has announced that its Promontory Fulfillment Services (PFS) unit has developed a new online Cost Savings Calculator that lets banks, credit unions and mortgage companies quickly compute its own operational cost of residential mortgage loan origination and compare that to PFS’s outsourced solution.
The Cost Savings Calculator requires only a minimal amount of information: Number of loan units the institution originates per month; number and annual salary of full-time loan-production staff (processors, underwriters, closers and administrative staff); and the number and annual salary of support staff (compliance/legal, secondary marketing and technology).
The Calculator enables the institution to calculate its own cost of origination and shows what a similar cost would be if PFS managed their fulfillment process. The calculator only focuses on operational costs once the loan has come into the institution and does not factor in loan officer compensation, because it assumes the client will continue to prospect for the loans. In addition to the cost analysis, the calculator will also identify areas of the operation, such as compliance, which may be under-staffed and could create potential compliance risks.
“The Mortgage Bankers Association publishes a wealth of data on the cost of origination, and today the average is above $8,000 per loan, when LO compensation is factored in,” said Ken Janik, Head of Operations, Promontory Fulfillment Services. “But these are averages and they may or may not be the right benchmarks for different sized banks with different overhead structures and business models. Our calculator uses each institution’s own numbers and instantly delivers a client-specific answer.”
Bruce Witherell, Chief Executive Officer of Promontory Mortgage Path said, “In the last few months, we have seen a number of mid-tier banks exit the mortgage origination business because they couldn’t justify the low margins or stand the cyclicality of mortgage lending. Our new calculator lets executives do their own math, and in minutes, come to their own conclusions about their true processing costs. They can also see how they can competitively continue to offer mortgages as a product without maintaining a mortgage operation.”