Mortgage Lending & Banking Best Practices

Proven Mortgage Lending Leading Practices to Adopt

  • Best Practices (#224) / Mortgage Lending / Mortgage Sales

    Best Practice (Good)
    Develop and implement loan officer certification programs for new and existing salespeople. Run these programs yearly to keep up with new policies, regulations and company culture.
    Typical Practice (Bad)
    Rely on experience and knowledge accumulated by loan officers and sales personnel to drive the efficiency of loan origination and processing.
    Benefits: Improves loan processing and origination cycle times, and keeps sales personnel up to date on leading practices and industry regulations.
  • Best Practices (#225) / Mortgage Lending / Mortgage Sales

    Best Practice (Good)
    Organize and use a prospecting team to contact potential customers in an attempt to convert them to borrowers, as well as using a sales force that reaches out to prospects who have expressed interest in the bank's mortgage lending services.
    Typical Practice (Bad)
    Only follow up with prospects who submit inquiries and sales interviews, converting them into loan applications. Sales teams, loan officers and branch managers should do not proactively seek out potential customers to convert.
    Benefits: The use of dedicated prospecting teams has consistently proven to yield higher returns in new business than the universal banker concept, particularly in small-business lending and mortgage origination.
  • Best Practices (#227) / Mortgage Lending / Mortgage Loan Operations

    Best Practice (Good)
    Document and publish (on company intranet, or similar) all loan processing and servicing routines across the organization for training purposes and operational consistency.
    Typical Practice (Bad)
    Allow Mortgage Loan Operation employees to train entry-level staff as they are hired on using their own ‘tribal knowledge’ and accumulated experience.
    Benefits: Helps to standardize loan processing activities across the organization and provides an easy-to-use guide for training and best practice implementation.
  • Best Practices (#228) / Mortgage Lending / Mortgage Loan Operations

    Best Practice (Good)
    Have Mortgage Loan Operation employees spend less than 20% of their time on application data gathering, product servicing and document collection activities. Hire low-level staff to deal solely with those activities.
    Typical Practice (Bad)
    Be sure that Mortgage Loan Operation employees spend around 50% of their time on application data gathering, product servicing and document collection activities.
    Benefits: Frees up loan origination and sales force employees to focus on more high-value tasks, such as new business development, cross-selling and proactive customer service.
  • Best Practices (#229) / Mortgage Lending / Mortgage Loan Operations

    Best Practice (Good)
    Develop a triage process for underwriting incoming applications, sending simpler files through an automated underwriting system or an entry-level underwriter, while assigning more difficult files to more senior, experienced underwriting staff.
    Typical Practice (Bad)
    Assign incoming applications to underwriting staff arbitrarily and allow them to use their experience and judgment to guide them through the underwriting process.
    Benefits: Improves underwriting cycle time and accuracy, and frees up senior underwriting staff to work on more complex, difficult underwriting tasks.
  • Best Practices (#230) / Mortgage Lending / Mortgage Loan Servicing

    Best Practice (Good)
    Establish a single point of contact (a loan servicing employee) for each borrower, especially those in default or undergoing loan modifications.
    Typical Practice (Bad)
    Allow mortgage servicing staff to field inquiries and make contact with borrowers on an as-needed basis, without assigning each borrower to a single servicing employee.
    Benefits: Improves overall customer service and loan servicing effectiveness while ensuring that loan servicing employees understand the situation and tendencies of their assigned borrowers.
  • Best Practices (#231) / Mortgage Lending / Mortgage Loan Servicing

    Best Practice (Good)
    Create a standardized policy for tracking customer contacts and keeping records of their information and interactions with the Mortgage Loan Servicing Group.
    Typical Practice (Bad)
    Pay no mind to tracking customer contacts and record keeping.
    Benefits: Decreases time needed to look up customer and loan information, decreasing the overall time taken to resolve their issue or answer the customer's question. Increases customer satisfaction and minimizes the duplicate entry error rate for tracking point of contacts.
  • Best Practices (#232) / Mortgage Lending / Mortgage Loan Defaults

    Best Practice (Good)
    Organize a dedicated group of customer-facing associates that are trained specifically to deal with questions regarding defaulted loans and implement a policy that will ensure the department will direct relevant questions customers have to that group.
    Typical Practice (Bad)
    Do not have the Default team use a single point of contact approach to handling customer issues and support. It is ok for customers to be transferred between departments with little resolution success.
    Benefits: Decreases total resolution time by connecting customers with default service specialists, which also decreases the time the rest of the department spends attempting to identify an associate who can answer customers' questions. Increases customer satisfaction and the likelihood that accounts that are defaulted will be offered solutions to regain good standing on their loan.
  • Best Practices (#233) / Mortgage Lending / Mortgage Loan Defaults

    Best Practice (Good)
    Direct all questions regarding the effects of defaulting (e.g., foreclosures) to the Mortgage Loan Defaults Group, which should have a dedicated group of associates trained to handle customer questions and default resolution strategies.
    Typical Practice (Bad)
    Simplify rules for the foreclosure waiver process so they can be taught to all customer service representatives.
    Benefits: Increases customer issue resolution time as customers are directly connected with the associates most specialized in account defaults. This in turn increases customer service and customer knowledge of default processes and issues, and whether or not there is a suite of options available to them to correct their default.
  • Best Practices (#234) / Mortgage Lending / Secondary/Wholesale Mortgage Sales

    Best Practice (Good)
    Implement a single, flexible mortgage-backed securities (MBS) pricing model across the entire organization and assess the performance and accuracy of the model on a monthly basis.
    Typical Practice (Bad)
    Allow staff across geographic regions and organizational areas to use mortgage-backed securities (MBS) pricing models that they prefer and are familiar with.
    Benefits: Standardizes the valuation of mortgage-backed securities across the organization and allows for quick adjustments in the configuration of the models used in MBS valuations.
  • Best Practices (#235) / Mortgage Lending / Secondary/Wholesale Mortgage Sales

    Best Practice (Good)
    Develop a quality compliance group/position and standardize quality assurance reviews for investor reporting. Organize these reviews after the points in the reporting process that produce the most errors.
    Typical Practice (Bad)
    Do not be alarmed that investor reporting has many last-minute errors and a 20% correction rate. Rework is a normal in the workplace.
    Benefits: Decreases cycle time for investor reporting, increasing investor satisfaction. Minimizes the amount of rework needed for reporting by catching errors initially and reduces issue identification time by having a straightforward, standardized set of quality benchmarks to adhere to.

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