While it’s true that housing prices have largely recovered from the crash, and the housing market is on strong footing, regulatory burdens are still making it difficult for lenders, servicers, and investors to turn a profit. Lenders in particular are being forced to do more with less. If any lessons can be learned about the right way to adapt to today’s environment, it’s that investments in compliance result in huge returns. Industry leader Ellie Mae has made that investment particularly well, and all lenders and loan officers should take note.
When Ellie Mae was awarded the Market Influence award in 2014, their Encompass solution was processing 20% of all mortgage originations in the country. Their built-in compliance engine, Total Quality Loan program, was both critical and timely. With every new regulation handed down from Washington and the Consumer Financial Protection Bureau (CFPB), their compliance engine only becomes more valuable.
Between Q3 2014 and Q3 2015, Ellie Mae grew revenue by 61%, net income by 24%, and EBITDA 45%. These numbers reflect both added customer volume and increased company savings. Those savings were passed on to lenders, who flocked to Ellie Mae. On average, lenders could save $970 per loan, reduce per-loan origination expenses by $466, and increase ROI by close to 500%.
Lenders’ primary concern isn’t CFPB enforcement; it’s the decreasing customer volume and increasing costs that come along with the bureau’s regulations. A recent survey conducted by the Mortgage Bankers Association saw mortgage lenders averaging just $493 in returns per loan in Q4 2015. That’s a 60% drop from the $1,238 average in Q3 2015. Production expenses have also increased nationwide. In Q4, average production expenses per loan rose to $7,747—the highest levels since 2008.
Acuity National Real Estate Solutions is a national title insurance company that offers cutting-edge technology to help lenders and loan officers reduce cost and turnaround time. Besides our many title products, we offer a 24-hour closing hotline and a client portal for easy document management. For more information on our closing solutions, please visit our homepage.