Percentage of Mortgage Loans Abandoned by Borrower

Percentage of Mortgage Loans Abandoned by Borrower

KPI Details

Percentage of Mortgage Loans Abandoned by Borrower measures the number of submitted mortgage applications approved by the lender, but is either not accepted or withdrawn by the potential borrower, in relation to the total number of mortgage loan applications approved over the same period of time. A relatively low value for this metric is typically related to a few common factors, including a lack of transparency during the approval process (e.g., not keeping borrowers informed of where in the process the loan is, not keeping borrowers informed of whether their application has been approved or denied, etc.), disagreements between the lender and the potential borrower over the conditions of the loan, general inefficiencies within application review and approval processes (e.g., poor written/oral instructions concerning what is needed to fill in the mortgage application, increased contacts due to missing or incorrect information or documentation, untimely contacts concerning missing or incorrect information, etc.), and sub-par mortgage underwriter training and performance. Each of these factors can overcomplicate loan processing procedures and the increase customer frustration and attrition rates.

KPI Definition

The number of submitted mortgage applications approved by the lender, but is either not accepted or withdrawn by the potential borrower, divided by the total number of mortgage loan applications approved over the same period of time, as a percentage.

KPI Best Practices

• Track the time allocation of loan officers to maximize time spent on prospecting and closing activities
• Regularly assess the mortgage rates of competitors to ensure you have appropriate rates for borrowers
• Analyze source of application submissions and why potential borrowers abandon their applications (despite being approved)

KPI Calculation Instructions Percentage of Mortgage Loans Abandoned by Borrower?

Two numbers are used to calculate this KPI: (1) the number of submitted mortgage applications approved by the lender, but is either not accepted or withdrawn by the potential borrower, and (2) the total number of mortgage loan applications approved over the same period of time. Include all mortgage applications completed by potential borrowers and submitted to the institution through any channel in the denominator. Include only new mortgages and refinances in this calculation (i.e., do not include home equity lines of credit or modifications); in most cases, new mortgages and refinances should be analyzed separately for this KPI.

KPI Formula :

(Number of Mortgage Applications that are Abandoned by the Borrower /Number of Mortgage Loan Applications Submitted) * 100