Having a positive and empowered mindset is what often sets successful people apart. In psychology, this is called your “locus of control.” When you have an internal locus of control, it means you believe that your actions and decisions are the main factors in determining your success. On the other hand, if you have an external locus of control, you might think that outside factors, like luck or other people, are the reasons for your achievements or setbacks.
In the unpredictable mortgage market, many lenders may unknowingly feel like their success is out of their hands. While this feeling is understandable, it’s important not to stay in that mindset for too long. Instead, focus on the areas of your business that you can control and make them the best they can be.
In this first part of our three-part series, we’ll talk about how you can take charge of your loan origination process. Here are some useful tips and tools that can help you do just that.
Tip #1: Take Charge of Your Prequalification Process
The prequalification process is often the first experience potential borrowers have with your mortgage business. It’s an important first step that can set the tone for their entire experience with you. Prequalification helps borrowers understand if they meet your basic requirements, without affecting their credit scores.
Since this is your first opportunity to make a positive impression, it’s crucial to make the process smooth and easy. One way to do this is by using an automated tool like Cascade Prequal. This tool can enhance your prequalification process in a few key ways:
1. Meeting Applicants’ Expectations: Borrowers expect fast, digital responses. Cascade Prequal helps you meet these expectations by quickly comparing applicants’ data with your eligibility criteria and providing instant feedback.
2. Lowering Credit Reporting Costs: FICO, the company that sets credit score standards, raised its prices last year. Some lenders are now paying up to four times more for credit reports. Since hard pull credit reports can be expensive, Cascade Prequel uses soft pull reports to give you the same insights at a lower cost. This way, you can assess applicants without overspending.
3. Avoiding Trigger Leads: When you pull a hard credit report, it can alert other lenders about your applicant, which might lead them to try and steal your business. Cascade Prequal uses soft pulls, which means your applicants won’t be exposed to competitors right away, giving you more time to build a relationship with them.
4. Building Relationships with Applicants: Not every borrower will qualify during their first prequalification attempt. Instead of turning them away with an immediate denial, you can provide them with helpful tips on how to improve their credit scores. This can turn a denied applicant into a future borrower who will remember your helpfulness.
Tip #2: Set Clear Guidelines for Credit Report Ordering
Another way to take control of your loan origination process is to carefully manage when and how you order credit reports. Here are a few questions to help guide this process:
- Do you always order credit reports from all three bureaus right away, or do you start with one bureau first?
- How often do you spend money on credit reports for applicants who don’t end up qualifying?
- Are you manually reviewing reports, or do you use an automated system to compare them to your eligibility criteria?
In some cases, you may only need information from one credit bureau to decide whether or not to proceed with an applicant. SmartSelect is a tool that can help you save money by making this process more efficient. Here’s how it works:
- You can set your own criteria, such as minimum credit scores or history of bankruptcy.
- Based on your criteria, SmartSelect will first pull a credit report from just one or two bureaus.
- If the first report meets your criteria, SmartSelect will automatically pull the next report.
- If the first report doesn’t meet your criteria, the process stops, saving you money on unnecessary reports.
By using SmartSelect, you can avoid spending money on credit reports that don’t provide useful information. It also integrates with your loan origination system (LOS), making it easier to manage all applicant data in one place.
Tip #3: Simplify Your Verification of Income and Employment Process
Another part of the loan origination process that can take up a lot of time is verifying applicants’ income and employment. If you’re manually contacting employers, this process can get complicated and slow. Luckily, you can automate this process with a tool like Cascade VOE.
Cascade VOE allows you to choose a list of trusted third-party verification vendors and set them up in your preferred order. When you need to verify someone’s income or employment, Cascade VOE will automatically contact the vendors and report back when they get a response.
This tool can save you time and money by ensuring you only use the lowest-cost vendors first. It also helps you get faster results, often within minutes, so you can keep things moving smoothly in your loan origination process.
Tip #4: Use Milestone Ordering to Streamline Your Workflow
While improving individual steps in your loan origination process is important, it’s also key to make sure these steps are in the right order. Milestone ordering helps you do this by ensuring that certain tasks only happen after others are completed. For example, you don’t want to start verifying employment too early in the process.
By using milestone ordering, you can make sure that your entire team follows a clear, efficient path through the loan origination process. This can help you avoid unnecessary steps and make your operations more consistent.
Tip #5: Monitor Undisclosed Debt to Prevent Surprises at Closing
The last thing you want is to reach the closing stage and discover that your borrower no longer qualifies due to new debt or changes in their financial situation. This can lead to expensive problems, such as having to repurchase the loan.
To avoid this, you can use Cascade Undisclosed Debt Monitoring (UDM). This tool helps you keep track of any new credit activity during the period between when the initial credit report is pulled and when the loan closes.
Cascade UDM sends you alerts and updates if it notices any changes in the borrower’s credit profile, helping you spot potential issues before it’s too late.
Taking Control with Certified Credit
By adopting an internal locus of control and using these tools and strategies, you can take charge of your loan origination process. Not only will this help you stay ahead during market fluctuations, but it can also make your business more efficient and successful.
If you’re ready to take control and improve your loan origination process, Certified Credit can
help. We offer a variety of automated tools and services to optimize your workflow, including credit reports, fraud support, and risk management. Reach out today to learn more about how we can help you streamline your mortgage lending operations.
