Promontory MortgagePath, a mortgage technology and loan fulfillment service provider, recently announced that its Promontory Fulfillment Services (PFS) unit has developed a new online Cost Savings Calculator.
The new product is designed to allow banks, credit unions and mortgage companies to quickly compute their own operational cost of residential mortgage loan origination and compare that to PFS’s outsourced solution, according to a company press release.
The Cost Savings Calculator requires the following information:
- Number of loan units the institution originates per month;
- Number and annual salary of full time loan-production staff (processors, underwriters, closers and administrative staff);
- Number and annual salary of support staff (compliance/legal, secondary marketing and technology).
The calculator solely focuses on operational costs once the loan has come into the institution and does not factor in loan officer compensation, because it assumes the client will continue to prospect for the loans, the release states. In addition to the cost analysis, the calculator will also identify areas of the operation, such as compliance, which may be under-staffed and could create potential compliance risks.
“The Mortgage Bankers Association (MBA) publishes a wealth of data on the cost of origination, and today the average is above $8,000 per loan, when LO compensation is factored in,” Promontory Fulfillment Services’ Head of Operations Ken Janik said in the release. “But these are averages and they may or may not be the right benchmarks for different sized banks with different overhead structures and business models. Our calculator uses each institution’s own numbers and instantly delivers a client-specific answer.”
“In the last few months we have seen a number of mid-tier banks exit the mortgage origination business because they couldn’t justify the low margins or stand the cyclicality of mortgage lending,” Promontory Mortgage Path CEO Bruce Witherell said. “Our new calculator lets executives do their own math, and in minutes, come to their own conclusions about their true processing costs. They can also see how they can competitively continue to offer mortgages as a product without maintaining a mortgage operation.”