Mortgage industry hiring well above year-ago levels in 1Q: LBA Ware

Year-over-year staffing gains remained elevated compared to pre-pandemic levels in the first quarter even though loan volumes retreated from more near-term record highs, LBA Ware’s latest quarterly data shows.

Users of the company’s compensation system found year-over-year processor headcounts in the first quarter were up 58% from a year ago. The number of registered loan officers increased by 32%. Comparable year-over-year gains for fourth-quarter 2020 were 51% and 27%, respectively.

The fact that hiring is still historically high and some lenders are reporting volume declines suggests the time is ripe for mortgage companies to start looking at why an increasingly automated industry hasn’t been more efficient, LBA Ware CEO Lori Brewer said.

“Based on the trends we saw, there’s room for improvement,” Brewer said.

Mortgage companies often lack the money to invest in operations when business is slow. They lack the time to implement more efficient technologies when business booms, so an inflection point in the business cycle can represent a sweet spot for workflow analysis and retooling.

Lenders may want to do this before there’s more financial strain from a change in the business cycle. Not only does volume tend to go down when that shift occurs, per-loan expenses can go up. For example, in the first quarter, average per-loan commissions fell 1.8% because they’re relatively lower for refinances and refis were still relatively heavy. The forecasted shift to a lower-volume market dominated by purchase loans that have higher commissions could change that.

To identify where efficiencies lie before that shift in the market goes too far, Brewer suggested the industry consider whether it’s got a “last mile” problem to solve similar to that experienced by companies like Amazon when shipping goods. The last mile refers to the point at which automation gets tough to apply.

“Someone still has to go through that doc package even though you pulled assets. Maybe there’s another bank account that you can’t get access from and you have all these roadblocks,” she said, citing one example. “We still have this chasm we have to get over, which is the back office.”

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