The Pareto principle is well-known among business leaders, both those that attended a four-year college and those that got their education from the school of “learning-on-the-job.” But in case you’re not familiar with it, the Pareto principle says that 80 percent of your results are due to 20 percent of your effort.
Regarding loan volume and profits, this would mean that 80 percent of your loan volume is the result of the efforts of 20 percent of your LO’s.
This can be broken down even further and applied to an individual LO — 80% of their productivity and profitability is the result of 20% of their effort. You will soon learn that a Digital Mortgage POS can be the engine for the “productive 20%”.
How to Increase Loan Officer’s Performance and Profitability
Know Your Lending Metrics
If you want to know if your LO is improving their productivity, you must have a baseline. Decide what you are measuring and record where they are starting. We’ve found that the most meaningful Lending metrics to measure are:
- Days it took to close the loan
- Pull-through ratio (submitted applications to closed loans)
- Number of loans closed per month
- Cost to close per loan
- Borrower satisfaction
How you keep track is up to you — spreadsheet, note cards, ledger — whatever is most convenient and functional for you. We don’t recommend displaying the baseline measurements for the whole LO team to see at this point. While competition may motivate some, it can embarrass and discourage others.
It’s better to wait until there’s already an improvement noted as this is more visually motivating rather than just seeing the baseline.
Analyze and Compare Loan Officer Performance
Analyze each Lending metric and attempt to understand the effort that is giving them those numbers.
Talk with each LO and ask them to explain their process. Compare the methods of your under-performing LO’s with your top-earners.
Are there gaps that are slowing down closing? How can you reduce the friction that adds to the cost of each loan?
What time-wasters can you find in their mortgage lead generation efforts?
Ask the difficult questions, listen carefully to your LO’s responses, and observe their process from origination to closing. Be critical but not judgmental — remember that your goal is to look for ways to improve, not just point out things they are doing poorly.
Then, identify the key issues and actions that are holding back performance. You’ll need this info to come up with targeted solutions.
Implement Solutions to Improve
Now that you’ve identified critical areas that are negatively affecting your LO’s performance and profitability, you can employ solutions. Set up in-house training, consider sales workshops, restructure your LO team to play to their strengths.
Be strategic in implementing you digital mortgage tools for improving loan officer performance. While a mortgage website with a secure digital 1003 is a baseline, our clients say that the mortgage tool that impacted their productivity and profits most significantly is a mortgage POS platform.
Incentivize To Sky-Rocket Loan Officer Performance
Your LO team will begin to see and feel the upward shift in their performance fairly quickly after you implement those solutions, especially with mortgage tech. Add even more fuel to the fire by giving your LO’s incentives for reaching goals and improving on those Lending metrics.
Where to Grow From Here
Where you want to take you lending business from this point is up to you. Some of our clients decide to expand their LO team and profits by scaling up. Other lending firms choose to focus on maximizing profits with a core, top-performing LO team.
Whichever way to decide to increase the size of your 20-percent, the digital mortgage tools and support from LenderHomePage can make it possible. Contact up for a demo and customized mortgage tech platform. 888-377-1265
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