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”