Outsourcing Mortgage Underwriting: Why It Is Vital for Credit Unions?

The continuously changing stringent mortgage regulations and shifting mortgage environment have created an increasing need for credit unions to begin outsourcing mortgage underwriting. Credit unions would probably face more challenges in 2019. There are increasing mortgage rates on one end combined with higher/increased home prices, while credit unions have to accept the burden that comes with financial regulations on the other end. This mixture causes accumulations and delays.

Credit unions need another business model to be able to overcome these two challenges. This should be what will help them reduce their operational costs to the barest while ensuring optimum levels of efficiency of essential processes such as mortgage underwriting.

Without facing backlogs or delays, outsourcing mortgage underwriting can help foremost mortgage players to meet their needs for the reasons discussed below:

1. Experienced Underwriters

You can tap into or enjoy the skills of knowledgeable underwriters who are experienced in all areas of mortgage underwriting through outsourcing. This will, in turn, save your credit union the problem of finding and recruiting a team of experienced underwriters.

2. Reduction in Cost

Keeping a firm control on resource costs is becoming a big hurdle and challenge for credit unions, with the present volatile rate in the marketplace. The demand for loans may fall and so will the profits, as borrowers wait for the rate to fall (expected to happen). This is the more reason credit unions must ensure the reduction in costs necessitated for keeping up a team of in-house mortgage underwriters.

The payment made to a team of knowledgeable underwriters, appraisers, and processors constitute a big expense for credit unions. Avoiding such resource associated expenses would make big savings for them. By outsourcing mortgage underwriting services, it is possible for credit unions to save on cost without losing on the know-how and proficiency needed to review loans, particularly those that automation cannot decide.

3. Improved Risk Management

Mortgage underwriting outsourcing vendors strictly comply with the lender’s criteria and policies. This guarantees improved risk management and helps your credit union to avoid risky loans. An underwriting outsourcing partner can help credit unions to understand the actual risks and scope of the threat that are a part of regulatory action, with the increase in regulations.

4. Increase in Effectiveness

Going by the current credit union reports, an outsourcing mortgage service provider is capable of deciding on at least 2,500 loans in a month, with a high loan authorization ratio of 45%. You will be able to set the guidelines according to your needs and accomplish a higher authorization rate if 45% is something you are not looking for. In a speed of 5 to 10 minutes, knowledgeable underwriters can churn out third party underwriting very fast.

Flexible Pricing Models

When it comes to outsourcing mortgage underwriting, you can also avail flexible pricing models. An outsourcing vendor can offer you the pricing models that go with your requirements. When you outsource mortgage underwriting, you will be able to choose a model favorable to your credit union. Outsourcing firms are always more than willing to give you discounts, should there be an increase in the volume of underwriting.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.