Tightening in origination volume may call for opening consumer-direct call centers, a mortgage industry strategist has put forward.
Garth Graham, a strategic mortgage banking consultant for the Stratmor Group, said that as origination business gets more competitive, mortgage companies should look to opening a consumer-direct channel, or a call center set up to receive untapped leads coming from online and phone applications.
The call center model is increasingly viable, Graham explained, because consumers are now more willing than they were a few years ago to go through the mortgage process online or over the phone. His consultancy’s research found that online originations were up 50% from three years, rising from 10% to 15% of the market. Graham's company also found that 70% of all mortgage purchase originations began on the phone or online.
Mortgage companies’ risk is lessened, when compared to buying loans from correspondents, brokers or doing them in retail operations, he said. Graham argued purchasing loans from partner correspondents or brokers involves a great deal of buy-back risk. Call centers, Graham contended, also cost less than brick-and-mortar operations.
Regulations also make call-centers very attractive. Graham said that call centers provided for more control and better compliance management than other channels. They also afford originators the opportunity to train and monitor employees all from one place.
Graham advised that companies considering launching call centers should consider two main factors: first, they must have the capital for the space and the technology. More importantly, he said, companies need a solid source for leads.
Loan servicing companies could be good candidates for call centers, Graham said, because they already have a solid source of clients in their network.
With demand still high, Graham said call-centers were a growing alternative strategy as long as they are built correctly and the prices are competitive.