(How to) Never Be Late Again

Aren’t you utterly sick and tired of the “end of the month” cluster-f*$& of loans that don’t close on time?

I believe the biggest reason why loans don’t close on time is because loan officers don’t know how to take full responsibility for their pipeline.


Six Sigma for Loan Processing

Many of the biggest manufacturing companies in the world use a quality control process known as “six sigma” to improve all of their processes.

Six sigma is set of tools and strategies where people operate by a certain set of standards and timelines to achieve optimal performance and efficiency and each person in the process is held accountable to those standards and timelines.

This is desperately needed in the lending industry.

If you wait for your company to implement systems for processing then you might as well go for a jog around the globe.  It ain’t gonna happen.  You’ve got to proactively manage your deals and take responsibility for this process.

I used a very simple loan processing strategy that gave me leverage to move my loans through the system at a steady clip to ensure they closed on time.  I’ll outline this simple process below.


Manage The Loan Processing “Process”

It’s obvious that you can’t just hand in a file to processing and turn the light off until the closing day.  At the same time, you can’t allow yourself to get sucked in to the deal so far that you’re spending 80% of your time in processing instead of selling.

In order to keep your loan on track for a smooth, on-time closing, you need to make sure each step in the process has been properly executed.

The problem is that most loan officers or processors aren’t bringing accountability to each step of the process.  In fact, many don’t know what the steps are!

You can’t just say, “this loan needs to close by the 30th so let’s get workin’ on it.” That kind of thinking is downright foolish.  It opens up the door for finger pointing and the processor blaming the loan officer and vice versa.

Let’s break down the crucial main steps that transpire once a contract comes in:

  • Get loan documents out to the borrower
  • Order appraisal
  • Order title
  • Get signed loan documents back
  • Retrieve all necessary borrower documentation
  • Appraisal complete
  • Submit complete file to underwriting
  • Conditional approval
  • Send in final conditions
  • Compliance review
  • Final approval/Clear to close issued
  • Close and fund

There are more or less steps in the process depending on the company, but generally speaking these are the steps that must occur once a contract comes in for a new purchase.

Now, what I did was break down the above process into how many business days it might take to complete each step and working backwards from the closing date on the contract, set due dates for each of those steps.

For example, if the closing date says May 30th, then I would work backwards and assign a due date for each step.  In this example, the clear to close due date would say May 28th; the compliance review due date would be May 27th; send in final conditions due date would be May 24th.  And so on and so forth.


Bring Accountability To The Process

At each step in the process, I would check on the file the day before each due date, and say “hey, I just wanted to check that this file is on track to be submitted tomorrow; if it doesn’t go in tomorrow, it puts us behind.”

By getting in front of the process like this and holding people accountable (including myself) I largely avoided late files.

The opposite of this process is unfortunately the norm.  A week before closing a loan officer will say “so, where are we on this?” And the processor might say “crap, that hasn’t even been submitted yet.”

Then all hell breaks loose.

The truth is, I found that loan processors always appreciated my “gentle” managing of the process because it helped keep them on track while they were buried in paperwork.

The fly in the ointment is when the loan goes off track or the process gets delayed early on in the process, but no one really knows that’s happening because no one has taken time to break down each step of the loan processing process.

By taking responsibility for the loan process in this manner it saves you countless hours and headaches of trying to jam loans through the system at the end of the month.

And of course, we all know how fun that is.  All that does is ruin relationships with processors, realtors, borrowers, and everyone else in the process.

Take control of your loans by strategically managing the process and you’ll find more loans close on time with a lot less stress.

Think this process is a good idea and could work for you?  Share your comments below.


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