How partnering with a consultant might save your business

Taking a Critical Look at Operations: How partnering with a consultant might save your business By Pete Butler, Executive Managing Director, Business Unit Head Wipro Mortgage Digital Operations & Platforms and Opus Capital Markets Consultants, LLC Since 2008, the mortgage industry has changed drastically, and continues to evolve with a current uptick of volume. As new buyers enter the market and residential prices continue to increase, so has the cost per loan, which has risen steadily year over year. As lenders look to handle higher volume and streamline processes, they should also think strategically about the best ways to reduce their overhead and create lean operations to manage seasonal peaks and valleys. Partnering with consultants to identify potential process improvements is one ideal method to create better operations and reduce the cost per loan. Often, when looking inward, many lenders miss out on best practices and do not realize their own blind spots in processes and procedures. By working with a consulting group, individual lenders earn an industry-wide perspective based on consultants’ understanding of marketplace best practices. In addition to this, lenders frequently learn ways to make better use of their staff, deploy their technology more successfully and reduce their compliance risks, all while lowering operational costs. Working with a Consultant Many businesses are hesitant to embrace any significant change; however, in this competitive environment, lenders should be comfortable with the idea that their operations need to evolve over time. When working with consultants, lenders need to dedicate a certain amount of time to the consultants’ discovery processes, which can include extensive onsite evaluations and a review of the current technology. By looking at an individual loan’s lifecycle, consultants will evaluate points of potential inefficiency or processes that need to change, first in origination operations, then in servicing. During this consulting process, these experts can also help lenders identify regulatory compliance best practices for end-to-end operations, including how to create change management procedures for the inevitable regulatory changes in the industry. Similarly, consultants can identify areas of potential risk, whether related to regulatory issues or data management, and offer solutions to reduce those risks. Taking Advantage of a Fresh perspective While consulting with experts can disrupt operations, it is difficult to overstate the value of bringing in outsiders for a fresh point of view. These unbiased consultants have no personal agenda or political objectives other than identifying best practices to save the lender time and resources. Many times, the changes consultants recommend may disrupt processes that important individuals in the company recommended years ago, and lower level employees have been too afraid to question. These personal ties to operational procedures, or even technology contracts, are one of the obstacles to a company’s success, and an unbiased outsider can easily recommend change without fallout. Taking a Strategic Look at Staff Occasionally, the presence of consultants can make employees uneasy, since consulting and reorganization or downsizing departments are often unfairly correlated. However, during this period of low unemployment, talented employees are hard to find, and employers are often eager to reallocate any talented employees whose roles might be disrupted by change. This reallocation can often be one of the biggest benefits of process improvement, through which lenders can identify which departments are understaffed and shift resources to address those needs as other departments create better operational efficiencies. As consultants review operations, they often make recommendations on leading edge technology solutions that can work in harmony with existing lender technology, if desired, to help streamline processes and reduce manual labor, further freeing valuable staff. By focusing employees on more strategic tasks, such as quality control instead of data entry, these employees often show a dramatic increase in job satisfaction. Shifting Team Structures Many times, consultants recommend implementing team structures as a source of improvement. In particular, they recommend that the originations department have structured teams instead of having underwriters, processors and closers working in isolation. Similarly, having loan officers assigned to groups can be most efficient. These teams work best if all members are located in the same physical office, with the exception of underwriters, who can operate successfully from remote locations, yet still be teamed. The Potential for Offshoring Consultants may recommend building a hybrid onshore/offshore approach to underwriting, especially if lenders are concerned about the rising cost per loan. In most cases, the quality of work from these underwriters is as high as onshore workers, but at a reduced cost. For those concerned about quality control, taking the entire process primarily offshore may not be the best solution due to various challenges, not the least of which are licensing requirements by some states. By using this hybrid approach, some lenders have reported reducing their cost per loan to below half of the national average, and depending on the product type, it could be below $2,000 per loan. Implementing New Technology As with staffing structures, consultants often look closely at the technology a lender uses for origination and servicing. During this process of identifying areas of improvement, they may recommend origination technology and/or configuration changes that eliminates significant portions of manual tasks, particularly solutions that rely on AI. For servicing, many consultants find this department often relies on the most antiquated processes and technology, since much of the innovation in the industry focuses on originations. Consultants often recommend the use of technology for smarter data and document transfers from originations to servicing. By deploying technology strategically, as consultants are looking to transform operations in these departments to focus on single touch processes, instead of multiple manual processes for overworked employees. How to Make the Most of Your Consulting Relationship The most successful consulting relationships have transparency on both sides, which is vital from the inception. The client in this relationship should be prepared for numerous questions from the consultants, and must answer as honestly as possible. Some clients make the mistake of underestimating the depth of these relationships and do not commit fully on the front end. To make this transformation a success, they must dedicate time and personnel to these efforts. Occasionally, clients fail to provide consultants with an advisor figure, who can serve as a point person for questions. When this happens, the engagement tends to drag out further and can be much more costly for the lender, while also yielding reduced results. Furthermore, clients that do provide adequate resources tend to have less down time implementing changes and have a more seamless transition to improved processes. Ideally, lenders should engage with consultants as early as possible, allowing for UAT, stress testing and adjustments leading to steady state in order to have new operational processes in place before higher volumes of activity come in the Spring. Consulting relationships often yield results over time, instead of immediately. Evaluating the success of an engagement should happen gradually over phases, especially as any technology or staffing changes will involve training and retraining. While lenders look for new ways to compete, embracing change, even in a short period of time, can yield huge results, particularly in reducing the cost per loan and the amount of time employees spend on manual tasks, thus creating new and improved metric goals. Pete Butler is the Executive Managing Director and oversees Wipro Mortgage Digital Operations/Platforms which serves the complete mortgage industry lifecycle and Opus Capital Markets Consultants, a specialized risk management and quality control service provider for a wide range of participants in the mortgage and consumer lending industry. For more information, please visit and