The real estate downturn continues to have dire consequences for industry professionals across the board — from bank loan officers and mortgage brokers to loan processors and bank account representatives. Those who have not been laid off either find themselves looking for another job or struggling to make sales at a time when the market is at its lowest point in 10 years.
That’s not to say there aren’t signs of hope. Housing markets in Texas, Oklahoma, Maryland, and North Carolina are still productive, and a burgeoning market in mortgage refinancing, estimated to be worth about $18 billion, will dwarf the past returns of the subprime market, even at its height in 2003-2004.
Thus, the real estate market may be down, but it certainly isn’t out. In fact, the market could improve over the next 12 to 18 months. By midsummer this year, some speculate the tide may already have turned, and our economy will be past the point of recession. However, new industry and federal regulations and guidelines, the wariness of lenders, and fundamental changes to the market itself necessitate a shift in strategy for mortgage professionals.
Today, the mantra is “adapt or perish.” And the answer is “virtual third-party processing.”
But what is third-party processing, and how does it help the industry? And furthermore, what does it offer professionals who have been laid off or are simply looking for new, more successful employment?
Virtual third-party processing is an upgrade to the old process of doing business in the mortgage industry necessitated by the current environment. Until recently, applying for a home mortgage was little more than a crapshoot, as a broker sent in multiple applications for a borrower to various lenders and hoped for the best. Most of these applications were D.O.A. for one reason or another — poor income verification, faulty appraisals, mistakes in the paperwork, etc.
For brokers and consumers, the cost was wasted time. For lenders, the price was considerably higher, as each loan application costs $2,500 to $3,500 to process, whether it is viable or not. Major wholesale lenders like Countrywide, Bank of America, and Bear Stearns may have lost millions processing bad loan applications — applications that had little or no chance of being approved — over the past few years.
With the new system of virtual third-party processing, like the one developed by Use Einstein Processing Solutions, a virtually linked network of highly talented loan processors with extensive experience in wholesale lending (who operate from home offices across the country), act as the go-between for brokers and bank account representatives. A third-party processor (3pp) works directly with the broker and consumer to compile an accurate and complete loan application, verifies key information such as proof of income and the appraisal, and then aligns, or “matches,” it with the appropriate wholesale lender.
With a 3pp, the mortgage application process is much more targeted and efficient, and increases approval success from the current 38% to 80 or 90%. This is especially true in light of new industry-wide developments like the new Universal Closing Instructions, possible federal mandates, the shift from stated income to income verification, tighter in-house regulations on loan apps from banks, the new market in refis, and new opportunities with FHA financing.
The new virtual 3pp is a necessary evolution in the real estate market and offers real employment potential to professionals in the real estate lending industry. Use Einstein Processing Solutions, the company behind the new strategy, plans to capitalize on the enormous talent pool that currently exists of mortgage industry professionals who have been laid off or who are considering a new line of work.
By working smarter and more efficiently, a 3pp is able to maintain steady sales — through refis and standard home loans — even during tough times. It’s a great way for industry professionals to maintain their experience, rather than taking a 12-month absence to pursue other work while they wait for the market to correct itself.
About the Author
Robert Marley, managing director of Use Einstein Processing Solutions, LLC, has spent 20 years in the industry on the lending side, including with firms such as Bear Stearns, Countrywide, and Finance America. With Einstein, Marley has created the first nationwide virtual third-party processing network to help brokers better align home loan apps with wholesale lenders, increasing the acceptance rate on loans, reducing broker costs and time, and reducing expenses on the lender side, too. For more information, please visit www.useeinstein.com or call (954) 345-7600.
