They’re the superheroes of the mortgage industry: saving the day at the last minute and then vanishing into the night. Enter contract mortgage processors, the unsung stars of the mortgage process who keep costs down, bring the loan to fruition, and don’t expect to be a part of the team.
Hire Here, There & Everywhere
With the constant ebbs and flows of the market, it’s tough for mortgage originators to be as flexible as possible with costs. Especially when it comes to the choice of whether to hire an in-house mortgage processor, it all comes down to individual preference; originators toe the line between wanting a permanent staff member and also being able to engage and be flexible with the market.
“The main issue at hand is the hiring, training, and firing of someone: an LO doesn’t want to focus on that, they want to help clients,” said Chelsea Balak, vice president of operations at wemlo, a third-party processing company. “That’s a huge time suck which is inevitable if you have someone on staff.”
Balak says that wemlo works as a matchmaking service when pairing processors to brokers. “We actually give them a whole processing team,” she explained. “We first do an initial call with the broker or company to see how they work and so we can convey our own expectations to them. After the initial call, we assign [them] a primary processor, backup, and processing manager. So they really get that team mentality where if someone is out there’s always a backup.”
And that’s not when the matchmaking stops. Balak explained that each company’s culture and even the time zone their headquarters work in is taken into account when pairing a company with a processing team. “Our team knows about and is familiar with 15 loan products and about 30 lender portals,” she said. “We consider [when matchmaking] the products that the company uses and which processors have the best skill sets for the job.”
“What we really sell is that there’s the ability of flexibility to scale. [There’s] the ability to ramp up the processing team during a busy season and then when it slows down they don’t have to worry about layoffs.”
– Chelsea Balak, vice president of operations, wemlo
Scaling for Practicality
One main selling point is that contract processors operate on an as-needed basis. Balak says that her team at wemlo knows that the need for processors fluctuates cyclically with the market, and they use that to their advantage when marketing themselves to brokers.
“What we really sell is that there’s the ability of flexibility to scale,” she said. “[There’s] the ability to ramp up the processing team during a busy season, and then when it slows down they don’t have to worry about layoffs. This was especially beneficial for last year when the market started dropping halfway through the year.”
Balak also reminds that it’s cost-effective to hire a contract processor. “Wemlo employs our processors on salary and commission, so that’s how they earn their money,” she said. “An in-house processor means that the cost for them comes directly from the broker’s pocket and commission, but a contract processor is paid for by the borrower.”
Kim Kircher, director of processing at Secured Mortgage Processing (SMP), said hiring processors on a contract basis frees up the LO from having to “babysit” their loan originating team.
“Our team does the bulk of the work. We collect conditions, get the loan into underwriting, and [do] everything up until funding,” Kircher said. “We want to free up the LO so they can go get more leads instead of babysitting their file. It’s really on us to make sure the loan closes, and that the borrower has a good experience.”
Kircher has been with SMP for about four years and says that from her experience, brokers and originators always want to invest in contract processors, even in a sluggish market.
“They don’t want to pay for those in-house processors,” she said. “They’d rather have the borrower pay the processor fee and then be able to keep money in their pockets.”
Kircher added that SMP’s first customer was Arizona-based NEXA Mortgage.
Mike Kortas, NEXA’s president, said that having a contract processor affiliate frees up the loan officer, echoing Kircher.
“These contract processors allow us to focus on what we do best, originating loans, while their processors can focus on what they do best, getting to closing fast.” Kortas said. “These services [also] don’t raise the cost to the consumer over traditional processing fees at all, [which] allows for the loan officer and the consumer to both win in a way that is not possible when it comes to in-house processing”
Balak says that most of the processors for wemlo work out of the headquarters in Boca Raton, Fla.
“We prefer a team-building atmosphere, and it’s easier to collaborate in an in-person place,” she explained.
But Kircher’s team of processors at SMP are spread out. “Our workers are commission-based and all remote,” Kircher said. “That means they can be available whenever since they’re not worried about overtime, and they can work flexible hours to make sure the loan closes. When one of our processors takes a file, they know that they have to do whatever it takes to get the loan closed or they’re not getting paid.”
Since working remotely is considered risky behavior in the industry, Kircher says that SMP’s 120 processors have several rules to uphold while working from home.
“They’re expected to adhere to privacy and security policies. Since everything is web-based, they need antivirus malware to protect borrower information,” she said. “We use a CRM called BNTouch and shared drives so no one computer has a loan’s information on it. And we have a rule that if a processor is working at home at the same time as a spouse or roommate, they need to make sure that they’re working in a separate space to keep everyone’s information safe and private.”