenges which were discussed in recent STRATMOR Operations Workshops with 120 executives.
For example, the workshop participants, who represented 49 different lenders, significantly overestimated the productivity of their processors, underwriters and closers, according to the report.
After participants were asked to estimate the productivity of their processors, underwriters and closers, STRATMOR compared their responses to the calculated productivity of full-time employees for these positions based on quarterly application and closed loan data submitted by participants.
“For Q2, Q3 and Q4 2020, with only one exception, executives believed that processor, underwriter and closer productivity was much higher than the data would indicate, especially in the processor and closer categories,” Cameron wrote.
The company’s senior partner attributes the disconnect to how processors, underwriters and closers are defined and the roles that are included in these fulfillment areas, as well as the recent trend to use more task-based processing which entails “peeling off’ certain tasks and activities and assigning them to less experienced staff who are easier to hire.
“All that makes good business sense, but it also adds additional bodies into the mortgage fulfillment factory, and all staff must be accounted for to arrive at true productivity metrics,” Cameron said. “Operations executives tend to forget about the additional employees added into the fulfillment process when quoting or thinking about productivity metrics. That, in our view, is the reason for the disconnect between their view of productivity versus the actual calculated metrics.”
Cameron notes that the STRATMOR workshop data showed that processing and underwriting remained the largest bottlenecks during the first quarter of the year. However, while operations executives are still busy recruiting to meet demand, the hiring spree may be cresting.
“For the first time in nine months, executives in our most recent workshop sessions in February indicated that, while still going strong, hiring has slowed down for some,” he wrote.
Of the lenders who participated in the workshop, 61 percent paid signing bonuses to new underwriters, citing various reasons for doing so. And according to Cameron, work from home protocols will have long term impacts on industry labor costs, as workshop participants see the industry moving toward a “new normal” following the pandemic. Two of the impacts, he writes, may be reduced compensation costs and higher turnover.