Production Labor Cost per Mortgage Originated
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Production Labor Cost per Mortgage Originated. Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Production Labor Cost per Mortgage Originated?
The total mortgage loan production personnel expense (all salary, commissions and benefits related to mortgage sales and origination) incurred by the organization divided by the total number of mortgage loans originated by the organization over the same period of time.
Why should Production Labor Cost per Mortgage Originated be measured?
Production Labor Cost per Mortgage Originated measures the average labor cost incurred by the organization to originate, or close, a single mortgage loan. Labor expenses typically comprise 55%-70% of total origination unit cost. High labor costs may be related to various organizational shortcomings, including: redundant job positions within the origination process (e.g., Loan Processors and Loan Specialists perform similar, overlapping tasks), low pull-through rates, extended closing cycle times and lower than average Loan Officer production volumes can all contribute to high labor costs on a per mortgage basis. Several common improvement opportunities can be addressed to reduce average labor cost per loan: simple and transparent KPIs to measure Loan Officer production, better methods to track loan documentation and status, standardized pre-approval checkpoints, and the use of alternate channels to collect borrower application data (e.g., the internet and mobile devices) can help to improve cost-effectiveness, efficiency and overall customer service levels.
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