At a time when all lenders are facing rising per-loan costs, increased regulatory pressure and tighter investor guidelines, many lenders are looking to lower origination costs and improve their profit margins, and one software provider says its mortgage management solution can save lenders nearly $1,000 per loan.
Mortgage industry software provider Ellie Mae says its Encompass platform, which supports about 80 percent of the loan originations at small and midsize banks, can save lenders up to $970 per loan.
An independent study recently conducted by MarketWise Advisors LLC measured results from Ellie Mae’s clients and found that the savings come from reduced origination costs, improved operational efficiencies and increased loan quality and compliance.
Specifically, the $970.14 in potential savings and value per loan comprises $612.83 in improved asset quality and execution potential per loan and $337.31 in improved efficiencies and cost savings potential per loan, according to the study.
“ROI is a critical factor for mortgage lenders, especially in today’s environment,” said Ellie Mae President and CEO Jonathan Corr. “The results of the MarketWise ROI Benchmark study demonstrate that the adoption of Ellie Mae’s Encompass all-in-one mortgage management solution can save lenders a substantial amount of money and provide value through improved efficiencies, loan quality and compliance.”
The study also found that the hourly cost per employee averaged $38.89, including direct employee salaries plus overhead costs. The net operational impact that formed the total potential value was a decrease of up to 5.69 hours and six basis points of improvement. On average, Encompass clients have a 477 percent projected return on investment, and the average payback period was 2.64 months.
Encompass enables banks, credit unions and mortgage lenders to create and fund mortgages and improve compliance, loan quality and efficiency. The software is used by more than 119,000 mortgage professionals and thousands of mortgage companies, including six of the 20 largest U.S. mortgage lenders.
MarketWise Advisors independently develops programs to analyze performance and return on investment of technologies through models that identify the potential return. The study was conducted in the fourth quarter of 2014. The Ellie Mae clients that participated in the study represented diverse lending entities, origination channels, geographies and business structures.