5 Tips for Taking Control of Your Origination Process & Grow Your Lending Business


5 Tips for Taking Control of Your Origination Process & Grow Your Lending Business

October 12, 2023
Certified Credit

Research shows that tackling life’s challenges with an empowered attitude is what separates people who are successful from those who aren’t. In psychology, this concept is known as your locus of control. Having an internal locus of control means that you believe you’re the ultimate arbiter of your outcomes. In contrast, having an external locus of control means that you assume your success is up to outside forces. 

In light of the unpredictable mortgage market conditions, many lenders have unknowingly adopted an external locus of control. While understandable, you don’t want to stay in this disempowered mindset for too long—instead, it’s much more productive to focus on the areas within your business that are under your control and optimize them to be the best they can be.

In part one of this three-part series, we’ll discuss how you can take control of your loan origination. Read on to discover tips, tricks, and tools that can facilitate this process. 

 Download our Take Control of Your Mortgage Lending Success Guide to access additional insights!

Tip #1 Take Control of Your Prequalification Process

The first interaction that many prospective borrowers will have with your mortgage lending business is when they apply for prequalification with you. Prequalification gives them a chance to see if they meet your basic eligibility criteria without affecting their credit scores.

Since your prequalification process can make or break your first impression with new applicants, you want it to go smoothly and satisfy their expectations. You can do so in one fell swoop using a tool, like Cascade Prequal

Cascade Prequal is an automated prequalification solution that can improve your origination process by:

    • Fulfilling applicants’ high expectations – Today’s borrowers want digitized applications and instant responses. Cascade Prequal can deliver just that. It compares applicants’ submission data to your pre-set eligibility criteria, enabling you to deliver a swift response.
    • Cutting credit reporting costs – Last year, FICO decided to raise its credit report prices quite notably. For some lenders, this price increase has raised their credit reporting costs by up to 400%. With hard pull credit reports costing more than ever before, you only want to order them when it’s truly necessary.

      Offering prequalification allows you to evaluate applicants’ initial creditworthiness without paying for hard pull credit reports. Instead, Cascade Prequel uses affordable soft pull credit reports. Thus, offering prequalification can help you cut down your credit reporting costs while still taking a look at interested applicants’ credit history.
    • Preventing trigger leads – When you pull a hard credit report for an applicant, it can alert the competition via trigger leads. After that, your competitors may start reaching out to your new applicant and try to steal their business. With the market being so tight, you want to hold onto every applicant that comes your way.

      Cascade Prequel uses soft pull credit reports, so it won’t activate trigger leads. In turn, it can give you more time to establish a positive rapport with new applicants and secure their allegiance before you open them up to the competition.
    • Paving the way for loyal borrower relationships – Not every aspiring homeowner will prequalify with you the first time they apply. Rather than sending these applicants away with an instant denial, you can use this opportunity to nurture them into loyal leads. All you need to do is provide them with personalized credit score improvement tips.

      At Certified Credit, our credit score improvement tools can facilitate this process. After sharing a customized plan with an applicant, you can check in on their progress and advise them to reapply for prequalification down the line. Since individualized credit education is hard to come by, these non-qualifying applicants will likely become loyal borrowers who formally apply with you and refer their friends and family. 

Tip #2 Set Strategic Parameters For Credit Report Ordering

In addition to using soft pull credit reports whenever possible, another way to improve your loan origination is to reevaluate your credit report ordering workflows. Here are some questions to kickstart this process: 

    • Do you currently order tri-merge credit reports right away? Or do you start with one bureau first?
    • How often do you invest money in hard pull credit reports for applicants who don’t end up qualifying with you?
    • Do you manually compare credit reports to your eligibility criteria? Or do you have an automated system in place to speed up this process?

On occasion, a one-bureau report can give you all the information you need to disqualify an applicant. In other cases, you may need all three reports to make a final call. SmartSelect is an innovative solution that can help you streamline your credit reporting costs without manually ordering credit reports one by one. 

Here’s how SmartSelect works:

    • You set your credit thresholds, which can include specific credit score minimums, collection balances, zip codes, bankruptcies, foreclosures, delinquencies, and unreleased federal tax liens. After that, you can select your preferred credit report ordering parameters from the following options:
        • One bureau → two bureau → three bureau
        • One bureau → three bureau 
        • Two bureau → three bureau
    • When it’s time to order a credit report, SmartSelect will initiate the order with one or two credit bureaus first (based on your stated parameters).
    • If this first credit report’s information matches your credit thresholds, SmartSelect will let you know. After that, it will automatically pull the second and third reports according to your preferred parameters.
    • If the first credit report’s information does not meet your credit thresholds, SmartSelect will stop the process there, preventing you from spending any more money on that applicant.
    • You can pause SmartSelect’s credit reporting ordering process at any time. You can also update your credit thresholds and credit report ordering parameters as needed. 

By ensuring you don’t spend money on credit reports you don’t need, SmartSelect can save you time and money, allowing you to allocate these resources to other areas of your business. SmartSelect can also integrate with your loan origination system (LOS), enabling you to view all of your applicants’ data from one place. 

#3 Streamline Your Verification of Income and Employment

In addition to credit reports, another key ordering process in loan origination is verification of income and employment (VOE). If you complete your VOEs manually, you may be wasting a lot of valuable time. After all, tracking down applicants’ employers and getting in touch with them can be a tricky process. 

You can streamline things considerably by leveraging an automated tool, like Cascade VOE. Cascade VOE allows you to hand-pick a roster of third-party verification vendors and arrange them in your preferred order. If you want to save money, simply place the lowest-cost vendors at the top of your cascade. After that, all you have to do is initiate verification requests within Cascade VOE. This advanced solution will then:

  • Cycle through your verification vendors in order until it returns a hit. 
  • Notify you as soon as it yields a hit. 
  • Pass on any outstanding verifications to Certified Credit’s dedicated manual VOE team. 

Cascade VOE is known for returning swift verifications—you’ll often receive a hit within a few minutes of submitting a request. By using the lowest-cost vendor option every time, Cascade VOE can also make your verification ordering a lot more cost-effective and consistent.

#4 Leverage Milestone Ordering

Improving distinct processes within your loan origination workflow can make a big impact. However, it’s equally important to take a step back and consider whether or not the steps within your workflow are positioned optimally. 

For instance, in the case of VOE, requesting verifications too early can lead to unnecessary orders. Even if you save this step for later on, you can’t always be sure that your loan officers are following suit. 

Milestone ordering can solve this problem. With milestone ordering, you can ensure that certain steps are only taken after others have been completed. In turn, you can standardize loan origination across your entire organization and make sure that every step is being taken at the most strategic time. 

#5 Prevent Surprises Upon Closing With Undisclosed Debt Monitoring

After originating a loan, the last thing you want to run into is an unexpected fallout or a repurchase request. These expensive obstacles can arise when your applicant no longer qualifies for their loan at the time of closing. 

An applicant’s eligibility can change after their initial credit check for a variety of reasons. For instance, they may:

    • Take out a new tradeline
    • Amass a large credit card balance
    • Fail to make an existing credit payment on time
    • Incur an increased credit payment amount

You may be able to prevent these events by educating your borrowers on the risks of altering their creditworthiness during the quiet period (the time between your initial credit pull and closing). However, you still need to safeguard your business from such blindspots. You can do so using Cascade Undisclosed Debt Monitoring (UDM)

Cascade UDM automatically monitors your applicants’ credit activity while they’re in the quiet period. It can send you instant alerts and daily summaries regarding your applicants’ eligibility criteria. You can designate which credit file information is most relevant to you.

By keeping you in the know, Cascade UDM can protect your loan origination process from untimely surprises. What’s more, it can remove the LQI requirement to order a Refresh Report before closing. 

Take Control of Your Origination Process with Certified Credit

As you can see, you have a lot of influence over your internal processes. By adopting an internal locus of control, you can transform your mortgage lending business into a well-oiled machine. When you do, you’ll be better able to weather market downturns and capitalize on market booms. 

If you’re ready to take more control of your loan origination process, reach out to Certified Credit to schedule a credit consultation. Our mortgage lending solutions can help you optimize your workflows. Better yet, our team of experts can help you select the right solutions for your business’ unique needs. In addition to our automated tools, we also offer:

    • Affordable tri-merge credit reports
    • Flood zone determinations
    • Fraud and risk support
    • Settlement services

Want even more ways to take control of your mortgage lending success? Download our Take Control of Your Mortgage Lending Success Guide today!