A good insight of the mortgage world mechanisms can give one the ability to see the ups and downs in the market and grasp the similarities with other working systems in other domains (apparently unrelated to the world of finances). This was the case of a mortgage banker and columnist for the National Mortgage News, who thanks to his 25-year experience in the mortgage industry, could clearly see and relevantly depict the parallelism between an ER room and the mortgage environment.
How do consumers feel when filing for a loan? This columnist had the real benefit of understanding what it is like for a borrower to go through the loan filing and approval process. And the comparison with the hospital experience seems all the more illustrative in this context…
Waiting for three hours before getting help in a hospital is an ordeal because of the frustration it causes. Things are strikingly similar in the mortgage industry where the borrower is kept waiting at every step in the loan file processing. In the mortgage business, there is a different specialist that handles each step in the sequential process:
The loan application is filed first and the loan is submitted to the next stage. Then, there follow the disclosure and the appraisal, the lender submits the underwriting and afterwards answers the questions.
Every stage in the process involves a series of work tasks and the next phase can only begin when these are complete. By comparison, a patient cannot be seen by the ER personnel unless they have a bed available, and, until they examine the patient, there is no drug treatment; hence, one has to suffer the pain and wait. It is similarly “painful” for borrowers waiting for their loan to pass through every stage. For example, bankers can’t appoint an underwriter to review the tax returns until they have the appraisal ready. And the explanation for this state of facts is that “the loan is not yet ready to submit to underwriting”.
This manner of handling the process totally fails to meet the customer’s expectations. Why won’t the banker review the tax return if the homebuyer has the documents of his entire tax return? The problem lies first in the limitations of the systems that prevent more than one person from working simultaneously on the same loan. The majority of LOS systems don’t break the process into tasks so that these can be queued for those who can handle them.
Very few lenders break the process into steps. It is more common to have multiple tasks handled at the level of each stage, and the loan file can only advance when all these tasks are complete. Documents, requests and data will just sit and wait until the moment when they are fully ready for the next person in line to work on them. This situation often causes last-minute surprises.
Besides the flaws in the operational systems, there is also the problem of resources. Just as in a hospital there are scarce resources, the same thing happens for the mortgage industry where instead of doctors, nurses and specialists, there are underwriters, credit managers, compliance managers and other processors.
Neither of the two industries has enough of these specialists, and therefore they try to compensate by creating artificial gates or queuing systems (like in hospital). This way of handling the work process causes incredible customer dissatisfaction. When the service provider fails to satisfy the customer, it is less likely for the client to use the service again and bring you money either by returning or by referring the lender to family or friends. Resources are managed successfully today, but this management impacts the generation of future revenue, and diminishes the ability to retain that resource in the future.
Before the highly talented professionals get involved in the work process, customers interact with other personnel which are often considered less talented. Nevertheless, the latter are those that actually influence customer satisfaction most. If resources are managed carefully, people in the first line of action should be capable of ensuring excellent communication with the client.
High customer satisfaction depends on the ability to manage the workflow successfully. This is one of the biggest flaws in the mortgage and medical industries. If a hospital has well-trained professionals in the admittance office who communicate clearly and empathically with the people coming in, clients would accept a difficult situation a lot better. Things are pretty similar in the mortgage industry.
The best lenders know this and use all the tools they have to keep the customer informed on the lending process. They call or send text message/email updates on the loan status, not to mention the availability of online options where the borrower can get information on the loan status.
Information is currency in the ER as well as in the mortgage world. People have their expectations and they want to be delivered as agreed. When waiting in the emergency room, it really makes a difference to know whether you are the 4th or the 14th in line. If nobody informs you on the situation, this backfires in the form of huge customer dissatisfaction.
Unless mortgage bankers become aware of the impact waiting has on borrowers, they will not be able to deliver top quality service. And the consequences for this inefficiency will become more than just apparent in the future.